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[Federal Register Volume 89, Number 229 (Wednesday, November 27, 2024)]
[Rules and Regulations]
[Pages 93912-94594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25521]

[[Page 93911]]

Vol. 89

Wednesday,

No. 229

November 27, 2024

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Part 406, 407, 410, et al.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment 
and Ambulatory Surgical Center Payment Systems; Quality Reporting 
Programs, Including the Hospital Inpatient Quality Reporting Program; 
Health and Safety Standards for Obstetrical Services in Hospitals and 
Critical Access Hospitals; Prior Authorization; Requests for 
Information; Medicaid and CHIP Continuous Eligibility; Medicaid Clinic 
Services Four Walls Exceptions; Individuals Currently or Formerly in 
Custody of Penal Authorities; Revision to Medicare Special Enrollment 
Period for Formerly Incarcerated Individuals; and All-Inclusive Rate 
Add-On Payment for High-Cost Drugs Provided by Indian Health Service 
and Tribal Facilities; Final Rule

Federal Register / Vol. 89 , No. 229 / Wednesday, November 27, 2024 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 406, 407, 410, 411, 416, 419, 435, 440, 457, 482, and 
485

[CMS-1809-FC]
RIN 0938-AV35

Medicare and Medicaid Programs: Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems; Quality 
Reporting Programs, Including the Hospital Inpatient Quality Reporting 
Program; Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals; Prior Authorization; Requests 
for Information; Medicaid and CHIP Continuous Eligibility; Medicaid 
Clinic Services Four Walls Exceptions; Individuals Currently or 
Formerly in Custody of Penal Authorities; Revision to Medicare Special 
Enrollment Period for Formerly Incarcerated Individuals; and All-
Inclusive Rate Add-On Payment for High-Cost Drugs Provided by Indian 
Health Service and Tribal Facilities

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period revises the Medicare 
Hospital Outpatient Prospective Payment System (OPPS) and the Medicare 
Ambulatory Surgical Center (ASC) payment system for calendar year 2025 
based on our continuing experience with these systems. We describe the 
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. Also, this final rule updates the requirements for the 
Hospital Outpatient Quality Reporting Program, Rural Emergency Hospital 
Quality Reporting Program, Ambulatory Surgical Center Quality Reporting 
Program, and Hospital Inpatient Quality Reporting Program. We also 
summarize information received in response to a Request for Information 
on potential modifications to the Safety of Care measure group in the 
Overall Hospital Quality Star Rating methodology. In this final rule, 
we are also finalizing our proposal to narrow the description of 
``custody'' in the Medicare payment exclusion rule and to revise the 
special enrollment period criteria for formerly incarcerated 
individuals. We are also finalizing our Medicaid and Children's Health 
Insurance Program (CHIP) continuous eligibility provisions. We are also 
finalizing the proposal to reduce the review timeframe for standard 
prior authorization requests for certain covered outpatient department 
services paid under the OPPS from 10-business days to 7-calendar days. 
Further, this rule finalizes updates to the Conditions of Participation 
(CoPs) for hospitals and critical access hospitals (CAHs) in an effort 
to advance the health and safety of pregnant, birthing, and postpartum 
women. This rule also finalizes our proposed policy to separately pay 
Indian Health Service (IHS) and Tribal hospitals for high-cost drugs 
furnished in hospital outpatient departments through an add-on payment 
in addition to the all-inclusive rate (AIR) under the authorities used 
to calculate the AIR starting January 1, 2025. Finally, we are 
finalizing exceptions to the Medicaid clinic services four walls 
requirement for IHS and Tribal clinics, and, at state option, for 
behavioral health clinics and clinics located in rural areas.

DATES: 
    Effective date: The provisions of this rule are effective January 
1, 2025.
    Implementation date: Except as set forth in this section, the 
regulations at Sec. Sec.  482.43(c), 482.55(c), and 485.618(e) must be 
implemented by July 1, 2025; the regulations at Sec. Sec.  482.59(a) 
and (b) and 485.649(a) and (b) must be implemented by January 1, 2026; 
and the regulations at Sec. Sec.  482.21(b)(4) and (e), 482.59(c), 
485.641(d)(4) and (e)(2), and 485.649(c) must be implemented by January 
1, 2027.
    Comment period: To be assured consideration, comments must be 
received at one of the addresses provided below, by December 31, 2024.

ADDRESSES: In commenting, please refer to file code CMS-1809-FC.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1809-FC, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    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 to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1809-FC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Regulation coordination questions at 
[email protected] or Elise Barringer (410) 786, 9222.
    Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact 
the HOP Panel mailbox at [email protected].
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
policies, contact Anita Bhatia via email at [email protected].
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
measures, contact Marsha Hertzberg via email at 
[email protected].
    All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs 
Provided by Indian Health Service (IHS) and Tribal Facilities, contact 
Nate Vercauteren via email at [email protected].
    Blood and Blood Products, contact Au'Sha Washington via email at 
[email protected] or Nicole Marcos via email at 
[email protected].
    Cancer Hospital Payments, contact Scott Talaga via email at 
[email protected].
    CMS Web Posting of the OPPS and ASC Payment Files, contact Gil Ngan 
via email at [email protected].
    Medicaid Clinic Services Four Walls Exceptions, contact Sheri 
Gaskins via email at [email protected] or Ryan Tisdale via 
email at [email protected].
    Composite APCs (Multiple Imaging and Mental Health) and 
Comprehensive APCs (C-APCs), via email at Elise Barringer via email at 
[email protected].
    Device-Intensive Status and No Cost/Full Credit and Partial Credit 
Devices, contact Scott Talaga via email at [email protected].
    Domestic Personal Protection Equipment RFI, contact Jesse Hawkins 
via email at [email protected]
    Health and Safety Standards for Obstetrical Services in Hospitals 
and Critical Access Hospitals, contact The Clinical Standards Group, 
[email protected]
    Hospital Inpatient Quality Reporting (IQR) Program policies, 
contact Julia Venanzi via email at [email protected].

[[Page 93913]]

    Hospital Inpatient Quality Reporting (IQR) Program measures, 
contact Melissa Hager via email at [email protected] or Ngozi 
Uzokwe via email at [email protected].
    Hospital Outpatient Quality Reporting (OQR) Program policies, 
contact Kimberly Go via email at [email protected].
    Hospital Outpatient Quality Reporting (OQR) Program measures, 
contact Janis Grady via email at [email protected].
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Elise Barringer via email at 
[email protected].
    IHS Outpatient Encounter Rate available to all American Indian and 
Alaska Native (AI/AN) Outpatient Programs Request for Information, 
contact Lisa Parker via email at [email protected].
    Inpatient Only (IPO) Procedures List, contact Abigail Cesnik via 
email at [email protected].
    Medicaid and CHIP Continuous Eligibility Policy, contact Cassie 
Lagorio via email at [email protected].
    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga 
via email at [email protected].
    No Legal Obligation to Pay Payment Exclusion, contact Frederick 
Grabau via email at [email protected].
    Non-Opioid Policy or Implementation of Section 4135 of the 
Consolidated Appropriations Act (CAA), 2023, contact Cory Duke via 
email at [email protected].
    OPPS Brachytherapy, contact Cory Duke via email at 
[email protected] and Scott Talaga via email at 
[email protected].
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier 
Payments, and Wage Index), contact Erick Chuang via email at 
[email protected] or Scott Talaga via email at 
[email protected].
    OPPS Dental Policy, contact Nicole Marcos via email at 
[email protected].
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Gil Ngan via email at [email protected], Cory Duke 
via email at [email protected], or Tonya Gierke via email at 
[email protected].
    OPPS New Technology Procedures/Services, contact the New Technology 
APC mailbox at [email protected].
    OPPS Packaged Items/Services, contact Cory Duke via email at 
[email protected].
    OPPS Pass-Through Devices, contact the Device Pass-Through mailbox 
at [email protected].
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova via email at [email protected].
    Outpatient Department Prior Authorization Process, contact Kelly 
Wojciechowski via email at [email protected].
    Overall Hospital Quality Star Rating Request for Information, 
contact Tyson Nakashima Sr. via email at [email protected].
    Partial Hospitalization Program (PHP), Intensive Outpatient (IOP), 
and Community Mental Health Center (CMHC) Issues, contact the PHP 
Payment Policy Mailbox at [email protected].
    Payment Policy for Devices in Category B Investigational Device 
Exemption Clinical Trials Policy and Drugs with a Medicare Coverage 
with Evidence Development (CED) Designation, contact Cory Duke via 
email at [email protected] and Nicole Marcos via email at 
[email protected].
    Remote Services, contact Elise Barringer via email at 
[email protected] or Nate Vercauteren via email at 
[email protected].
    Rural Emergency Hospital Quality Reporting (REHQR) Program 
policies, contact Anita Bhatia via email at [email protected].
    Rural Emergency Hospital Quality Reporting (REHQR) Program 
measures, contact Melissa Hager via email at [email protected].
    Special Enrollment Period for Formerly Incarcerated Individuals, 
contact Steve Manning via email at [email protected].
    All Other Issues Related to Hospital Outpatient Payments Not 
Previously Identified, contact the OPPS mailbox at 
[email protected].
    All Other Issues Related to the Ambulatory Surgical Center Payments 
Not Previously Identified, contact the ASC mailbox at 
[email protected].

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the individual will take actions to harm the individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a 
plain language summary of this rule may be found at https://www.regulations.gov/.
    Severability of Provisions: We are clarifying and emphasizing our 
intent that if any provision of this final rule is held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further action, it shall be severable 
from other parts of this final rule, and from rules and regulations 
currently in effect, and not affect the remainder thereof or the 
application of the provision to other persons not similarly situated or 
to other, dissimilar circumstances. If any provision is held to be 
invalid or unenforceable, the remaining provisions which could function 
independently should take effect and be given the maximum effect 
permitted by law. Through this rule, we adopt provisions that are 
intended to and will operate independently of each other, even if each 
serves the same general purpose or policy goal. Where a provision is 
necessarily dependent on another, the context generally makes that 
clear.

Addenda Available Only Through the Internet on the CMS Website

    In the past, a majority of the Addenda referred to in our OPPS/ASC 
proposed and final rules were published in the Federal Register as part 
of the annual rulemakings. However, beginning with the calendar year 
(CY) 2012 OPPS/ASC proposed rule, all of the Addenda no longer appear 
in the Federal Register as part of the annual OPPS/ASC proposed and 
final rules to decrease administrative burden and reduce costs 
associated with publishing lengthy tables. Instead, these Addenda are 
published and available only on the CMS website. The Addenda relating 
to the OPPS are available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. 
The Addenda relating to the ASC payment

[[Page 93914]]

system are available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices.

Current Procedural Terminology (CPT) Copyright Notice

    Throughout this final rule with comment period, we use CPT codes 
and descriptions to refer to a variety of services. We note that CPT 
codes and descriptions are copyright 2024 American Medical Association 
(AMA). All Rights Reserved. CPT is a registered trademark of the AMA. 
Applicable Federal Acquisition Regulations and Defense Federal 
Acquisition Regulations apply.

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    B. Legislative and Regulatory Authority for the Hospital OPPS
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel)
    F. Public Comments Received on the CY 2024 Proposed Rule
    G. Public Comments Received on the CY 2024 OPPS/ASC Final Rule 
With Comment Period
II. Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes
    D. Statewide Average Default Cost-to-Charge Ratios (CCRs)
    E. Adjustment for Rural Sole Community Hospitals (SCHs) and 
Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act for CY 2025
    F. Payment Adjustment for Certain Cancer Hospitals for CY 2025
    G. Hospital Outpatient Outlier Payments
    H. Calculation of an Adjusted Medicare Payment From the National 
Unadjusted
    Medicare Payment
    I. Beneficiary Copayments
III. OPPS Ambulatory Payment Classification (APC) Group Policies
    A. OPPS Treatment of New and Revised HCPCS Codes
    B. OPPS Changes--Variations Within APCs
    C. New Technology APCs
    D. Universal Low Volume APC Policy for Clinical and 
Brachytherapy APCs
    E. APC-Specific Policies
IV. OPPS Payment for Devices
    A. Pass-Through Payment for Devices
    B. Device-Intensive Procedures
V. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
    A. OPPS Transitional Pass-Through Payment for Additional Costs 
of Drugs, Biologicals, and Radiopharmaceuticals
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
Without Pass-Through Payment Status
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    A. Amount of Additional Payment and Limit on Aggregate Annual 
Adjustment
    B. Final Estimate of Pass-Through Spending for CY 2025
VII. OPPS Payment for Hospital Outpatient Visits and Critical Care 
Services
VIII. Payment for Partial Hospitalization and Intensive Outpatient 
Services
    A. Background
    B. Coding and Billing for PHP and IOP Services Under the OPPS
    C. CY 2025 Payment Rates for PHP and IOP
    D. Outlier Policy for CMHCs
IX. Services That Will Be Paid Only as Inpatient Services
    A. Background
    B. Changes to the Inpatient Only (IPO) List
X. Nonrecurring Policy Changes
    A. Remote Services
    B. Virtual Direct Supervision of Cardiac Rehabilitation (CR), 
Intensive Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation 
(PR) Services and Diagnostic Services Furnished to Hospital 
Outpatients
    C. All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs 
Provided by Indian Health Service and Tribal Facilities
    D. Coverage Changes for Colorectal Cancer (CRC) Screening 
Services
    E. Request for Comment on Payment Adjustments under the IPPS and 
OPPS for Domestic Personal Protective Equipment
    F. Payment for HIV Pre-Exposure Prophylaxis (PrEP) in Hospital 
Outpatient Departments
    G. Payment Policy for Devices in Category B Investigational 
Device Exemption (IDE) Clinical Trials Policy and Drugs/Devices With 
a Medicare Coverage With Evidence Development (CED) Designation
XI. CY 2025 OPPS Payment Status and Comment Indicators
    A. CY 2025 OPPS Payment Status Indicator Definitions
    B. CY 2025 Comment Indicator Definitions
XII. MedPAC Recommendations
    A. OPPS Payment Rates Update
    B. Medicare Safety Net Index
    C. ASC Cost Data
XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System
    A. Background, Legislative History, Statutory Authority, and 
Prior Rulemaking for the ASC Payment System
    B. ASC Treatment of New and Revised Codes
    C. Payment Policies Under the ASC Payment System
    D. Additions to ASC Covered Surgical Procedures and Covered 
Ancillary Services Lists
    E. ASC Payment Policy for Non-Opioid Post-Surgery Pain 
Management Drugs, Biologicals, and Devices
    F. Final CY 2025 Non-Opioid Policy for Pain Relief Under the 
OPPS and ASC Payment System
    G. New Technology Intraocular Lenses (NTIOLs)
    H. Calculation of the ASC Payment Rates and the ASC Conversion 
Factor
XIV. Cross-Program Measures for the Hospital Outpatient Quality 
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), 
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs
    A. Background
    B. CMS Commitment To Advancing Health Equity Using Quality 
Measurement
    C. Modification of the Immediate Measure Removal Policy for the 
Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical 
Center Quality Reporting (ASCQR) Programs Beginning With CY 2025
XV. Hospital Outpatient Quality Reporting (OQR) Program
    A. Background and Statutory Authority
    B. Program Measure Set Policies
    C. Program Measure Updates
    D. Administrative Requirements
    E. Form, Manner, and Timing of Data Submission
    F. Public Reporting of Measure Data
    G. Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2025 Payment 
Determination
XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program
    A. Background and Statutory Authority
    B. Program Measure Set Policies
    C. Program Measure Updates
    D. Administrative Requirements
    E. Form, Manner, and Timing of Data Submission
    F. Public Reporting of Measure Data
XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program
    A. Background and Statutory Authority
    B. Program Measure Set Policies
    C. Program Measure Updates
    D. Administrative Requirements
    E. Form, Manner, and Timing of Data Submission
    F. Public Reporting of Measure Data
    G. Request for Information (RFI)--Development of Frameworks for 
Specialty Focused Reporting and Minimum Case Number for Required 
Reporting
    H. Payment Reduction for ASCs That Fail To Meet the ASCQR 
Program Requirements
XVIII. Medicaid Clinic Services Four Walls Exceptions
    A. Background
    B. Summary of the Medicaid Clinic Services Four Walls Exceptions 
Proposed Provisions, Public Comments and Responses to Comments
XIX. Changes to the Review Timeframes for the Hospital Outpatient 
Department (OPD) Prior Authorization Process
XX. Provisions Related to Medicaid and the Children's Health 
Insurance Program (CHIP)
    A. Continuous Eligibility in Medicaid and CHIP (42 CFR 435.926 
and 457.342)
    B. Summary of the Proposed Provisions, Public Comments and 
Responses to Comments on Medicaid and CHIP Continuous Eligibility

[[Page 93915]]

XXI. Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals
    A. Background and Statutory Authority
    B. The U.S. Maternal Health Crisis
    C. Summary of the Proposed Provisions, Public Comments and 
Responses to Comments on Health and Safety Standards for Obstetrical 
Services in Hospitals and Critical Access Hospitals
XXII. Hospital-Wide All-Cause Risk Standardized Mortality Measures 
in the Hospital Inpatient Quality Reporting Program
    A. Background
    B. Updates to the Form, Time, and Manner Requirements for the 
Hybrid Hospital-Wide All-Cause Readmission (HWR) and Hybrid 
Hospital-Wide All-Cause Risk Standardized Mortality (HWM) Measures 
for the FY 2026 and the FY 2027 Payment Determinations
XXIII. Individuals Currently or Formerly in the Custody of Penal 
Authorities
    A. Medicare FFS No Legal Obligation to Pay Payment Exclusion and 
Incarceration (revisions to 42 CFR 411.4)
    B. Revision to Medicare Special Enrollment Period for Formerly 
Incarcerated Individuals
XXIV. Overall Hospital Quality Star Rating Modification To Emphasize 
the Safety of Care Measure Group: Request for Information (RFI)
    A. Summary
    B. Background
    C. Current Overall Hospital Quality Star Rating Methodology
    D. Safety of Care in Star Ratings
    E. Potential Future Options To Greater Emphasize Patient Safety 
in the Overall Hospital Quality Star Rating
    F. Solicitation of Public Comment
XXV. Files Available to the Public via the Internet
XXVI. Collection of Information Requirements
    A. ICRs for the Hospital Outpatient Quality Reporting (OQR) 
Program
    B. ICRs for the Rural Emergency Hospitals Quality Reporting 
(REHQR) Program
    C. ICRs for the Ambulatory Surgical Center Quality Reporting 
(ASCQR) Program
    D. ICRs Related to Medicaid Clinic Services Four Walls 
Exceptions
    E. ICRs for Changes to the Review Timeframes for Hospital 
Outpatient Department (OPD) Prior Authorization Process
    F. ICRs for the Hospital Inpatient Quality Reporting (IQR) 
Program
    G. ICRs for Continuous Eligibility (42 CFR 435.926 and 457.342)
    H. ICRs Regarding Organization, Staffing and Delivery of 
Services for Hospitals (Sec.  482.59(a) and (b)) and CAHs (Sec.  
485.649(a) and (b))
    I. ICRs Regarding OB Staff Training for Hospitals (Sec.  
482.59(c) and CAHs (Sec.  485.649(c))
    J. ICRs Regarding Revisions to QAPI (Sec.  482.21) Standards for 
OB Services
    K. ICRS Regarding Emergency Services Readiness in Emergency 
Services (Sec.  482.55) for Hospitals
    L. Transfer Protocols in Discharge Planning (Sec.  482.43) for 
Hospitals
    M. Total Costs for all ICRs Related to Maternal Health
XXVII. Response to Comments
XXVIII. Economic Analyses
    A. Statement of Need
    B. Overall Impact of Provisions of This Final Rule With Comment 
Period
    C. Detailed Economic Analyses
    D. Regulatory Review Cost Estimation
    E. Regulatory Flexibility Act (RFA) Analysis
    F. Unfunded Mandates Reform Act Analysis
    G. Federalism
    H. Conclusion
    I. Waiver Fiscal Responsibility Act Requirements

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    We are updating the payment policies and payment rates for services 
furnished to Medicare beneficiaries in hospital outpatient departments 
(HOPDs) and ambulatory surgical centers (ASCs), beginning January 1, 
2025. Section 1833(t) of the Social Security Act (the Act) requires us 
to annually review and update the payment rates for services payable 
under the Hospital Outpatient Prospective Payment System (OPPS). 
Specifically, section 1833(t)(9)(A) of the Act requires the Secretary 
of the Department of Health and Human Services (the Secretary) to 
review certain components of the OPPS not less often than annually, and 
to revise the groups, the relative payment weights, and the wage and 
other adjustments to take into account changes in medical practice, 
changes in technology, and the addition of new services, new cost data, 
and other relevant information and factors. In addition, under section 
1833(i)(D)(v) of the Act, we annually review and update the ASC payment 
rates. This final rule with comment period also includes additional 
policy changes made in accordance with our experience with the OPPS and 
the ASC payment system and recent changes in our statutory authority. 
We describe these and various other statutory authorities in the 
relevant sections of this final rule with comment period. Also, this 
final rule with comment period updates the requirements for the 
Hospital Outpatient Quality Reporting (OQR) Program, the Rural 
Emergency Hospital Quality Reporting (REHQR) Program, the Ambulatory 
Surgical Center Quality Reporting (ASCQR) Program, and the Hospital 
Inpatient Quality Reporting (IQR) Program. We summarize information 
received in response to a Request for Information on potential 
modifications of the Safety of Care measure group in the Overall 
Hospital Quality Star Rating methodology. Given that the maternal 
health crisis in the United States is among the highest in high-income 
countries and also disproportionately impacts racial and ethnic 
minorities, we are finalizing updates to the CoPs for hospitals and 
CAHs in an effort to advance the health and safety of pregnant, 
birthing, and post-partum women. We are also finalizing an 
implementation approach in phases that allows additional time for 
hospitals and CAHs to comply with the requirements of the rule. In 
addition, we are narrowing the description of ``custody'' for the 
purposes of Medicare's no legal obligation to pay payment exclusion at 
Sec.  411.4(b), providing an illustrative list of individuals who are 
not considered to be in custody, adding a definition of ``penal 
authority,'' reorganizing the regulation, and making certain technical 
edits. This rule also revises the eligibility requirements in the 
special enrollment period (SEP) for formerly incarcerated individuals 
at Sec. Sec.  406.27(d) (Premium Part A) and 407.23(d) (Part B) to tie 
the eligibility for this SEP to the determination made by the Social 
Security Administration (SSA) that they are no longer incarcerated for 
releases beginning on January 1, 2025, and limit the current 
eligibility criteria for the SEP, with reference to ``custody'' 
associated with Sec.  411.4(b) to releases between January 1, 2023, and 
December 31, 2024. Additionally, we are finalizing our proposed 
revisions to Medicaid and CHIP regulations to codify the requirement 
within the CAA, 2023 to require States to provide 12 months of 
continuous eligibility to children under the age of 19 in Medicaid and 
CHIP, with limited exceptions.
    Finally, we are finalizing our proposed exceptions to the Medicaid 
clinic services benefit four walls requirement, to authorize Medicaid 
payment for clinic services provided outside the four walls of the 
clinic for IHS/Tribal clinics, and at State option, behavioral health 
clinics and clinics located in rural areas. Our current regulation at 
42 CFR 440.90(b) includes an exception to the four walls requirement 
under the Medicaid clinic services benefit only for clinic services 
furnished to individuals who are unhoused. We believe finalizing these 
additional exceptions will help maintain and improve access for the 
populations served by IHS/Tribal clinics, behavioral health clinics, 
and clinics located in rural areas.

[[Page 93916]]

2. Summary of the Major Provisions
     OPPS Update: For CY 2025, we are increasing the payment 
rates under the OPPS by an Outpatient Department (OPD) fee schedule 
increase factor of 2.9 percent. This increase factor is based on the 
final inpatient hospital market basket percentage increase of 3.4 
percent for inpatient services paid under the hospital inpatient 
prospective payment system (IPPS) reduced by a final productivity 
adjustment of 0.5 percentage point. Based on this update, we estimate 
that total payments to OPPS providers (including beneficiary cost 
sharing and estimated changes in enrollment, utilization, and case mix) 
for calendar year (CY) 2025 will be approximately $87.7 billion, an 
increase of approximately $4.7 billion compared to estimated CY 2024 
OPPS payments. We are continuing to implement the statutory 2.0 
percentage point reduction in payments for hospitals that fail to meet 
the hospital outpatient quality reporting requirements by applying a 
reporting factor of 0.9806 to the OPPS payments and copayments for all 
applicable services.
     ASC Payment Update: For CYs 2019 through 2023, we adopted 
a policy to update the ASC payment system using the hospital market 
basket update. In light of the impact of the COVID-19 public health 
emergency (PHE) on healthcare utilization, we extended our policy to 
update the ASC payment system using the hospital market basket update 
an additional 2 years--through CYs 2024 and 2025. Using the hospital 
market basket methodology, for CY 2025, we increased payment rates 
under the ASC payment system by 2.9 percent for ASCs that meet the 
quality reporting requirements under the ASCQR Program. This increase 
is based on a final hospital market basket percentage increase of 3.4 
percent reduced by a productivity adjustment of 0.5 percentage point. 
Based on this final update, we estimate that total payments to ASCs 
(including beneficiary cost sharing and estimated changes in 
enrollment, utilization, and case-mix) for CY 2025 will be 
approximately $7.4 billion, an increase of approximately $308 million 
compared to estimated CY 2024 Medicare payments.
     Device Pass-Through Payment Applications: For CY 2025, we 
received 14 complete applications for device pass-through payments. We 
sought public comment on these applications and make final 
determinations on these applications in this final rule with comment 
period.
     Changes to the List of ASC Covered Surgical Procedures and 
Ancillary Services Lists: For CY 2025, we are adding 21 medical and 
dental procedures to the ASC covered procedures list (CPL) and 
ancillary services lists, based upon existing criteria at Sec.  
416.166.
     Changes to the Inpatient Only (IPO) List: For CY 2025, we 
are finalizing adding three liver allograft services for which codes 
were newly created by the AMA CPT Editorial Panel for CY 2025 to the 
IPO list. Additionally, we are finalizing removing a pelvic fixation 
code (CPT code 22848) from the IPO list for CY 2025.
     Remote Services: For CY 2025, we are clarifying our 
policies for remotely furnished outpatient therapy services, Diabetes 
Self-Management Training and Medical Nutrition Therapy services and 
mental health services furnished remotely to beneficiaries in their 
homes by hospital staff to maintain alignment across payment systems.
     Payment for High-Cost Drugs Provided by Indian Health 
Service and Tribal Hospitals: For CY 2025, we are finalizing our policy 
to separately pay IHS and tribal hospitals for high-cost drugs 
furnished in hospital outpatient departments through an add-on payment 
in addition to the AIR under the authorities used to calculate the AIR.
     Clinical Trials Coding and Payment: We are finalizing a 
clarification to our Category B clinical trials coding and payment 
policy for devices and procedures to specify that our policy applies 
only to IDE studies with a control arm and where a payment adjustment 
is necessary to preserve the scientific validity of such a study. We 
are not finalizing our proposal to extend our coding and payment policy 
to drugs and devices that are being studied in clinical trials under a 
Coverage with Evidence Development (CED) National Coverage 
Determination (NCD),\1\ for which the trial includes a treatment and 
control arm for CY 2025. We are taking additional time to consider the 
broad implications of a payment methodology for clinical trials for CED 
drugs and devices.
---------------------------------------------------------------------------

    \1\ https://www.cms.gov/medicare/coverage/evidence.
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     Payment for HIV Pre-Exposure Prophylaxis (PrEP) in 
Hospital Outpatient Departments: For CY 2025, we are finalizing paying 
for HIV PrEP drugs covered as an additional preventive service and 
related services under the OPPS. We are finalizing a site neutral 
policy where products are generally paid similar rates under the OPPS 
and Physician Fee Schedule.
     Diagnostic Radiopharmaceuticals Separate Payment: We are 
finalizing a policy to pay separately for diagnostic 
radiopharmaceuticals with per day costs above a threshold of $630, 
which is approximately two times the volume weighted average cost 
amount currently associated with diagnostic radiopharmaceuticals in the 
Nuclear Medicine APCs. We also are finalizing updating the $630 
threshold in CY 2026 and subsequent years by the Producer Price Index 
(PPI) for Pharmaceutical Preparations. Finally, we are finalizing 
payment for separately payable diagnostic radiopharmaceuticals based on 
their Mean Unit Cost (MUC) derived from OPPS claims for CY 2025.
     Exclusion of Cell and Gene Therapies from Comprehensive 
Ambulatory Payment Classification (C-APC) Packaging: We are finalizing 
a policy to exclude qualifying cell and gene therapies from C-APC 
packaging.
     Add-on Payment for Radiopharmaceutical Technetium-99m (Tc-
99m) Derived from Domestically Produced Mo-99: For CY 2025, an add-on 
payment applies to radiopharmaceuticals that use Tc-99m produced 
without use of highly enriched uranium (HEU). For CY 2026, we are 
finalizing replacing the add-on payment for radiopharmaceuticals 
produced without the use of Tc-99m derived from non-HEU sources with an 
add-on payment for radiopharmaceuticals that use Tc-99m derived from 
domestically produced Mo-99.
     Changes to the Review Timeframes for the Hospital 
Outpatient Department (OPD) Prior Authorization Process: We are 
changing the current review timeframe for prior authorization requests 
for OPD services from 10-business days to 7-calendar days for standard 
reviews.
     Health Equity Measures for the Hospital Outpatient Quality 
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), 
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs: We 
are finalizing: (1) adoption of the Hospital Commitment to Health 
Equity (HCHE) measure in the Hospital OQR and the REHQR Programs, and 
adoption of the Facility Commitment to Health Equity (FCHE) measure in 
the ASCQR Program, beginning with the CY 2025 reporting period/CY 2027 
payment or program determinations; (2) adoption of the Screening for 
Social Drivers of Health (SDOH) measure in all three programs beginning 
with voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028

[[Page 93917]]

payment or program determinations; and (3) adoption of the Screen 
Positive Rate for SDOH measure in all three programs beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment or program determinations.
     Modification of the Immediate Measure Removal Policy for 
the Hospital OQR and ASCQR Programs: We are finalizing modification of 
the immediate measure removal policy to an immediate measure suspension 
policy to increase transparency regarding the process for removing 
adopted measures in the Hospital OQR and ASCQR Programs beginning with 
CY 2025.
     Hospital Outpatient Quality Reporting (OQR) Program: In 
addition to the cross-program measures and policies, we are finalizing: 
(1) adoption of the Patient Understanding of Key Information Related to 
Recovery After a Facility-Based Outpatient Procedure or Surgery, 
Patient Reported Outcome-Based Performance Measure (Information 
Transfer PRO-PM) beginning with voluntary reporting for the CY 2026 
reporting period followed by mandatory reporting beginning with the CY 
2027 reporting period/CY 2029 payment determination; (2) removal of the 
MRI Lumbar Spine for Low Back Pain measure beginning with the CY 2025 
reporting period/CY 2027 payment determination; (3) removal of the 
Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-
Risk Surgery measure beginning with the CY 2025 reporting period/CY 
2027 payment determination; (4) the requirement that electronic health 
record (EHR) technology be certified to all electronic clinical quality 
measures (eCQMs) available to report beginning with the CY 2025 
reporting period/CY 2027 payment determination; and (5) public 
reporting of the Median Time from Emergency Department (ED) Arrival to 
ED Departure for Discharged ED Patients measure--Psychiatric/Mental 
Health Patients stratification on Care Compare beginning with CY 2025.
     Rural Emergency Hospital Quality Reporting (REHQR) 
Program: In addition to the cross-program measures, we are finalizing: 
(1) extension of the reporting period for the Risk-Standardized 
Hospital Visits Within 7 Days After Hospital Outpatient Surgery measure 
from 1 year to 2 years beginning with the CY 2027 program 
determination; and (2) when, after status conversion, REHs are required 
to report data under the REHQR Program.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: In addition to finalizing the cross-program measures and 
policies, we summarize comments received on the potential development 
of frameworks for specialty focused reporting and minimum case number 
for required reporting under the ASCQR Program.
     Hospital Inpatient Quality Reporting (IQR) Program: We are 
finalizing the voluntary reporting of the core clinical data elements 
(CCDEs) and linking variables for both the Hybrid Hospital-Wide 
Readmission (HWR) and Hybrid Hospital-Wide Standardized Mortality (HWM) 
measures, for the performance period of July 1, 2023, through June 30, 
2024, impacting the FY 2026 payment determination for the Hospital IQR 
Program. Additionally, we are extending voluntary reporting of CCDEs 
and linking variables for an additional year for the performance period 
of July 1, 2024, through June 30, 2025, impacting the FY 2027 payment 
determination for the Hospital IQR Program.
     Overall Hospital Quality Star Rating: We summarize 
comments received on potential modifications to the Safety of Care 
measure group in the Overall Hospital Quality Star Rating methodology.
     Medicare FFS No Legal Obligation to Pay Payment Exclusion 
and Incarceration: We are narrowing the description of ``custody'' for 
purposes of Medicare's no legal obligation to pay payment exclusion at 
Sec.  411.4(b), stating explicitly in regulatory text that individuals 
who are released to the community pending trial (including those in 
pretrial community supervision and those released pursuant to cash 
bail), on parole, probation, or home detention, or required to reside 
in halfway houses are not considered to be in ``custody'' for purposes 
of the payment exclusion, adding a definition of ``penal authority,'' 
reorganizing the regulation, and making certain technical edits.
     Revision to Medicare Special Enrollment Period for 
Formerly Incarcerated Individuals: We are finalizing the eligibility 
requirements in the special enrollment period (SEP) for formerly 
incarcerated individuals at Sec. Sec.  406.27(d) and 407.23(d) to 
remove the reference to ``custody'' associated with Sec.  411.4(b) and 
instead tie the eligibility for this SEP to the determination made by 
SSA that they are no longer incarcerated. We are also expanding the SEP 
eligibility criteria to include individuals released from confinement 
to residency in halfway houses.
     Continuous Eligibility in Medicaid and CHIP: We are 
finalizing our proposed revisions to Medicaid and CHIP regulations to 
codify the requirement within the CAA, 2023 for States to provide 12 
months of continuous eligibility to children under the age of 19 in 
Medicaid and CHIP, with limited exceptions. Specifically, we are 
finalizing the removal of the option to provide continuous eligibility 
to a subgroup of Medicaid and CHIP enrollees and for a time period of 
less than 12 months. For CHIP, we are finalizing the removal of the 
option to disenroll children from CHIP during a continuous eligibility 
period for failure to pay premiums.
     Medicaid Clinic Services Four Walls Exceptions: We are 
finalizing three exceptions to the Medicaid clinic services benefit 
four walls requirement at 42 CFR 440.90. Our current regulation at 42 
CFR 440.90(b) allows for Medicaid payment for clinic services furnished 
outside of the four walls of the clinic only to individuals who are 
unhoused. Our final rule adds a mandatory exception to the four walls 
requirement for IHS/Tribal clinics at 42 CFR 440.90(c) and optional 
exceptions for behavioral health clinics and clinics located in rural 
areas at 42 CFR 440.90(d) and (e), respectively.
     Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals: We are finalizing new 
Conditions of Participation (CoPs) for hospitals and CAHs for 
obstetrical services, including new requirements for maternal quality 
assessment and performance improvement (QAPI), as well as baseline 
standards for the organization, staffing, and delivery of care within 
obstetrical units, and staff training on evidence-based best practices 
every 2 years. We are finalizing revisions to the emergency services 
CoP related to emergency readiness for hospitals and CAHs that provide 
emergency services. In addition, we are finalizing revisions to the 
Discharge Planning CoP for all hospitals related to transfer protocols. 
Further, we are finalizing a phased-in implementation to provide 
hospitals and CAHs with additional time to come into compliance with 
the requirements. Lastly, we sought comments in the proposed rule on 
whether these requirements should also apply to rural emergency 
hospitals (REHs), which we discuss below.
3. Summary of Costs and Benefits
    In section XXVIII of this final rule with comment period, we set 
forth a detailed analysis of the regulatory and federalism impacts that 
the proposed

[[Page 93918]]

changes would have on affected entities and beneficiaries. Key 
estimated impacts are described below.
a. Impacts of All OPPS Changes
    Table 201 in section XXVIII.C of this final rule with comment 
period displays the distributional impact of all the OPPS changes on 
various groups of hospitals and CMHCs for CY 2025 compared to all 
estimated OPPS payments in CY 2024. We estimate that the final policies 
in this final rule with comment period would result in a 3.0 percent 
overall increase in OPPS payments to providers. We estimate that total 
OPPS payments for CY 2025, including beneficiary cost-sharing, to the 
approximately 3,500 facilities paid under the OPPS (including general 
acute care hospitals, children's hospitals, cancer hospitals, and 
CMHCs) would increase by approximately $1.98 billion compared to CY 
2024 payments, excluding our estimated changes in enrollment, 
utilization, and case-mix.
    We estimated the isolated impact of our OPPS policies on CMHCs 
because CMHCs have historically only been paid for partial 
hospitalization services under the OPPS. Beginning CY 2024, they are 
also paid for intensive outpatient program (IOP) services under the 
OPPS. Continuing the provider-specific structure we adopted beginning 
in CY 2011, and basing payment fully on the type of provider furnishing 
the service, we estimate a 11.9 percent increase in CY 2025 payments to 
CMHCs relative to their CY 2024 payments.
b. Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes based on the fiscal 
year (FY) 2025 IPPS final rule wage indexes will result in a 0.1 
percent increase for urban hospitals under the OPPS and a 0.9 percent 
increase for rural hospitals. These wage indexes include continued 
implementation of the Office of Management and Budget (OMB) labor 
market area delineations based on 2020 Decennial Census data, with 
updates, as discussed in section II.C of this final rule with comment 
period.
c. Impacts of the Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    For CY 2025, we are continuing to provide additional payments to 
cancer hospitals so that a 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. Section 16002(b) of the 21st Century Cures 
Act requires that this weighted average PCR be reduced by 1.0 
percentage point. In light of the COVID-19 PHE impact on claims and 
cost data used to calculate the target PCR, we had maintained the CY 
2021 target PCR of 0.89 through CYs 2022 and 2023. However, in CY 2024, 
we finalized a policy to reduce the target PCR by 1.0 percentage point 
each calendar year until the target PCR equals the PCR of non-cancer 
hospitals using the most recently submitted or settled cost report 
data. For CY 2024, we finalized a target PCR of 0.88. For CY 2025, we 
are finalizing a target PCR of 0.87 to determine the CY 2025 cancer 
hospital payment adjustment to be paid at cost report settlement. That 
is, the payment adjustments would be the additional payments needed to 
result in a PCR equal to 0.87 for each cancer hospital.
d. Impacts of the OPD Fee Schedule Increase Factor
    For the CY 2025 OPPS/ASC, we are establishing an OPD fee schedule 
increase factor of 2.9 percent and applying that increase factor to the 
conversion factor for CY 2025. As a result of the OPD fee schedule 
increase factor and other budget neutrality adjustments, we estimate 
that urban hospitals will experience an increase in payments of 
approximately 3.2 percent and that rural hospitals will experience an 
increase in payments of 3.2 percent. Classifying hospitals by teaching 
status, we estimate non-teaching hospitals will experience an increase 
in payments of 3.3 percent, minor teaching hospitals will experience an 
increase in payments of 3.5 percent, and major teaching hospitals will 
experience an increase in payments of 2.7 percent. We also classified 
hospitals by the type of ownership. We estimate that hospitals with 
voluntary ownership will experience an increase of 3.1 percent in 
payments, while hospitals with government ownership will experience an 
increase of 2.6 percent in payments. We estimate that hospitals with 
proprietary ownership will experience an increase of 4.9 percent in 
payments.
e. Impacts of the ASC Payment Update
    For impact purposes, the surgical procedures on the ASC covered 
surgical procedure list are aggregated into surgical specialty groups 
using CPT and HCPCS code range definitions. The percentage change in 
estimated total payments by specialty groups under the CY 2025 payment 
rates, compared to estimated CY 2024 payment rates, generally ranges 
between an increase of 3 percent and an increase of 4 percent, 
depending on the service, with some exceptions. We estimate the impact 
of applying the inpatient hospital market basket update to ASC payment 
rates will increase payments by $193 million under the ASC payment 
system in CY 2025.
f. Impacts of Medicaid Clinic Services Four Walls Exceptions
    We estimate that the finalized exceptions to the four walls 
requirement under the Medicaid clinic services benefit for IHS/Tribal 
clinics, behavioral health clinics, and clinics located in rural areas 
will increase total expenditures by $1.18 billion from FY 2025 through 
2029. Our estimate includes a Federal impact of $1.15 billion and 
impact to States of $30 million. These estimates are discussed in more 
detail in section XXVIII of this final rule.
g. Impacts of Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals
    We are finalizing maternal health focused revisions to the CoPs for 
hospitals and CAHs, which are estimated to increase burden on hospitals 
and CAHs by $423 million annually with total costs estimated at $4.23 
billion over 10 years. We expect an average annual cost of $67,103 per 
hospital and CAH. As discussed in detail in section XXVIII of this 
final rule with comment period, we expect the benefits of these 
policies to include reduced maternal morbidity and mortality, leading 
to financial benefits for patients, their families, and payors. We also 
expect that the policies are likely to reduce inequality in maternal 
health outcomes among pregnant and postpartum women from different 
groups and lead to overall improvements in patient care.
h. Impacts of the Medicaid and CHIP Continuous Eligibility Requirements
    We are finalizing our proposed revisions to Medicaid and CHIP 
regulations to codify the requirement within the CAA, 2023 for States 
to provide 12 months of continuous eligibility to children under the 
age of 19 in Medicaid and CHIP, with limited exceptions. For CHIP, we 
are finalizing the removal of the option to disenroll children from 
CHIP during a continuous eligibility period for failure to pay 
premiums. Requiring 12months of continuous eligibility in Medicaid and 
CHIP is estimated to increase annual average enrollment in Medicaid and 
CHIP by approximately 124,000 by 2028 (75,000 in Medicaid and 49,000 in 
CHIP). The total estimated impact of this requirement over 5 years is 
$2,466 million, including Federal impact of

[[Page 93919]]

$1,592 million and State impact of $874 million.

B. Legislative and Regulatory Authority for the Hospital OPPS

    When Title XVIII of the Act was enacted, Medicare payment for 
hospital outpatient services was based on hospital-specific costs. In 
an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act, authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 
2006; the Medicare Improvements and Extension Act under Division B of 
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), 
enacted on December 29, 2007; the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and 
Education Reconciliation Act of 2010 (HCERA, Pub. L. 111-152), enacted 
on March 30, 2010 (these two public laws are collectively known as the 
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act 
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the 
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 
112-96), enacted on February 22, 2012; the American Taxpayer Relief Act 
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR 
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the 
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), 
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization 
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 
2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), 
enacted on December 18, 2015, the 21st Century Cures Act (Pub. L. 114-
255), enacted on December 13, 2016; the Consolidated Appropriations 
Act, 2018 (Pub. L. 115-141), enacted on March 23, 2018; the Substance 
Use Disorder--Prevention that Promotes Opioid Recovery and Treatment 
for Patients and Communities Act (Pub. L. 115-271), enacted on October 
24, 2018; the Further Consolidated Appropriations Act, 2020 (Pub. L. 
116-94), enacted on December 20, 2019; the Coronavirus Aid, Relief, and 
Economic Security Act (Pub. L. 116-136), enacted on March 27, 2020; the 
Consolidated Appropriations Act, 2021 (Pub. L. 116-260), enacted on 
December 27, 2020; the Inflation Reduction Act, 2022 (Pub. L. 117-169), 
enacted on August 16, 2022; and the Consolidated Appropriations Act 
(CAA), 2023 (Pub. L. 117-238), enacted December 29, 2022.
    Under the OPPS, we generally pay for hospital Part B services on a 
rate-per-service basis that varies according to the APC group to which 
the service is assigned. We use the Healthcare Common Procedure Coding 
System (HCPCS) (which includes certain Current Procedural Terminology 
(CPT) codes) to identify and group the services within each APC. The 
OPPS includes payment for most hospital outpatient services, except 
those identified in section I.C of this final rule with comment period. 
Section 1833(t)(1)(B) of the Act provides for payment under the OPPS 
for hospital outpatient services designated by the Secretary (which 
includes partial hospitalization services furnished by CMHCs), and 
certain inpatient hospital services that are paid under Medicare Part 
B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use, as required by section 
1833(t)(2)(B) of the Act. In accordance with section 1833(t)(2)(B) 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, 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

[[Page 93920]]

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. In addition, section 
1833(t)(1)(B)(v) of the Act does not include applicable items and 
services (as defined in subparagraph (A) of paragraph (21)) that are 
furnished on or after January 1, 2017, by an off-campus outpatient 
department of a provider (as defined in subparagraph (B) of paragraph 
(21)). We set forth the services that are excluded from payment under 
the OPPS in regulations at 42 CFR 419.22.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals are:
     Critical access hospitals (CAHs);
     Hospitals located in Maryland and paid under Maryland's 
All-Payer or Total Cost of Care Model;
     Hospitals located outside of the 50 States, the District 
of Columbia, and Puerto Rico;
     Indian Health Service (IHS) hospitals; and
     Rural emergency hospitals (REH).

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)(A) of the Act requires the Secretary to review certain 
components of the OPPS, not less often than annually, and to revise the 
groups, the relative payment weights, and the wage and other 
adjustments to take into account changes in medical practices, changes 
in technology, the addition of new services, new cost data, and other 
relevant information and factors.
    Since initially implementing the OPPS, we have published final 
rules in the Federal Register annually to implement statutory 
requirements and changes arising from our continuing experience with 
this system. These rules can be viewed on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.

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

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
106-113, requires that we consult with an expert outside advisory panel 
composed of an appropriate selection of representatives of providers to 
annually review (and advise the Secretary concerning) the clinical 
integrity of the payment groups and their weights under the OPPS. In CY 
2000, based on section 1833(t)(9)(A) of the Act, the Secretary 
established the Advisory Panel on Ambulatory Payment Classification 
Groups (APC Panel) to fulfill this requirement. In CY 2011, based on 
section 222 of the Public Health Service Act (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). The HOP Panel is not restricted to 
using data compiled by CMS, and in conducting its review, it may use 
data collected or developed by organizations outside the Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the Panel, and, at that time, named the APC Panel. This 
expert panel is composed of appropriate representatives of providers 
(currently employed full-time, not as consultants, in their respective 
areas of expertise) who review clinical data and advise CMS about the 
clinical integrity of the APC groups and their payment weights. Since 
CY 2012, the Panel also is charged with advising the Secretary on the 
appropriate level of supervision for individual hospital outpatient 
therapeutic services. The Panel is technical in nature, and it is 
governed by the provisions of the Federal Advisory Committee Act 
(FACA). The current charter specifies, among other requirements, that 
the Panel--
     May advise on the clinical integrity of Ambulatory Payment 
Classification (APC) groups and their associated weights;
     May advise on the appropriate supervision level for 
hospital outpatient services;
     May advise on OPPS APC rates for ASC covered surgical 
procedures;
     Continues to be technical in nature;
     Is governed by the provisions of the FACA;
     Has a Designated Federal Official (DFO); and
     Is chaired by a Federal Official designated by the 
Secretary.
    The Panel's charter was amended on November 15, 2011, renaming the 
Panel and expanding the Panel's authority to include supervision of 
hospital outpatient therapeutic services and to add critical access 
hospital (CAH) representation to its membership. The Panel's charter 
was also amended on November 6, 2014 (80 FR 23009), and the number of 
members was revised from up to 19 to up to 15 members. The Panel's 
current charter was approved on November 21, 2022, for a 2-year period.
    The current Panel membership and other information pertaining to 
the Panel, including its charter, Federal Register notices, membership, 
meeting dates, agenda topics, and meeting reports, can be viewed on the 
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
    The Panel has held many meetings, with the last meeting taking 
place on August 26, 2024. The recommendations of the Panel for the most 
recent meeting are available on the CMS website at: https://www.cms.gov/medicare/regulations-guidance/advisory-committees/hospital-outpatient-payment. Prior to each meeting, we publish a notice in the 
Federal Register to announce the meeting, new members, and any other 
changes of which the public should be aware. Beginning in CY 2017, we 
have transitioned to one meeting per year (81 FR 31941). In CY 2022, we 
published a Federal Register notice requesting nominations to fill 
vacancies on the Panel (87 FR 68499). CMS is currently accepting 
nominations at: https://mearis.cms.gov.
    In addition, the Panel has established an administrative structure 
that, in part, currently includes the use of three subcommittee 
workgroups to provide preparatory meeting and subject support to the 
larger panel. The three current subcommittees include the following:
     APC Groups and Status Indicator Assignments Subcommittee, 
which advises and provides recommendations to the Panel on the 
appropriate status

[[Page 93921]]

indicators to be assigned to HCPCS codes, including but not limited to 
whether a HCPCS code or a category of codes should be packaged or 
separately paid, as well as the appropriate APC assignment of HCPCS 
codes regarding services for which separate payment is made;
     Data Subcommittee, which is responsible for studying the 
data issues confronting the Panel and for recommending options for 
resolving them; and
     Visits and Observation Subcommittee, which reviews and 
makes recommendations to the Panel on all technical issues pertaining 
to observation services and hospital outpatient visits paid under the 
OPPS.
    Each of these workgroup subcommittees was established by a majority 
vote from the full Panel during a scheduled Panel meeting, and the 
Panel recommended at the August 21, 2023, meeting that the 
subcommittees continue. We accepted this recommendation.
    For discussions of earlier Panel meetings and recommendations, we 
refer readers to previously published OPPS/ASC proposed and final 
rules, the CMS website mentioned earlier in this section, and the FACA 
database at https://facadatabase.gov.

F. Public Comments Received on the CY 2025 Proposed Rule

    We received approximately 3,500 timely pieces of correspondence on 
the CY 2025 OPPS/ASC proposed rule that appeared in the Federal 
Register on July 22, 2024 (89 FR 59186). We received comments from 
elected officials, providers and suppliers, practitioners, and advocacy 
groups. We provide summaries of the public comments, and our responses 
are set forth in the various sections of this final rule with comment 
period under the appropriate headings. We note that we received some 
public comments that were outside the scope of the CY 2025 OPPS/ASC 
proposed rule. Out-of-scope-public comments are not addressed in this 
CY 2025 OPPS/ASC final rule with comment period.

G. Public Comments Received on the CY 2024 OPPS/ASC Final Rule With 
Comment Period

    We received approximately 180 timely pieces of correspondence on 
the CY 2024 OPPS/ASC final rule with comment period that appeared in 
the Federal Register on November 22, 2023 (88 FR 81540).

II. Updates Affecting OPPS Payments

A. 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 Ambulatory Payment Classifications (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 2025 OPPS, we proposed to recalibrate the APC relative 
payment weights for services furnished on or after January 1, 2025, and 
before January 1, 2026 (CY 2025), using the same basic methodology that 
we described in the CY 2024 OPPS/ASC final rule with comment period (88 
FR 81549 through 81552), using CY 2023 claims data. That is, we 
proposed to recalibrate the relative payment weights for each APC based 
on claims and cost report data for hospital outpatient department 
(HOPD) services to construct a database for calculating APC group 
weights.
    For the purpose of recalibrating the proposed APC relative payment 
weights for CY 2025, we began with approximately 145 million final 
action claims (claims for which all disputes and adjustments have been 
resolved and payment has been made) for HOPD services furnished on or 
after January 1, 2023, and before January 1, 2024, before applying our 
exclusionary criteria and other methodological adjustments. After the 
application of those data processing changes, we used approximately 73 
million final action claims to develop the proposed CY 2025 OPPS 
payment weights. For exact numbers of claims used and additional 
details on the claims accounting process, we refer readers to the 
claims accounting narrative under supporting documentation for the CY 
2025 OPPS/ASC proposed rule on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
    Addendum N to the CY 2025 OPPS/ASC proposed rule (which is 
available via the internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) includes the proposed list of bypass codes for CY 
2025. The proposed list of bypass codes contains codes that are 
reported on claims for services in CY 2023 and, therefore, includes 
codes that were in effect in CY 2023 and used for billing. We proposed 
to retain these deleted bypass codes on the proposed CY 2025 bypass 
list because these codes existed in CY 2023 and were covered OPD 
services in that period, and CY 2023 claims data were used to calculate 
proposed CY 2025 payment rates. Keeping these deleted bypass codes on 
the bypass list potentially allows us to create more ``pseudo'' single 
procedure claims for ratesetting purposes. ``Overlap bypass codes'' 
that are members of the proposed multiple imaging composite APCs are 
identified by asterisks (*) in the third column of Addendum N to the CY 
2025 OPPS/ASC proposed rule. HCPCS codes that we proposed to add for CY 
2025 are identified by asterisks (*) in the fourth column of Addendum 
N.
    We did not receive any public comments on our general proposal to 
recalibrate the relative payment weights for each APC based on claims 
and cost report data for HOPD services or on our proposed bypass code 
process. We are finalizing as proposed the ``pseudo'' single claims 
process and the final CY 2025 list of bypass codes, as displayed in 
Addendum N to this final rule with comment period (which is available 
via the internet on the CMS website). For this final rule with comment 
period, for the purpose of recalibrating the final APC relative payment 
weights for CY 2025, we used approximately 78 million final action 
claims (claims for which all disputes and adjustments have been 
resolved and payment has been made) for HOPD services furnished on or 
after January 1, 2023, and before January 1, 2024. For the exact 
numbers of claims used and additional details on the claims accounting 
process, we refer readers to the claims accounting narrative under 
supporting documentation for this final rule with comment period on the 
CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
b. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2025, we proposed 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 2025 APC payment rates are based, we calculated hospital-
specific departmental CCRs for each hospital for which we had CY 2023 
claims data by comparing these claims data to the most recently 
available hospital cost reports, which, in most

[[Page 93922]]

cases, are from CY 2022. For the proposed CY 2025 OPPS payment rates, 
we used the set of claims processed during CY 2023. We applied the 
hospital-specific CCR to the hospital's charges at the most detailed 
level possible, based on a revenue code-to-cost center crosswalk that 
contains a hierarchy of CCRs used to estimate costs from charges for 
each revenue code. To ensure the completeness of the revenue code-to-
cost center crosswalk, we reviewed changes to the list of revenue codes 
for CY 2023 (the year of claims data we used to calculate the proposed 
CY 2025 OPPS payment rates) and updates to the National Uniform Billing 
Committee (NUBC) 2023 Data specifications Manual. That crosswalk is 
available for review and continuous comment on the CMS website at 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
    In accordance with our longstanding policy, similar to our 
finalized policy for CY 2024 OPPS ratesetting, we proposed to calculate 
CCRs for the standard cost centers--cost centers with a predefined 
label--and nonstandard cost centers--cost centers defined by a 
hospital--accepted by the electronic cost report database. In general, 
the most detailed level at which we calculate CCRs is the hospital-
specific departmental level.
    While we generally view the use of additional cost data as 
improving our OPPS ratesetting process, we have historically not 
included cost report lines for certain nonstandard cost centers in the 
OPPS ratesetting database construction when hospitals have reported 
these nonstandard cost centers on cost report lines that do not 
correspond to the cost center number. We believe it is important to 
further investigate the accuracy of these cost report data before 
including such data in the ratesetting process. Further, we believe it 
is appropriate to gather additional information from the public as well 
before including them in OPPS ratesetting. For CY 2025, we proposed not 
to include the nonstandard cost centers reported in this way in the 
OPPS ratesetting database construction.
    We did not receive any public comments on the general CCR process 
and therefore, we are finalizing our proposal for CY 2025 to use the 
hospital-specific overall ancillary and departmental CRs to convert 
charges to estimated costs through application of a revenue code-to-
cost center crosswalk and the proposed methodology.
2. Final Data Development and Calculation of Costs Used for Ratesetting
    In this section of this final rule with comment period, we discuss 
the use of claims to calculate the OPPS payment rates for CY 2025. The 
Hospital OPPS page on the CMS website on which this final rule with 
comment period is posted (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient) 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, later in this 
section we discuss the file of claims that comprises the data set that 
is available upon payment of an administrative fee under a CMS data use 
agreement. The CMS website, https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient, includes information 
about obtaining the ``OPPS Limited Data Set,'' which now includes the 
additional variables previously available only in the OPPS Identifiable 
Data Set, including International Classification of Diseases, Tenth 
Revision, Clinical Modification (ICD-10-CM) diagnosis codes and revenue 
code payment amounts. This file is derived from the CY 2023 claims that 
are used to calculate the proposed payment rates for the CY 2025 OPPS/
ASC proposed rule.
    Previously, the OPPS established the scaled relative weights on 
which payments are based using APC median costs, 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.
    We used the methodology described in sections II.A.2.a through 
II.A.2.c of this final rule with comment period to calculate the costs 
we used to establish the proposed relative payment weights used in 
calculating the OPPS payment rates for CY 2025 shown in Addenda A and B 
to this final rule with comment period (which are available via the 
internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). 
We refer readers to section II.A.4 of this final rule with comment 
period for a discussion of the conversion of APC costs to scaled 
payment weights.
    We note that under the OPPS, CY 2019 was the first year in which 
the claims data used for setting payment rates (CY 2017 data) contained 
lines with the modifier ``PN,'' which indicates nonexcepted items and 
services furnished and billed by off-campus provider-based departments 
(PBDs) of hospitals. Because nonexcepted items and services are not 
paid under the OPPS, in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58832), we finalized a policy to remove those claim lines 
reported with modifier ``PN'' from the claims data used in ratesetting 
for the CY 2019 OPPS and subsequent years. For the CY 2025 OPPS, we 
proposed to continue to remove claim lines with modifier ``PN'' from 
the ratesetting process.
    We did not receive any public comments on our proposal and are 
finalizing our proposal to continue to remove claim lines reported with 
modifier ``PN'' from the ratesetting process.
    For details of the claims accounting process used in this CY 2025 
OPPS/ASC final rule with comment period, we refer readers to the claims 
accounting narrative under supporting documentation for this final rule 
with comment period on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
a. Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
(a) Methodology
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs of blood and 
blood products, as well as for the costs of collecting, processing, and 
storing blood and blood products, are made through the OPPS payments 
for specific blood product APCs.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to continue to 
establish payment rates for blood and blood products using our blood-
specific CCR methodology (88 FR 49562), which utilizes actual or 
simulated CCRs from

[[Page 93923]]

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. To address the differences in CCRs and to 
better reflect hospitals' costs, our methodology simulates 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 and applies this mean ratio to the overall CCRs of 
hospitals not reporting costs and charges for blood cost centers on 
their cost reports. We propose to calculate the costs upon which the 
proposed 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 stated in the CY 2025 OPPS/ASC proposed rule that we continue to 
believe that the hospital-specific, simulated, blood-specific CCR 
methodology takes into account the unique charging and cost accounting 
structure of each hospital, as it 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. This methodology also yields more 
accurate estimated costs for these products and results in payment 
rates for blood and blood products that appropriately reflect the 
relative estimated costs of these products for hospitals without blood 
cost centers and for these blood products in general.
    We refer readers to Addendum B to this final rule with comment 
period (which is available via the internet on the CMS website at 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices) for the final CY 2025 payment 
rates for blood and blood products (which are generally identified with 
status indicator ``R'').
    For a more detailed discussion of payments for blood and blood 
products through APCs, we refer readers to:
     the CY 2005 OPPS proposed rule (69 FR 50524 and 50525) for 
a more comprehensive discussion of the blood-specific CCR methodology;
     the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66807 through 66810) for a detailed history of the OPPS payment for 
blood and blood products; and
     the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795 and 66796) for additional discussion of our policy not to make 
separate payments for blood and blood products when they appear on the 
same claims as services assigned to a C-APC.
    Comment: We received one comment regarding the cost calculations 
for blood and blood products. The commenter stated that current payment 
rates do not always cover the cost to process, store, and transport the 
unit of blood. The commenter recommended that CMS utilize the average 
wholesale price (AWP) as the payment rate for blood products, in 
addition to basing payment rates on the hospital CCRs, as they believed 
using AWP would help eliminate outliers and produce more accurate 
payment calculations. The commenter explained that cost reporting 
methodologies may vary among hospitals. For example, some cost centers 
may combine blood products with blood bank testing which could skew the 
CCRs for that cost center, which would then impact the payment rates.
    Response: We thank the commenter for their input and will keep it 
in mind for future rulemaking. However, we note that reflecting the 
range and variation of billing patterns across hospitals, as reflected 
in their claims, is part of establishing prospective payment rates. 
Additionally, we do not believe at this time that using AWP to set the 
payment rate for blood products would necessarily result in more 
accurate payment calculations, because AWP does not factor in volume 
discounts or rebates and, therefore, may not reflect the true cost of 
the product.
    Comment: One commenter supported our proposal to continue to pay 
separately for blood and blood products.
    Response: We thank the commenter for their support.
    After consideration of the public comments we received, we are 
finalizing our proposals for blood and blood products using our blood-
specific CCR methodology without modification. Please refer to Addendum 
B to this final rule with comment period, which is available on the CMS 
website, for the final CY 2025 payment rates for blood and blood 
products.
(b) New HCPCS Code for Red Blood Cell Product (HCPCS Code P9027)
    Effective October 1, 2024, the HCPCS workgroup created HCPCS code 
P9027 (Red blood cells, leukocytes reduced, oxygen/carbon dioxide 
reduced, each unit). HCPCS code P9027 may be used to bill for a blood 
product that utilizes a two-stage process to remove oxygen and maintain 
a deoxygenated state throughout its storage period, thereby preventing 
oxidative damage to red blood cells. We note that because HCPCS code 
P9027 was created after the CY 2025 OPPS/ASC proposed rule was issued, 
we did not include a proposal regarding the APC assignment for HCPCS 
code P9027 in the CY 2025 OPPS/ASC proposed rule. Due to its effective 
date, we assigned HCPCS code P9027 to APC 9541 with an SI = R (Blood 
and Blood Products) in Change Request 13784. The payment rate for HCPCS 
code P9027, effective October 1, 2024, is $252.48.
    While we usually calculate payment rates for blood and blood 
products using our blood-specific CCR methodology, when there is no 
claims data on the charges and costs for blood products upon which to 
apply our blood-specific CCR methodology, we establish a payment rate 
for the new blood product based on a crosswalk to an existing blood 
product HCPCS code that we believe provides the best proxy for the 
costs of the new blood product. Because we did not have any claims data 
on HCPCS code P9027 ahead of its October 1, 2024, effective date, we 
used a crosswalk code to assign a payment rate for HCPCS code P9027. 
Specifically, we found that HCPCS code P9040 (Red blood cells, 
leukocytes reduced, irradiated, each unit) with a CY 2024 payment rate 
of $252.48 was sufficiently similar to P9027 to serve as a crosswalk 
for purposes of a payment rate assignment.
    Comment: We received a comment from the manufacturer of the blood 
product described by P9027. HCPCS code P9027 may be used to bill for 
the blood product involving the Hemanext ONE System. The commenter 
provided estimated cost information regarding the blood product, 
including an expected average per-unit anticipated hospital cost of 
$510. The manufacturer provided the estimated costs based on total 
blood establishment manufacturing costs, including the costs to 
manufacture a single unit of the starting materials, the sales price 
for the Hemanext ONE System, and the blood establishment labor, 
overhead,

[[Page 93924]]

administrative, and shipping costs. The commenter noted that they 
believe their red blood cell product is potentially transformative and 
would provide improved health outcomes. The commenter stated that they 
believe the product whose CY 2024 Medicare payment rate reasonably 
approximates the projected average hospital acquisition cost for HCPCS 
P9027 is HCPCS code P9057 (Red blood cells, frozen/deglycerolized/
washed/leukocytes reduced, irradiated, each unit), with a CY 2024 
payment rate of $493.21 per unit. As such, the commenter recommends 
that CMS crosswalk the payment rate for HCPCS P9057 to HCPCS P9027. The 
commenter believes that a crosswalk to any other red blood cell product 
will result in a payment rate that does not cover the acquisition cost 
for HCPCS P9027 and creates patient access barriers.
    Response: We thank the commenter for their comment. Based on the 
additional cost information provided by the manufacturer, we believe 
that HCPCS code P9040 is not the best proxy for the costs of the blood 
product described by HCPCS code P9027. However, we disagree with the 
commenter that HCPCS code P9057 is the most appropriate crosswalk for 
new HCPCS code P9027 because the payment rate for HCPCS code P9057 
reflects additional processes that are not reflected in the code 
descriptor for HCPCS code P9027. Given this difference in process, and 
the associated differences in estimated costs, we believe HCPCS code 
P9035 is a more appropriate proxy for the costs associated with HCPCS 
code P9027. Therefore, we are establishing an interim payment rate for 
HCPCS code P9027 based on a crosswalk to existing blood product HCPCS 
code P9035. Table 1 lists the new HCPCS code P9027 and its payment 
crosswalk.
[GRAPHIC] [TIFF OMITTED] TR27NO24.000

    The interim payment rate for HCPCS code P9027 is open for public 
comment in this CY 2025 final rule with comment period. Specifically, 
HCPCS code P9027 is flagged with comment indicator ``NI'' in Addendum B 
to this final rule with comment period to indicate that we have 
assigned the codes an interim OPPS payment status for CY 2025 and are 
seeking public comments on the APC and status indicator assignments. 
Once we have claims data for this new HCPCS P-code, we will calculate a 
payment rate using the claims data that should be available for these 
new codes beginning in CY 2027, which is our practice for other blood 
products for which claims data have been available for 2 years.
(2) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy--cancer treatment through solid source radioactive 
implants--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 and 68241). As we have 
stated in prior OPPS updates, we believe that adopting the general OPPS 
prospective payment methodology for brachytherapy sources is 
appropriate for a number of reasons (77 FR 68240). The general OPPS 
methodology uses costs based on claims data to set the relative payment 
weights for hospital outpatient services. This payment methodology 
results in more consistent, predictable, and equitable payment amounts 
per source across hospitals by averaging the extremely high and low 
values, in contrast to payment based on hospitals' charges adjusted to 
costs. We believe that the OPPS methodology, as opposed to payment 
based on hospitals' charges adjusted to cost, also would provide 
hospitals with incentives for efficiency in the provision of 
brachytherapy services to Medicare beneficiaries. Moreover, this 
approach is consistent with our payment methodology for the vast 
majority of items and services paid under the OPPS. We refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 
through 70325) for further discussion of the history of OPPS payment 
for brachytherapy sources.
    For CY 2025, except where otherwise indicated, we proposed to 
continue our policy and use the costs derived from CY 2023 claims data 
to set the proposed CY 2025 payment rates for brachytherapy sources 
because CY 2023 is the year of data we proposed to use to set the 
proposed payment rates for most other items and services that would be 
paid under the CY 2025 OPPS. With the exception of the proposed payment 
rate for brachytherapy source C2645 (Brachytherapy planar source, 
palladium-103, per square millimeter) and the proposed payment rates 
for low-volume brachytherapy APCs discussed in section III.D of the CY 
2025 OPPS/ASC proposed rule, we proposed to base the payment rates for 
brachytherapy sources on the geometric mean unit costs for each source, 
consistent with the methodology that we proposed for other items and 
services paid under the OPPS, as discussed in section II.A.2 of the CY 
2025 OPPS/ASC proposed rule. We also proposed for CY 2025 and 
subsequent years 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

[[Page 93925]]

60537). For CY 2025 and subsequent years, we proposed to pay for the 
stranded and nonstranded not otherwise specified (NOS) codes, HCPCS 
codes C2698 (Brachytherapy source, stranded, not otherwise specified, 
per source) and C2699 (Brachytherapy source, non-stranded, not 
otherwise specified, per source), at a rate equal to the lowest 
stranded or nonstranded prospective payment rate for such sources, 
respectively, on a per-source basis (as opposed to, for example, per 
mCi), which is based on the policy we established in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66785). For CY 2025 and 
subsequent years, we also proposed to continue the policy we first 
implemented in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60537) regarding payment for new brachytherapy sources for which we 
have no claims data, based on the same reasons we discussed in the CY 
2008 OPPS/ASC final rule with comment period (72 FR 66786; which was 
delayed until January 1, 2010, by section 142 of Pub. L. 110-275). 
Specifically, this policy is intended to enable us to assign new HCPCS 
codes for new brachytherapy sources to their own APCs, with prospective 
payment rates set based on our consideration of external data and other 
relevant information regarding the expected costs of the sources to 
hospitals. The proposed CY 2025 payment rates for brachytherapy sources 
are included on Addendum B to the CY 2025 OPPS/ASC proposed rule (which 
is available via the internet on the CMS website) and identified with 
status indicator ``U.''
    For CY 2018, we assigned status indicator ``U'' (Brachytherapy 
Sources, Paid under OPPS; separate APC payment) to HCPCS code C2645 
(Brachytherapy planar source, palladium-103, per square millimeter) in 
the absence of claims data and established a payment rate using 
external data (invoice price) at $4.69 per mm\2\ for the brachytherapy 
source's APC-APC 2648 (Brachytx planar, p-103). For CY 2019, in the 
absence of sufficient claims data, we continued to establish a payment 
rate for C2645 at $4.69 per mm\2\ for APC 2648 (Brachytx planar, p103). 
Our CY 2018 claims data available for the CY 2020 OPPS/ASC final rule 
with comment period (84 FR 61142) included two claims with a geometric 
mean cost for HCPCS code C2645 of $1.02 per mm\2\. In response to 
comments from interested parties, we agreed that, given the limited 
claims data available and a new outpatient indication for C2645, a 
payment rate for HCPCS code C2645 based on the geometric mean cost of 
$1.02 per mm\2\ may not adequately reflect the cost of HCPCS code 
C2645. In the CY 2020 OPPS/ASC final rule with comment period, we 
finalized our policy to use our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to maintain the CY 2019 
payment rate of $4.69 per mm\2\ for HCPCS code C2645 for CY 2020. 
Similarly, in the absence of sufficient claims data to establish an APC 
payment rate, in the CY 2021, CY 2022, CY 2023, and CY 2024 OPPS/ASC 
final rules with comment period (85 FR 85879 through 85880, 86 FR 
63469, 87 FR 71760-71761, and 88 FR 81553), we finalized our policy to 
use our equitable adjustment authority under section 1833(t)(2)(E) of 
the Act to maintain the CY 2019 payment rate of $4.69 per mm\2\ for 
HCPCS code C2645 for CYs 2021 through 2024.
    There were no CY 2023 claims available that reported HCPCS code 
C2645 for the CY 2025 OPPS/ASC proposed rule. Therefore, in the absence 
of claims data, we proposed to continue to use our equitable adjustment 
authority under section 1833(t)(2)(E) of the Act to maintain the CY 
2024 payment rate of $4.69 per mm\2\ for HCPCS code C2645, which we 
proposed to be assigned to APC 2648 (Brachytx planar, p-103), for CY 
2025.
    Additionally, for CY 2022 and subsequent calendar years, we adopted 
a Universal Low Volume APC policy for clinical and brachytherapy APCs. 
As discussed in further detail in section X.C of the CY 2022 OPPS/ASC 
final rule with comment period (86 FR 63743 through 63747), we adopted 
this policy to mitigate wide variation in payment rates that occur from 
year to year for APCs with low utilization. Such volatility in payment 
rates from year to year can result in even lower utilization and 
potential barriers to access. Brachytherapy APCs that have fewer than 
100 single claims used for ratesetting purposes are designated as Low 
Volume APCs unless an alternative payment rate is applied, such as the 
use of our equitable adjustment authority under section 1833(t)(2)(E) 
of the Act in the case of APC 2648 (Brachytx planar, p-103), for which 
HCPCS code C2645 (Brachytherapy planar source, palladium-103, per 
square millimeter) is the only code assigned as discussed previously in 
this section.
    For CY 2025, we proposed to designate six brachytherapy APCs as Low 
Volume APCs as these APCs meet our criteria to be designated as Low 
Volume APCs. For more information on the brachytherapy APCs we proposed 
to designate as Low Volume APCs, see section III.D of the CY 2025 OPPS/
ASC proposed rule.
    Comment: We received support from commenters for our proposal to 
use our equitable adjustment authority under section 1833(t)(2)(E) of 
the Act to maintain the CY 2024 payment rate of $4.69 per mm\2\ for 
HCPCS code C2645, which we proposed to assign to APC 2648 (Brachytx 
planar, p-103) for CY 2025.
    Response: We thank the commenters for their support.
    After consideration of the public comment we received, we are 
finalizing, without modification, that we will use our equitable 
adjustment authority under section 1833(t)(2)(E) of the Act to maintain 
the CY 2024 payment rate of $4.69 per mm\2\ for HCPCS code C2645, which 
we are assigning to APC 2648 (Brachytx planar, p-103), for CY 2025.
    The final CY 2025 payment rates for brachytherapy sources are 
included in Addendum B to this final rule with comment period (which is 
available via the internet on the CMS website) and are identified with 
status indicator ``U.'' We continue to invite interested parties to 
submit recommendations for new codes to describe new brachytherapy 
sources. Such recommendations should be directed via email to 
[email protected] or by mail to the Division of Outpatient 
Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 
7500 Security Boulevard, Baltimore, MD 21244. We will continue to add 
new brachytherapy source codes and descriptors to our systems for 
payment on a quarterly basis.
b. Comprehensive APCs (C-APCs) for CY 2025
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a comprehensive payment policy that 
packages payment for adjunctive and secondary items, services, and 
procedures into the most costly primary procedure under the OPPS at the 
claim level. The policy was finalized in CY 2014, but the effective 
date was delayed until January 1, 2015, to allow additional time for 
further analysis, opportunity for public comment, and systems 
preparation. The comprehensive APC (C-APC) policy was implemented 
effective January 1, 2015, with modifications and clarifications in 
response to public

[[Page 93926]]

comments received regarding specific provisions of the C-APC policy (79 
FR 66798 through 66810).
    A C-APC is defined as a classification for the provision of a 
primary service and all adjunctive services provided to support the 
delivery of the primary service. We established C-APCs as a category 
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 
(79 FR 66809 and 66810). We have gradually added new C-APCs since the 
policy was implemented beginning in CY 2015, with the number of C-APCs 
now totaling 72 (80 FR 70332; 81 FR 79584 and 79585; 83 FR 58844 
through 58846; 84 FR 61158 through 61166; 85 FR 85885; 86 FR 63474; 87 
FR 71769; and 88 FR 81562).
    Under our C-APC policy, we designate a service described by a HCPCS 
code assigned to a C-APC as the primary service when the service is 
identified by OPPS status indicator ``J1.'' When such a primary service 
is reported on a hospital outpatient claim, taking into consideration 
the few exceptions that are discussed below, we make payment for all 
other items and services reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service (hereinafter collectively referred to as ``adjunctive 
services'') and representing components of a complete comprehensive 
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services 
are packaged into the payments for the primary services. This results 
in a single prospective payment for each of the primary, comprehensive 
services based on the costs of all reported services at the claim 
level. One example of a primary service would be a partial mastectomy 
and an example of a secondary service packaged into that primary 
service would be a radiation therapy procedure.
    Services excluded from the C-APC policy under the OPPS include 
services that are not covered OPD services, services that cannot by 
statute be paid for under the OPPS, and services that are required by 
statute to be separately paid. This includes certain mammography and 
ambulance services that are not covered OPD services in accordance with 
section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also 
are required by statute to receive separate payment under section 
1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which 
also require separate payment under section 1833(t)(6) of the Act; 
self-administered drugs (SADs) that are not otherwise packaged as 
supplies because they are not covered under Medicare Part B under 
section 1861(s)(2)(B) of the Act; and certain preventive services (78 
FR 74865 and 79 FR 66800 and 66801). A list of services excluded from 
the C-APC policy is included in Addendum J to this final rule (which is 
available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). If a service does not appear on this list of 
excluded services, payment for it will be packaged into the payment for 
the primary C-APC service when it appears on an outpatient claim with a 
primary C-APC service.
    The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period and modified and implemented 
beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR 
66800):
    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule 
with comment period, we define the C-APC payment policy as including 
all covered OPD services on a hospital outpatient claim reporting a 
primary service that is assigned to status indicator ``J1,'' \2\ 
excluding services that are not covered OPD services or that cannot by 
statute be paid for under the OPPS. Services and procedures described 
by HCPCS codes assigned to status indicator ``J1'' are assigned to C-
APCs based on our usual APC assignment methodology by evaluating the 
geometric mean costs of the primary service claims to establish 
resource similarity and the clinical characteristics of each procedure 
to establish clinical similarity within each APC.
---------------------------------------------------------------------------

    \2\ Status indicator ``J1'' denotes Hospital Part B Services 
Paid Through a Comprehensive APC. Further information can be found 
in CY 2025 Addendum D1.
---------------------------------------------------------------------------

    In the CY 2016 OPPS/ASC final rule with comment period, we expanded 
the C-APC payment methodology to qualifying extended assessment and 
management encounters through the ``Comprehensive Observation 
Services'' C-APC (C-APC 8011). Services within this APC are assigned 
status indicator ``J2.'' \3\ Specifically, we make a payment through C-
APC 8011 for a claim that:
---------------------------------------------------------------------------

    \3\ Status indicator ``J2'' denotes Hospital Part B Services 
That May Be Paid Through a Comprehensive APC. Further information 
can be found in CY 2025 Addendum D1.
---------------------------------------------------------------------------

     Does not contain a procedure described by a HCPCS code to 
which we have assigned status indicator ``T;''
     Contains 8 or more units of services described by HCPCS 
code G0378 (Hospital observation services, per hour);
     Contains services provided on the same date of service or 
one day before the date of service for HCPCS code G0378 that are 
described by one of the following codes: HCPCS code G0379 (Direct 
admission of patient for hospital observation care) on the same date of 
service as HCPCS code G0378; CPT code 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); CPT code 99284 
(Emergency department visit for the evaluation and management of a 
patient (Level 4)); CPT code 99285 (Emergency department visit for the 
evaluation and management of a patient (Level 5)) or HCPCS code G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient); and
     Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1.''
    The assignment of status indicator ``J2'' to a specific set of 
services performed in combination with each other allows for all other 
OPPS payable services and items reported on the claim (excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS) to be deemed adjunctive services representing 
components of a comprehensive service and resulting in a single 
prospective payment for the comprehensive service based on the costs of 
all reported services on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
provided during the delivery of the comprehensive service, include 
diagnostic procedures, laboratory tests, and other diagnostic tests and 
treatments that assist in the delivery of the primary procedure; visits 
and evaluations performed in association with the procedure; uncoded 
services and supplies used during the service; durable medical 
equipment as well as prosthetic and

[[Page 93927]]

orthotic items and supplies when provided as part of the outpatient 
service; and any other components reported by HCPCS codes that 
represent services that are provided during the complete comprehensive 
service (78 FR 74865 and 79 FR 66800).
    In addition, payment for hospital outpatient department services 
that are similar to therapy services, such as speech language 
pathology, and delivered either by therapists or nontherapists is 
included as part of the payment for the packaged complete comprehensive 
service. These services that are provided during the perioperative 
period are adjunctive services and are deemed not to be therapy 
services as described in section 1834(k) of the Act, regardless of 
whether the services are delivered by therapists or other nontherapist 
health care workers. We have previously noted that therapy services are 
those provided by therapists under a plan of care in accordance with 
section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid 
for under section 1834(k) of the Act, subject to annual therapy caps as 
applicable (78 FR 74867 and 79 FR 66800). However, certain other 
services similar to therapy services are considered and paid for as 
hospital outpatient department services. Payment for these nontherapy 
outpatient department services that are reported with therapy codes and 
provided with a comprehensive service is included in the payment for 
the packaged complete comprehensive service. We note that these 
services, even though they are reported with therapy codes, are 
hospital outpatient department services and not therapy services. We 
refer readers to the July 2016 OPPS Change Request 9658 (Transmittal 
3523) for further instructions on reporting these services in the 
context of a C-APC service.
    Items included in the packaged payment provided in conjunction with 
the primary service also include all drugs, biologicals, and 
radiopharmaceuticals, regardless of cost, except those drugs with pass-
through payment status and SADs, unless they function as packaged 
supplies (78 FR 74868, 74869, and 74909 and 79 FR 66800). We refer 
readers to Section 50.2M, Chapter 15, of the Medicare Benefit Policy 
Manual for a description of our policy on SADs treated as hospital 
outpatient supplies, including lists of SADs that function as supplies 
and those that do not function as supplies.\4\
---------------------------------------------------------------------------

    \4\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
---------------------------------------------------------------------------

    We define each hospital outpatient claim reporting a single unit of 
a single primary service assigned to status indicator ``J1'' as a 
single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line-
item charges for services included on the C-APC claim are converted to 
line-item costs, which are then summed to develop the estimated APC 
costs. These claims are then assigned one unit of the service with 
status indicator ``J1'' and later used to develop the geometric mean 
costs for the C-APC relative payment weights. (We note that we use the 
term ``comprehensive'' to describe the geometric mean cost of a claim 
reporting ``J1'' service(s) or the geometric mean cost of a C-APC, 
inclusive of all the items and services included in the C-APC service 
payment bundle.) Charges for services that would otherwise be 
separately payable are added to the charges for the primary service. 
This process differs from our traditional cost accounting methodology 
only in that all such services on the claim are packaged (except 
certain services as described above). We apply our standard data trims, 
which exclude claims with extremely high primary units or extreme 
costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the C-APCs. We establish a 
ranking of each primary service (single unit only) to be assigned to 
status indicator ``J1'' according to its comprehensive geometric mean 
costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof, we 
identify one ``J1'' service as the primary service for the claim based 
on our cost-based ranking of primary services. We then assign these 
multiple ``J1'' procedure claims to the C-APC to which the service 
designated as the primary service is assigned. If the reported ``J1'' 
services on a claim map to different C-APCs, we designate the ``J1'' 
service assigned to the C-APC with the highest comprehensive geometric 
mean cost as the primary service for that claim. If the reported 
multiple ``J1'' services on a claim map to the same C-APC, we designate 
the most costly service (at the HCPCS code level) as the primary 
service for that claim. This process results in initial assignments of 
claims for the primary services assigned to status indicator ``J1'' to 
the most appropriate C-APCs based on both single and multiple procedure 
claims reporting these services and clinical and resource homogeneity.
    Complexity Adjustments. We use complexity adjustments to provide 
increased payment for certain comprehensive services. We apply a 
complexity adjustment by promoting qualifying paired ``J1'' service 
code combinations or paired code combinations of ``J1'' services and 
certain add-on codes (as described further below) from the originating 
C-APC (the C-APC to which the designated primary service is first 
assigned) to the next higher paying C-APC in the same clinical family 
of C-APCs. We apply this type of complexity adjustment when the paired 
code combination represents a complex, costly form or version of the 
primary service according to the following criteria:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the 2 times rule, as stated in section 
1833(t)(2) of the Act and section III.B.2 of this final rule with 
comment period, in the originating C-APC (cost threshold).
    These criteria identify paired code combinations that occur 
commonly and exhibit materially greater resource requirements than the 
primary service. The CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79582) included a revision to the complexity adjustment 
eligibility criteria. Specifically, we finalized a policy to 
discontinue the requirement that a code combination (that qualifies for 
a complexity adjustment by satisfying the frequency and cost criteria 
thresholds described above) also not create a 2 times rule violation in 
the higher level or receiving APC.
    After designating a single primary service for a claim, we evaluate 
that service in combination with each of the other procedure codes 
reported on the claim assigned to status indicator ``J1'' (or certain 
add-on codes) to determine if there are paired code combinations that 
meet the complexity adjustment criteria. For a new HCPCS code, we 
determine initial C-APC assignment and qualification for a complexity 
adjustment using the best available information, crosswalking the new 
HCPCS code to a predecessor code(s) when appropriate.
    Once we have determined that a particular code combination of 
``J1'' services (or combinations of ``J1'' services reported in 
conjunction with certain add-on codes) represents a

[[Page 93928]]

complex version of the primary service because it is sufficiently 
costly, frequent, and a subset of the primary comprehensive service 
overall according to the criteria described above, we promote the claim 
including the complex version of the primary service as described by 
the code combination to the next higher cost C-APC within the clinical 
family, unless the primary service is already assigned to the highest 
cost APC within the C-APC clinical family or assigned to the only C-APC 
in a clinical family. We do not create new APCs with a comprehensive 
geometric mean cost that is higher than the highest geometric mean cost 
(or only) C-APC in a clinical family just to accommodate potential 
complexity adjustments. Therefore, the highest payment for any claim 
including a code combination for services assigned to a C-APC would be 
the highest paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1'' service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2025, we apply the frequency and cost criteria 
thresholds discussed above, testing claims reporting one unit of a 
single primary service assigned to status indicator ``J1'' and any 
number of units of a single add-on code for the primary ``J1'' service. 
If the frequency and cost criteria thresholds for a complexity 
adjustment are met and reassignment to the next higher cost APC in the 
clinical family is appropriate (based on meeting the criteria outlined 
above), we make a complexity adjustment for the code combination; that 
is, we reassign the primary service code reported in conjunction with 
the add-on code to the next higher cost C-APC within the same clinical 
family of C-APCs. As previously stated, we package payment for add-on 
codes into the C-APC payment rate. If any add-on code reported in 
conjunction with the ``J1'' primary service code does not qualify for a 
complexity adjustment, payment for the add-on service continues to be 
packaged into the payment for the primary service and is not reassigned 
to the next higher cost C-APC. We list the complexity adjustments for 
``J1'' and add-on code combinations for CY 2025, along with all the 
other final complexity adjustments, in Addendum J to this final rule 
with comment period (which is available via the internet on the CMS 
website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
    Addendum J to this final rule with comment period includes the 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 final rule with comment period also 
contains summary cost statistics for each of the paired code 
combinations that describe a complex code combination that would 
qualify for a complexity adjustment and be reassigned to the next 
higher cost C-APC within the clinical family. The combined statistics 
for all proposed reassigned complex code combinations are represented 
by an alphanumeric code with the first four digits of the designated 
primary service followed by a letter. For example, the proposed 
geometric mean cost listed in Addendum J for the code combination 
described by complexity adjustment assignment 3320R, which is assigned 
to C-APC 5224 (Level 4 Pacemaker and Similar Procedures), includes all 
paired code combinations that will be reassigned to C-APC 5224 when CPT 
code 33208 is the primary code. Providing the information contained in 
Addendum J to this final rule with comment period allows interested 
parties the opportunity to better assess the impact associated with the 
assignment of claims with each of the paired code combinations eligible 
for a complexity adjustment.
    Comment: We received support from commenters for a variety of 
existing and proposed complexity adjustments.
    Response: We thank the commenters for their support.
    Comment: Multiple commenters requested that CMS apply a complexity 
adjustment to additional code combinations. The specific C-APC 
complexity adjustment code combinations requested by the commenters for 
CY 2025 are listed in Table 2.
BILLING CODE 4120-01-P

[[Page 93929]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.001

[[Page 93930]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.002

BILLING CODE 4120-01-C
    Response: We reviewed each of the requested code combinations 
suggested by commenters, listed in Table 2, against our complexity 
adjustment

[[Page 93931]]

criteria. The code combination for primary HCPCS code 28296 with 
secondary HCPCS code 28270 meets our cost and frequency criteria, 
qualifying for a complexity adjustment for CY 2025. All the remaining 
code combinations listed failed to meet our cost or frequency criteria 
and do not qualify for complexity adjustments for CY 2025. Addendum J 
to this final rule with comment period includes the cost statistics for 
each code combination that was evaluated for a complexity adjustment.
    Comment: Commenters requested that CMS modify, waive, or eliminate 
the established C-APC complexity adjustment eligibility criteria of 25 
or more claims reporting the code combination (frequency) and a 
violation of the 2 times rule in the originating C-APC (cost) to allow 
additional code combinations to qualify for complexity adjustments. 
These commenters were concerned that C-APC packaging and a lack of 
complexity adjustment would limit access to procedures. Specifically, 
some commenters expressed concern that CMS's methodology for 
determining complexity adjustments is unnecessarily restrictive, 
particularly the 25-claim threshold, and suggested that CMS eliminate 
the 25-claim threshold and implement a complexity adjustment whenever a 
code pair exceeds the cost threshold.
    Some commenters were concerned that when multiple ``J1'' primary 
services are reported on a claim, along with an add-on service, the 
add-on service is not evaluated for a complexity adjustment. Commenters 
cited examples where significant claims volume from add-on services may 
not be incorporated into the complexity adjustment evaluation. 
Commenters also reiterated requests to broaden the complexity 
adjustment policy and allow clusters of procedures, consisting of a 
``J1'' code pair and multiple other associated add-on codes used in 
combination with that ``J1'' code pair, to qualify for complexity 
adjustments. Commenters stated that there are certain complex 
procedures that include numerous add-on codes and this approach would 
allow more accurate reflection of the cost of medical practice when 
multiple procedures are performed together. They noted that lack of 
additional payment for these code combinations can present a financial 
challenge for the providers who perform these more resource intensive 
services.
    Response: We appreciate these comments. At this time, we do not 
believe changes to the C-APC complexity adjustment criteria are 
necessary or that we should make exceptions to the criteria to allow 
claims with the code combinations suggested by the commenters to 
receive complexity adjustments. As we stated in the CY 2017 OPPS/ASC 
final rule (81 FR 79582), we believe that the complexity adjustment 
criteria, which require a frequency of 25 or more claims reporting a 
code combination and a violation of the 2 times rule in the originating 
C-APC, are appropriate to determine if a combination of procedures 
represents a complex, costly subset of the primary service that should 
qualify for the adjustment and be paid at the next higher paying C-APC 
in the clinical family. As we also previously stated in the CY 2020 
OPPS/ASC final rule with comment period (84 FR 61161), a minimum of 25 
claims is already a very low threshold for a national payment system. 
Lowering the minimum of 25 claims further could lead to unnecessary 
complexity adjustments for service combinations that are rarely 
performed.
    Comment: A few commenters suggested that to help maintain better 
stability and predictability of payments associated with complex 
procedures, CMS should revise the complexity adjustment policy by 
allowing qualifying codes to maintain the complexity adjusted payment 
for three calendar years before they are required to go through the 
eligibility review. For codes that do not qualify in a given year, they 
could be evaluated in the next calendar year. Commenters asserted that 
the updated cadence would allow more time for providers and coders to 
be educated on new code pairs that qualify for complexity adjustments 
and it would help promote payment stability and predictability for 
these complex procedures.
    Response: For the OPPS ratesetting process, our goal is to use the 
best available data for ratesetting to accurately estimate the costs 
associated with furnishing outpatient services and to set appropriate 
payment rates. We evaluate code combinations each year against our 
complexity adjustment criteria using the latest available data. 
Potentially maintaining complexity adjustments that are not supported 
by the latest data could undermine our goals for the ratesetting 
process.
    Comment: A few commenters requested that CMS provide additional 
information on the rationale for not counting claims that reflect code 
combinations of services that would otherwise meet the frequency 
criteria needed to receive a complexity adjustment. Commenters 
conducted their own data modeling using data reflecting all code 
combinations that met the frequency criteria needed to receive a 
complexity adjustment. Commenters asked for greater transparency on the 
methodology CMS used to evaluate the complexity adjustment frequency 
criteria for code combinations.
    Response: We refer commenters to the claims accounting narrative 
under supporting documentation for this CY 2025 OPPS/ASC final rule on 
the CMS website at: https://www.cms.gov/files/document/2025-nprm-opps-claims-accounting.pdf. The claims accounting narrative provides a 
detailed overview of how CMS processes the CY 2023 claims data to 
produce the proposed prospective CY 2025 OPPS payment rates. We are 
updating the section on Comprehensive APCs in order to provide 
additional clarity on the claims accounting process used for 
determining complexity adjustments.
    After consideration of the public comments we received, we are 
finalizing the C-APC complexity adjustment policy for CY 2025 as 
proposed. We are also finalizing the proposed complexity adjustments, 
with the addition of one new code combination (i.e., primary HCPCS code 
28296 with secondary HCPCS code 28270) suggested by commenters that 
meets our complexity adjustment criteria.
(2) Exclusion of Procedures Assigned to New Technology APCs From the C-
APC Policy
    Services that are assigned to New Technology APCs are typically new 
procedures that do not have sufficient claims history to establish an 
accurate payment for them. Beginning in CY 2002, we retain services 
within New Technology APC groups until we gather sufficient claims data 
to enable us to assign the service to an appropriate clinical APC. This 
policy allows us to move a service from a New Technology APC in less 
than 2 years if sufficient data are available. It also allows us to 
retain a service in a New Technology APC for more than 2 years if 
sufficient data upon which to base a decision for reassignment have not 
been collected (82 FR 59277).
    The C-APC payment policy packages payment for adjunctive and 
secondary items, services, and procedures into the most costly primary 
procedure under the OPPS at the claim level. Prior to CY 2019, when a 
procedure assigned to a New Technology APC was included on the claim 
with a primary procedure, identified by OPPS status indicator ``J1,'' 
payment for the new technology service was typically packaged into the 
payment for the primary procedure.

[[Page 93932]]

Because the new technology service was not separately paid in this 
scenario, the overall number of single claims available to determine an 
appropriate clinical APC for the new service was reduced. This was 
contrary to the objective of the New Technology APC payment policy, 
which is to gather sufficient claims data to enable us to assign the 
service to an appropriate clinical APC.
    To address this issue and ensure that there are sufficient claims 
data for services assigned to New Technology APCs, in the CY 2019 OPPS/
ASC final rule with comment period (83 FR 58847), we finalized 
excluding payment for any procedure that is assigned to a New 
Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from 
being packaged when included on a claim with a ``J1'' service assigned 
to a C-APC. In the CY 2020 OPPS/ASC final rule with comment period, we 
finalized that beginning in CY 2020, payment for services assigned to a 
New Technology APC would be excluded from being packaged into the 
payment for comprehensive observation services assigned status 
indicator ``J2'' when they are included on a claim with a ``J2'' 
service (84 FR 61167).
(3) Exclusion of Drugs and Biologicals Described by HCPCS Code C9399 
(Unclassified Drugs or Biologicals) From the C-APC Policy
    Section 1833(t)(15) of the Act, as added by section 621(a)(1) of 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (Pub. L. 108-173), provides for payment under the OPPS for new 
drugs and biologicals until HCPCS codes are assigned. Under this 
provision, we are required to make payment for a covered outpatient 
drug or biological that is furnished as part of covered outpatient 
department services but for which a HCPCS code has not yet been 
assigned in an amount equal to 95 percent of average wholesale price 
(AWP) for the drug or biological.
    In the CY 2005 OPPS/ASC final rule with comment period (69 FR 
65805), we implemented section 1833(t)(15) of the Act by instructing 
hospitals to bill for a drug or biological that is newly approved by 
the Food and Drug Administration (FDA) and that does not yet have a 
HCPCS code by reporting the National Drug Code (NDC) for the product 
along with the newly created HCPCS code C9399 (Unclassified drugs or 
biologicals). We explained that when HCPCS code C9399 appears on a 
claim, the Outpatient Code Editor (OCE) suspends the claim for manual 
pricing by the Medicare Administrative Contractor (MAC). The MAC prices 
the claim at 95 percent of the drug or biological's AWP, using Red Book 
or an equivalent recognized compendium, and processes the claim for 
payment. We emphasized that this approach enables hospitals to bill and 
receive payment for a new drug or biological concurrent with its 
approval by the FDA. The hospital does not have to wait for the next 
quarterly release or for approval of a product specific HCPCS code to 
receive payment for a newly approved drug or biological or to resubmit 
claims for adjustment. We instructed that hospitals would discontinue 
billing HCPCS code C9399 and the NDC upon implementation of a product 
specific HCPCS code, status indicator, and appropriate payment amount 
with the next quarterly update. We also note that HCPCS code C9399 is 
paid in a similar manner in the ASC setting, as 42 CFR 416.171(b) 
outlines that certain drugs and biologicals for which separate payment 
is allowed under the OPPS are considered covered ancillary services for 
which the OPPS payment rate, which is 95 percent of AWP for HCPCS code 
C9399, applies. Since the implementation of the C-APC policy in 2015, 
payment for drugs and biologicals described by HCPCS code C9399 had 
been included in the C-APC payment when these products appear on a 
claim with a primary C-APC service. Packaging payment for these drugs 
and biologicals that appear on a hospital outpatient claim with a 
primary C-APC service is consistent with our C-APC packaging policy 
under which we make payment for all items and services, including all 
non-pass-through drugs, reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service and representing components of a complete comprehensive 
service, with certain limited exceptions (78 FR 74869). It was our 
position that the total payment for the C-APC with which payment for a 
drug or biological described by HCPCS code C9399 is packaged includes 
payment for the drug or biological at 95 percent of its AWP.
    However, we determined that in certain instances, drugs and 
biologicals described by HCPCS code C9399 are not being paid at 95 
percent of their AWPs when payment for them is packaged with payment 
for a primary C-APC service. In order to ensure payment for new drugs, 
biologicals, and radiopharmaceuticals described by HCPCS code C9399 at 
95 percent of their AWP, for CY 2023 and subsequent years, we finalized 
our proposal to exclude any drug, biological, or radiopharmaceutical 
described by HCPCS code C9399 from packaging when the drug, biological, 
or radiopharmaceutical is included on a claim with a ``J1'' service, 
which is the status indicator assigned to a C-APC, and a claim with a 
``J2'' service, which is the status indicator assigned to comprehensive 
observation services. See Addendum J for the CY 2025 C-APC payment 
policy exclusions.
    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized the proposal in section XI ``CY 2023 OPPS Payment Status and 
Comment Indicators'' to add a new definition to status indicator ``A'' 
to include unclassified drugs and biologicals that are reportable with 
HCPCS code C9399 (87 FR 72051). The definition, found in Addendum D1, 
would ensure the MAC prices claims for drugs, biologicals, or 
radiopharmaceuticals billed with HCPCS code C9399 at 95 percent of the 
drug or biological's AWP and pays separately for the drug, biological, 
or radiopharmaceutical under the OPPS when it appears on the same claim 
as a primary C-APC service.
(4) Exclusion of Cell and Gene Therapies From the C-APC Policy
    As previously discussed in this section, and in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74865), the C-APC policy 
packages payment for items and services that are typically integral, 
ancillary, supportive, dependent, or adjunctive to the primary service 
and provided during the delivery of the comprehensive service, 
including diagnostic procedures, laboratory tests and other diagnostic 
tests and treatments that assist in the delivery of the primary 
procedure. In the CY 2014 OPPS/ASC final rule (78 FR 74861), we 
finalized defining 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 treats all individually reported codes as representing components 
of the comprehensive service, we 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 that delivery of the primary service.
    As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59201 
through 59204), we generally treat all items and services reported on a 
C-APC claim as integral, ancillary, supportive, dependent, and 
adjunctive to the primary service and representing

[[Page 93933]]

components of a comprehensive service. Historically, items packaged for 
payment provided in conjunction with the primary C-APC 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 supplies (78 FR 74868 through 74869 and 74909).
    Our intent has been to make a single prospective payment based on 
the cost of all individually reported codes that appear on a claim with 
the primary C-APC service, which we believe represent the provision of 
a primary service and all adjunctive services provided to support that 
delivery of the primary service. We discussed in the CY 2025 OPPS/ASC 
proposed rule (89 FR 59201 through 59204), there are rare instances 
where the cell and gene therapies listed in Table 3, which are usually 
separately payable under the OPPS, appear on the same claim as a 
primary C-APC service and therefore, have their payment packaged with 
payment for the primary C-APC service. The therapies in Table 3 are 
usually separately paid and priced using the ASP methodology when not 
on a C-APC claim. Given the unique nature of these therapies, we do not 
believe they function as integral, ancillary, supportive, dependent, or 
adjunctive to any of the current C-APCs primary services. The cell 
therapies described in Table 3 are primarily for the treatment of 
specific cancers and are administered through an intravenous infusion. 
The gene therapies listed in Table 3 are generally for the treatment of 
certain rare ocular or spinal conditions caused by specific genetic 
mutations and are also either intravenously infused or administered 
through a subretinal injection. When these products are administered, 
they are the primary treatment being administered to a patient and 
thus, are not integral, ancillary, supportive, dependent, or adjunctive 
to any primary C-APC services. Additionally, the current primary C-APC 
services describe common surgical procedures, such as breast/lymphatic 
surgery and musculoskeletal procedures. The cell and gene therapies 
listed in Table 3 are intended to treat a specific condition and would 
not be used to support the outcome of any primary C-APC procedure. For 
example, HCPCS code J3399 (Injection, onasemnogene abeparvovec-xioi, 
per treatment, up to 5x10[caret]15 vector genomes) may be used to 
describe the gene therapy Zolgensma. This product is FDA-approved as an 
adeno-associated virus (AAV) vector-based gene therapy indicated for 
the treatment of pediatric patients less than 2 years of age with 
spinal muscular atrophy (SMA) with bi-allelic mutations in the survival 
motor neuron 1 (SMN1) gene. The specified mechanism of onasemnogene 
abeparvovec is a recombinant AAV9-based gene therapy designed to 
deliver a copy of the gene encoding the human SMN protein.\5\ The 
function of a product such as Zolgensma, is not intended to be 
integral, ancillary, supportive, dependent, and adjunctive to any C-APC 
as the gene therapy itself is an independent treatment.
---------------------------------------------------------------------------

    \5\ Zolgensma. FDA Package Insert. October 2023. https://www.fda.gov/media/126109/download?attachment.
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    Yescarta (HCPCS code Q2041) is an example of a cell therapy that 
functions as an independent treatment. Based on its FDA-approved 
indication,\6\ this product's intended clinical use would not be 
integral, ancillary, supportive, dependent, or adjunctive to any 
current C-APC primary service. Yescarta is indicated as a CD19-directed 
genetically modified autologous T cell immunotherapy for the treatment 
of Adult patients with large B-cell lymphoma that is refractory to 
first-line chemoimmunotherapy or that relapses within 12 months of 
first-line chemoimmunotherapy and adult patients with relapsed or 
refractory large B-cell lymphoma after two or more lines of systemic 
therapy, including diffuse large B-cell lymphoma (DLBCL) not otherwise 
specified, primary mediastinal large B-cell lymphoma, high grade B-cell 
lymphoma, and DLBCL arising from follicular lymphoma. Yescarta is the 
primary treatment being performed when administered for these FDA-
approved indications and should not be packaged as supportive of any C-
APC primary service even if the two services appear on the same claim.
---------------------------------------------------------------------------

    \6\ FDA Package Insert. Yescarta. April 2024. https://www.fda.gov/media/108377/download?attachment.
---------------------------------------------------------------------------

    We explained in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74868) that intravenous drugs, for example, are OPPS services 
that are considered adjunctive to the primary procedure because the 
correct administration of the drug either promotes a beneficial 
outcome, such as the use of intravenous pain medications, or prevents 
possible complications, such as the use of intravenous blood pressure 
medications to temporarily replace oral blood pressure medications and 
reduce the risk of a sudden rise in blood pressure when a normal daily 
medication is stopped. In the case of the cell and gene therapies 
described in Table 3, however, we do not believe the therapies 
``promote a beneficial outcome'' or ``prevent possible complications'' 
of any of the procedures currently designated as primary C-APC 
services. While the cell and gene therapies in Table 3 may ``promote a 
beneficial outcome'' for the patient in general, we do not believe the 
provision of cell and gene therapies are ``promoting a beneficial 
outcome'' for any of the primary C-APC services themselves, as the cell 
and gene therapies are serving as independent therapies. These are 
distinguishable from the previous examples of intravenous pain 
medications that are directly related to the primary C-APC service and 
promote a beneficial outcome for that procedure. Further, in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 74865), we stated 
that we proposed to package into C-APCs all of these integral, 
ancillary, supportive, dependent, and adjunctive services, hereinafter 
collectively referred to as ``adjunctive services,'' provided during 
the delivery of the comprehensive service. This includes the diagnostic 
procedures, laboratory tests and other diagnostic tests, and treatments 
that assist in the delivery of the primary procedure. In the CY 2025 
OPPS/ASC proposed rule (89 FR 59201 through 59204), we stated we did 
not believe that the cell and gene therapies listed in Table 3 are 
assisting in the delivery of any primary procedure currently assigned 
to a C-APC.
    Therefore, for CY 2025 only, we proposed not to package payment for 
the cell and gene therapies listed in Table 3 into the payment for the 
primary C-APC service when they appear on the same claim as primary C-
APCs services. We proposed this policy for one year only in order to 
gather more information from interested parties as to whether the 
proposed policy appropriately captures all of the unique therapies, 
such as the cell and gene therapies listed in Table 3, that function as 
primary treatments and do not support C-APC primary services. As 
discussed later in this section, we welcomed comments from readers on 
the proposal and the potential need for a different, modified, 
expanded, or supplemental policy for future rulemaking. We stated we 
will assess whether to continue this policy, or a modified version of 
this policy, beyond one year in future rulemaking, taking into 
consideration the comments received.
    We did not propose to include therapies that are on drug pass-
through status for all of CY 2025 in Table 3

[[Page 93934]]

because pass-through drugs are already excluded from C-APC packaging. 
We proposed that products for which pass-through status is expiring in 
CY 2025 would be excluded from C-APC packaging after their pass-through 
status expires. For example, the product described by HCPCS code Q2056 
has pass-through status expiring June 30, 2025. Until its pass-through 
status expires, the product will be excluded from C-APC packaging due 
to the pass-through C-APC exclusion policy, but after its pass-through 
status expires, we propose that the therapy would continue to be 
excluded from C-APC packaging under our proposed exclusion for cell and 
gene therapies. For more information on drug pass-through status, 
including expiring and continuing pass-through status, please see 
section V.A of this final rule with comment period.
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[[Page 93935]]

BILLING CODE 4120-01-C
    We proposed to exclude the therapies listed in Table 3 from C-APC 
packaging. We invited comment on the proposal, and we invited comment 
on whether there are any additional cell and gene therapies that may be 
appropriate to exclude from C-APC packaging for CY 2025. We asked 
commenters to explain why any additional cell and gene therapies that 
they believe should be excluded from C-APC packaging were not integral, 
ancillary, supportive, dependent, or adjunctive to any C-APC primary 
service. We invited comment on whether the proposal should be extended 
beyond 1 year or if a different, expanded, or supplemental policy 
approach may be warranted in future rulemaking. For example, we were 
interested in comments on whether there are other classes of drugs, 
biologicals, or other products that are not clearly integral, 
ancillary, adjunctive, or supportive of a primary C-APC service but 
could appear on the same claim as the C-APC for that primary service 
and for which payment would be packaged into the C-APC payment under 
our current policy. We stated that we would expect clinical evidence 
supporting commenters' assertion that other identified classes of 
drugs, biologicals, medical devices, or other products are not clearly 
supportive of a primary C-APC service but may nonetheless appear on the 
same claim as a primary C-APC procedure. Similarly, we invited comment 
on whether interested parties believe it is appropriate for these other 
classes of drugs, biologicals, or medical devices to be excluded from 
packaging with all C-APCs or only specific C-APCs, such as the 
Comprehensive Observation Services C-APC (SI = ``J2'').
    Finally, we invited comment on the following:
     Because the cell and gene therapies listed in Table 3 are 
not integral, ancillary, supportive, dependent, or adjunctive to any 
current C-APC procedure, how could CMS structure a new C-APC, or 
similar packaged payment policy, for the service to administer cell or 
gene therapies, such by creating as a Chimeric Antigen Receptor (CAR) 
T-cell therapy administration C-APC, with which the CAR-T or gene 
therapy would be integral, ancillary, supportive, dependent, or 
adjunctive to the primary C-APC service? What integral, ancillary, 
supportive, dependent, or adjunctive items and services are routinely 
provided as part of the administration of cell and gene therapies or in 
conjunction with cell and gene therapies generally?
    We recognized that currently, for CY 2024, the following HCPCS 
codes are associated with CAR-T therapy: HCPCS code 0537T (Chimeric 
antigen receptor t-cell (car-t) therapy; harvesting of blood-derived t 
lymphocytes for development of genetically modified autologous car-t 
cells, per day), 0538T (Chimeric antigen receptor t-cell (car-t) 
therapy; preparation of blood-derived t lymphocytes for transportation 
(eg, cryopreservation, storage)), 0539T (Chimeric antigen receptor t-
cell (car-t) therapy; receipt and preparation of car-t cells for 
administration), and 0540T (Chimeric antigen receptor t-cell (car-t) 
therapy; car-t cell administration, autologous) as discussed in 
previous OPPS rulemaking, including the CY 2022 OPPS/ASC final rule 
with comment period (86 FR 63550 through 63552).
    Separately, we also invited comment on whether policy revisions to 
the C-APC policy may be appropriate in future rulemaking, such as a 
modified outlier payment policy specific to C-APCs to address related 
situations in the future. We listed all proposed C-APC exclusion 
categories for CY 2025 in Addendum J to the CY 2025 OPPS/ASC proposed 
rule (which is available via the internet on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
    Comment: Commenters were generally very supportive of the proposal 
and thought this agency action was a positive step forward to ensure 
access to these new classes of drugs. They agreed with CMS's assessment 
that the cell and gene therapies listed in the CY 2025 OPPS/ASC 
proposed rule did not function as integral, ancillary, supportive, 
dependent, or adjunctive to any of the current C-APCs primary services. 
Commenters noted that they agreed that these treatments acted as 
independent therapies and were the reason for a Medicare beneficiary's 
visit to a hospital outpatient department. Additionally, commenters 
believed that this policy was necessary and important given the large 
number of cell and gene therapy products currently being researched 
that may ultimately be approved and available to Medicare beneficiaries 
in the coming years.
    Response: We thank commenters for their support of our proposal and 
rationale.
    Comment: Many commenters recommended CMS make this policy permanent 
as soon as possible. They noted that they agreed with CMS's assessment 
that it would be inappropriate to package cell and gene therapies into 
C-APCs for CY 2025 only, but that the same reasons that C-APC packaging 
would be inappropriate for CY 2025 would also apply to subsequent 
years. Other commenters recommended that CMS make this policy effective 
for an extended period of time, such as three years, in order to better 
understand how the policy is working.
    Response: We thank commenters for their feedback. Based on the 
comments received, we are persuaded that the reasoning for excluding 
these cell and gene therapy products from C-APC packaging in CY 2025 
would also apply to subsequent years. As such, we will be finalizing 
our proposal as later discussed in this section for CY 2025 and 
subsequent years.
    Comment: One commenter recommended that its cell therapy be added 
to the list of qualifying exceptions to C-APC packaging as their 
product received FDA approval on August 1, 2024, during the public 
comment period. A few commenters recommended CMS apply this packaging 
exception to other categories of drugs that they believed fell into a 
similar clinical category as cell and gene therapies. For example, one 
commenter suggested that its drug product is one of a growing number of 
innovative drugs that are administered using surgical procedures that 
are mapped to a C-APC, resulting in packaging of that product. The 
commenter stated that the product was the primary treatment being 
delivered to the patient, and not the C-APC procedure. Another 
commenter stated they have a product in the pipeline that, according to 
guidance from a specialty society, requires a procedure corresponding 
to CPT code 51720 (bladder instillation of anticarcinogenic agent), 
which is assigned to C-APC 5372, in order to insert the investigational 
product into the bladder. This commenter believed their product is the 
primary treatment being administered to a patient and is not supportive 
to any primary C-APC services. Therefore, they requested this product 
not be packaged into a C-APC and believed C-APC packaging would be 
inappropriate. This commenter also requested that in order to prevent 
C-APC packaging, one option would be for CMS to reassign the code used 
to describe the administration of its product to a drug administration 
APC rather than a C-APC. Specifically, they recommended CMS reassign 
CPT code 51720, which corresponds to the procedure used to administer 
the investigational product, to a non C-APC, such as a drug 
administration APC.

[[Page 93936]]

    Some commenters recommended that CMS extend the proposed policy to 
cell and gene therapies assigned to status indicator ``G'', which 
correlates to pass-through status. Similarly, commenters recommend CMS 
exclude a variety of products from C-APC packaging, such as Casgevy, 
Lyfgenia, Amtagvi, Omisurge, Zynteglo, Obe-cel, Hemgenix, Beqvez, 
Roctavian, Spinraza and Elevidys. A few commenters suggested CMS should 
review and identify any other products that may be administered as 
independent therapies in the hospital outpatient setting and stated 
that such products should be separately paid.
    Response: We greatly thank commenters for their detailed comments. 
For new cell and gene therapy products that are not integral, 
ancillary, supportive, dependent, or adjunctive to any C-APC primary 
service that were approved during CY 2024 and that continue to be 
approved, CMS will add their product specific HCPCS codes, when 
created, to the C-APC exclusion list. For example, HCPCS code J3392 
(Injection, exagamglogene autotemcel, per treatment) effective October 
1, 2024, which may be used to describe the product Casgevy, was added 
to the list of qualifying products. We also thank commenters for their 
suggestions to add additional drugs and classes of drugs to this C-APC 
exclusion policy as well as those drugs that are administered during a 
C-APC procedure. Additionally, we thank the commenter for its 
suggestion to move some codes that describe the administration of a 
product from a C-APC to a drug administration APC. We will take this 
feedback into consideration for future rulemaking. As we stated in the 
proposed rule, we welcomed comments from readers on the proposal and 
the potential need for a different, modified, expanded, or supplemental 
policy for future rulemaking. We believe that cell and gene therapies 
are a unique class of products, but we believe we need additional 
evidence and engagement from interested parties concerning whether 
other identified classes of drugs, biologicals, medical devices, or 
other products are not supportive of a primary C-APC service but may 
nonetheless appear on the same claim as a primary C-APC procedure. We 
strongly believe in the principles of our prospective payment system 
and the C-APC policy; therefore, we want to ensure than any potential 
future changes to our C-APC packaging policy maintain these principles.
    Commenters suggested that we exclude several additional products 
from C-APC packaging, such as Lyfgenia, Zynteglo, Hemgenix, Beqvez, 
Roctavian, and Elevidys. We note that these products are currently on 
OPPS pass-through status for the duration of CY 2025, and therefore 
will be excluded from C-APC packaging under that policy. Similarly, in 
response to commenters suggestion that we apply this policy to cell and 
gene therapy products assigned to status indicator ``G'', we note that 
we specifically did not propose to include therapies that are on drug 
pass-through status, represented by status indicator ``G'' for all of 
CY 2025 because pass-through drugs are already excluded from C-APC 
packaging. Please see section V.A of this final rule with comment 
period for additional information on OPPS drug pass-through status.
    Comment: Several commenters recommended that CMS unpackage all 
status indicator ``K'' drugs from C-APC packaging, which aligned with 
the 2024 Advisory Panel on Hospital Outpatient Payment recommendation 
to no longer package drugs with a status indicator of ``K'' into any C-
APC and, instead, they recommended CMS provide separate payment for all 
drugs and biologicals above the drug packaging threshold. Commenters 
said these status indicator ``K'' drugs should be paid based on 1847A 
of the Social Security Act and reimbursed at Average Sales Price plus 6 
percent rather than packaged. Similarly, a commenter suggested that 
since drugs on pass-through status are paid separately when billed with 
a C-APC, that CMS should continue that separately payable status after 
passthrough status expiration and the transition of that code's status 
indicator from ``G'' to ``K.''
    Commenters suggested that the proportion of status indicator ``K'' 
drug charges relative to all other charges appearing on C-APCs claims 
was less than 2.5 percent across all C-APCs. Meaning, in commenters' 
views, that C-APCs do not inherently involve the provision of status 
indicator ``K'' drugs. Another commenter recommended that CMS exclude 
high-cost primary therapy drugs across drug classes and not only to 
cell and gene therapies, apply the C-APC exclusion to primary therapy 
drugs that clinically align to C-APCs, and they included specific 
examples they researched that serve as the primary therapy drugs 
similar to cell and gene therapies.
    Response: We appreciate the information submitted by commenters, 
but respectfully disagree with their conclusions. The C-APC policy aims 
to package payment for items and services that are typically integral, 
ancillary, supportive, dependent, or adjunctive to the primary service 
and provided during the delivery of the comprehensive service, 
including diagnostic procedures, laboratory tests and other diagnostic 
tests and treatments that assist in the delivery of the primary 
procedure. We believe it is appropriate for most drugs and biologicals 
to be packaged into C-APCs as we believe they function to ``promote a 
beneficial outcome'' or ``prevent possible complications'' of C-APC 
services. We explained in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 74868) that intravenous drugs, for example, are OPPS 
services that are considered adjunctive to the primary procedure 
because the correct administration of the drug either promotes a 
beneficial outcome, such as the use of intravenous pain medications, or 
prevents possible complications, such as the use of intravenous blood 
pressure medications to temporarily replace oral blood pressure 
medications and reduce the risk of a sudden rise in blood pressure when 
a normal daily medication is stopped. We are therefore not excluding 
all status indicator ``K'' drugs above the drug packaging threshold 
from C-APC packaging. Our packaging policies are a fundamental 
component of the OPPS and they support our strategic goal of using 
larger payment bundles in the OPPS to maximize hospitals' incentives to 
provide care in the most efficient manner. Additionally, we do not 
believe at this time that cost alone is a reason to exclude a product 
from packaging.
    Comment: Many commenters responded to several of our requests for 
comment associated with the proposal. Commenters recommended no 
significant overall changes to the general methodology CMS proposed to 
exclude products from all C-APC packaging and pay separately based on 
the individual product's average sales price plus 6 percent. 
Specifically, commenters strongly conveyed that they did not see an 
appropriate reason for CMS to structure a new C-APC, or similar 
packaged payment policy, for the service to administer cell or gene 
therapies, such as by creating a CAR T-cell therapy administration C-
APC. Commenters believed that there is no accurate way to create a 
bundled payment for a whole group of cell and gene therapies as the 
costs and resources required are unique and novel between each of the 
therapies, which also makes it difficult to determine appropriate items 
and services associated with each therapy for inclusion in C-APC 
packaging. Commenters broadly believed no

[[Page 93937]]

different or supplemental policy was warranted given the numerous 
challenges providers face related to cell and gene therapies currently. 
They saw any additional change to move towards a packaged payment 
policy as an additional challenge for the hospitals providing the 
therapies.
    Similarly, commenters cautioned CMS against creating C-APCs for 
cell and gene therapies as this may cause inadequate Medicare 
reimbursement to hospitals, which, in their view, has the potential to 
jeopardize beneficiary access to CAR T-cell therapy and other high-cost 
therapies as commenters communicated that institutions weigh 
reimbursement challenges with their ability to provide this costly 
care. Commenters were concerned that creating a new packaged payment 
policy could lead to a financial loss and decrease the number of 
facilities offering high-cost cell and gene therapies in the hospital 
outpatient department.
    Commenters emphasized that these therapies involve highly 
specialized procedures, intensive monitoring, and multidisciplinary 
care teams, all of which contribute to their substantial costs. 
Commenters were concerned by the fact that the administration of cell 
and gene therapies are multi-step processes that can take weeks if not 
months and entail multiple services that would not appear on the same 
claim. Additional commenters reiterated that all of the various and 
distinct clinical services for CAR T-cell therapy are furnished over 
multiple encounters on different dates--making CAR T-cell therapy 
inappropriate for C-APCs, which are typically specific to a single 
encounter in their view. Commenters believed a CAR T-cell therapy C-
APC, or similar packaged payment policy, would be unprecedented and a 
huge policy departure for CMS and recommended CMS not pursue the idea 
any further.
    Many commenters believed that separate payment based on average 
sales price plus 6 percent is the most appropriate payment methodology 
for cell and gene therapies due to its transparency, uniformity and 
predictability. A few commenters pointed out that current hospital cost 
data is lower than ASP for CAR T-cell therapy products, potentially 
leaving products underpaid if paid based on C-APC principles. 
Commenters similarly took the position that there is no appropriate 
method in which CMS could modify its outlier payment policy with 
respect to C-APCs to better pay for these types of products.
    Response: We appreciate the insights provided by commenters and 
will take them into consideration for future rulemaking. At this time, 
we are not considering the creation of a new C-APC, similar packaged 
payment policy, or modified outlier policy, for services to administer 
cell or gene therapies.
    After consideration of the public comments we received, we are 
finalizing our policy proposal with a modification with respect to how 
long this policy will apply. For CY 2025 and subsequent years, we are 
finalizing a policy not to package payment for cell and gene therapies 
into C-APCs, when those cell and gene therapies are not functioning as 
integral, ancillary, supportive, dependent, or adjunctive to the 
primary C-APC service. For new cell and gene therapy products that are 
not integral, ancillary, supportive, dependent, or adjunctive to any C-
APC primary service, we will continue to add their product specific 
HCPCS codes, when created, to the C-APC exclusion list. The current 
list of qualifying products can be found in Table 4. We are not adding 
any additional drug classes to this policy exclusion at this time, and 
we are not currently considering any additional modifications to our 
policy, but will continue to consider additional refinements for future 
rulemaking.
    We list all final C-APC exclusion categories for CY 2025 in 
Addendum J to this final rule (which is available via the internet on 
the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
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BILLING CODE 4120-01-C
(5) Exclusion of Non-Opioid Products for Pain Relief Under Section 4135 
of the Consolidated Appropriations Act, 2023 From the C-APC Policy
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), 
was signed into law on December 29, 2022. Section 4135(a) and (b) of 
the CAA, 2023, titled ``Access to Non-Opioid Treatments for Pain 
Relief,'' amended section 1833(t)(16) and section 1833(i) of the Social 
Security Act, respectively, to provide for temporary additional 
payments for non-opioid treatments for pain relief (as that term is 
defined in section 1833(t)(16)(G)(i) of the Act). In particular, 
section 1833(t)(16)(G) provides that with respect to a non-opioid 
treatment for pain relief furnished on or after January 1, 2025,

[[Page 93939]]

and before January 1, 2028, the Secretary shall not package payment for 
the non-opioid treatment for pain relief into payment for a covered OPD 
service (or group of services) and shall make an additional payment for 
the non-opioid treatment for pain relief as specified in clause (ii) of 
that section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the 
Act provide for the amount of additional payment and set a limitation 
on that amount. As stated earlier in this section, our current policy 
is to exclude from the packaged C-APC payment those items and services 
that are required by statute to be separately paid.
    Accordingly, we proposed to exclude the non-opioid treatments for 
pain relief identified as satisfying the required criteria for payment 
under section 4135 of the CAA, 2023 from the C-APC policy to ensure 
payment is not packaged into any C-APC and that separate payment is 
made in accordance with the statute.
    Comment: Commenters were generally supportive of our proposal not 
to package payment and to pay separately for qualifying drugs, 
biologicals, and medical devices that met the criteria for payment 
under section 4135 of the CAA, 2023. A commenter mentioned its support 
of CMS packaging policies, and noted reservations about paying 
separately, and not packaging, non-opioid treatments for pain relief; 
however, they ultimately conceded that CMS must implement section 4135 
of the CAA, 2023, which requires separately payable status, and 
supported CMS's implementation methodology.
    Response: We thank commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our policy as proposed, and will exclude the non-opioid 
treatments for pain relief identified as satisfying the required 
criteria for payment under section 4135 of the CAA, 2023 from the C-APC 
policy to ensure payment is not packaged into any C-APC and that 
separate payment is made in accordance with the statute. Please see 
section XIII.F of this final rule with comment period for a list of the 
products that we are finalizing would qualify for payment under the new 
payment policy for non-opioid drugs, biologicals, and devices for pain 
relief.
(6) C-APCs for CY 2025
    For CY 2025 and subsequent years, we proposed to continue to apply 
the C-APC payment policy methodology. We refer readers to the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79583) for a discussion 
of the C-APC payment policy methodology and revisions.
    Each year, in accordance with section 1833(t)(9)(A) of the Act, we 
review and revise the services within each APC group and the APC 
assignments under the OPPS. As a result of our annual review of the 
services and the APC assignments under the OPPS, we did not propose to 
convert any standard APCs to C-APCs in CY 2025; thus, we proposed that 
the number of C-APCs for CY 2025 would be the same as the number for CY 
2024, which is 72 C-APCs.
    Comment: A few commenters requested that CMS reconsider our 
packaging policies for C-APC 8011 (Comprehensive Observation Services). 
They requested that CMS remove the rule that the presence of a SI ``T'' 
procedure on a claim excludes payment of C-APC 8011 and instead package 
the payment of the SI ``T'' procedure into C-APC 8011, as is already 
done with SI ``Q'' procedures. Commenters stated that this requirement 
violates the basic tenet of the packaging concept in that when 
observation services are ordered and furnished, the observation 
services become the primary service provided to such patients and the 
SI ``T'' procedure is provided ancillary to that primary service. 
Commenters cited scenarios in which hospitals provide significant, 
resource-intensive services to a patient but are paid significantly 
less than if a SI ``T'' procedure was not done.
    Response: We thank the commenters for bringing this to our 
attention. In the CY 2016 OPPS/ASC final rule with comment period (80 
FR 70334-70336), in response to commenters' concerns regarding 
packaging payment for potentially high-cost surgical procedures into 
the payment for an observation C-APC, we finalized a policy that claims 
reporting procedures assigned status indicator ``T'' do not qualify for 
payment through C-APC 8011, regardless of whether the procedure 
assigned status indicator ``T'' was furnished before or after 
observation services (described by HCPCS code G0378) were provided. In 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79562), we 
stated that services that would otherwise qualify for C-APC 8011 are 
not considered to be observation services when they are associated with 
a surgical procedure (assigned to status indicator ``T''). Instead, 
they are considered to be perioperative recovery, which is always 
packaged in with the surgical procedure. We will continue to review the 
impacts of this issue and may revisit it in future rulemaking.
    Comment: Two commenters expressed concerns with the C-APC 
methodology for surgical insertion codes for brachytherapy treatment, 
stating that these concerns impact beneficiary access to brachytherapy 
in the HOPD setting. These commenters stated that the C-APC methodology 
lacks the appropriate charge capture mechanisms to accurately reflect 
the services associated with the C-APC, that there are significant 
variations in the clinical practice and billing patterns in the 
hospital claims data used for ratesetting, and that the C-APC rates do 
not accurately or fully reflect the services and costs associated with 
the primary procedure. Commenters urged the agency to explore 
alternatives, including that CMS discontinue the C-APC policy for all 
brachytherapy insertion codes. Alternatively, one commenter suggested 
that CMS could continue to pay for ``J1'' brachytherapy insertion codes 
under the C-APC payment methodology but exclude and make separate 
payment for designated preparation and planning services in addition to 
the C-APC payment. Another commenter called for education on whether 
services, like brachytherapy, that are assigned to a J1 indicators and 
delivered over multiple patient encounters may be reported per 
encounter.
    Response: We appreciate the comments on the C-APC methodology. 
However, we believe that the current C-APC methodology is appropriately 
applied to surgical insertion for brachytherapy treatment procedures 
and is accurately capturing costs, particularly as the brachytherapy 
sources used for these procedures are excluded from C-APC packaging and 
are separately payable. We will evaluate if provider education may be 
appropriate in this circumstance. We will continue to examine these 
concerns and will determine if any modifications on this policy are 
warranted in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing the C-APCs as proposed. Table 5 lists the final C-APCs for 
CY 2025. All C-APCs are displayed in Addendum J to this CY 2025 OPPS/
ASC final rule with comment period (which is available via the internet 
on the CMS website). Addendum J to this final rule with comment period 
also contains all of the data related to the C-APC payment policy 
methodology, including the list of complexity adjustments and other 
information for CY 2025.
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    C-APC Clinical Family Descriptor Key:

AENDO = Airway Endoscopy
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, 
and Related Devices.
BREAS = Breast Surgery
COCHL = Cochlear Implant
EBIDX = Excision/Biopsy/Incision and Drainage
ENTXX = ENT Procedures
EPHYS = Cardiac Electrophysiology/
EVASC = Endovascular Procedures
EXEYE = Extraocular Ophthalmic Surgery
GIXXX = Gastrointestinal Procedures
GYNXX = Gynecologic Procedures
INEYE = Intraocular Surgery
LAPXX = Laparoscopic Procedures
NERVE = Nerve Procedures
NSTIM = Neurostimulators
ORTHO = Orthopedic Surgery
PUMPS = Implantable Drug Delivery Systems
RADTX = Radiation Oncology
SCTXX = Stem Cell Transplant

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UROXX = Urologic Procedures
VASCX = Vascular Procedures
WPMXX = Wireless PA Pressure Monitor
c. 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 mental health services and multiple imaging 
services. We refer readers to the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66611 through 66614 and 66650 through 66652) for 
a full discussion of the development of the composite APC methodology, 
and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) 
and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241, 
59242, and 59246 through 52950) for more recent background.
(1) Mental Health Services Composite APC
    For CY 2025, we proposed 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 (88 FR 49572). We refer readers to the April 7, 2000, 
OPPS final rule with comment period (65 FR 18452 through 18455) for the 
initial discussion of this longstanding policy and the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74168) for more recent 
background.
    In the CY 2018 OPPS/ASC proposed rule and final rule with comment 
period (82 FR 33580 and 33581 and 82 FR 59246 and 59247), we proposed 
and finalized the policy for CY 2018 and subsequent years that, when 
the aggregate payment for specified mental health services provided by 
one hospital to a single beneficiary on a single date of service, based 
on the payment rates associated with the APCs for the individual 
services, exceeds the maximum per diem payment rate for partial 
hospitalization services provided by a hospital, those specified mental 
health services will be paid through composite APC 8010 (Mental Health 
Services Composite). In addition, we set the payment rate for composite 
APC 8010 for CY 2018 at the same payment rate for APC 5863, which was 
the maximum partial hospitalization per diem payment rate for a 
hospital, and finalized a policy that the hospital would continue to be 
paid the payment rate for composite APC 8010. This policy applied in 
CYs 2018 through 2023.
    In the CY 2024 OPPS/ASC proposed rule, we stated that APC 5863 was 
no longer the maximum partial hospitalization per diem payment rate for 
a hospital due to the creation of APC 5864, which is four or more 
hospital-based PHP services per day (88 FR 49572). We solicited comment 
on whether APC 5864 would be appropriate to use as the daily mental 
health cap, as we have historically set the daily mental health cap for 
composite APC 8010 at the maximum partial hospitalization per diem 
payment rate for a hospital (88 FR 49572). Based on public comments 
received and our longstanding policy, in CY 2024 OPPS/ASC final rule, 
we finalized APC 5864, four hospital-based PHP services per day, as the 
daily mental health cap (88 FR 81566).
    We continue to believe that the costs associated with administering 
a partial hospitalization program represent the most resource intensive 
of all outpatient mental health services. For CY 2025 and subsequent 
years, we proposed to continue this policy that when the aggregate 
payment for specified mental health services provided by one hospital 
to a single beneficiary on a single date of service, based on the 
payment rates associated with the APCs for the individual services, 
exceeds the per diem payment rate for 4 partial hospitalization 
services provided in a day by a hospital (the payment amount for APC 
5864), those specified mental health services would be paid through 
composite APC 8010. In addition, we proposed to continue to set the 
payment rate for composite APC 8010 at the same payment rate that we 
propose for APC 5864, which is a partial hospitalization per diem 
payment rate for 4 partial hospitalization services furnished in a day 
by a hospital.
    Under the proposed policy, the Integrated OCE (I/OCE) would 
continue to determine whether to pay for these specified mental health 
services individually, or to make a single payment at the same payment 
rate established for APC 5864 for all the specified mental health 
services furnished by the hospital on that single date of service by 
paying for the services through composite APC 5863.
    Comment: One commenter recommended that CMS change the status 
indicator for two neuropsychological testing codes (HCPCS codes 96133 
and 96137) from SI = N to SI = Q3 to allow separate payment for 
additional hours of testing or increase the payment rate for the 
primary testing procedure codes. Noting the multiple day structure of 
neuropsychological testing, they requested a daily payment for each 
date of service. The commenters noted that the payment rate for 
Composite APC 8010, which is capped at the maximum per diem partial 
hospitalization rate, is lower than the individual HCPCS code APC 
payment rates and does not provide sufficient payment for these 
procedures.
    Response: After reviewing this issue, we believe the Composite APC 
methodology is being appropriately applied in this case. Composite APCs 
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.
    The words ``list separately in addition to code for primary 
procedure'' are included in the long descriptors for HCPCS codes 96133 
and 96137 to indicate that that the codes are considered ``add-ons'' to 
another primary code that cannot be reported independently. 
Specifically, add-on codes must always be reported with another primary 
code on the same day. The AMA states in the CPT 2024 Professional 
Edition (page xviii) that ``add-on codes are always performed in 
addition to the primary service or procedure and must never be reported 
as a stand-alone code.'' In most cases, add-on codes are typically 
ancillary and supportive to a primary diagnostic or therapeutic 
modality and are an integral part of the primary service they support. 
As specified under 42 CFR 419.2(b)(18), certain services described by 
add-on codes are generally packaged under the OPPS, and payments for 
the codes are bundled with the primary codes.

[[Page 93943]]

Consequently, HCPCS codes 96133 and 96137 are not paid separately under 
the OPPS, but instead, their payment is packaged into the primary code.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59246 
through 59247), we stated that the costs associated with administering 
a partial hospitalization program at a hospital represent the most 
resource intensive of all outpatient mental health services. We 
continue to believe that the Composite APC methodology, which limits 
the aggregate payment for specified mental health services provided by 
one hospital to a single beneficiary on a single date of service, based 
on the payment rates associated with the APCs for the individual 
services, to the per diem payment rate for four partial hospitalization 
services provided in a day by a hospital (the payment amount for APC 
5864), is appropriate.
    We will continue to examine these concerns and will determine if 
any modifications to this policy are warranted in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, that when the aggregate 
payment for specified mental health services provided by one hospital 
to a single beneficiary on a single date of service, based on the 
payment rates associated with the APCs for the individual services, 
exceeds the maximum per diem payment rate for four partial 
hospitalization services provided in a day by a hospital (the payment 
amount for APC 5864), those specified mental health services would be 
paid through composite APC 8010 for CY 2025. In addition, we are 
finalizing setting the payment rate for composite APC 8010 for CY 2025 
at the same payment rate that we set for APC 5864, which is the maximum 
partial hospitalization per diem payment rate for a hospital.
(2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital submits a claim for more than one imaging procedure within an 
imaging family on the same date of service, 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 6.
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement under section 
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging 
services provided with and without contrast. While the ultrasound 
procedures included under the policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be provided either with or without contrast. 
The five multiple imaging composite APCs established in CY 2009 are:
     APC 8004 (Ultrasound Composite);
     APC 8005 (CT and CTA without Contrast Composite);
     APC 8006 (CT and CTA with Contrast Composite);
     APC 8007 (MRI and MRA without Contrast Composite); and
     APC 8008 (MRI and MRA with Contrast Composite).
    We define the single imaging session for the ``with contrast'' 
composite APCs as having at least one or more imaging procedures from 
the same family performed with contrast on the same date of service. 
For example, if the hospital performs an MRI without contrast during 
the same session as at least one other MRI with contrast, the hospital 
will receive payment based on the payment rate for APC 8008, the ``with 
contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for payment based on the composite APC payment rate, which includes any 
packaged services furnished on the same date of service. The standard 
(noncomposite) APC assignments continue to apply for single imaging 
procedures and multiple imaging procedures performed across families. 
For a full discussion of the development of the multiple imaging 
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68559 through 68569).
    For CY 2025, we proposed to continue to pay for all multiple 
imaging procedures within an imaging family performed on the same date 
of service using the multiple imaging composite APC payment 
methodology. We continue to believe that this policy would reflect and 
promote the efficiencies hospitals can achieve when performing multiple 
imaging procedures during a single session.
    For CY 2025, except where otherwise indicated, we proposed to use 
the costs derived from CY 2023 claims data to set the proposed CY 2025 
payment rates. Therefore, for CY 2025, the proposed payment rates for 
the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, 
and 8008) were based on proposed geometric mean costs calculated from 
CY 2023 claims available for the CY 2025 OPPS/ASC proposed rule that 
qualify for composite payment under the current policy (that is, those 
claims reporting more than one procedure within the same family on a 
single date of service). To calculate the proposed geometric mean 
costs, we used the same methodology that we used to calculate the 
geometric mean costs for these composite APCs since CY 2014, as 
described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74918). The imaging HCPCS codes referred to as ``overlap bypass codes'' 
that we removed from the bypass list for purposes of calculating the 
proposed multiple imaging composite APC geometric mean costs, in 
accordance with our established methodology as stated in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74918), are identified 
by asterisks in Addendum N to this final rule with comment period 
(which is available via the internet on the CMS website) and are 
discussed in more detail in section II.A.1.a of the this final rule 
with comment period.
    For this final rule with comment period, we were able to identify 
approximately 0.95 million ``single session'' claims out of an 
estimated 2.1 million potential claims for payment through composite 
APCs from our ratesetting claims data, which represents approximately 
45.0 percent of all eligible claims, to calculate the final CY 2025 
geometric mean costs for the multiple imaging composite APCs. Table 6 
lists the final HCPCS codes that would be subject to the multiple 
imaging composite APC policy and their respective families and 
approximate composite APC final geometric mean costs for CY 2025.
    We did not receive any public comments on this policy. We are 
finalizing without modification our proposal to continue the use of 
multiple imaging composite APCs to pay for the provision of more than 
one imaging procedure from the same imaging family on the same date. 
Table 6 lists the HCPCS codes that will be subject to the multiple 
imaging composite APC policy and their respective imaging families and 
approximate composite APC final geometric mean costs for CY 2025.
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3. Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
    Like other prospective payment systems, the OPPS relies on the 
concept of averaging to establish a payment rate for services. The 
payment may be more or less than the estimated cost of providing a 
specific service or a bundle of specific services for a particular 
beneficiary. The OPPS packages payments for multiple interrelated items

[[Page 93948]]

and services into a single payment to create incentives for hospitals 
to furnish services most efficiently and to manage their resources with 
maximum flexibility. Our packaging policies support our strategic goal 
of using larger payment bundles in the OPPS to maximize hospitals' 
incentives to provide care in the most efficient manner. For example, 
where there are a variety of devices, drugs, items, and supplies that 
could be used to furnish a service, some of which are more costly than 
others, packaging encourages hospitals to use the most cost-efficient 
item that meets the patient's needs, rather than to routinely use a 
more expensive item, which may occur if separate payment is provided 
for the item.
    Packaging also encourages hospitals to effectively negotiate with 
manufacturers and suppliers to reduce the purchase price of items and 
services or to explore alternative group purchasing arrangements, 
thereby encouraging the most economical health care delivery. 
Similarly, packaging encourages hospitals to establish protocols that 
ensure that necessary services are furnished, while scrutinizing the 
services ordered by practitioners to maximize the efficient use of 
hospital resources. Packaging payments into larger payment bundles 
promotes the predictability and accuracy of payment for services over 
time. Finally, packaging may reduce the importance of refining service-
specific payments 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. 
Packaging encourages efficiency and is an essential component of a 
prospective payment system, therefore packaging payments for items and 
services that are typically integral, ancillary, supportive, dependent, 
or adjunctive to a primary service has been a fundamental part of the 
OPPS since its implementation in August 2000. 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, categories of items and 
services currently packaged in the OPPS are listed in 42 CFR 419.2(b). 
Our overarching goal is to make payments for all services under the 
OPPS more consistent with those of a prospective payment system and 
less like those of a per-service fee schedule, which pays separately 
for each coded item. As a part of this effort, we have continued to 
examine the payment for items and services provided under the OPPS to 
determine which OPPS services can be packaged to further achieve the 
objective of advancing the OPPS toward a more prospective payment 
system.
b. Final CY 2025 Policy on Packaged Items and Services
    For CY 2025, we examined the items and services currently provided 
under the OPPS, reviewing categories of integral, ancillary, 
supportive, dependent, or adjunctive items and services for which we 
believe payment would be appropriately packaged into payment for the 
primary service that they support. Specifically, we examined the HCPCS 
code definitions (including CPT code descriptors) and hospital 
outpatient department billing patterns to determine whether there were 
categories of codes for which packaging would be appropriate according 
to existing OPPS packaging policies or a logical expansion of those 
existing OPPS packaging policies.
    For CY 2025, we did not propose any changes to the overall 
packaging policy discussed. We proposed to continue to conditionally 
package the costs of selected newly identified ancillary services into 
payment for a primary service where we believe that the packaged item 
or service is integral, ancillary, supportive, dependent, or adjunctive 
to the provision of care that was reported by the primary service HCPCS 
code.
    While we did not propose any changes to the overall packaging 
policy, we proposed potential modifications to our packaging policy as 
described in the following sections.
    We did not receive any public comments on our overall packaging 
policy proposal and therefore, we are finalizing our proposal to 
continue to conditionally package the costs of selected newly 
identified ancillary services into payment for a primary service where 
we believe that the packaged item or service is integral, ancillary, 
supportive, dependent, or adjunctive to the provision of care that was 
reported by the primary service HCPCS code, as proposed for CY 2025.
    We did receive specific recommendations regarding C-APC packaging 
of Cell and Gene Therapies and associated products, which are addressed 
in section II.b.4 of this final rule with comment period, and the 
packaging of non-opioid treatments for pain relief, which are addressed 
in section XIII.E of this final rule with comment period. Additionally, 
commenters made recommendations on our packaging policies in the 
context of our diagnostic radiopharmaceutical proposal, which is 
discussed in the next section.
c. Payment for Diagnostic Radiopharmaceuticals
(1) Background on OPPS Packaging Policy for Diagnostic 
Radiopharmaceuticals
    Under the OPPS, we package several categories of nonpass-through 
drugs, biologicals, and radiopharmaceuticals, regardless of the cost of 
the products. Because the products are packaged according to the 
policies in Sec.  419.2(b), we refer to them as ``policy-packaged'' 
drugs, biologicals, and radiopharmaceuticals. In particular, under 
Sec.  419.2(b)(15), payment for drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure is packaged with the payment for the 
related procedure or service. Packaging costs into a single aggregate 
payment for a service, encounter, or episode of care is a fundamental 
principle that distinguishes a prospective payment system from a fee 
schedule. In general, packaging the costs of supportive items and 
services into the payment for the primary procedure or service with 
which they are associated encourages hospital efficiencies and enables 
hospitals to manage their resources with maximum flexibility.
    In the CY 2008 OPPS/ASC final rule with comment period we finalized 
the packaging status of diagnostic radiopharmaceuticals as part of our 
overall enhanced packaging approach for the CY 2008 OPPS and subsequent 
years (72 FR 66635 through 66641). Importantly, we believed diagnostic 
radiopharmaceuticals are always intended to be used with a diagnostic 
nuclear medicine procedure and function as supplies when used in a 
diagnostic test or procedure, making it appropriate to package the 
payment for the diagnostic radiopharmaceutical into the payment for the 
related nuclear medicine procedure. Diagnostic radiopharmaceuticals are 
one specific type of product that is policy packaged under the category 
described by Sec.  419.2(b)(15). Since we implemented this policy in CY 
2008, interested parties have raised concerns regarding policy 
packaging of diagnostic radiopharmaceuticals. In previous rulemaking 
(87 FR 71962 and 71963), commenters recommended that CMS always pay 
separately under the OPPS for diagnostic radiopharmaceuticals, not just 
when the products have pass-through payment status. Many of these 
commenters mentioned that pass-

[[Page 93949]]

through payment status helps the diffusion of new diagnostic 
radiopharmaceuticals into the market. However, commenters believe the 
packaged payment rate is often inadequate after pass-through status 
expires, especially in cases where the diagnostic radiopharmaceutical 
is high-cost and has low utilization.
    We have heard from interested parties regarding alternative payment 
methodologies, such as subjecting diagnostic radiopharmaceuticals to 
the drug packaging threshold and creating separate APC payments for 
diagnostic radiopharmaceuticals with a per-day cost greater than $500. 
Interested parties have also recommended that we analyze our nuclear 
medicine APC structure and consider establishing additional nuclear 
medicine APCs to reflect the costs of diagnostic radiopharmaceuticals 
more accurately. Historically, commenters opposed incorporating the 
cost of diagnostic radiopharmaceuticals into the associated nuclear 
medicine APC as the nuclear medicine APCs are sometimes paid at a lower 
rate than the payment rate for the diagnostic radiopharmaceutical 
itself when it has pass-through payment status (87 FR 71962 and 71963).
    Importantly, commenters historically have also been concerned that 
packaging payment for precision diagnostic radiopharmaceuticals in the 
outpatient hospital setting creates barriers to beneficiary access for 
safety net hospitals serving a high proportion of Medicare 
beneficiaries and hospitals serving underserved communities (87 FR 
71962 and 71963). Commenters specified that certain populations, such 
as those with Alzheimer's disease, depend on the use of certain high-
cost diagnostic radiopharmaceuticals. Commenters discussed difficulties 
enrolling hospitals in clinical studies due to OPPS packaging policies 
and suggested that we pay separately under the OPPS specifically for 
radiopharmaceuticals that are used for Alzheimer's disease. 
Additionally, commenters have recommended that CMS continue to apply 
radiolabeled product edits to the nuclear medicine procedures to ensure 
that all packaged costs are included on nuclear medicine claims to 
establish appropriate payment rates in the future. Beginning January 1, 
2008, CMS implemented OPPS edits that require hospitals to include a 
HCPCS code for a radiolabeled product when a separately payable nuclear 
medicine procedure is present on a claim. This policy to require 
hospitals to include a HCPCS code for a radiolabeled product for a 
separately payable nuclear medicine procedure ended in CY 2014 (78 FR 
75033 through 75034).
    Many of these comments and our responses have been discussed in 
rulemaking since the policy to package diagnostic radiopharmaceuticals 
was adopted, and they prompted us to solicit comment on payment for 
diagnostic radiopharmaceuticals in the CY 2024 OPPS/ASC proposed rule 
(88 FR 49577). In that proposed rule, we stated we continue to believe 
that diagnostic radiopharmaceuticals are an integral component of many 
nuclear medicine and imaging procedures and charges associated with 
them should be reported on hospital claims to the extent they are used. 
Accordingly, we reiterated our belief that the payment for the 
diagnostic radiopharmaceutical should be reflected within the payment 
for the primary procedure with which it is used. We noted that 
ratesetting uses the geometric mean of reported procedure costs, which 
in the example of nuclear medicine procedures includes the costs of the 
reported diagnostic radiopharmaceutical, based on data submitted to CMS 
from all hospitals paid under the OPPS to set the payment rate for the 
service. The costs that are calculated by Medicare reflect the average 
costs of items and services that are packaged into a primary procedure 
and will not necessarily equal the sum of the cost of the primary 
procedure and the Average Sales Price (ASP) of the specific items and 
services used in the procedure in each case. Furthermore, we explained 
that the costs are based on the reported costs submitted to Medicare by 
the hospitals and not the list price established by the manufacturer. 
Claims data that include the diagnostic radiopharmaceutical packaged 
with the associated procedure should reflect the combined cost of the 
procedure and the radiopharmaceutical used in the procedure.
    As we have reiterated over the years, we believe packaging policies 
are inherent principles of the OPPS and are essential to a prospective 
payment system. At the same time, we have explained that we are 
committed to ensuring beneficiary access to diagnostic 
radiopharmaceuticals while also ensuring the availability of new and 
innovative diagnostic tools for Medicare beneficiaries. Therefore, we 
sought public comments on potential modifications to our packaging 
policy for diagnostic radiopharmaceuticals to ensure equitable payment 
and continued beneficiary access.
    As described in the CY 2024 OPPS/ASC proposed rule (88 FR 49578), 
we solicited comment on how the OPPS packaging policy for diagnostic 
radiopharmaceuticals has impacted beneficiary access, including whether 
there are specific patient populations or clinical disease states for 
whom this issue is especially critical.
    In addition, we solicited comment on the following potential 
approaches that would enhance beneficiary access, while also 
maintaining the principles of the outpatient prospective payment 
system. These approaches included: (1) paying separately for diagnostic 
radiopharmaceuticals with per-day costs above the OPPS drug packaging 
threshold of $140; (2) establishing a specific per-day cost threshold 
that may be greater or less than the OPPS drug packaging threshold; (3) 
restructuring APCs, including by adding nuclear medicine APCs for 
services that utilize high-cost diagnostic radiopharmaceuticals; (4) 
creating specific payment policies for diagnostic radiopharmaceuticals 
used in clinical trials; and (5) adopting codes that incorporate the 
disease state being diagnosed or a diagnostic indication of a 
particular class of diagnostic radiopharmaceuticals.
    Finally, we were interested in hearing from stakeholders how the 
suggested policy modifications might impact our overarching goal of 
utilizing packaging policies to better align OPPS policies with those 
of a prospective payment system rather than a fee schedule. We stated 
we would also like to know if making any of the suggested policy 
changes could have negative consequences for beneficiaries, such as 
unintentionally influencing clinical practice decisions, increasing 
beneficiary cost-sharing obligations, or inadvertently encouraging the 
use of higher-cost diagnostic radiopharmaceuticals over lower cost, but 
equally effective, diagnostic options.
    We received a significant number of comments in response to the 
comment solicitation on potential issues caused by our current payment 
policy for diagnostic radiopharmaceuticals under the OPPS and on new 
approaches to payment for these products. Commenters expressed concerns 
regarding the CMS policy to package diagnostic radiopharmaceuticals and 
the financial implications this policy has for facilities. Commenters 
believe that, for newer, more innovative radiopharmaceuticals, the 
current OPPS packaging policy has led to a lack of patient access to 
the technologies after the radiopharmaceutical's pass-through status 
expires, especially if there is no clinical alternative to the 
radiopharmaceutical. Most commenters requested that CMS provide 
separate payment for diagnostic

[[Page 93950]]

radiopharmaceuticals. Some commenters believed paying separately for 
all diagnostic radiopharmaceuticals regardless of their per-day cost 
was the best methodology to avoid encouraging price inflation for 
diagnostic radiopharmaceuticals to reach a certain threshold. Other 
commenters thought that applying the existing OPPS per-day cost 
threshold ($135 for CY 2024) to the payment of diagnostic 
radiopharmaceuticals would be an adequate solution. Others supported a 
$500 threshold, and many cited the Facilitating Innovative Nuclear 
Diagnostics Act (FIND Act) of 2023 as their rationale for that number 
and recognized that the $500 threshold number may be a more targeted 
approach relative to the OPPS drug packaging threshold as the higher 
cost diagnostic radiopharmaceuticals are the most disadvantaged by the 
OPPS packaging policy in their view. For the full discussion on the 
comment solicitation summarized here, refer to the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81573 through 81577).
(2) Packaging Threshold for Diagnostic Radiopharmaceuticals
    As stated in the CY 2024 OPPS final rule with comment period (88 FR 
81577), we agree with commenters that payment for diagnostic 
radiopharmaceuticals is a complex and important issue. We explained 
that we intended to further consider these points and take them into 
consideration for future notice and comment rulemaking. As described in 
the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222), after 
significant consideration and ongoing engagement from interested 
parties, we proposed a change to our current policy that packages 
diagnostic radiopharmaceuticals regardless of their cost.
    We continue to believe diagnostic radiopharmaceuticals are always 
intended to be used with a diagnostic nuclear medicine procedure and 
function as supplies when used in a diagnostic test or procedure, 
generally making it appropriate to package payment for them with 
payment for the related nuclear medicine procedure. In the CY 2025 
OPPS/ASC proposed rule (89 FR 59213 through 59222), we stated that 
while we continue to believe that this should be the policy for most 
diagnostic radiopharmaceuticals, we believe there are certain 
situations in which the packaged payment amount attributed to the 
diagnostic radiopharmaceutical used in an imaging procedure assigned to 
a nuclear medicine APC may not adequately account for the cost of a 
diagnostic radiopharmaceutical that has a significantly higher cost, 
but lower utilization relative to the other diagnostic 
radiopharmaceuticals that may be used with the procedure. In situations 
where a hospital may have to pay significantly more to purchase a 
diagnostic radiopharmaceutical than Medicare pays, a hospital may 
decide not to provide that specific diagnostic radiopharmaceutical 
imaging agent to Medicare beneficiaries. This could potentially deny 
access to diagnostic tools for which there is no clinical alternative. 
To ensure Medicare payment policy is not providing a financial 
disincentive to using high cost, low utilization diagnostic 
radiopharmaceuticals, especially when those agents may be the most 
clinically appropriate, and to ensure appropriate beneficiary access, 
we believe a subset of diagnostic radiopharmaceuticals with higher per 
day costs should be paid separately and not packaged into the 
diagnostic procedure with which the diagnostic radiopharmaceutical is 
used.
    To address these concerns, we proposed to pay separately for any 
diagnostic radiopharmaceutical with a per day cost greater than $630. 
Any diagnostic radiopharmaceutical with a per day cost below that 
threshold would continue to be policy packaged under the current policy 
at Sec.  419.2(b)(15). We discuss our proposed methodology for 
determining the proposed per day cost threshold of $630 in further 
detail in this section.
    To determine an appropriate threshold for our proposal, we 
estimated the approximate payment that would typically be attributable 
to diagnostic radiopharmaceutical payment within each nuclear medicine 
APC (APCs 5591, 5592, 5593, and 5594). We did this by assessing the 
offsets associated with these APCs that were directly attributable to 
``policy packaged'' drugs. The offset amounts used are correlated with 
the approximate portion of APC payment associated with these ``policy 
packaged'' drugs. For nuclear medicine APCs, the primary ``policy 
packaged'' drugs are diagnostic radiopharmaceuticals. To calculate this 
threshold, we calculated a volume weighted average of the offset dollar 
amount of each nuclear medicine APC. This involved taking the offset 
percentage for ``policy packaged'' drugs, multiplying it by the APC 
geometric mean to get an offset dollar amount, and then multiplying 
that offset amount by the number of single claims to get the total 
offset amount for each nuclear medicine APC level. We then calculated 
the sum of the total offset amount for all 4 of the nuclear medicine 
APCs. We divided this number by the total number of single claims for 
all 4 nuclear medicine APCs, resulting in $314.28, which represents the 
volume weighted average policy packaged offset amount for the nuclear 
medicine APC series. We then took that number and multiplied it by 2, 
and rounded it to the nearest $5 increment, which resulted in $630. See 
Table 7 for the values used to calculate this threshold amount. We 
noted that the data values in Table 7 were collected without 
unpackaging the set of diagnostic radiopharmaceuticals listed in Table 
8. We noted that if we finalized our proposal and those diagnostic 
radiopharmaceuticals were unpackaged, it would change the APC geometric 
mean unit costs (MUCs) as well as the offset percentages. This is why 
the APC geometric mean cost values listed below are not the same as in 
the addenda to this rule.

[[Page 93951]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.011

    The offset percentages used were updated based on the available 
data for the CY 2025 proposed rule and these offset percentages are 
usually the offsets that are published in the final rule. However, we 
included the data in Table 7 to illustrate how we arrived at the 
proposed $630 threshold. Additionally, the file and corresponding 
offset percentages used for the $630 threshold are similar to and 
consistent with the ones that can be found in the CY 2024 NFRM APC 
Offset File. These files are available via the internet on the CMS OPPS 
website.\7\
---------------------------------------------------------------------------

    \7\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/annual-policy-files.
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    We proposed to multiply by two the volume weighted average amount 
of the offset to establish the threshold triggering separate payment 
because this amount would ensure that separate payment would apply only 
to diagnostic radiopharmaceuticals whose costs significantly exceed the 
approximate amount of payment already attributed to the product in the 
nuclear medicine APC payment. This is consistent with the principles of 
a prospective payment system where some payments are lower than 
hospitals' costs while other payments are greater than a hospitals' 
costs. However, diagnostic radiopharmaceuticals with costs more than 
double the volume weighted average amount of the offset could present a 
hospital with a significant financial loss. This is why the OPPS has 
several payment provisions that rely on a multiplier of costs as a 
threshold for modifying payment.
    Our proposed approach to multiply the average offset amount by two 
is consistent with the two-times rule the OPPS uses to determine 
Ambulatory Payment Classification (APC) levels, where a significant 
service that has a cost greater than two times the lowest cost 
significant service in an APC is generally moved to a higher level APC 
in the series. The two-times rule requires that the highest calculated 
cost of an individual procedure categorized to any given APC cannot 
exceed two times the calculated cost of the lowest cost procedure 
categorized to that same APC. We note that the two-times rule does not 
apply to diagnostic radiopharmaceuticals themselves, but only to the 
procedures in which they are used, which is why we are proposing a 
diagnostic radiopharmaceutical packaging threshold utilizing a similar 
two-times methodology.
    As described in the CY 2025 OPPS/ASC proposed rule (89 FR 59213 
through 59222), our proposed approach to multiply the average offset 
amount by two is also generally consistent with the OPPS outlier policy 
applicable to certain high-cost procedures, where costs greater than 
1.75 times the APC payment trigger an additional outlier payment. 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. Outlier payments are provided on a service basis when 
the cost of a service exceeds the APC payment amount multiplier 
threshold (1.75) as well as the APC payment amount plus a fixed-dollar 
amount threshold. The proposed diagnostic radiopharmaceutical packaging 
threshold would serve a similar purpose as the outlier policy, in that 
it would provide payments to hospitals to help mitigate the financial 
risk associated with high-cost diagnostic radiopharmaceuticals, where a 
very costly diagnostic radiopharmaceutical could present a hospital 
with significant financial loss.
    We proposed a multiplier of two and explained that we believe two 
is the most appropriate number for the multiplier for the volume 
weighted average amount of the offset, but we sought comment on the 
alternatives of using 1.75 times the volume weighted average amount of 
the offset as the threshold amount for triggering separate payment, or 
another appropriate multiplier amount. We stated that, for example, an 
interested party could present data that a financial disincentive to 
use diagnostic radiopharmaceuticals exists when costs are 1.75 times, 
or three times or five times, the volume weighted average offset 
amount. Since the hospital outpatient outlier payment policy is a 
longstanding policy familiar to most hospitals, we sought comment on 
utilizing elements of that policy for purposes of our proposed 
diagnostic radiopharmaceutical packaging policy in order to help 
hospitals mitigate the financial risk that may be associated with 
furnishing high-cost and complex diagnostic radiopharmaceuticals. As 
previously mentioned, we sought comment on the use of 1.75 times as the 
multiplier threshold rather than 2. Although the outlier policy uses 
both a 1.75 multiplier threshold and a fixed-dollar threshold, we 
sought comment regarding the use of 1.75 as the multiplier to set a 
fixed dollar threshold for the volume weighted average amount of the 
offset as the goals of the

[[Page 93952]]

outlier policy and the proposed diagnostic radiopharmaceutical policy 
are similar.
    We also solicited comment on the alternative of using the standard 
drug packaging threshold, which was proposed to be $140 for CY 2025 and 
is being finalized as $140 for CY 2025 in section V.B of this final 
rule with comment period, as the threshold for separate payment for 
diagnostic radiopharmaceuticals. We believe that diagnostic 
radiopharmaceuticals are functioning as supplies to the nuclear 
medicine procedure in which they are used. Because diagnostic 
radiopharmaceuticals function as supplies in the diagnostic procedures 
in which they are used, they are serving as an item that is integral, 
ancillary, supportive, dependent, or adjunctive to the primary 
diagnostic service. This is in contrast to therapeutic drugs, 
biologicals, and therapeutic radiopharmaceuticals that are typically 
packaged under the standard drug packaging threshold. These products 
could be the only therapeutic modality provided to a patient during an 
encounter and may not serve as an item that is integral, ancillary, 
supportive, dependent, or adjunctive to the primary service. Due to 
this clinical difference, we did not believe that using the standard 
drug packaging threshold was appropriate for diagnostic 
radiopharmaceuticals, and therefore we proposed a threshold specific to 
diagnostic radiopharmaceuticals. As stated in the CY 2025 OPPS/ASC 
proposed rule (89 FR 59213 through 59222), we were interested to hear 
from commenters whether they agreed or disagreed with this assessment.
    Comment: A significant portion of commenters provided broad support 
for CMS's overall proposal regarding payment for diagnostic 
radiopharmaceuticals, stating that this policy will ensure access for 
Medicare beneficiaries, empower clinicians to make the best treatment 
decisions, and encourage innovation from industry. Commenters 
frequently stated that this policy will ensure access for 
underrepresented populations, which often have higher rates of disease 
but lower rates of detection.
    Response: We thank commenters for their support.
    Comment: Many commenters were supportive of CMS's proposal 
regarding separate payment for diagnostic radiopharmaceuticals, 
including the packaging threshold of $630. Commenters appreciated that 
CMS was targeting those products with costs that significantly exceeded 
the amount of the current packaged payment. These commenters supported 
the overall methodology and rationale for the calculation of the 
threshold, which was based on the approximate payment that would 
typically be attributable to diagnostic radiopharmaceuticals within 
each nuclear medicine APC by assessing the offsets associated with 
these APCs that were directly attributable to ``policy packaged'' 
drugs. Commenters generally agreed with using two times this amount to 
establish the threshold as they agreed it correlated with the statutory 
OPPS two times rule.
    Response: We thank commenters for their support of our proposal to 
create a $630 threshold and the associated methodology used to 
calculate that threshold.
    Comment: While many commenters were supportive of CMS's proposed 
$630 using the two times threshold multiplier, several said they also 
would not be opposed to a 1.75 multiplier, which would result in a $550 
threshold. Other commenters advocated solely for a 1.75 multiplier 
citing consistency with the OPPS outlier policy, which they believed is 
a more appropriate comparator policy than the OPPS two times rule.
    Response: 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. Outlier payments are provided on a service 
basis when the cost of a service exceeds the APC payment amount 
multiplier threshold (1.75) as well as the APC payment amount plus a 
fixed-dollar amount threshold. An outlier payment is triggered when the 
cost of a service exceeds two different thresholds, a fixed dollar 
threshold and a multiplier threshold. A 1.75 multiplier is appropriate 
for the outlier payment policy as it is combined with a secondary 
fixed-dollar threshold, which is appropriate for the broader OPPS 
outlier policy which can apply to a large number of services with 
vastly different costs and payment amounts. For the OPPS outlier 
policy, two separate thresholds must be surpassed in order for separate 
payment to be made. We believe the lower 1.75 multiplier is appropriate 
for the outlier policy as there is also a secondary threshold that must 
be met to trigger outlier payments. The single threshold for separate 
payment for diagnostic radiopharmaceuticals would apply to a much 
narrower range of products; therefore, we do not believe the same two-
threshold system used for OPPS outlier payments is practical. This 
makes a single threshold more appropriate, and because we are using a 
single threshold, we believe the higher two times multiplier is more 
appropriate, as there is not a secondary threshold that must also be 
surpassed. We believe our proposed approach to multiply the average 
offset amount by two to set the threshold is the most appropriate 
approach to determining this threshold, as this results in only those 
products whose costs significantly exceed, by two-times, the 
approximate amount of payment already attributed to the product in the 
nuclear medicine APC payment. This multiplier is consistent with the 
two-times rule the OPPS uses to determine Ambulatory Payment 
Classification (APC) levels, which also uses a single two times 
multiplier, rather than a two-threshold system like the OPPS outlier 
policy. The OPPS two times rule instructs that a significant service 
that has a cost greater than two times the lowest cost significant 
service in an APC is generally moved to a higher-level APC in the 
series. The two-times rule requires that the highest calculated cost of 
an individual procedure categorized to any given APC cannot exceed two 
times the calculated cost of the lowest cost procedure assigned to that 
same APC. A two times multiplier ensures that separate payment would 
apply only to diagnostic radiopharmaceuticals whose costs significantly 
exceed the approximate amount of payment already attributed to the 
product in the nuclear medicine APC payment.
    Comment: A few commenters suggested other thresholds, such as the 
OPPS drug packaging threshold, in order to treat diagnostic 
radiopharmaceuticals in a similar manner as other drugs, biologicals, 
and therapeutic radiopharmaceuticals paid under the OPPS. Commenters 
also believed that using a lower threshold actually decreased the 
likelihood that a provider would be financially incentivized to use a 
product above the threshold, as more products would be paid separately 
using a lower threshold. They believed a lower threshold decreased the 
likelihood of a non-clinical financial incentive to use a higher cost 
radiopharmaceutical. Other commenters believed using a $500 threshold 
would be appropriate as it coincided with the figure used for separate 
payment for diagnostic radiopharmaceuticals in draft legislation, 
titled the Facilitating Innovative Nuclear Diagnostics (FIND) Act. 
Commenters also suggested using an alternative threshold multiplier, 
such as 1.51, 1.50, or 1.25. These commenters thought these lower 
thresholds would

[[Page 93953]]

allow for more products to be paid separately and argued a cost for a 
diagnostic radiopharmaceutical even 25 percent higher than the average 
diagnostic radiopharmaceutical cost could be considered significant and 
warrant separate payment. Two commenters suggested reassessing the 
threshold based on the changing costs of products over time or 
assessing which products are driving the APC payments and then setting 
the threshold higher than the cost of those high-volume products.
    Response: We thank commenters for their comments; however, we 
believe the commenters' suggested thresholds are inconsistent with our 
OPPS two-times rule as described, which we believe is a longstanding 
and reasonable proxy for determining when costs exceed payment to a 
degree that warrants payment modification. The two-times rule utilizes 
a two times multiplier to determine APC levels, where a significant 
service that has a cost greater than two times the lowest cost 
significant service in an APC is generally moved to a higher-level APC 
in the series. The lower thresholds suggested by commenters would not 
follow this principle, and therefore, would not exclusively identify 
diagnostic radiopharmaceuticals whose costs significantly exceed the 
approximate amount of payment already attributed to the product in the 
nuclear medicine APC payment. We believe diagnostic 
radiopharmaceuticals are unique and therefore warrant their own 
specific threshold that is distinct from the broader drug packaging 
threshold used for therapeutic drugs, biologicals, and 
radiopharmaceuticals. This is because diagnostic radiopharmaceuticals 
are functioning as supplies to the nuclear medicine procedure in which 
they are used and are serving as an item that is integral, ancillary, 
supportive, dependent, or adjunctive to the primary diagnostic service. 
This is in contrast to therapeutic drugs, biologicals, and therapeutic 
radiopharmaceuticals that are typically packaged under the standard 
drug packaging threshold. These products could be the only therapeutic 
modality provided to a patient during an encounter and may not serve as 
an item that is integral, ancillary, supportive, dependent, or 
adjunctive to the primary service. Due to these differences, we believe 
a threshold specific to diagnostic radiopharmaceuticals is appropriate.
    Comment: Some commenters advocated that CMS use a threshold of at 
least $630. Several commenters believed that focusing separate payment 
on those radiopharmaceuticals whose costs significantly exceed the 
payment already attributable to the product will help concentrate the 
effects of unbundling on only those products that are most likely to 
create access issues for beneficiaries while reducing the broader 
effects on the nuclear medicine APCs. One commenter stated that 
unpackaging radiopharmaceuticals with per day costs greater than $630 
would decrease the nuclear medicine APC procedure payment rates, but 
that decrease would be exacerbated if CMS used a lower threshold.
    Response: We thank commenters for their support. We agree a $630 
threshold would appropriately identify only those diagnostic 
radiopharmaceuticals whose costs significantly exceed the approximate 
amount of payment already attributed to the product in the nuclear 
medicine APC payment.
    Comment: Several commenters requested that CMS clarify that the 
proposal does not alter the qualifications for pass-through payment 
status or the pass-through payment methodology for those diagnostic 
radiopharmaceuticals that apply for pass-through status under the OPPS.
    Response: That is correct. This policy is distinct from the 
policies described in section V.A of this final rule with comment 
period, which describe the qualifications and payment methodology for 
those products that qualify for OPPS pass-through status.
    Comment: A few commenters recommended CMS monitor the effects of 
this policy if finalized. For example, one commenter supported the 
proposal, but suggested CMS carefully monitor the affected nuclear 
medicine APCs and address any larger than expected alterations to their 
reimbursement or other unintended consequences. An additional commenter 
encouraged CMS to continue to evaluate this methodology as new products 
enter the market. This commenter recommended CMS ensure no unintended 
consequences of this policy occur, such as manufacturers purposefully 
pricing their products just above the payment threshold.
    Response: We thank the commenter for their support. We will monitor 
the effects of this policy and will consider proposing modifications in 
future rulemaking if appropriate.
    Comment: One commenter sought clarification from CMS that, if 
finalized, its proposal to provide separate payment for diagnostic 
radiopharmaceutical products would be implemented in a budget neutral 
manner.
    Response: Yes. This policy will be implemented in a budget neutral 
manner.
    After consideration of the public comments we received, we are 
finalizing this aspect of our proposal without modification and will 
pay separately for any diagnostic radiopharmaceutical with a per day 
cost greater than $630 for CY 2025. Any diagnostic radiopharmaceutical 
with a per day cost at or below that threshold will continue to be 
policy packaged under the current policy at Sec.  419.2(b)(15).
(3) Calculating the Per Day Cost of Diagnostic Radiopharmaceuticals
    We proposed to calculate the per day costs for diagnostic 
radiopharmaceuticals using a methodology similar to the one we use for 
determining the per day costs of drugs and biologicals for comparison 
to the OPPS drug packaging threshold, proposed to be $140 for CY 2025.
    We proposed to calculate the per day cost based on the methodology 
described in section V.B.1.b of the CY 2025 OPPS/ASC proposed rule, 
which relies on the methodology in the CY 2006 OPPS/ASC proposed rule 
(70 FR 42723 and 42724) and finalized in the CY 2006 OPPS final rule 
with comment period (70 FR 68636 through 68638). Though the clinical 
use of the drugs, biologicals, and therapeutic radiopharmaceuticals 
differs from diagnostic radiopharmaceuticals, we believe the method of 
determining how much of that item is used per day should be similar. 
Therefore, we proposed to use a similar methodology for determining the 
per day costs of diagnostic radiopharmaceuticals, as we do drugs, 
biologicals, and therapeutic radiopharmaceuticals. This methodology 
consists of nine steps:
    Step 1. After application of the CCRs, we aggregated all line-items 
for a single date of service on a single claim for each product. This 
resulted in creation of a single line-item with the total number of 
units and the total cost of a diagnostic radiopharmaceutical given to a 
patient in a single day.
    Step 2. We then created a separate record for each diagnostic 
radiopharmaceutical by date of service, regardless of the number of 
lines on which the diagnostic radiopharmaceutical was billed on each 
claim. For example, ``diagnostic radiopharmaceutical X'' is billed on a 
claim with two different dates of service, and for each date of 
service, the diagnostic radiopharmaceutical is billed on two line-items 
with a cost of $10 and 5 units for each line-item. In this case,

[[Page 93954]]

the computer program would create two records for this diagnostic 
radiopharmaceutical, and each record would have a total cost of $20 and 
10 units of the product.
    Step 3. We trimmed records with unit counts per day greater or less 
than 3 standard deviations from the geometric mean.
    Step 4. For each remaining record for a diagnostic 
radiopharmaceutical, we calculated the cost per unit of the diagnostic 
radiopharmaceutical. If the HCPCS descriptor for ``diagnostic 
radiopharmaceutical X'' is ``per 1 millicurie'' and one record was 
created for a total of 10 millicurie (as indicated by the total number 
of units for the diagnostic radiopharmaceutical on the claim for each 
unique date of service), the computer program divided the total cost 
for the record by 10 to give a per unit cost. We then weighted this 
unit cost by the total number of units in the record. We did this by 
generating a number of line-items equivalent to the number of units in 
that particular claim. Thus, a claim with 100 units of ``diagnostic 
radiopharmaceutical X'' and a total cost of $200 would be given 100 
line-items, each with a cost of $2, while a claim of 50 units with a 
cost of $50 would be given 50 line items, each with a cost of $1.
    Step 5. We trimmed the unit records with cost per unit greater or 
less than 3 standard deviations from the geometric mean.
    Step 6. We aggregated the remaining unit records to determine the 
mean cost per unit of the diagnostic radiopharmaceutical.
    Step 7. Using only the records that remained after records with 
unit counts per day greater or less than 3 standard deviations from the 
geometric mean were trimmed (step 3), we determined the total number of 
units billed for each item and the total number of unique per-day 
records for each item. We divided the count of the total number of 
units by the total number of unique per day records for each item to 
calculate an average number of units per day.
    Step 8. We used the payment rate (the mean unit cost (MUC) derived 
from the CY 2023 hospital claims data) for each diagnostic 
radiopharmaceutical and multiplied the payment rate by the average 
number of units per day for each diagnostic radiopharmaceutical to 
arrive at its per day cost.
    Step 9. We packaged the items with per day costs less than or equal 
to $630 and designated items with per day costs greater than $630 as 
separately payable.
    As just described, to determine the proposed CY 2025 packaging 
status for all nonpass-through diagnostic radiopharmaceuticals, we 
proposed to use the per day cost, calculated on a HCPCS code-specific 
basis, of each diagnostic radiopharmaceutical that had a HCPCS code in 
CY 2023 and was paid (via packaged or separate payment) under the OPPS. 
We used data from CY 2023 claims processed through December 31, 2023, 
for this calculation.
    We proposed to continue to package payment for diagnostic 
radiopharmaceuticals with per day costs less than or equal to $630 
under our existing packaging policy for diagnostic radiopharmaceuticals 
that function as surgical supplies under Sec.  419.2(b)(15). Similar to 
our policy for the drug packaging threshold, we proposed to use updated 
claims data to make final determinations of the packaging status of 
HCPCS codes for diagnostic radiopharmaceuticals for each OPPS/ASC final 
rule with comment period. We proposed to make an annual packaging 
determination for each diagnostic radiopharmaceutical HCPCS code only 
when we develop the OPPS/ASC final rule with comment period for the 
update year. We proposed that only diagnostic radiopharmaceutical HCPCS 
codes that are identified as separately payable in this final rule with 
comment period would be subject to quarterly updates.
    Consequently, the packaging status of some HCPCS codes for 
diagnostic radiopharmaceuticals in the OPPS/ASC proposed rule may 
differ from the same HCPCS codes' packaging status determined based on 
the data used for the final rule with comment period. Under these 
circumstances, we proposed to follow the established policies for the 
OPPS drug packaging threshold, which were initially adopted for the CY 
2005 OPPS (69 FR 65780), to more equitably pay for those diagnostic 
radiopharmaceuticals whose costs fluctuate relative to the proposed CY 
2025 OPPS diagnostic radiopharmaceutical packaging threshold in a way 
that affects the product's payment status (packaged or separately 
payable). Our policy for the OPPS drug packaging threshold has not 
changed for many years and is the same as described in the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70434). We believe these 
same policies should apply to diagnostic radiopharmaceuticals in order 
to ensure payment consistency for those diagnostic radiopharmaceuticals 
whose costs fluctuate relative to the proposed CY 2025 OPPS diagnostic 
radiopharmaceutical packaging threshold. For CY 2025, similar to our 
historical practice for the drug packaging threshold, we proposed to 
apply the following policies to those HCPCS codes for diagnostic 
radiopharmaceuticals whose relationship to the diagnostic 
radiopharmaceutical packaging threshold changes based on the final 
updated data: HCPCS codes for diagnostic radiopharmaceuticals that are 
proposed for separate payment in CY 2025, and that then have per day 
costs equal to or less than the CY 2025 final rule diagnostic 
radiopharmaceutical packaging threshold, based on the updated hospital 
claims data used for the CY 2025 final rule, would remain packaged in 
CY 2025. HCPCS codes for diagnostic radiopharmaceuticals for which we 
proposed packaged payment in CY 2025 but that then have per-day costs 
greater than the CY 2025 final rule drug packaging threshold, based on 
updated hospital claims data used for the CY 2025 final rule, would 
receive separate payment in CY 2025.
    Comment: Most commenters were supportive of the methodology used to 
calculate the per day costs, and many commenters were able to analyze 
the cost data published with the proposed rule and calculate the same 
list of products with per day costs exceeding $630.
    Response: We thank commenters for their support of our proposal, 
and for their agreement with our calculations of the per day costs.
    Comment: A few commenters recommended CMS consider alternative 
methods of calculating per day costs and make refinements in the future 
as we gain more experience with this policy.
    Response: We thank commenters for their input. Our methods for 
calculating per day cost are consistent with our longstanding policies 
for calculating per day costs for purposes of the OPPS drug packaging 
threshold and we believe they should be finalized for CY 2025 and 
subsequent years. We could address this methodology in future 
rulemaking if the need arises; however, this methodology has worked 
effectively for calculating per day costs of drugs, biologicals and 
radiopharmaceuticals for purposes of the OPPS drug packaging threshold, 
and we believe this well-known process will work equally well for 
diagnostic radiopharmaceuticals to create a trimmed data set from which 
from per day costs can be calculated.
    Comment: Many commenters recommended that CMS not apply the 
proposed packaging rules in 2025 and pay separately for any product 
that was proposed for separate payment or that exceeds the cost 
threshold in the final rule data. Commenters stated that CMS

[[Page 93955]]

should only consider applying its proposed methodology after the 
separate payment threshold has been in effect for a reasonable period 
of time. Specifically, commenters recommended that HCPCS codes for 
diagnostic radiopharmaceuticals that are proposed for separate payment 
in CY 2025, and that then have per day costs equal to or less than the 
threshold for the final rule, be separately paid. Similarly, commenters 
believed HCPCS codes for diagnostic radiopharmaceuticals for which CMS 
proposed packaged payment in CY 2025 but that then have per-day costs 
greater than the CY 2025 final rule drug packaging threshold, based on 
updated hospital claims data used for the CY 2025 final rule, receive 
separate payment in CY 2025.
    Commenters stated that the claims data and the cost report data are 
updated between the proposed and final rule. Specifically, commenters 
noted that the determination of whether a diagnostic 
radiopharmaceutical will qualify for separate payment uses both units 
and mean cost calculated from Medicare claims data to determine the per 
day cost. As the mean cost estimate relies on cost-to-charge ratios, in 
the commenter's view, the diagnostic radiopharmaceutical packaging 
determination is susceptible to fluctuations in the mean cost estimate 
and those fluctuations are not necessarily driven by variation in the 
actual price of the product. The commenter stated that this is in 
contrast to ASP based payment rates, as ASP is an external estimate of 
product cost.
    Response: We thank commenters for their comments and understand 
their concerns about potential cost data fluctuations changing 
packaging determinations between the proposed and final rule. However, 
based on updated data for the final rule, the diagnostic 
radiopharmaceuticals that have per day costs that exceed $630 are the 
same 26 diagnostic radiopharmaceuticals that exceeded the $630 
threshold using proposed rule data, meaning, for purposes of 
determining whether a product's per day cost exceeded $630, the updated 
data for the final rule did not change the list of qualifying products.
    After consideration of the public comments we received, we are 
finalizing our proposal regarding the calculation of per day costs of 
diagnostic radiopharmaceuticals without modification. Specifically, we 
are finalizing a policy to calculate the per day costs for diagnostic 
radiopharmaceuticals for purposes of determining whether a diagnostic 
radiopharmaceutical qualifies for separate payment using a methodology 
similar to the one we use for determining the per day costs of drugs 
and biologicals for comparison to the OPPS drug packaging threshold. We 
calculated the per day cost based on the methodology described in 
section V.B.1.b of this final rule with comment period, which relies on 
the methodology in the CY 2006 OPPS/ASC proposed rule (70 FR 42723 and 
42724) and finalized in the CY 2006 OPPS final rule with comment period 
(70 FR 68636 through 68638).
(4) Updating the Diagnostic Radiopharmaceutical Packaging Threshold in 
CY 2026
    Starting in CY 2026 and subsequent years, we proposed to update the 
proposed threshold amount of $630 by the PPI for Pharmaceuticals for 
Human Use (Prescription) (Bureau of Labor Statistics series code 
WPUSI07003) from IHS Global, Inc (IGI). IGI is a nationally recognized 
economic and financial forecasting firm with which CMS contracts to 
forecast the various price indexes including the Producer Price Index 
(PPI) Pharmaceuticals for Human Use (Prescription). This is the same as 
the update factor used for the OPPS drug packaging threshold, where we 
originally used the four-quarter moving average 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 the 
applicable calendar year. We believe it is appropriate to use the same 
PPI for Pharmaceuticals for Human Use (Prescription) for the diagnostic 
radiopharmaceutical packaging threshold, as diagnostic 
radiopharmaceuticals are also prescription pharmaceuticals for human 
use. We proposed that starting for CY 2026, we would use the most 
recently available four quarter moving average PPI levels to trend the 
final CY 2025 threshold forward from the third quarter of CY 2024 to 
the third quarter of CY 2025 and round the resulting dollar amount to 
the nearest $5 increment. We explained that the proposal to update the 
diagnostic radiopharmaceutical packaging threshold would maintain 
consistency with our longstanding methodology for updating the OPPS 
drug packaging threshold, which is discussed in more detail in section 
V.B.1.a. of this final rule with comment period and also in the CY 2007 
OPPS/ASC final rule with comment period (71 FR 68085 and 68086).
    Comment: The majority of commenters supported our proposal to 
update the final threshold by the PPI for Pharmaceuticals for Human Use 
(Prescription) in CY 2026 and future years. They stated this was 
appropriate to reflect the increasing cost of diagnostic 
radiopharmaceuticals annually.
    Response: We thank commenters for their support.
    Comment: A small number of commenters were not in favor of our 
proposal to update the threshold by the PPI for Pharmaceuticals for 
Human Use (Prescription). One commenter believed CMS should take a 
broader approach and comprehensively review the appropriateness of the 
threshold amount yearly based on data for that year.
    Response: We thank commenters for their insights; however, we 
continue to believe it is appropriate to subject the diagnostic 
radiopharmaceutical packaging threshold to the same update factor that 
is used for the OPPS drug packaging threshold as supported by the 
majority of commenters. Updating the finalized threshold by the PPI for 
Pharmaceuticals for Human Use (Prescription) is consistent with our 
longstanding policy to update the OPPS drug packaging threshold 
annually. This PPI update factor provides aggregate changes in the 
selling prices of pharmaceuticals, which makes it an appropriate factor 
with which to update the diagnostic radiopharmaceutical packaging 
threshold to ensure that as diagnostic radiopharmaceuticals' costs 
change over time, the threshold continues to identify products with 
costs that significantly exceed the otherwise applicable APC payment 
amounts as determined in this rule and that therefore should be 
eligible for separate payment.
    After consideration of the public comments we received, we are 
finalizing our proposal to update the finalized packaging threshold 
without modification. Specifically, starting in CY 2026 and for 
subsequent years, we will update the threshold amount of $630 by the 
PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor 
Statistics series code WPUSI07003) from IHS Global, Inc (IGI).
(5) Amount of Separate Payment for Diagnostic Radiopharmaceuticals 
Exceeding the Threshold
    As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59213 
through 59222), once we determine that the per day cost of a nonpass-
through diagnostic radiopharmaceutical exceeds the cost threshold of 
$630 per day for CY 2025, we then proposed to assign that 
radiopharmaceutical to an APC,

[[Page 93956]]

making it a specified covered outpatient drug (SCOD) per section 
1833(t)(14)(B) of the Act. Accordingly, we proposed to pay for those 
nonpass-through, separately payable diagnostic radiopharmaceuticals 
based on our authority under section 1833(t)(14)(A)(iii)(II) of the 
Act. While under this authority we would ordinarily use the ASP 
methodology under section 1847A of the Act, we find that the ASP data 
we have is not usable for payment purposes. As previously mentioned, 
radiopharmaceuticals are not required to report ASP under section 1847A 
of the Act, and as such, there are very few manufacturers reporting ASP 
for their products currently. As discussed in the CY 2025 OPPS/ASC 
proposed rule (89 FR 59213 through 59222), of those few manufacturers 
reporting ASP, the ASP values that we do have generally do not align 
with the ASP we would expect based on the cost and Mean Unit Cost (MUC) 
data submitted to CMS by hospitals. For example, a frequently used 
diagnostic radiopharmaceutical had a reported ASP that is over 23,000 
percent higher than the MUC derived from claims data. As manufacturers 
of diagnostic radiopharmaceuticals may be unaware of the correct 
reporting requirements, we explained that we believe it would be 
inappropriate to propose to pay for separately payable diagnostic 
radiopharmaceuticals based on their ASPs as currently reported, without 
giving manufacturers the opportunity to submit, certify, or restate the 
ASPs of their products. We believed MUC would be an appropriate proxy 
for the average price for a diagnostic radiopharmaceutical for a given 
year, as it is calculated based on the average costs for a particular 
year and is directly reflective of the actual cost data that hospitals 
submit to CMS.
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222), 
we stated that under our policy for therapeutic radiopharmaceuticals 
(74 FR 60520), there are several requirements for reporting ASP. For 
example, ASP data submitted would need to be provided for a patient-
specific dose, or patient-ready form, of the radiopharmaceutical in 
order to properly calculate the ASP amount for a given HCPCS code if 
that HCPCS code dose descriptor was per study dose or similar. ASP data 
submitted should align with the code's dose descriptor and billing 
unit. We stated we would expect that the ASP data reported by a 
manufacturer would be representative of the item(s) sold by the 
manufacturer. We used the term ``patient-ready'' in that rule to ensure 
that ASP data submitted for OPPS payment purposes for separately 
payable radiopharmaceuticals reflect the costs of all the component 
materials of the finished radiopharmaceutical product. We expected that 
the ASP data would represent the sales price of all of the component 
materials of the finished radiopharmaceutical product sold by the 
manufacturer in terms that reflect the applicable HCPCS code descriptor 
such as ``per study dose'', ``per millicurie'' and ``up to XX 
millicuries.'' For the few manufacturers that reported ASP data for 
their diagnostic radiopharmaceuticals, we believed it may be possible 
that they are not aware of the reporting requirements or are unaware of 
how to properly report ASP for their product, as CMS has not used ASP 
as the basis of payment for nonpass-through diagnostic 
radiopharmaceuticals before. Therefore, we explained that we believe a 
reasonable alternative for CY 2025 for separate payment of diagnostic 
radiopharmaceuticals that exceed the per day cost threshold is to use 
of their mean unit cost from claims data. This is consistent with our 
current practice for therapeutic radiopharmaceuticals when ASP data is 
not available. For diagnostic radiopharmaceuticals, we believe that ASP 
data is effectively not available for purposes of determining a payment 
amount and, therefore, payment based on MUC is a reasonable 
alternative.
    We previously acknowledged (74 FR 35335), and continue to 
acknowledge, the complexities associated with reporting ASP for 
radiopharmaceuticals. We encourage manufacturers to submit ASP 
information for diagnostic radiopharmaceuticals, if possible. While we 
proposed to use MUC to pay for separately payable diagnostic 
radiopharmaceuticals in CY 2025, manufacturers can begin, or continue, 
to report ASP data for potential future use in paying for diagnostic 
radiopharmaceuticals. For CY 2025, ASP reporting is voluntary for 
diagnostic radiopharmaceuticals paid under the OPPS. We encouraged 
interested parties to submit comments regarding potential issues that 
may arise that prevent appropriate ASP reporting for diagnostic 
radiopharmaceuticals. If manufacturers choose to report ASP data, the 
data must meet reporting requirements to be used for payment under the 
OPPS.
    As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59213 
through 59222), manufacturers that choose to report ASP data for their 
diagnostic radiopharmaceuticals would need to provide comprehensive 
data for CMS to calculate an ASP amount for a given HCPCS code. In 
instances where there is more than one manufacturer of a particular 
diagnostic radiopharmaceutical, we proposed that all manufacturers 
would need to submit ASP information for payment to be made based on 
ASP. This is because it would be inappropriate for Medicare payment for 
a HCPCS code to be based on the payment information submitted by one 
manufacturer, if that payment is used for a product made by different 
manufacturers. This is because the ASP information reported by one 
manufacturer might not reflect the ASP of the same product made by 
other manufacturers.
    We note that ASP submissions for radiopharmaceutical payment under 
the OPPS would need to meet all of the existing regulatory and 
subregulatory requirements of the ASP reporting process under sections 
1847A and 1927(b)(3) of the Act.
    Specifically, we reiterated our ASP reporting requirements outlined 
in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520) 
for products for which we are encouraging the reporting of ASP, but for 
which reporting is not statutorily required. The ASP data submitted 
would need to be provided for a patient-specific dose, or patient-ready 
form, of the diagnostic radiopharmaceutical in order to properly 
calculate the ASP amount that aligns with the dose descriptor for a 
given HCPCS code. When reporting an ASP for a separately payable 
radiopharmaceutical, we expect that the ASP data reported by a 
manufacturer would be representative of the item(s) sold by the 
manufacturer. In the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60520), we used the term ``patient-ready'' to ensure that ASP 
data submitted for OPPS payment purposes for separately payable 
radiopharmaceuticals reflect the costs of all the component materials 
of the finished radiopharmaceutical product. We expect that the ASP 
data would represent the sales price of all of the component materials 
of the finished radiopharmaceutical product sold by the manufacturer in 
terms that reflect the applicable HCPCS code descriptor, such as ``per 
study dose'' or ``millicurie.'' We defined a ``patient-ready'' dose for 
OPPS purposes as including all component materials of the 
radiopharmaceutical, at a minimum, and any other processing the 
manufacturer requires to produce the radiopharmaceutical that it sells 
that are reflected in the sales price, including radiolabeling, as long 
as any fees paid for such processing done on behalf of

[[Page 93957]]

the manufacturer meet the definition of ``bona fide service fees'' 
under Sec.  414.802 (74 FR 60525).
    As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59213 
through 59222), we understand that manufacturers of separately payable 
radiopharmaceuticals produce radiopharmaceuticals that require a 
variety of processing steps in order to prepare the product for 
administration to a beneficiary. To be used for separate OPPS 
radiopharmaceutical payment, the ASP data reported by a manufacturer 
must represent sales of all of the component materials associated with 
the radiopharmaceutical. For our full policy on which factors to 
incorporate into ASP pricing, please see the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60520 through 60521).
    In order to be used for payment under the OPPS, all 
radiopharmaceutical ASP submissions should meet the existing regulatory 
and subregulatory requirements of the ASP submission process under 
sections 1847A and 1927(b)(3) of the Act. In particular, we explained 
that we believe the ``bona fide service fee'' test in the ASP 
regulations is instructive here, and we refer readers to the CY 2010 
OPPS/ASC final rule with comment period for our discussion on 
radiopharmaceutical ASP reporting (74 FR 60521).
    To summarize our CY 2010 policy for ASP reporting on 
radiopharmaceuticals for OPPS payment purposes (74 FR 60521), a 
patient-specific dose or patient-ready form in the context of OPPS ASP 
submission for radiopharmaceutical payment means that the ASP 
reflecting manufacturer sales must represent sales of all of the 
component materials for the radiopharmaceutical, including a minimum of 
a cold kit and a radioisotope, and be reported in terms that reflect 
the applicable HCPCS code descriptor, such as ``treatment dose'' or 
``millicurie.'' The ASP would not necessarily take into account the 
preparation of the final form of the radiopharmaceutical for patient 
administration, including radiolabeling, which may be conducted by the 
manufacturer, freestanding radiopharmacy, hospital pharmacy, or other 
entity. With respect to the latter, fees paid by the manufacturer for 
these services would be excluded from the ASP calculation (that is, 
would not be considered price concessions that reduce the ASP) only if 
they are ``bona fide service fees'' as defined in the regulations 
governing ASP. Thus, if the manufacturer pays a ``bona fide service 
fee'' for the services of the freestanding radiopharmacy, hospital 
pharmacy, or other entity, and reflects that fee in its price for the 
radiopharmaceutical, the amount of the ``bona fide service fee'' would 
be taken into account in the reported ASP data. However, manufacturers 
are not required to pay for the preparation of a radiopharmaceutical 
(including radiolabeling) in a freestanding radiopharmacy, hospital 
pharmacy, or other entity after sale of all of the component materials, 
and in that case, the cost of those services would not be reflected in 
the ASP data submitted to CMS. Manufacturers should submit ASP data for 
a separately payable radiopharmaceutical that incorporates prices for 
sales of all of the component materials by the manufacturer. We sought 
comment on these ASP reporting requirements outlined in the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60521) and previous CMS 
guidance on the guidelines for the Submission of OPPS ASP Data for 
Nonpass-Through Separately Payable Therapeutic Radiopharmaceuticals and 
Radiopharmaceuticals with Pass-Through Status.\8\ We continue to 
believe that these ASP reporting practices should be applicable to 
radiopharmaceuticals, including both therapeutic and diagnostic 
radiopharmaceuticals, but sought comment from interested parties in 
this space to ensure that these reporting guidelines are clear and 
reflective of clinical practice today.
---------------------------------------------------------------------------

    \8\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/opps_asp_radiopharm_guidance10302009.pdf.
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    We mentioned in the CY 2025 OPPS/ASC proposed rule (89 FR 59213 
through 59222) that we still see the potential value in the use of ASP 
data for payment purposes for diagnostic radiopharmaceuticals when 
reported correctly and by all manufacturers who manufacture a product 
that is described by a given HCPCS code. We stated that we believe that 
the use of ASP information for OPPS payment could provide an 
opportunity to improve payment accuracy for separately payable 
diagnostic radiopharmaceuticals by applying an established methodology 
that has already been successfully implemented under the OPPS for other 
separately payable drugs and biologicals, as well as therapeutic 
radiopharmaceuticals. Because the per day cost calculations determine 
whether a diagnostic radiopharmaceutical qualifies for separate 
payment, using the most accurate pricing information is paramount. The 
use of ASP information could provide an opportunity to further improve 
the accuracy of the per day cost calculations and the separate payment 
amounts for diagnostic radiopharmaceuticals. As previously mentioned, 
we do not believe that the limited amount of ASP information submitted 
currently is adequate for the purpose of determining separate payment 
for those few products that currently do report ASP, which is why we 
proposed to pay diagnostic radiopharmaceuticals with per day costs 
above the $630 threshold at each diagnostic radiopharmaceutical's mean 
unit cost. However, we were still interested in the potential to use 
ASP for the purpose of determining a diagnostic radiopharmaceutical's 
per day cost and payment amount in the future. Therefore, we wanted to 
engage with interested parties to learn about the unique aspects and 
challenges that may be associated with reporting ASP for diagnostic 
radiopharmaceuticals, and radiopharmaceuticals in general. We 
specifically sought comment as to whether interested parties believe 
CMS should require payment for diagnostic radiopharmaceuticals to be 
based on ASP in the future, such as in CY 2026 rulemaking, if 
interested parties are confident in their reporting ability.
    We discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59213 
through 59222) that we do believe that there could be situations in 
which it is appropriate to use ASP currently. For example, in section 
V.A.4 of the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 
59222), we proposed to utilize ASP in payment for diagnostic 
radiopharmaceuticals on OPPS transitional pass-through status. In this 
situation, we believed the use of ASP is appropriate as the 
manufacturer of that diagnostic radiopharmaceutical is actively 
involved in the radiopharmaceutical's pass-through application, and CMS 
can ensure that pricing is reported appropriately for purposes of the 
drug pass-through cost significance tests and for purposes of payment 
if the pass-through status is approved. Typically, there is only one 
manufacturer for a diagnostic radiopharmaceutical applying for pass-
through status, so CMS does not have to ensure all manufacturers are 
reporting ASP for that particular HCPCS code prior to establishing a 
separate payment amount based on ASP. Additionally, as discussed in 
section V.B.5 of the CY 2025 OPPS/ASC proposed rule (Proposed Payment 
for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals with 
HCPCS Codes but Without OPPS Hospital

[[Page 93958]]

Claims Data), we proposed to base the initial payment for new 
diagnostic radiopharmaceuticals with HCPCS codes, but which do not have 
pass-through status and are without claims data, on ASP, and on WAC if 
ASP data for these diagnostic radiopharmaceuticals are not available. 
If the WAC also is unavailable, we proposed to make payment for new 
diagnostic radiopharmaceuticals at 95 percent of the products' most 
recent AWP. We believe the volume of products in this category will 
typically be very low; however, in these rare situations, we believe it 
would be appropriate to use ASP until a MUC is available. Similar to 
drugs applying for pass-through status, there is typically only one 
manufacturer for a diagnostic radiopharmaceutical that is new and 
described by a HCPCS code, but without claims data, so CMS does not 
have to ensure all manufacturers are reporting ASP for that particular 
HCPCS code prior to establishing a separate payment amount based on 
ASP. Additionally, although reporting of ASP is not a condition of CMS 
approving a HCPCS application, CMS has the opportunity to actively 
engage with the manufacturer, or sponsor of a HCPCS application, during 
the HCPCS application process. This allows for ongoing dialogue and 
education regarding the unique ASP reporting requirements that may be 
associated with a particular product, including how to ensure the 
reported ASP aligns with the dose descriptor for the newly assigned 
HCPCS code.
    We sought comments on additional unique situations in which it 
still may be appropriate for CMS to use ASP information to assess per 
day costs and payment amounts for diagnostic radiopharmaceuticals for 
CY 2025. For example, we stated that one such unique situation could be 
continuing the use of ASP for a particular HCPCS code once its pass-
through status has ended, if the HCPCS code was actively being paid 
based on ASP while on pass-through status. Under our proposal, payment 
for a diagnostic radiopharmaceutical would be based on MUC once its 
pass-through status ends. We sought comment on this potential unique 
situation, as well as others of which readers may be aware. We stated 
that we may finalize utilizing ASP in additional situations that 
commenters bring to our attention in the final rule as policies for CY 
2025 depending on comments received.
    As discussed, we proposed to base the payment rate for diagnostic 
radiopharmaceuticals on mean unit cost data derived from hospital 
claims. We did not propose to use ASP data for determining payment 
rates of nonpass-through diagnostic radiopharmaceuticals with claims 
data but are seeking comment on its use for determining the per day 
cost and setting the payment rate for diagnostic radiopharmaceuticals 
in the future. Additionally, we did not propose to use WAC or AWP as a 
basis for payment for diagnostic radiopharmaceuticals. Similar to our 
reasoning for payment of therapeutic radiopharmaceuticals in the CY 
2012 OPPS/ASC final rule with comment period (77 FR 68390), we believe 
that paying for diagnostic radiopharmaceuticals using mean unit cost 
would appropriately pay for the average price of nonpass-through 
separately payable diagnostic radiopharmaceuticals for the applicable 
year. We believe MUC is an appropriate proxy for the average price for 
a diagnostic radiopharmaceutical for a given year, as it is calculated 
based on the average costs for a particular year and is directly 
reflective of the actual cost data that hospitals submit to CMS.
    As we stated in the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60523), we believe that WAC or AWP is not an appropriate proxy 
to provide OPPS payment for average therapeutic radiopharmaceutical 
acquisition cost and associated handling costs when manufacturers are 
not required to submit ASP data because payment based on WAC or AWP for 
separately payable drugs and biologicals is usually temporary for a 
calendar quarter until a manufacturer is able to submit the required 
ASP data in accordance with the quarterly ASP submission timeframes for 
reporting under section 1847A of the Act. However, WAC and AWP reported 
to compendia may not be reflective of a patient ready dose. We are 
additionally concerned about the use of WAC and AWP since ASP reporting 
for OPPS payment of separately payable diagnostic radiopharmaceuticals 
would not be required for CY 2025. The absence of appropriate ASP 
reporting could result in payment for a separately payable diagnostic 
radiopharmaceutical based on WAC or AWP indefinitely, a result which we 
believe would be inappropriate, as these pricing metrics do not capture 
all of the pricing discounts that may be reflected in the ASP. In the 
CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222), we stated 
that given all of the concerns we had with other pricing methodologies 
for diagnostic radiopharmaceuticals, we proposed to rely on CY 2023 
mean unit cost data derived from hospital claims data for payment rates 
for diagnostic radiopharmaceuticals for CY 2025.
    Our proposed payment methodology for diagnostic 
radiopharmaceuticals that have costs above a $630 threshold would be 
similar, but not the same, as the methodology adopted for therapeutic 
radiopharmaceuticals as described in the CY 2010 OPPS/ASC final rule 
with comment period (74 FR 60518). Although therapeutic 
radiopharmaceuticals are generally targeted at treating a certain 
disease or condition, and diagnostic radiopharmaceuticals are generally 
targeted at diagnosing a certain disease or condition, we believe they 
are clinically very similar products, manufactured in a similar manner, 
and should generally be paid using a similar payment methodology when 
paid separately. As such, we stated that we believe the same payment 
method as is used for therapeutic radiopharmaceuticals should apply to 
diagnostic radiopharmaceuticals above the cost threshold. However, as 
previously discussed, given our concerns with current ASP reporting 
patterns, we proposed to use MUC as the basis of payment for nonpass-
through diagnostic radiopharmaceuticals for CY 2025. Therefore, we 
explained that we believe it is appropriate for the methodology to 
determine the proposed payment amounts to differ between diagnostic and 
therapeutic radiopharmaceuticals, at least for CY 2025. We stated that 
we will consider aligning the payment methodologies between therapeutic 
and diagnostic radiopharmaceuticals, either based on ASP or MUC, in 
future rulemaking.
    We explained that we believe that mean unit cost data is an 
appropriate and adequate proxy for the average price for diagnostic 
radiopharmaceuticals and associated handling costs for these products. 
Mean unit cost data is reflective of the actual cost data that 
hospitals submit to CMS. The MUC payment methodology is consistent with 
our payment policy for therapeutic radiopharmaceuticals as stated in 
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60523) and 
is currently the basis of payment for many therapeutic 
radiopharmaceuticals when ASP is unavailable.
    As previously discussed, we find that the ASP data we have is not 
usable for the purpose of paying for diagnostic radiopharmaceuticals 
and, therefore, we proposed to pay for qualifying nonpass-through 
diagnostic radiopharmaceuticals with claims data based on MUC. However, 
we also sought comment on how we could

[[Page 93959]]

potentially use our equitable adjustment authority at section 
1833(t)(2)(E) of the Act to make an adjustment to the ASP data that has 
been reported in order to make it usable for the purpose of paying 
equitably for these products. For example, we sought comment as to 
whether CMS could use its equitable adjustment authority to adjust 
payment for diagnostic radiopharmaceuticals based on an adjusted ASP 
value when the ASP amounts reported to CMS deviate by a given 
threshold, such as two times the MUC calculated for the diagnostic 
radiopharmaceutical using claims data. Alternatively, the adjusted 
payment rate could be an average of the reported ASP and MUC, or other 
methodologies suggested by commenters. We broadly sought comment on 
this potential use of equitable adjustment authority to make the 
limited ASP data reported for diagnostic radiopharmaceuticals usable 
for purposes of setting payment rates for qualifying products.
    We note, if readers do not believe it is appropriate for CMS to 
base the payment amount for diagnostic radiopharmaceuticals on MUC for 
CY 2025, we proposed in the alternative to maintain our current policy 
of unconditionally policy packaging all diagnostic radiopharmaceuticals 
regardless of their cost until an appropriate payment methodology can 
be established to determine a separate payment amount for diagnostic 
radiopharmaceuticals.
    We stated that HCPCS codes that describe diagnostic 
radiopharmaceuticals with per day costs that meet or exceed the 
proposed diagnostic radiopharmaceutical packaging threshold would be 
assigned to a status indicator of ``K'', indicating separate payment. 
An APC and a payment rate would be assigned as shown in Addendum B to 
the proposed rule. HCPCS codes that describe diagnostic 
radiopharmaceuticals with per day costs that are at or below the 
proposed diagnostic radiopharmaceutical packaging threshold would 
continue to be assigned to a status indicator of ``N'', indicating 
packaged payment. We welcomed comment on these determinations. The 
proposed list of diagnostic radiopharmaceuticals that we calculated as 
having per day costs that exceed $630 and their proposed status 
indicators can be found in Table 8.

[[Page 93960]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.012

    Proposed definitions of status indicators were included in Addendum 
D1 to the CY 2025 OPPS/ASC proposed rule (89 FR 59213 through 59222). 
Addenda to that proposed rule can be found on the CMS OPPS web page.
    We proposed corresponding regulation text edits at Sec.  
419.2(b)(15) to only package diagnostic radiopharmaceuticals when their 
per day cost is at or below the per day diagnostic radiopharmaceutical 
packaging threshold for the applicable year. Specifically, we proposed 
to add the text ``at or below the per-day diagnostic 
radiopharmaceutical packaging threshold for the applicable year'' to 
qualify the packaging of diagnostic radiopharmaceuticals. We also 
proposed corresponding regulation text edits at Sec.  419.41 
(Calculation of national beneficiary copayment amounts and national 
Medicare program payment amounts) to codify our proposed payment policy 
for diagnostic radiopharmaceuticals and our existing policy for 
therapeutic radiopharmaceuticals.
    Comment: Commenters were largely supportive of CMS's proposal to 
pay diagnostic radiopharmaceuticals based on their mean unit cost for 
CY 2025. Commenters applauded CMS for recognizing that the uniqueness 
of diagnostic radiopharmaceuticals could lead to some difficulty or 
uncertainty around reporting other pricing data, such as Average Sales 
Price (ASP), for these products. Additionally, commenters generally 
seemed to understand CMS's concerns with using ASP as a basis for 
payment broadly for CY 2025 given the limited information available.
    Response: We thank commenters for their support of our proposal.
    Comment: Although the majority of commenters were generally 
supportive of using mean unit cost as the basis for diagnostic 
radiopharmaceutical payment for CY 2025, many of these commenters saw 
the use of MUC as a transitional step, and recommended CMS consider 
Average Sales Price as the

[[Page 93961]]

methodology to determine the payment amount as soon as possible. Other 
commenters suggested specific unique situations in which they believed 
it would be appropriate for CMS to use ASP, such as when a product's 
OPPS pass-through status expires if the product was being paid based on 
ASP while on OPPS pass-through status. Similarly, some commenters 
expressed some drawbacks to using MUC as a payment amount rather than 
ASP, such as that mean unit cost depends on hospital cost to charge 
ratios and uses cost data from prior years, rather than from the 
current payment year. Similarly, a commenter communicated that the MUC 
methodology underestimates the actual costs to hospitals for higher 
priced technologies due to charge compression which, in their view, may 
result in an inaccurate payment rate for a product compared to the 
actual acquisition cost for a product by a given hospital.
    Commenters stated that using ASP information was consistent with 
payment for drugs under the OPPS, and they also stated that ASP 
information was an established methodology that could provide an 
opportunity to improve payment accuracy.
    Commenters believed there was value in using ASP as the basis of 
payment, and although they acknowledged CMS may not have access to ASP 
data for patient ready doses for all diagnostic radiopharmaceuticals, 
commenters recommended we transition to an ASP-based payment.
    Some commenters stated their belief that separate payment will 
incentivize reporting of ASP data. CMS was urged to work with 
manufacturers to obtain ASP data and only consider basing payment on 
ASP when such data are determined to be reliable. Commenters also 
recommended that CMS provide at least one year notice of its intent to 
base payment on ASP to facilitate the most complete reporting and 
consistent payment methodologies across products.
    Response: We thank commenters for their feedback and considerations 
on our proposal. Our concerns from the proposed rule remain for the 
final rule, in that there are very few manufacturers reporting ASP for 
their products currently, and of those few manufacturers reporting ASP, 
the ASP values that we do have generally do not align with the ASP we 
would expect based on the cost data submitted to CMS by hospitals. 
While a small number of manufacturers may be reporting ASP correctly, 
such as those recently on OPPS pass-through status, we believe a 
consistent payment methodology is most appropriate for nonpass-through 
diagnostic radiopharmaceuticals with per day costs above the threshold. 
We do agree that there could be some value in the use of ASP for 
determining a payment amount in the future; however, if we were to use 
the ASP methodology, we believe there must be more consistent, 
validated, and universal reporting in order for ASP to be a viable 
payment methodology. To maintain a consistent payment methodology for 
CY 2025, we believe it is appropriate to treat all nonpass-through 
diagnostic radiopharmaceuticals with claims data the same and pay using 
MUC without exception, such as for products with recent pass-through 
expiration.
    Comment: Commenters expressed a broad interest in using ASP data 
and learning how to report that data appropriately to CMS, including 
regarding topics such as ``bona fide service fees.'' Commenters 
indicated a desire to learn more about how they could report ASP for 
their specific products. Many manufacturers expressed their intent to 
initiate discussions with CMS in order to potentially begin to report 
ASP data.
    Response: We thank commenters for expressing their interest in use 
of ASP data and appropriate ASP reporting. As we have previously 
stated, and as commenters have noted, we recognize the complexities 
associated with reporting ASP for radiopharmaceuticals. We encourage 
ongoing engagement with CMS in order for manufacturers to provide 
information regarding their products' unique reporting complexities.
    Comment: Some commenters recommended CMS continue to consider the 
appropriateness of other sources of cost data for future years, such as 
wholesale acquisition cost (WAC).
    Response: We continue to believe that neither WAC nor AWP is an 
appropriate proxy to provide OPPS payment for average 
radiopharmaceutical acquisition costs and associated handling costs 
when manufacturers are not required to submit ASP data. This is because 
payment based on WAC or AWP for separately payable drugs and 
biologicals is usually temporary for a calendar quarter until a 
manufacturer is able to submit the required ASP data in accordance with 
the quarterly ASP submission timeframes for reporting under section 
1847A of the Act. WAC and AWP reported to compendia may not be 
reflective of a patient ready dose. The absence of an ASP reporting 
requirement and inappropriate or no reporting of ASP could result in 
payment for a separately payable diagnostic radiopharmaceutical based 
on WAC or AWP indefinitely, a result which we believe would be 
inappropriate, as these pricing metrics do not capture all of the 
pricing discounts that may be reflected in the ASP.
    Comment: Some commenters were concerned about potential 
fluctuations in MUC data and the effect on payment for separately 
payable diagnostic radiopharmaceuticals. Several commenters recommend 
CMS apply its low volume APC policy to diagnostic radiopharmaceutical 
APCs, stating that CMS's policy for setting payment rates for low 
volume APCs, defined as those with fewer than 100 claims, by using up 
to four years of claims data and basing the rate on the highest value 
among the arithmetic mean, geometric mean, or median improves payment 
rate stability for low volume APCs.
    Response: We thank commenters for their recommendations. We did not 
propose to subject low volume diagnostic radiopharmaceutical APCs to 
the broader OPPS low volume policy, and we note that the low volume APC 
policy does not apply to APCs to which single drugs, biologicals, or 
radiopharmaceuticals are assigned, even if there is a low volume of 
claims for these items. We understand the commenter's concerns; 
however, we do not believe it would be appropriate to finalize this 
policy modification without further engagement from interested parties. 
While we agree this suggested policy modification could result in 
greater payment stability, we want to ensure that there are no 
unintended consequences of such a policy, such as an unintended 
decrease in the overall MUC payment rate as a result of using 4 years 
of cost data. We encourage additional engagement on this issue.
    Comment: A commenter noted that we proposed that only diagnostic 
radiopharmaceutical HCPCS codes that are identified as separately 
payable in the final rule with a comment period would be subject to 
quarterly updates. The commenter was unsure why quarterly updates would 
be necessary for MUC-based payment, which they expect would be 
established annually as part of the rulemaking process and thus not be 
subject to quarterly updates.
    Response: We thank the commenter for this comment and confirm that 
their understanding is correct. MUC will be calculated on an annual 
basis for the payment of nonpass-through diagnostic 
radiopharmaceuticals with per day costs exceeding $630. Because we are 
not adopting an ASP-based payment approach at this time, there is no 
need to update the payment amounts

[[Page 93962]]

quarterly as the MUC will be set in this final rule for the entire 
calendar year.
    Comment: A few commenters believed that the product Magtrace, which 
may be described by HCPCS code A9697 (Injection, carboxydextran-coated 
superparamagnetic iron oxide, per study dose), was inappropriately 
assigned to a packaged payment status for the proposed rule and should 
be subject to this policy and designated for separate payment in the 
final rule. One commenter stated that the product is a magnetic tracer 
indicated to assist in localizing lymph nodes draining a tumor site, as 
part of a sentinel lymph node biopsy procedure in patients with breast 
cancer undergoing mastectomy or lumpectomy. The commenter stated that 
when HCPCS code A9697 was first incorporated in the October 2023 OPPS 
Update Transmittal, it was in a table titled ``Table 15.--Newly 
Established HCPCS Codes for Drugs, Biologicals, and 
Radiopharmaceuticals as of October 1, 2023'' and that Medicare 
Administrative Contractors (MACs) have indicated that HCPCS codes in 
the A9500-A9700 range, which the Magtrace code falls within, are for 
radiopharmaceuticals.
    Response: We note that this product is not radioactive 
9 10 and is regulated by the FDA as a medical device under 
the product name ``Magtrace and Sentimag Magnetic Localization System'' 
with a premarket approval.\11\ Accordingly, we do not believe that this 
product qualifies as a diagnostic radiopharmaceutical, and do not 
believe that it should be paid separately under this policy. We believe 
this product functions as a supply when used in a diagnostic test or 
procedure and should continue to be packaged under 42 CFR 419.2(b)(15). 
Please see section V.A. of this final rule with comment period for the 
payment status of HCPCS code A9697 for CY 2025.
---------------------------------------------------------------------------

    \9\ Per the manufacturer's website: ``Is Magtrace Radioactive? 
No. Magtrace is the world's first non-radioactive tracer to offer 
dual identification. This not only facilitates the eradication of 
radioactive products from the OR, but provides psychological 
benefits for the patient.'' https://www.endomag.com/resources/faqs/magtrace/?product=magtrace.
    \10\ Per the manufacturer's website: ``Magtrace[supreg] is a 
uniquely designed non-radioactive liquid tracer used to map the 
potential spread of cancer to the axilla in sentinel lymph node 
biopsy procedures. The liquid is made up of tiny particles of iron 
oxide, coated in sugar and suspended in saline.'' https://www.endomag.com/resources/faqs/magtrace/.
    \11\ https://www.fda.gov/medical-devices/recently-approved-devices/magtrace-and-sentimag-magnetic-localization-system-p160053s002.
---------------------------------------------------------------------------

    Comment: Broadly, commenters suggested that CMS subject additional 
classes of drugs, such as contrast agents to this policy. For example, 
a commenter discussed one such product, Cysview, which may be described 
by HCPCS code A9589 (Instillation, hexaminolevulinate hydrochloride, 
100 mg), and believed CMS's reasoning in the proposed rule for 
unpackaging and paying separately for diagnostic radiopharmaceuticals 
applies equally to their product. The commenter believed lack of 
separate payment was a barrier to beneficiary access and recommended 
CMS pay for products like theirs when the products' costs exceeded a 
certain threshold.
    Response: We thank the commenters for their feedback. We continue 
to believe that our packaging policies are a fundamental principle that 
distinguishes a prospective payment system from a fee schedule. In 
general, packaging the costs of supportive items and services into the 
payment for the primary procedure or service with which they are 
associated encourages hospital efficiencies and enables hospitals to 
manage their resources with maximum flexibility. We will take the 
information commenters provided into consideration as appropriate for 
possible future rulemaking.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification. In summary, for CY 2025 
we are paying separately for any diagnostic radiopharmaceutical with a 
per day cost greater than $630 using the methodology described. Any 
diagnostic radiopharmaceutical with a per day cost at or below that 
threshold would continue to be policy packaged under our longstanding 
policy at Sec.  419.2(b)(15). We are finalizing our proposal regarding 
updating the selected packaging threshold without modification. 
Specifically, starting in CY 2026 and for subsequent years, we will 
update the threshold amount of $630 by the PPI for Pharmaceuticals for 
Human Use (Prescription) (Bureau of Labor Statistics series code 
WPUSI07003) from IHS Global, Inc (IGI). We are finalizing our proposal 
to pay for those nonpass-through, separately payable diagnostic 
radiopharmaceuticals based on our authority under section 
1833(t)(14)(A)(iii)(II) of the Act, and as we find that the ASP data we 
have is not usable for the purpose of paying for diagnostic 
radiopharmaceuticals, we are paying for qualifying nonpass-through 
diagnostic radiopharmaceuticals with claims data based on mean unit 
cost data derived from hospital claims. We believe that paying for 
diagnostic radiopharmaceuticals using mean unit cost would 
appropriately pay for the average price of nonpass-through separately 
payable diagnostic radiopharmaceuticals for the applicable year. We 
believe MUC is an appropriate proxy for the average price for a 
diagnostic radiopharmaceutical for a given year, as it is calculated 
based on the average costs for a particular year and is directly 
reflective of the actual cost data that hospitals submit to CMS.
    The finalized list of diagnostic radiopharmaceuticals that have 
calculated per day costs that exceed $630 and their status indicators 
can be found in Table 9.

[[Page 93963]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.013

    Definitions of status indicators can be found in Addendum D1 to 
this final rule with comment period. Addenda to this final rule with 
comment period can be found on the CMS OPPS web page.
    Additionally, we are finalizing with slight modification 
corresponding regulation text edits at Sec.  419.2(b)(15) to only 
package diagnostic radiopharmaceuticals when their per day cost is at 
or below the per day diagnostic radiopharmaceutical packaging threshold 
for the applicable year. We are adding the language ``with per-day 
costs at or'' to the regulation text as a technical change to conform 
with our final policy as the prior text did not make it clear that the 
per day cost of a diagnostic radiopharmaceutical must be at or below 
the per-day diagnostic radiopharmaceutical packaging threshold in order 
for the product to be packaged. Overall, this regulation text is 
changed by adding the text ``with per-day costs at or below the per-day 
diagnostic radiopharmaceutical packaging threshold for the applicable 
year'' rather than only ``below the per-day diagnostic 
radiopharmaceutical packaging threshold for the applicable year'' to 
qualify the packaging of diagnostic radiopharmaceuticals. Aside from 
those changes described in V.B.5 of this CY 2025 OPPS/ASC final rule 
with comment period to conform with our payment policy for nonpass-
through diagnostic radiopharmaceuticals in situations in which claims 
data are not available, we are finalizing without modification 
corresponding regulation text edits at Sec.  419.41 (Calculation of 
national beneficiary copayment amounts and national Medicare program 
payment amounts) to codify our proposed payment policy for diagnostic 
radiopharmaceuticals and our existing policy for therapeutic 
radiopharmaceuticals.

[[Page 93964]]

4. Implementation of Section 4135 of the Consolidated Appropriations 
Act (CAA)
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), 
was signed into law on December 29, 2022. Section 4135(a) and (b) of 
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief, 
amended sections 1833(t)(16) and 1833(i) of the Act, respectively, to 
provide for temporary additional payments for non-opioid treatments for 
pain relief (as that term is defined in section 1833(t)(16)(G)(i) of 
the Act). In particular, section 1833(t)(16)(G) of the Act provides 
that with respect to a non-opioid treatment for pain relief furnished 
on or after January 1, 2025, and before January 1, 2028, the Secretary 
shall not package payment for the non-opioid treatment for pain relief 
into payment for a covered OPD service (or group of services) and shall 
make an additional payment for the non-opioid treatment for pain relief 
as specified in clause (ii) of that section. Clauses (ii) and (iii) of 
section 1833(t)(16)(G) of the Act provide for the amount of additional 
payment and set a limitation on that amount, respectively.
    As the additional payments are required to begin on January 1, 
2025, we proposed and are finalizing a policy to implement the CAA, 
2023 section 4135 amendments in this final rule with comment period. 
Our finalized policy to implement section 4135 of CAA, 2023 can be 
found in section XIII.E of this final rule with comment period.
5. Calculation of OPPS Scaled Payment Weights
    We established a policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68283) of using geometric mean-based APC costs to 
calculate relative payment weights under the OPPS. In the CY 2024 OPPS/
ASC final rule with comment period (88 FR 81577 through 81578), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2024 that were shown in Addenda A and B of the CY 2024 
OPPS/ASC final rule with comment period (which were made available via 
the internet on the CMS website) using the APC costs discussed in 
sections II.A.1 and II.A.2 of the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81549 through 81572). For CY 2025, as we did for 
CY 2024, we proposed to continue to apply the policy established in CY 
2013 and calculate relative payment weights for each APC for CY 2025 
using geometric mean-based APC costs.
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a policy that created 
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for 
assessment and management of a patient), representing all clinic visits 
under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital 
Clinic Visits). We also finalized a policy to use CY 2012 claims data 
to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on 
the total geometric mean cost of the levels one through five CPT 
Evaluation or Assessment and Management (E/M) codes for clinic visits 
previously recognized under the OPPS (CPT codes 99201 through 99205 and 
99211 through 99215). In addition, we finalized a policy to no longer 
recognize a distinction between new and established patient clinic 
visits.
    For CY 2016, we deleted APC 0634 and reassigned the outpatient 
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and 
Related Services) (80 FR 70372). For CY 2025, as we did for CY 2024, we 
proposed to continue to standardize all of the relative payment weights 
to APC 5012. We believe that standardizing relative payment weights to 
the geometric mean of the APC to which HCPCS code G0463 is assigned 
maintains consistency in calculating unscaled weights that represent 
the cost of some of the most frequently provided OPPS services. For CY 
2025, as we did for CY 2024, we proposed to assign APC 5012 a relative 
payment weight of 1.00 and to divide the geometric mean cost of each 
APC by the geometric mean cost for APC 5012 to derive the unscaled 
relative payment weight for each APC. The choice of the APC on which to 
standardize the relative payment weights does not affect payments made 
under the OPPS because we scale the weights for budget neutrality.
    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 2025 is neither 
greater than nor less than the estimated aggregate weight that would 
have been calculated without the changes. To comply with this 
requirement concerning the APC changes, we proposed to compare the 
estimated aggregate weight using the CY 2024 scaled relative payment 
weights to the estimated aggregate weight using the proposed CY 2025 
unscaled relative payment weights.
    For CY 2024, we multiplied the CY 2024 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2023 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 2025, we 
proposed to apply the same process using the estimated CY 2025 unscaled 
relative payment weights rather than scaled relative payment weights. 
We proposed to calculate the weight scalar by dividing the CY 2024 
estimated aggregate weight by the unscaled CY 2025 estimated aggregate 
weight.
    For a detailed discussion of the weight scalar calculation, we 
refer readers to the OPPS claims accounting document available on the 
CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. Click on the 
link labeled ``Hospital Outpatient Prospective Payment--Notice of 
Proposed Rulemaking with Comment Period (NPRM)'' for 2025, which can be 
found under the heading ``Hospital Outpatient Regulations and Notices'' 
and open the claims accounting document link, which is labeled ``2025 
NPRM OPPS Claims Accounting (PDF).''
    We proposed to compare the estimated unscaled relative payment 
weights in CY 2025 to the estimated total relative payment weights in 
CY 2024 using CY 2023 claims data, holding all other components of the 
payment system constant to isolate changes in total weight. Based on 
this comparison, we proposed to adjust the calculated CY 2025 unscaled 
relative payment weights for purposes of budget neutrality. We proposed 
to adjust the estimated CY 2025 unscaled relative payment weights by 
multiplying them by a proposed weight scalar of 1.4452 to ensure that 
the proposed CY 2025 relative payment weights are scaled to be budget 
neutral. The proposed CY 2025 relative payment weights listed in 
Addenda A and B to the proposed rule (which are available via the 
internet on the CMS website) are scaled and incorporate the 
recalibration adjustments discussed in sections II.A.1 and II.A.2 of 
this final rule with comment period.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain specified covered outpatient drugs (SCODs). Section 
1833(t)(14)(H) of the

[[Page 93965]]

Act provides that additional expenditures resulting from this paragraph 
shall not be taken into account in establishing the conversion factor, 
weighting, and other adjustment factors for 2004 and 2005 under 
paragraph (9) but shall be taken into account for subsequent years. 
Therefore, the cost of those SCODs (as discussed in section V.B.2 of 
this final rule with comment period) is included in the budget 
neutrality calculations for the CY 2025 OPPS.
    We did not receive any public comments on the proposed weight 
scalar calculation, and we are finalizing our proposal to use the 
calculation process described in the CY 2025 OPPS/ASC proposed rule, 
without modification, for CY 2025. For CY 2025, as we did for CY 2024, 
we will continue to apply the policy established in CY 2013 and 
calculate relative payment weights for each APC for CY 2025 using 
geometric mean-based APC costs. For CY 2025, as we did for CY 2024, we 
will assign APC 5012 a relative payment weight of 1.00; and we will 
divide the geometric mean cost of each APC by the geometric mean cost 
for APC 5012 to derive the unscaled relative payment weight for each 
APC. To comply with this requirement concerning the APC changes, we 
will compare the estimated aggregate weight using the CY 2024 scaled 
relative payment weights to the estimated aggregate weight using the CY 
2025 unscaled relative payment weights.
    Using updated final rule claims data, we are updating the estimated 
CY 2025 unscaled relative payment weights by multiplying them by a 
weight scalar of 1.4452 to ensure that the final CY 2025 relative 
payment weights are scaled to be budget neutral. The final CY 2025 
relative payments weights listed in Addenda A and B of this final rule 
with comment period (available via the internet on the CMS website) 
were scaled and incorporate the recalibration adjustments discussed in 
sections II.A.1 and II.A.2 of this final rule with comment period.

B. Conversion Factor Update

1. OPD Fee Schedule Increase Factor
    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2025 IPPS/Long Term 
Care Hospital (LTCH) PPS proposed rule (89 FR 36204), consistent with 
current law, based on IHS Global, Inc.'s fourth quarter 2023 forecast, 
the proposed FY 2025 IPPS market basket percentage increase was 3.0 
percent. In the CY 2025 OPPS/ASC proposed rule, we noted that under our 
regular process for the CY 2025 OPPS/ASC final rule with comment 
period, we would use the market basket update for the FY 2025 IPPS/LTCH 
PPS final rule (89 FR 68986). We explained that if that forecast is 
different than the IPPS market basket percentage increase used for the 
proposed rule, the CY 2025 OPPS/ASC final rule with comment period OPD 
fee schedule increase factor would reflect that updated forecast of the 
market basket percentage increase.
    For CY 2025, we proposed to use the estimate of the hospital 
inpatient market basket percentage increase of 3.0 percent as one 
component to calculate the OPD fee schedule increase factor.
    Comment: Two commenters expressed their support for the proposed 
hospital inpatient market basket increase of 3.0 percent.
    Response: We appreciate the support of the commenters.
    Comment: Several commenters expressed concerns that the proposed CY 
2025 market basket update does not adequately reflect the rising 
inflation and costs that hospitals have faced over the last few years. 
Commenters stated that economy-wide inflation grew by 12.4 percent from 
2021 through 2023 (as measured by the Consumer Price Index (CPI)), more 
than two times faster than Medicare reimbursement for hospital 
outpatient services, which increased by 5.9 percent during the same 
time. A commenter noted that the US Health Care Inflation Rate (USHCIR) 
for June 2024 was 3.3 percent and long-term USHCIR was 5.1 percent. 
Another commenter noted that inflation for hospital services in July 
2024 was 6.1 percent. The commenters observed these rates are 
substantially higher that the proposed market basket increase.
    Many commenters stated that rapid and sustained growth in labor 
costs have put persistent cost pressure on hospitals. They also noted 
increases in drug prices, citing a recent study and a report by the 
Health and Human Services (HHS) Assistant Secretary for Planning and 
Evaluation which found that in 2022 and 2023, prices for nearly 2,000 
drugs increased faster than the rate of general inflation, with an 
average price increase of 15.2 percent. Several commenters also stated 
that hospitals have seen significant growth in administrative costs due 
to what they described as inappropriate practices by large commercial 
health insurers, including Medicare Advantage and Medicaid managed care 
plans, such as automatic claim denials and onerous prior authorization 
requirements. Commenters also discussed the continued costs of 
addressing past and preventing future cyberattacks and a commenter 
stated they have seen significant increases in capital costs, 
particularly since the pandemic. Some commenters stated that hospitals 
will continue to face increased costs due to the Change Healthcare 
cyberattack, such as interest costs on loan payments for loans acquired 
during the cyberattack, expected denials that will require additional 
administrative costs, and manual processing of claims. Commenters also 
urged CMS to consider the changing health care environment, which they 
state is putting enormous financial strain on hospitals and health 
systems and is expected to continue through 2025.
    Several commenters proposed CMS apply a payment increase of at 
least 4.1 percent which is aligned with MedPAC's March 2024 Report to 
Congress, which recommended a 1.5 percentage points increase over the 
FY 2025 payment update. These commenters noted that this was the second 
year that MedPAC made a recommendation of increasing the market basket 
update. Several commenters suggested various higher market basket 
increases, which they believe better reflects hospitals' input prices 
and the contract labor staffing challenge. A commenter encouraged CMS 
to consider, at a minimum, matching the 3.7 percent increase that the 
commenter stated Medicare Advantage will receive.
    Several commenters recommended CMS look to alternative data sources 
that they asserted better reflect true labor and input cost increases 
in a timely manner. The commenters stated that the proposed payment 
update does not recognize these challenges, nor does it factor in the 
realities of inflation impacting operating costs. Commenters also 
stated CMS must use data that better reflects the input price inflation 
that hospitals have experienced and are projected to experience in CY 
2025. Multiple commenters recommended CMS use more recent data to 
update adjustments to 2025 OPPS rates.
    Many commenters noted their financial pressures due to the PHE, 
aging, more complex patients, negative Medicare margins of -12.7 
percent as

[[Page 93966]]

estimated by MedPAC, and reliance on public payers. Several commenters 
urged CMS to consider and assess the financial position of hospitals, 
particularly those with low margins. Multiple commenters asked for CMS 
to increase rates to cover the cost of care for Medicaid patients. Many 
commenters noted financial hardships, particularly in 2022, with high 
inflation and workforce shortages. They noted that MedPAC found that 
all-payment operating and overall Medicare margins both fell to record 
lows, estimating Medicare hospital margins of negative 12.7 percent for 
FY 2022. MedPAC's FY 2024 recommendation was to increase the market 
basket update by one percentage point and, for FY 2025, that Congress 
increase the acute hospital market basket by 1.5 percentage points over 
current law.
    Response: We acknowledge commenters' concerns, however, as we 
stated in the CY 2025 OPPS/ASC proposed rule, section 1833(t)(3)(C)(iv) 
of the Act requires the OPD fee schedule increase factor for a year to 
equal the IPPS market basket percentage increase factor applicable 
under section 1886(b)(3)(B)(iii) to hospital discharges in the fiscal 
year ending in such year. Accordingly, we are unable to adopt a final 
OPD fee schedule increase factor different than the IPPS market basket 
percentage increase factor finalized in the FY 2025 IPPS/LTCH PPS final 
rule. We refer commenters to that final rule for responses regarding 
the issues commenters raised (89 FR 69340).
    Comment: Many commenters expressed concerns with the Employment 
Cost Index (ECI) used to measure changes in labor compensation in the 
market basket, which they state may no longer accurately capture the 
changing composition and cost structure of the hospital labor market 
given the large increases in short-term contract labor use and its 
growing costs. The commenters stated labor costs have increased by more 
than 18 percent from CY 2020 to CY 2023. They attributed this increase 
to expensive contract labor costs (as a result of higher utilization 
rates and higher costs per hour) and faster growth in salaries for 
employed workers (reflecting sign-on and retention bonuses). They 
further stated that while salaries for contract nurses have decreased 
some from a peak in certain geographical areas, they still remained 
nearly 60 percent higher at the end of FY 2023 compared to the start of 
FY 2020. They further stated that CMS recognizes that the ECI does not 
capture shifts in composition of labor, and the commenters stated that 
by design, the ECI is not capturing the shifts that have occurred as 
hospitals have had to turn to contract labor to meet patient demand. 
Several commenters recommended that CMS use its exceptions and 
adjustments authority to adopt new or supplemental data sources, to 
ensure labor costs are adequately reflected in the payment update in 
the final rule. They further requested CMS utilize supplemental data 
sources to evaluate the accuracy of the ECI proxy and to modify 
methodologies, including adopting new or supplemental data, to 
calculate the payment update if its analysis determines that the ECI is 
not adequately capturing labor costs.
    Response: We refer commenters to the FY 2025 IPPS/LTCH PPS final 
rule, where we responded to similar comments regarding the use of the 
ECI and related issues raised by commenters (89 FR 69340 through 
69341). We further note that, as we stated in the CY 2025 OPPS/ASC 
proposed rule, section 1833(t)(3)(C)(iv) of the Act requires the OPD 
fee schedule increase factor for a year to equal the IPPS market basket 
percentage increase factor applicable under section 1886(b)(3)(B)(iii) 
to hospital discharges in the fiscal year ending in such year. 
Accordingly, we are unable to adopt a final OPD fee schedule increase 
factor different than the IPPS market basket percentage increase factor 
finalized in the FY 2025 IPPS/LTCH PPS final rule, which would occur if 
we used a different methodology to measure changes in labor 
compensation in the OPPS market basket.
    Comment: Several commenters recommended that CMS reevaluate the 
data sources it uses for rebasing its market basket and calculating the 
annual market basket update, including labor costs. They strongly 
encouraged CMS to adopt new or supplemental data sources in future 
rulemaking that more accurately reflect the costs to hospitals, such as 
through use of more real time data from the hospital community. They 
stated that they believe that the current market basket does not 
account for the higher costs of contract labor, which has become more 
common in hospitals in an era of clinical labor shortages. A commenter 
requested that CMS rebase the market baskets more frequently and at 
least every 3 years to ensure the market basket reflects the 
appropriate mix of services provided to Medicare beneficiaries.
    Response: We refer commenters to the FY 2025 IPPS/LTCH PPS final 
rule, where we responded to similar comments (89 FR 69341). As we 
stated in the CY 2025 OPPS/ASC proposed rule, section 1833(t)(3)(C)(iv) 
of the Act requires the OPD fee schedule increase factor for a year to 
equal the IPPS market basket percentage increase factor applicable 
under section 1886(b)(3)(B)(iii) to hospital discharges in the fiscal 
year ending in such year. Accordingly, we are unable to adopt a final 
OPD fee schedule increase factor different than the IPPS market basket 
percentage increase factor finalized in the FY 2025 IPPS/LTCH PPS final 
rule.
    Comment: Commenters stated that since the COVID-19 PHE, IHS Global, 
Inc (IGI) has shown a consistent 3-year trend of under-forecasting the 
market basket growth and expressed concern this may indicate a more 
systematic issue with IGI's forecasting. They stated that these missed 
forecasts are permanently established in the standard payment rate for 
IPPS and will continue to compound, which they estimate to be $4 
billion. Several commenters, including many associations, urged CMS to 
use its special exceptions and adjustments authority under section 
1886(d)(5)(i) of the Act to implement a retrospective one-time 
adjustment for CY 2025 to account for the underestimation of the market 
basket updates over the last several years. Commenters recommended that 
CMS implement various one-time adjustments to account for underpayments 
in one or more years between CY 2021 and CY 2023 as well as for 
forecasted underpayments for CY 2024. The commenters stated the 
underestimation is, in large part, because the market basket is a time-
lagged estimate that cannot fully account for unexpected changes that 
occur, such as historic inflation and increased labor and supply costs. 
They stated this is exactly what occurred at the end of the CY 2021 
into CY 2022, which resulted in a large forecast error in the CY 2022 
market basket update.
    Several commenters noted that CMS currently implements a capital 
IPPS market basket forecast error adjustment as well as SNF PPS market 
basket forecast error adjustment policy, which resulted in FY 2024 and 
FY 2025 SNF forecast error adjustments of 3.6 percentage points and 1.7 
percentage points, respectively. They stated while CMS has not 
developed an analogous policy for the OPPS operating update, they 
believe such a forecast error adjustment to the CY 2025 OPPS operating 
update could be adopted under CMS' existing authority. They noted the 
forecast errors for CY 2021 through CY 2023 for OPPS exceeded the 0.5 
percentage point threshold that is used for the SNF forecast error 
adjustment policy. A commenter recommended CMS establish a forecast

[[Page 93967]]

error threshold of 1.5 percentage points, and retroactively adjust 
payments for that year.
    Response: We refer commenters to the FY 2025 IPPS/LTCH PPS final 
rule, where we responded to similar comments (89 FR 69342). As we 
stated in the CY 2025 OPPS/ASC proposed rule, section 1833(t)(3)(C)(iv) 
of the Act requires the OPD fee schedule increase factor for a year to 
equal the IPPS market basket percentage increase factor applicable 
under section 1886(b)(3)(B)(iii) to hospital discharges in the fiscal 
year ending in such year. Accordingly, we are unable to adopt a final 
OPD fee schedule increase factor different than the IPPS market basket 
percentage increase factor finalized in the FY 2025 IPPS/LTCH PPS final 
rule.
    Comment: Multiple commenters supported the proposed 3.0 percent 
market basket increase believing the market basket increase would help 
rural hospitals. However, the commenters believe inflation for 
outpatient hospital services is substantially higher than the market 
basket increase, and they would prefer a higher market basket increase 
to help rural providers. The commenters stated that the operating 
margin for independent rural hospitals is -2.2 percent and that the 
operating margins for system-affiliated rural hospitals is 1.7 percent. 
Other commenters believe the low market basket increases lead to 
challenges for rural providers. Those commenters noted that the 
operating margins for rural hospitals are not sustainable, and they 
noted that eleven hospitals in rural and underserved areas have closed 
in the past two years even with the establishment of a new Medicare 
provider type that allows such hospitals to become rural emergency 
hospitals. The commenters believe a higher market basket increase would 
help rural hospitals stay open and provide access to quality care 
especially maternal care in the areas that they serve.
    Response: We appreciate the support of the commenters of the 
proposed market basket increase, and we appreciate the commenters' 
raising their concerns regarding rural hospitals. As we stated in the 
CY 2025 OPPS/ASC proposed rule, section 1833(t)(3)(C)(iv) of the Act 
requires the OPD fee schedule increase factor for a year to equal the 
IPPS market basket percentage increase factor applicable under section 
1886(b)(3)(B)(iii) to hospital discharges in the fiscal year ending in 
such year. Accordingly, we are unable to adopt a final OPD fee schedule 
increase factor different than the IPPS market basket percentage 
increase factor finalized in the FY 2025 IPPS/LTCH PPS final rule.
    Comment: Multiple commenters claim that section 1833(t)(3)(C)(iv) 
of the Act, which defines the outpatient hospital department market 
basket increase factor, has provisions that give CMS flexibility to use 
a different market basket increase factor for outpatient hospital 
services than the market basket increase factor used for inpatient 
hospital services. The commenters requested that CMS take advantage of 
section 1833(t)(3)(C)(iv) to establish a market basket increase for CY 
2025 for the OPPS that would be larger than the market basket increase 
that was finalized for FY 2025 for the IPPS.
    Response: Section 1833(t)(3)(C)(iv) of the Act permits the 
Secretary to substitute for the market basket percentage increase an 
annual percentage increase that is computed and applied with respect to 
covered OPD services furnished in a year in the same manner as the 
market basket percentage increase is determined and applied to 
inpatient hospital services for discharges occurring in a fiscal year. 
We would only anticipate utilizing a specific outpatient hospital 
market basket factor if the rate of change in the cost of covered OPD 
services was substantially different than the rate of change in the 
cost of inpatient hospital services for the previous fiscal year. We 
did not find evidence that the rate of change for covered OPD services 
was substantially different that the rate of changes for inpatient 
hospital services. Therefore, we are adopting an OPD fee schedule 
increase factor for CY 2025 equal to the IPPS market basket percentage 
increase factor applicable under section 1886(b)(3)(B)(iii) to hospital 
discharges in the fiscal year ending in such year, as required by 
section 1833(t)(3)(C)(iv) of the Act. We decline to adopt a final OPD 
fee schedule increase factor different than the IPPS market basket 
percentage increase factor finalized in the FY 2025 IPPS/LTCH PPS final 
rule.
2. Productivity Adjustment
    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 
``productivity adjustment''). In the FY 2012 IPPS/LTCH PPS final rule 
(76 FR 51689 through 51692), we finalized our methodology for 
calculating and applying the productivity adjustment. The U.S. 
Department of Labor's Bureau of Labor Statistics (BLS) publishes the 
official measures of private nonfarm business productivity for the U.S. 
economy. We note that previously the productivity measure referenced in 
section 1886(b)(3)(B)(xi)(II) of the Act was published by BLS as 
private nonfarm business multifactor productivity. Beginning with the 
November 18, 2021, release of productivity data, BLS replaced the term 
multifactor productivity (MFP) with total factor productivity (TFP). 
BLS noted that this is a change in terminology only and will not affect 
the data or methodology. As a result of the BLS name change, the 
productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of the 
Act is now published by BLS as private nonfarm business total factor 
productivity. However, as mentioned, the data and methods are 
unchanged. Please see www.bls.gov for the BLS historical published TFP 
data. A complete description of IHS Global, Inc.'s (IGI) TFP projection 
methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. In addition, we note 
that beginning with the FY 2022 IPPS/LTCH PPS final rule, we refer to 
this adjustment as the productivity adjustment rather than the MFP 
adjustment to more closely track the statutory language in section 
1886(b)(3)(B)(xi)(II) of the Act. We note that the adjustment continues 
to rely on the same underlying data and methodology. In the FY 2025 
IPPS/LTCH PPS proposed rule (89 FR 36204), the proposed productivity 
adjustment for FY 2025 was 0.4 percentage point.
    Therefore, we proposed that the productivity adjustment for the CY 
2025 OPPS/ASC would be 0.4 percentage point. We also proposed that if 
more recent data subsequently became available after the publication of 
the CY 2025 OPPS/ASC proposed rule (for example, a more recent estimate 
of the market basket percentage increase and/or the productivity 
adjustment), we would use such updated data, if appropriate, to 
determine the CY 2025 hospital inpatient market basket update and the 
productivity adjustment, which are components in calculating the OPD 
fee schedule increase factor under

[[Page 93968]]

sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act.
    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 proposed for CY 2025 an OPD fee schedule increase factor of 
2.6 percent for the CY 2025 OPPS/ASC (which is the proposed estimate of 
the hospital inpatient market basket percentage increase of 3.0 
percent, less the proposed 0.4 percentage point productivity 
adjustment).
    Comment: Several commenters expressed concerns about the 
application of the productivity adjustment, particularly given the 
extreme pressures in which hospital and health systems operate. They 
stated the use of the private nonfarm business TFP is meant to capture 
gains from new technologies, economies of scale, business acumen, 
managerial skills and changes in productions. Thus, they stated this 
measure effectively assumes the hospital sector can mirror productivity 
gains from the private nonfarm business sector. They stated, however, 
in an economy marked by great uncertainty due to the PHE and labor and 
other productivity shocks, this assumption is significantly flawed. 
Other commenters requested that productivity adjustment be eliminated 
for CY 2025 without any additional reasons. A commenter also requested 
that CMS use its ``special exceptions and adjustments'' authority to 
reduce the productivity adjustment for CY 2025. Another commenter asked 
that the productivity adjustment not apply to small rural and sole 
community hospitals for CY 2025.
    Response: Section 1833(t)(3)(F)(i) requires that after determining 
the OPD fee schedule increase factor under subparagraph (C)(iv), the 
Secretary shall reduce such increase factor by the productivity 
adjustment described in section 1886(b)(3)(B)(xi) of the Act. As 
required by statute, the FY 2025 productivity adjustment is derived 
based on the 10-year moving average growth in economy-wide productivity 
for the period ending FY 2025.
    We thank the commenters for their comments. After consideration of 
the comments received and consistent with our proposal, we are 
finalizing an OPD fee schedule increase factor of 2.9 percent for CY 
2025, which consists of the IPPS market basket increase factor of 3.4 
percent less a 0.5 percentage point productivity adjustment.
3. Other Conversion Factor Adjustments
    To set the OPPS conversion factor for 2025, we proposed to increase 
the CY 2024 conversion factor of $87.382 by 2.6 percent. In accordance 
with section 1833(t)(9)(B) of the Act, we proposed further to adjust 
the conversion factor for CY 2025 to ensure that any revisions made to 
the wage index and rural adjustment are made on a budget neutral basis. 
We proposed to calculate an overall budget neutrality factor of 1.0026 
for wage index changes by comparing proposed total estimated payments 
from our simulation model using the proposed FY 2025 IPPS wage indexes 
to those payments using the FY 2024 IPPS wage indexes, as adopted on a 
calendar year basis for the OPPS. We further proposed to calculate an 
additional budget neutrality factor of 0.9982 to account for our 
proposed policy to cap wage index reductions for hospitals at 5 percent 
on an annual basis.
    For CY 2025, we proposed to maintain the current rural adjustment 
policy, as discussed in section II.E of this final rule with comment 
period. Therefore, the proposed budget neutrality factor for the rural 
adjustment was 1.0000.
    We proposed to calculate a CY 2025 budget neutrality adjustment 
factor for the cancer hospital payment adjustment by transitioning from 
the target PCR of 0.89 we finalized for CYs 2020 through 2023 (which 
included the 1.0 percentage point reduction as required by section 
16002(b) of the 21st Century Cures Act) and incrementally reducing the 
target PCR by an additional 1.0 percentage point for each calendar 
year, beginning with CY 2024, until the target PCR equals the PCR of 
non-cancer hospitals calculated using the most recent data minus 1.0 
percentage point as required by section 16002(b) of the 21st Century 
Cures Act. Therefore, we proposed to apply a budget neutrality 
adjustment factor of 1.0006 to the conversion factor for the cancer 
hospital payment adjustment. In accordance with section 1833(t)(18)(C) 
of the Act, as added by section 16002(b) of the 21st Century Cures Act 
(Pub. L. 114-255), we reduce the target PCR by 0.01, which brings the 
proposed target PCR to 0.87. This is 0.02 less than the target PCR of 
0.89 from CY 2021 through CY 2023, which was held at the pre-PHE 
target.
    For the CY 2025 OPPS/ASC proposed rule, we estimated that proposed 
pass-through spending for drugs, biologicals, and devices for CY 2025 
would equal approximately $625 million, which represented 0.71 percent 
of total projected CY 2025 OPPS spending. Therefore, we stated that the 
proposed conversion factor would be adjusted by the difference between 
the 0.27 percent estimate of pass-through spending for CY 2024 and the 
0.71 percent estimate of proposed pass-through spending for CY 2025, 
resulting in a proposed decrease to the conversion factor for CY 2025 
of 0.44 percent.
    We proposed that estimated payments for outliers would remain at 
1.0 percent of total OPPS payments for CY 2025. We estimated for the 
proposed rule that outlier payments would be approximately 0.85 percent 
of total OPPS payments in CY 2024; the 1.00 percent for proposed 
outlier payments in CY 2025 would constitute a 0.15 percent increase in 
payment in CY 2025 relative to CY 2024.
    For CY 2025, we proposed to use a conversion factor of $87.382 in 
the calculation of the national unadjusted payment rates for those 
items and services for which payment rates are calculated using 
geometric mean costs; that is, the proposed OPD fee schedule increase 
factor of 2.6 percent for CY 2025, the required proposed wage index 
budget neutrality adjustment of approximately 1.0026, the proposed 5 
percent annual cap for individual hospital wage index reductions 
adjustment of approximately 0.9982, the proposed cancer hospital 
payment adjustment of 1.0006, and the proposed adjustment of a decrease 
of 0.44 percentage point of projected OPPS spending for the difference 
in pass-through spending, which resulted in a proposed conversion 
factor for CY 2025 of $89.379.
    For CY 2025, we also proposed that hospitals that fail to meet the 
reporting requirements of the Hospital OQR Program would continue to be 
subject to a further reduction of 2.0 percentage points to the OPD fee 
schedule increase factor. For hospitals that fail to meet the 
requirements of the Hospital OQR Program, we proposed to make all other 
adjustments discussed above, but use a reduced OPD fee schedule update 
factor of 0.6 percent (that is, the proposed OPD fee schedule increase 
factor of 2.6 percent further reduced by 2.0 percentage points). This 
would result in a proposed reduced conversion factor for CY 2025 of 
$87.636 for hospitals that fail to meet the Hospital OQR Program 
requirements (a difference of -1.743 in the conversion factor relative 
to hospitals that met the requirements). For further discussion of the 
Hospital OQR Program, we refer readers to section XV of this final rule 
with comment period. For 2025, we proposed

[[Page 93969]]

to use a reduced conversion factor of $87.636 in the calculation of 
payments for hospitals that fail to meet the Hospital OQR Program 
requirements (a difference of -1.743 in the conversion factor relative 
to hospitals that met the requirements).
    We received no comments on our proposed adjustments to the 
conversion factor for CY 2025. For this CY 2025 OPPS/ASC final rule 
with comment period, based on more recent data available, the OPD fee 
schedule increase factor for the CY 2025 OPPS is 2.9 percent (which 
reflects the 3.4 percent final estimate of the hospital inpatient 
market basket percentage increase reduced by a 0.5 percentage point 
productivity adjustment). For CY 2025, we are using a conversion factor 
of $89.169 in the calculation of the national unadjusted payment rates 
for those items and services for which payment rates are calculated 
using geometric mean costs; that is, the OPD fee schedule increase 
factor of 2.9 percent for CY 2025, the required wage index budget 
neutrality adjustment of 0.9927, the 5 percent annual cap for 
individual hospital wage index reductions of 0.9995, the cancer 
hospital payment adjustment of 1.0005, and the adjustment of 0.10 (or 
0.37 less 0.27) percentage point of projected OPPS spending for the 
difference in pass-through spending that results in a conversion factor 
for CY 2024 of $89.169. We are also finalizing a reduced conversion 
factor of $87.439 in the calculation of payments for hospitals that 
fail to meet the Hospital OQR Program requirements (a difference of -
1.730 in the conversion factor relative to hospitals that met the 
requirements).
    The calculations we performed to determine the CY 2025 final 
conversion factor are shown in Table 10.
BILLING CODE 4120-01-P

[[Page 93970]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.014

[[Page 93971]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.015

BILLING CODE 4120-01-C

C. 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.A.5 of this final rule with 
comment period.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during- our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). We proposed to continue this policy for 
the CY 2025 OPPS/ASC. We refer readers to section II.C of this final 
rule with comment period for a description and an example of how the 
wage index for a particular hospital is used to determine payment for 
the hospital.
    We did not receive any public comments on our proposed labor-
related share, and we are finalizing our proposal without modification.
    As discussed in the claims accounting narrative included with the 
supporting documentation for this final rule with comment period (which 
is available via the internet on the CMS website (https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices)), for estimating APC costs, we would standardize 
60 percent of estimated claims costs for geographic area wage variation 
using the same FY 2025 pre-reclassified wage index that we use under 
the IPPS to standardize costs. This standardization process removes the 
effects of differences in area wage levels from the determination of a 
national unadjusted OPPS payment rate and copayment amount.
    Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS 
April 7, 2000, final rule with comment period (65 FR 18495 and 18545)), 
the OPPS adopted the final fiscal year IPPS post-reclassified wage 
index as the calendar year wage index for adjusting the OPPS standard 
payment amounts for labor market differences. Therefore, in general, 
the wage index that applies to a particular acute care, short-stay 
hospital under the IPPS has also applied to that hospital under the 
OPPS. As initially explained in the September 8, 1998, OPPS/ASC 
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

[[Page 93972]]

the Act, the IPPS wage index is updated annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74191). Section 10324 of the 
Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, 
which defines a frontier State and amended section 1833(t) of the Act 
to add paragraph (19), which requires a frontier State wage index floor 
of 1.00 in certain cases, and states that the frontier State floor 
shall not be applied in a budget neutral manner. We codified these 
requirements at Sec.  419.43(c)(2) and (3) of our regulations. For CY 
2025 we proposed to implement this provision in the same manner as we 
have since CY 2011. Under this policy, the frontier State hospitals 
would receive a wage index of 1.00 if the otherwise applicable wage 
index (including reclassification, the rural floor, and rural floor 
budget neutrality) is less than 1.00. Because the HOPD receives a wage 
index based on the geographic location of the specific inpatient 
hospital with which it is associated, the frontier State wage index 
adjustment applicable for the inpatient hospital also would apply for 
any associated HOPD. We refer readers to the FY 2011 through FY 2024 
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 and 53370; for FY 2014, 78 FR 50590 and 50591; for FY 2015, 79 FR 
49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR 56922; for FY 2018, 
82 FR 38142; for FY 2019, 83 FR 41380; for FY 2020, 84 FR 42312; for FY 
2021, 85 FR 58765; for FY 2022, 86 FR 45178; FY 2023, 87 FR 49006; and 
for FY 2024, 88 FR 58977.
    In addition to the changes required by the Affordable Care Act, we 
note that the proposed FY 2025 IPPS wage indexes continue to reflect a 
number of adjustments implemented in past years, including, but not 
limited to, reclassification of hospitals to different geographic 
areas, the rural floor provisions, the imputed floor wage index 
adjustment in all-urban states, an adjustment for occupational mix, an 
adjustment to the wage index based on commuting patterns of employees 
(the out-migration adjustment), and the permanent 5-percent cap on any 
decrease to a hospital's wage index from its wage index in a prior FY. 
Beginning with FY 2024, we include hospitals with Sec.  412.103 
reclassification along with geographically rural hospitals in all rural 
wage index calculations, and exclude ``dual reclass'' hospitals 
(hospitals with simultaneous Sec.  412.103 and Medicare Geographic 
Classification Review Board (MGCRB) reclassifications) implicated by 
the hold harmless provision at section 1886(d)(8)(C)(ii) of the Act (88 
FR 58971 through 58973). We also proposed to continue the low wage 
index hospital policy, under which we increase the wage index for 
hospitals with a wage index value below the 25th percentile wage index 
value for a fiscal year by half the difference between the otherwise 
applicable final wage index value for a year for that hospital and the 
25th percentile wage index value for that year across all hospitals. We 
refer readers to the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36181 
through 36186) for a detailed discussion of all proposed changes to the 
FY 2025 IPPS wage indexes.
    We note that in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49018 
through 49021), we finalized a permanent approach to smooth year-to-
year decreases in hospitals' wage indexes. Specifically, for FY 2023 
and subsequent years, we apply a 5-percent cap on any decrease to a 
hospital's wage index from its wage index in the prior FY, regardless 
of the circumstances causing the decline. That is, a hospital's wage 
index for FY 2025 would not be less than 95 percent of its final wage 
index for FY 2024. Except for newly opened hospitals, we apply the cap 
for a fiscal year using the final wage index applicable to the hospital 
on the last day of the prior fiscal year. A newly opened hospital would 
be paid the wage index for the area in which it is geographically 
located for its first full or partial fiscal year (subject to any 
reclassification), and it would not receive a cap for that first year, 
because it would not have been assigned a wage index in the prior year 
(in accordance with 42 CFR 419.41(c)(1) and 419.43(c), as noted 
previously).
    We delineate hospital labor market areas based on Core-Based 
Statistical Areas (CBSAs) established by the Office of Management and 
Budget (OMB). As discussed in the FY 2025 IPPS/LTCH PPS proposed rule 
(89 FR 36139 through 36174), OMB issued revisions to the current labor 
market area delineations on July 21, 2023, that included a number of 
significant changes such as new CBSAs, urban counties that become 
rural, rural counties that become urban, and existing CBSAs that are 
split apart (OMB Bulletin 23-01). This bulletin can be found at: 
https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf. The proposed changes to the IPPS wage index based on the newest 
CBSA delineations are available in the FY 2025 IPPS/LTCH PPS proposed 
rule. We proposed that corresponding changes would be adopted in the 
OPPS, which uses the IPPS wage index, based on the new OMB delineations 
in the CY 2025 OPPS/ASC proposed rule, consistent with any proposals in 
the FY 2025 IPPS/LTCH PPS proposed rule. We believe that using the 
revised delineations based on OMB Bulletin No. 23-01 will increase the 
integrity of the OPPS wage index system by creating a more accurate 
representation of current geographic variations in wage levels. We 
refer readers to proposed changes based on the new OMB delineations in 
the FY 2025 IPPS/LTCH PPS proposed rule at 89 FR 36139 through 36174, 
which includes a discussion of the effects of implementation of the 
proposal to adopt the revised OMB labor market area delineations on 
reclassified hospitals.
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. The FY 
2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different 
lists of codes to identify counties: Social Security Administration 
(SSA) codes and Federal Information Processing Standard (FIPS) codes. 
Historically, CMS listed and used SSA and FIPS county codes to identify 
and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS 
wage indexes. However, the SSA county codes are no longer being 
maintained and updated, although the FIPS codes continue to be 
maintained by the U.S. Census Bureau. The Census Bureau's most current 
statistical area information is derived from ongoing census data from 
2020. The Census Bureau maintains a complete list of changes to 
counties or county equivalent entities on the website at: https://www.census.gov/geo/reference/county-changes.html (which, as of May 6, 
2019, migrated to: https://www.census.gov/programs-surveys/geography.html). In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), 
for purposes of cross walking counties to CBSAs for the IPPS wage 
index, we finalized our proposal to discontinue the use of the SSA 
county codes and begin using only the FIPS county codes. Similarly, for 
the purposes of cross walking counties to CBSAs for the OPPS wage 
index, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59260), we finalized our proposal to discontinue

[[Page 93973]]

the use of SSA county codes and begin using only the FIPS county codes. 
For CY 2025, under the OPPS, we are continuing to use only the FIPS 
county codes for purposes of cross walking counties to CBSAs.
    We proposed to use the FY 2025 IPPS post-reclassified wage index 
for urban and rural areas as the wage index for the OPPS to determine 
the wage adjustments for both the OPPS payment rate and the copayment 
rate for CY 2025. We note that the proposed FY 2025 IPPS wage indexes 
reflect several proposed changes as a result of the revised OMB 
delineations, including proposed policies to accommodate changes in 
rural or urban status for existing counties, as well as addition or 
removal of certain individual CBSAs compared to the previous 
delineations. Therefore, policies and adjustments that were finalized 
for the FY 2025 IPPS post-reclassified wage index would be reflected in 
the final CY 2025 OPPS wage index beginning on January 1, 2025, if 
appropriate. We refer readers to the FY 2025 IPPS/LTCH PPS proposed 
rule (89 FR 36181 through 36186) and the proposed FY 2025 hospital wage 
index files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-proposed-rule-home-page. Regarding budget neutrality for the CY 2025 
OPPS wage index, we refer readers to section II.C of this final rule 
with comment period.
    As a general matter, we continue to believe that using the IPPS 
post-reclassified 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. We acknowledge, 
however, that an interim final action with comment period (IFC) 
entitled Changes to the Fiscal Year 2025 Hospital Inpatient Prospective 
Payment System (IPPS) Rates Due to Court Decision appeared in the 
October 3, 2024 Federal Register (89 FR 80405), which makes certain 
changes to the FY 2025 IPPS post-reclassified wage index for some 
hospitals that were not and could not have been anticipated or 
accounted for in the OPPS proposed rule. For reasons discussed in 
detail later in this section, we believe it is more appropriate and 
consistent with CMS' authority to use the post-reclassified wage index 
established in the FY 2025 IPPS final rule (89 FR 68986) as corrected 
in the FY 2025 IPPS final rule correction (89 FR 80098) for purposes of 
the CY 2025 OPPS wage index than it would be to incorporate the 
exceptional changes implemented by the IFC.
    Hospitals that are paid under the OPPS, but not under the IPPS, do 
not have an assigned hospital wage index under the IPPS. Therefore, for 
non-IPPS hospitals paid under the OPPS, it is our longstanding policy 
to assign the wage index that would be applicable if the hospital was 
paid under the IPPS, based on its geographic location and any 
applicable wage index policies and adjustments. We proposed to continue 
this policy for CY 2025. We refer readers to the FY 2025 IPPS/LTCH PPS 
proposed rule (89 FR 36181 through 36186) for a detailed discussion of 
the proposed changes to the FY 2025 IPPS wage indexes.
    It has been our longstanding policy to allow non-IPPS hospitals 
paid under the OPPS to qualify for the out-migration adjustment if they 
are located in a section 505 out-migration county (section 505 of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA)) (Pub. L. 108-173). Applying this adjustment is consistent with 
our general approach to adopt 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 index 
adjustment if they are located in a section 505 out-migration county. 
This is the same out-migration adjustment policy that would apply if 
the hospital were paid under the IPPS. For CY 2025, we proposed to 
continue our policy of allowing non-IPPS hospitals paid under the OPPS 
to qualify for the outmigration adjustment if they are located in a 
section 505 out-migration county (section 505 of the MMA) (88 FR 49585 
and 49586). Furthermore, we proposed that the wage index that would 
apply for CY 2025 to non-IPPS hospitals paid under the OPPS would 
continue to include the rural floor adjustment and any policies and 
adjustments applied to the IPPS wage index to address wage index 
disparities. In addition, we proposed that the wage index that would 
apply to non-IPPS hospitals paid under the OPPS would include the 5-
percent cap on wage index decreases.
    Comment: One commenter supported CMS's decision to utilize the 
updated OMB delineations and agreed with the CBSA assignments made in 
Connecticut based on the regional planning areas.
    Response: We appreciate the commenter's support.
    Comment: A commenter did not agree with CMS's adoption of OMB's 
CBSA delineation revisions. The commenter stated that OMB cautions that 
CBSAs are not intended for any non-statistical uses and should only be 
used for other purposes with full consideration of the effects of using 
the delineations for such purposes. Further, the commenter stated that 
the Metropolitan Areas Protection and Standardization Act (MAPS Act) 
bars the automatic propagation of OMB revisions in CBSA delineations to 
geographic area determinations in nonstatistical Federal programs, and 
stated that any change to the standards of CBSA delineations shall 
propagate for any non-statistical use by any domestic assistance 
program only if the relevant agency determines that such a propagation 
supports the purposes of the program, is in the public interest, and 
adopts the change through notice-and-comment rulemaking. The commenter 
contends that if CMS chooses to adopt new OMB delineations, CMS must 
fully explain why reliance on the updated CBSAs as set forth by OMB is 
appropriate for purposes of the FY 2025 hospital wage index 
adjustments. The commenter stated that CMS has not provided an 
appropriate rationale for relying on the updated CBSAs and proposed to 
adopt the revised CBSAs by default. The commenter contends that CMS 
must make a fact-specific determination of those CBSAs' suitability for 
Medicare reimbursement purposes, including whether it would be 
appropriate to use additional data to modify OMB's delineations to 
ensure that such changes are appropriate for purposes of defining 
regional labor markets for hospital workers.
    Response: CMS acknowledges that the CBSA definitions and 
delineations were not specifically created for the purpose of 
determining a hospital wage index. However, based on the reasons stated 
in prior rulemaking, we continue to believe that these definitions and 
delineations, which are regularly reviewed and updated by OMB, are the 
best proxy for CMS to use to adjust hospital payment rates based on 
geographic variations in labor costs in accordance with the statute. We 
note that the OPPS wage index has historically adopted the IPPS wage 
index on a calendar year basis, and thus the same structure for 
organizing geographic areas applied to the IPPS through CBSAs has 
applied in the OPPS.
    Section 1886(d)(3)(E) of the Act requires that, as part of the 
methodology for determining prospective payments to hospitals through 
the IPPS, the Secretary must adjust the standardized amounts ``for area 
differences in hospital wage levels by a factor (established by the 
Secretary) reflecting the relative hospital wage level in the

[[Page 93974]]

geographic area of the hospital compared to the national average 
hospital wage level.'' Section 1833(t)(2)(D) of the Act provides that 
for the OPPS, ``the Secretary shall 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.'' We refer 
readers to the FY 1985 IPPS final rule (50 FR 24375 through 24377) and 
the FY 1995 IPPS final rule (60 FR 29218 through 29220) for a history 
of the outreach, consultation, and discussion of the challenges faced 
in defining appropriate labor market areas for purposes of the wage 
index methodology. As with any classification system in which 
boundaries must be established, it is impossible to designate 
boundaries that will be completely satisfactory to all concerned. There 
was no consensus among the interested parties on a choice for new labor 
market areas, and CMS concluded the adoption and continuation of an 
MSA-based framework was the most prudent course of action. We also 
refer readers to the FY 2005 rule (69 FR 49027 through 49028) for 
further discussion regarding the process and outreach CMS undertook 
before initially adopting OMB CBSAs as the basis for the wage index 
methodology. We found that the CBSA framework offered a useful proxy 
for labor market area delineations and that none of the alternative 
labor market areas that were studied provided a distinct improvement 
over the use of MSAs.
    As stated previously, CMS continued to evaluate other potential 
methods to calculate variations in geographic labor markets in a manner 
that maintains or improves consistency and equity in hospital payments 
in response to recommendations from MedPAC. However, as stated in the 
2012 Report to Congress: Plan to Reform the Medicare Wage Index (on the 
web at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-IndexReform), CMS has concluded that 
implementing any of the recommended revisions to wage index 
methodologies would require Congressional action. The commenter did not 
suggest any alternative method for defining geographic labor market 
areas and, given our decades long history of using OMB CBSA (and the 
prior Primary MSA) definitions and delineations for wage index 
purposes, we continue to believe adopting OMB revisions in a timely 
manner is essential to the wage index by creating a more accurate 
representation of geographic variations in wage levels. CMS is aware of 
the MAPS Act requirements for the adoption of CBSA definitions for 
nonstatistical use and believes that we have provided an adequate 
rationale to support our proposed adoption through notice and comment 
rulemaking. As we stated in the proposed rule (89 FR 36140), we believe 
that using the revised delineations based on OMB Bulletin No. 23-01 
will increase the integrity of the wage index by creating a more 
accurate representation of current geographic variations in wage 
levels. While the adoption of the revised delineations will have both 
positive and negative impacts on specific hospitals and labor markets, 
we believe that periodically updating the labor market delineations 
using objective criteria and based on the most recently available 
commuting data will serve the public's interest in ensuring accurate 
Medicare payments to hospitals under the OPPS by more accurately 
reflecting current geographic variations in labor costs in the hospital 
payment methodology. While some CBSAs would be modified in significant 
ways, the criteria for MSA, Micropolitan Statistical Area, and 
Metropolitan Division definitions finalized by OMB are generally 
consistent with past updates, and we do not find that the adoption of 
these delineations will create extreme variations in payments to 
hospitals, especially when considering the impact of the policy to cap 
annual wage index reductions at 5 percent. On this basis, and for the 
reasons we stated in prior rulemaking, we have determined that their 
use supports the purpose of adjusting hospital payment rates based on 
geographic variations in labor costs in accordance with the statute. We 
have reviewed our findings and impacts relating to the new OMB 
delineations and find no compelling reason to delay implementation. 
Therefore, we are finalizing the proposed policies implementing the 
revised OMB delineations, including the policy for the treatment of 
Micropolitan Statistical areas, Metropolitan divisions, and the change 
to county-equivalent definitions for the State of Connecticut.
    Comment: A commenter requested that in addition to the permanent 
cap policy, CMS implement a 3-year wage index transition period 
consistent with prior updates to the CBSA categorizations made due to 
OMB updates.
    Response: We note that when we previously adopted revised OMB 
delineations, the majority of negatively impacted hospitals received a 
wage index adjustment for only one fiscal year via a 50/50 blend of 
wage index values using the then-current and newly adopted delineations 
(79 FR 66827). Hospitals that were reassigned from an urban to rural 
area as a result of our adoption of the revised OMB delineations 
received a 3-year transition period from their previous urban area wage 
index, as long as they did not obtain a new MGCRB reclassification 
during that time period. As discussed in the FY 2023 IPPS/LTCH PPS 
final rule (87 FR 49018 through 49021), the 5 percent cap on annual 
wage index reductions was intended to make unnecessary any future 
transitions in connection with wage index policy implementations, 
including the adoption of revised labor market area definitions. Based 
on our analysis of wage index differences between FY 2024 and FY 2025, 
we estimate that only 136 hospitals (less that 4 percent) will receive 
a wage index cap that did not receive the cap in FY 2024. This 
indicates any impact on overall wage index values that could be caused 
by the adoption of the revised delineations would be relatively small. 
Furthermore, given the iterative and interactive effects of different 
reclassification and wage index hold-harmless policies, it is difficult 
to isolate the effects on wage index values (both positive and 
negative) that are due solely to the adoption of the revised 
delineations. That is, hospitals may make different reclassification 
decisions based on the transition policy, rather than the actual 
impacts of the revised delineations. We believe that any attempt to 
tailor a transition policy specifically to the impacts of adopting 
revised labor market delineations is not likely to yield results that 
more accurately reflect current differences in area wages than the 5 
percent cap policy. We believe the 5 percent cap policy ensures that 
hospitals will not experience large payment reductions as a result of 
annual changes in their wage index value, allows adequate time for 
hospitals to evaluate reclassification options, and provides 
consistency and predictability in wage index values. Largely due to the 
modification of the rural wage index calculation finalized in FY 2024 
IPPS/LTCH PPS final rule (88 FR 58971 through 58977), a much larger 
number of urban and rural hospitals within the same state (nearly 60 
percent) receive identical wage index values (prior to the application 
of other policies, such as the outmigration adjustment, 5 percent cap 
on annual wage index decreases, and low-wage index hospital policy). 
This

[[Page 93975]]

fact suggests that there is even less need for separate transition 
policies for urban and rural hospitals in response to changes in 
geographic delineations than there was previously. Furthermore, we did 
not receive a comment from any hospital (urban or rural) citing 
specific negative impacts due solely or primarily to the proposed 
adoption of the revised OMB delineations. For these reasons, we do not 
believe it is necessary to implement any additional or alternative 
transition policy to the 5 percent cap on wage index decrease policy.
    Comment: A commenter supported our policy to treat urban hospitals 
reclassified as rural hospitals under Sec.  412.103 as rural hospitals 
for purposes of the rural wage indexes and the rural floor.
    Response: We appreciate the commenter's support of our policy.
    Comment: Multiple commenters supported our proposed low-wage index 
policy, which, for hospitals with a wage index value below the 25th 
percentile, increases the hospital's wage index by half the difference 
between the otherwise applicable wage index value for that hospital and 
the 25th percentile wage index value for all hospitals. Some commenters 
stated that the policy helps to address unjustified disparities in 
Medicare reimbursement. One commenter supported the continuation of 
this policy and noted the court decision in Bridgeport Hospital v. 
Becerra, 108 F.4th 882 (D.C. Cir. 2024) that determined that CMS lacked 
the statutory authority to adopt this policy in the IPPS.
    One commenter opposed the proposed low wage index hospital policy. 
They believe that it has the effect of harming hospitals in high wage 
areas while having unclear impacts on the hospitals in low wage areas 
that receive higher payments. The commenter further noted the recent 
court decision in Bridgeport Hospital v. Becerra. As a result, they 
urged CMS to discontinue the low wage index policy in the OPPS, but 
advocated that if CMS maintained the policy, it do so in a non-budget 
neutral manner.
    Response: We appreciate these comments.
    Since the establishment of the OPPS, we have adopted the IPPS wage 
index on a calendar year basis in the OPPS. As we have noted across the 
years and earlier in this section, 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 cases where CMS has had statutory authority to 
implement certain policies under the IPPS in a non-budget neutral 
manner, to apply the same wage index values in the OPPS we have budget 
neutralized those adjustments in accordance with section 1833(t)(2)(D) 
of the Act, such as with the outmigration adjustment (69 FR 65842 
through 65844).
    On July 23, 2024, the Court of Appeals for the D.C. Circuit held 
that the Secretary lacked authority under section 1886(d)(3)(E) of the 
Act or under the ``adjustments'' language of section 1886(d)(5)(I)(i) 
of the Act to adopt the low wage index hospital policy for FY 2020 for 
the IPPS, and that the policy and related budget neutrality adjustment 
in the IPPS must be vacated. Bridgeport Hosp. v. Becerra, 108 F.4th 
882, 887-91 & n.6 (D.C. Cir. 2024). In consideration of the court 
decision, CMS subsequently issued the interim final action with comment 
period (IFC) entitled Changes to the Fiscal Year 2025 Hospital 
Inpatient Prospective Payment System (IPPS) Rates Due to Court Decision 
(CMS-1808-IFC) to remove the low wage index hospital policy for FY 2025 
IPPS purposes. At the same time, the IFC included a payment exception 
under section 1886(d)(5)(I)(i) of the Act that corresponded 
mathematically to a 5 percent cap on wage index reductions from FY 2024 
for certain low wage index hospitals most significantly impacted by the 
removal of the low wage index policy.
    We note that we proposed to include the low wage index hospital 
policy as part of the CY 2025 OPPS wage index and believe that the 
statutory authority provided under section 1833(t)(2)(D) of the Act 
allows us to finalize a similar policy for the CY 2025 OPPS, as we have 
done each year beginning in CY 2020. Specifically, section 
1886(d)(3)(E) of the Act requires that CMS base the IPPS wage index on 
a comparison of ``the relative hospital wage level in the geographic 
area of the hospital compared to the national average hospital wage 
level,'' and on ``a survey conducted by the Secretary (and updated as 
appropriate) of the wages and wage-related costs of subsection (d) 
hospitals in the United States,'' whereas section 1833(t)(2)(D) 
contains no such prescriptions for the manner of determining the OPPS 
wage index. (We continue to effectuate relevant prescriptions, such as 
the requirement in sections 1833(t)(2)(D) and 1833(t)(9) of the Act 
that OPPS wage index policies are generally budget neutral.) In 
addition, CMS has authority to apply the low wage index hospital policy 
to the OPPS wage index under section 1833(t)(2)(E) of the Act, which 
allows the Secretary to ``establish, in budget neutral manner, . . . 
other adjustments as determined to be necessary to ensure equitable 
payments, such as adjustments for certain classes of hospitals. We 
believe implementing the low wage index hospital policy is a valid 
exercise of the Secretary's authority to adopt ``adjustments'' to OPPS 
payments under the OPPS statute, where the provision regarding 
calculation of the OPPS wage adjustment factor does not contain the 
same language that the D.C. Circuit found to be prescriptive for the 
calculation of the IPPS wage index found at section 1886(d)(3)(E) of 
the Act. Additionally, section 1833(t)(2)(E) of the Act--unlike the 
adjustment authority at section 1886(d)(5)(I)--authorizes us to make 
adjustments to ``ensure equitable payments.'' In light of the unique 
circumstances presented by the timing of D.C. Circuit's decision, 
application of the low wage-index-hospital policy under the OPPS for CY 
2025 avoids unexpected and arguably unfair payment consequences for 
hospitals that were not plaintiffs in the Bridgeport case and so falls 
within our equitable adjustment authority.
    While this would create a divergence between the OPPS wage index 
values in CY 2025 and the ultimate, effective FY 2025 IPPS wage index 
values for some hospitals, we continue to believe that the concerns 
related to the wage index that led to the application of this policy to 
the OPPS wage index in previous years continue to apply, and that the 
OPPS authority for wage adjustment factors continues to give CMS the 
authority to implement a budget neutral low wage index hospital policy. 
Additionally, we believe that the same reasons underlying adoption of 
the IFC policies for the FY 2025 IPPS wage index weigh against 
incorporating those policies for purposes of the CY 2025 OPPS wage 
index. Specifically, we noted in the IFC that the intention of the 
policies implemented therein is to ``promote certainty regarding. . 
.payments'' and ``provide for payment stability and promote 
predictability,'' in light of the court's decision in the Bridgeport 
Hospital case (89 FR 80408). Given the differences noted in the 
previous paragraph between the IPPS and OPPS in CMS's statutory 
authorities related to the wage index, those interests are better 
served by finalizing the OPPS wage index methodology as proposed, 
including the low wage index hospital policy.
    Finally, we acknowledge that in the IFC, we implemented under 
section 1886(d)(5)(I)(i) of the Act a transitional payment exception 
for hospitals that benefitted from the FY 2024 low wage

[[Page 93976]]

index hospital policy in the IPPS without budget neutralizing that 
exception. But that payment exception serves a different purpose from 
that of the low wage index hospital policy. And, in any event, unlike 
the statute authorizing the transitional payment exception, CMS's 
authority to implement a low wage index hospital policy in the OPPS 
requires it to budget neutralize that policy. That is, while section 
1886(d)(5)(I)(i) contains no budget neutrality requirement, both 
section 1833(t)(2)(D) and (t)(2)(E) do. Thus, in the context of the 
OPPS, we will continue to budget neutralize the low wage index hospital 
policy. For these reasons, and those discussed above, we are finalizing 
in the CY 2025 OPPS the low wage index hospital policy as we had 
proposed in the CY 2025 OPPS/ASC proposed rule (89 FR 59227).
    We recognize that creating different effective wage index values 
for a hospital under the OPPS than the wage index value for the 
hospital under the IPPS for CY 2025 differs in some respects from how 
we have implemented the OPPS wage index previously, where we have used 
the IPPS wage index value in effect throughout the FY as the OPPS wage 
index value for all hospitals. However, we believe this is the 
appropriate approach for the CY 2025 OPPS given the unusual 
circumstances wherein an appellate court ruled that CMS lacked 
authority under the IPPS statute for a policy under the FY 2020 IPPS 
wage index that the OPPS proposed rule had already proposed to include 
in the OPPS wage index. We further believe the approach in this final 
rule is consistent with Sec.  419.43(c), which states: ``CMS uses the 
hospital inpatient prospective payment system wage index established in 
accordance with Part 412 of this chapter to make the adjustment 
specified under paragraph (a) of this section.'' The OPPS wage index 
values will match the IPPS wage index values in the FY 2025 IPPS final 
rule, as corrected in the FY 2025 IPPS final rule correction (89 FR 
80098), which were ``established in accordance with Part 412''; we are 
merely declining to incorporate certain modifications to those values 
made in the IFC, which reflect extraordinary steps taken due to the 
timing of the court's decision in Bridgeport Hospital.
    CMS will explore options for realigning the IPPS and OPPS wage 
index values through future rulemaking.
    Comment: Multiple commenters supported our policy to apply a 5 
percent cap on any decrease to a hospital's wage index from its wage 
index in the prior FY. Commenters also requested that the proposed 5-
percent cap policy be applied in a non-budget neutral manner, which the 
commenter stated would allow the cap to be applied while avoiding 
decreases to the wage index in areas with high wage indexes.
    Response: We appreciate the commenters' support of our policy to 
apply a 5-percent cap on any decrease to a hospital's wage index from 
its wage index in the prior FY. For the OPPS, 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, which is 
inconsistent with the commenters' request to exclude the wage index cap 
policy from budget neutrality.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification to use the FY 2025 IPPS 
post-reclassified wage index for urban and rural areas as finalized in 
the FY 2025 IPPS final rule and corrected in the FY 2025 IPPS final 
rule correction as the wage index for the OPPS, which includes the OPPS 
low wage index hospital policy, to determine the wage adjustments for 
both the OPPS payment rate and the copayment rate for CY 2025. In 
addition to the low wage index hospital policy, which will only apply 
in the OPPS in CY 2025, certain FY 2025 post-reclassified wage index 
policies will be reflected in the final CY 2025 OPPS wage index 
beginning on January 1, 2025, including, but not limited to, 
reclassification of hospitals to different geographic areas, the rural 
floor provisions, the imputed floor wage index adjustment in all-urban 
states, an adjustment for occupational mix, an adjustment to the wage 
index based on commuting patterns of employees (the out-migration 
adjustment), and a 5-percent cap on any decrease to a hospital's wage 
index from its wage index in the prior FY. We refer readers to the FY 
2025 IPPS/LTCH PPS final rule (89 FR 69252 through 69310) and the FY 
2025 hospital wage index files posted on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-final-rule-home-page. Regarding budget 
neutrality for the CY 2025 OPPS wage index, we refer readers to section 
II.B. of this final rule with comment period.
    For CMHCs, for CY 2025, we proposed to continue to calculate the 
wage index by using the post-reclassification IPPS wage index based on 
the CBSA where the CMHC is located. Furthermore, we proposed that the 
wage index that would apply to a CMHC for CY 2025 would continue to 
include the rural floor adjustment and any policies and adjustments 
applied to the IPPS wage index to address wage index disparities. In 
addition, the wage index that would apply to CMHCs would include the 5-
percent cap on wage index decreases. Also, we proposed that the wage 
index that would apply to CMHCs would not include the outmigration 
adjustment because that adjustment only applies to hospitals.
    We did not receive any public comments on our proposals, and we are 
finalizing our proposals regarding CMHC wage index calculations without 
modification.
    Table 4A associated with the FY 2025 IPPS/LTCH PPS final rule 
(available via the internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-final-rule-home-page) identifies counties that would be 
eligible for the out-migration adjustment. Table 2 associated with the 
FY 2025 IPPS/LTCH PPS final rule as corrected by the FY 2025 IPPS final 
rule correction identifies IPPS hospitals that would receive the out-
migration adjustment for FY 2025. We are including the outmigration 
adjustment information from Table 2 associated with the FY 2025 IPPS/
LTCH PPS final rule as Addendum L to this final rule with comment 
period, with the addition of non-IPPS hospitals that would receive the 
section 505 outmigration adjustment under this final rule. Addendum L 
is available via the internet on the CMS website. We refer readers to 
the CMS website for the OPPS at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices. At 
this link, readers will find a link to the FY 2025 IPPS final rule wage 
index tables and the CY 2025 OPPS final rule Addendum L.

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

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, we use overall hospital-specific CCRs calculated from 
the hospital's most recent cost report (OMB control number: 0938-0050 
for Form CMS-2552-10) to determine outlier payments, payments for pass-
through devices, and monthly interim transitional corridor payments 
under the OPPS during the PPS year. For certain hospitals, under the 
regulations at 42 CFR 419.43(d)(5)(iii), we use the

[[Page 93977]]

statewide average default CCRs to determine the payments mentioned 
earlier if it is not possible to determine an accurate CCR for a 
hospital in certain circumstances. This includes hospitals that are 
new, hospitals that have not accepted assignment of an existing 
hospital's provider agreement, and hospitals that have not yet 
submitted a cost report. We also use the statewide average default CCRs 
to determine payments for hospitals whose CCR falls outside the 
predetermined ceiling threshold for a valid CCR or for hospitals in 
which the most recent cost report reflects an all-inclusive rate status 
(Medicare Claims Processing Manual (Pub. L. 100-04), Chapter 4, Section 
10.11).
    We discussed our policy for using default CCRs, including setting 
the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final 
rule with comment period (73 FR 68594 through 68599) in the context of 
our adoption of an outlier reconciliation policy for cost reports 
beginning on or after January 1, 2009. For details on our process for 
calculating the statewide average CCRs, we refer readers to the Claims 
Accounting Narrative for this final rule with comment period, which is 
posted on our website. We proposed to calculate the default ratios for 
CY 2025 using the most recent cost report data.
    We did not receive any public comments on our proposal, and we are 
finalizing our proposal without modification to calculate the default 
ratios for CY 2025 using the most recent cost report data, which are 
from a June 2024 HCRIS cost report extract.
    We no longer publish a table in the Federal Register containing the 
statewide average CCRs in the annual OPPS/ASC proposed rule and final 
rule with comment period. These CCRs and the upper limit CCR value at 
which we would apply statewide CCRs will be available for download with 
each OPPS/ASC CY proposed rule and final rule on the CMS website. We 
refer readers to our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; 
click on the link on the left of the page titled ``Annual Policy 
Files'' and then select the relevant year to download the statewide 
CCRs and upper limit in the ``Downloads'' section of the web page.

E. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential 
Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the 
Act for CY 2025

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural sole community hospitals 
(SCHs) of 7.1 percent for all services and procedures paid under the 
OPPS, excluding separately payable drugs and biologicals, brachytherapy 
sources, items paid at charges reduced to costs, 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 provides 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, items paid at charges reduced to 
costs, 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 
our regulations at Sec.  419.43(g) to clarify that essential access 
community hospitals (EACHs) are also 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 the Balanced Budget Act of 1997 (BBA) 
(Pub. L. 105-33), a hospital can no longer become newly classified as 
an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2024.
    For CY 2025, we proposed to continue the current policy of a 7.1 
percent payment adjustment for rural SCHs, including EACHs, for all 
services and procedures paid under the OPPS, excluding separately 
payable drugs and biologicals, brachytherapy sources, items paid at 
charges reduced to costs, and devices paid under the pass-through 
payment policy, applied in a budget neutral manner.
    Comment: Many commenters supported our policy to continue the 7.1 
percent payment adjustment for rural SCHs and EACHs.
    Response: We thank the commenters for their support of our policy.
    Comment: Multiple commenters stated that the 7.1 percent payment 
adjustment should be extended to urban SCHs and Medicare dependent 
hospitals (MDHs). The commenters suggested CMS perform another study to 
look at the costs that MDHs incur and that CMS has the authority to 
extend the adjustment to MDHs and urban SCHs without legislation.
    Response: We reiterate that our study of the cost difference by 
APC's between hospitals in rural areas and urban areas only showed a 
significant difference in costs for rural SCHs. CMS results did not 
identify significant cost differences between hospitals in urban areas 
and MDHs. In addition, our authority under section 1833(t)(13) of the 
Act only extends to rural hospitals. Therefore, we are not expanding 
the types of hospitals eligible for the 7.1 percent payment adjustment 
at this time.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue our current 
policy of utilizing a budget neutral 7.1 percent payment adjustment 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. Payment Adjustment for Certain Cancer Hospitals for CY 2025

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 department services. These cancer hospitals are exempted 
from payment under the IPPS. With the Medicare, Medicaid and SCHIP 
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), the Congress 
added section 1833(t)(7), ``Transitional Adjustment to Limit Decline in 
Payment,'' to the Act, which requires the Secretary to determine OPPS 
payments to cancer and children's hospitals based on their pre-BBA

[[Page 93978]]

payment amount (these hospitals are often referred to under this policy 
as ``held harmless'' and their payments are often referred to as ``hold 
harmless'' payments).
    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 department services under the OPPS and a ``pre-
BBA amount.'' That is, cancer hospitals are permanently held harmless 
to their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower in amount under the OPPS than the 
payment amount they would have received before implementation of the 
OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA 
amount'' is the product of the hospital's reasonable costs for covered 
outpatient department services occurring in the current year and the 
base payment-to-cost ratio (PCR) for the hospital defined in section 
1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the 
determination of the base PCR are defined at Sec.  419.70(f). TOPs are 
calculated on Worksheet E, Part B, of the Hospital Cost Report or the 
Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-
2552-10 (OMB NO: 0938-0050), 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 (Pub. L. 111-148) amended 
section 1833(t) of the Act by adding a new paragraph (18), which 
instructs the Secretary to conduct a study to determine if, under the 
OPPS, outpatient costs incurred by cancer hospitals described in 
section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed 
outpatient costs incurred by other hospitals furnishing services under 
section 1833(t) of the Act, as determined appropriate by the Secretary. 
Section 1833(t)(18)(A) of the Act requires the Secretary to take into 
consideration the cost of drugs and biologicals incurred by cancer 
hospitals and other hospitals. Section 1833(t)(18)(B) of the Act 
provides that, if the Secretary determines that cancer hospitals' costs 
are higher than those of other hospitals, the Secretary shall provide 
an appropriate adjustment under section 1833(t)(2)(E) of the Act to 
reflect these higher costs. In 2011, after conducting the study 
required by section 1833(t)(18)(A) of the Act, we determined that 
outpatient costs incurred by the 11 specified cancer hospitals were 
greater than the costs incurred by other OPPS hospitals. For a complete 
discussion regarding the cancer hospital cost study, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 and 
74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs, as discussed in the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most recently submitted or settled cost report 
data that are available at the time of final rulemaking for the 
calendar year. The amount of the payment adjustment is made on an 
aggregate basis at cost report settlement. We note that the changes 
made by section 1833(t)(18) of the Act do not affect the existing 
statutory provisions that provide for TOPs for cancer hospitals. The 
TOPs are assessed, as usual, after all payments, including the cancer 
hospital payment adjustment, have been made for a cost reporting 
period. Table 11 displays the target PCR for purposes of the cancer 
hospital adjustment for CY 2012 through CY 2024.
[GRAPHIC] [TIFF OMITTED] TR27NO24.016

2. Policy for CY 2025
    Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) 
amended section 1833(t)(18) of the Act by adding subparagraph (C), 
which requires that in applying Sec.  419.43(i) (that is, the payment 
adjustment for certain cancer hospitals) for services furnished on or 
after January 1, 2018, the target PCR adjustment be reduced by 1.0 
percentage point less than what would

[[Page 93979]]

otherwise apply. Section 16002(b) also provides that, in addition to 
the percentage reduction, the Secretary may consider making an 
additional percentage point reduction to the target PCR that takes into 
account payment rates for applicable items and services described under 
section 1833(t)(21)(C) of the Act for hospitals that are not cancer 
hospitals described under section 1886(d)(1)(B)(v) of the Act. Further, 
in making any budget neutrality adjustment under section 1833(t) of the 
Act, the Secretary shall not take into account the reduced expenditures 
that result from application of section 1833(t)(18)(C) of the Act.
    We proposed to provide additional payments to the 11 specified 
cancer hospitals so that each cancer hospital's proposed PCR is equal 
to the weighted average PCR (or ``target PCR'') for the other OPPS 
hospitals, generally using the most recent submitted or settled cost 
report data that are available, reduced by 1.0 percentage point, to 
comply with section 16002(b) of the 21st Century Cures Act, and 
adjusted by the proposed post-Public Health Emergency (PHE) transition 
as described later in this section. We are not proposing an additional 
reduction beyond the 1.0 percentage point reduction required by section 
16002(b) of the 21st Century Cures Act for CY 2025.
    To calculate the proposed CY 2025 target PCR, we proposed to use 
the same extract of cost report data from HCRIS used to estimate costs 
for the CY 2025 OPPS which, in most cases, would be the most recently 
available hospital cost reports. 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 2023 claims 
data that we used to model the impact of the proposed CY 2025 APC 
relative payment weights (3,448 hospitals) because it is appropriate to 
use the same set of hospitals that are being used to calibrate the 
modeled CY 2025 OPPS. The cost report data for the hospitals in this 
dataset were from cost report periods with fiscal year ends ranging 
from 2019 to 2023; however, the cost reporting periods were 
predominantly from fiscal years ending in 2022 and 2023. We then 
removed the cost report data of the 49 hospitals located in Puerto Rico 
from our dataset because we did not believe their cost structure 
reflected 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 16 
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 3,421 hospitals with 
cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS were approximately 87 percent of reasonable cost 
(weighted average PCR of 0.87). Therefore, after applying the 1.0 
percentage point reduction, as required by section 16002(b) of the 21st 
Century Cures Act, using our standard process 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 target PCR equal to 0.86 for each cancer hospital.
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81586 
through 81589), we explained that we believe we should begin to take 
into consideration the PCR of non-cancer hospitals based on the most 
recently available data for calculating the target PCR. We noted that 
we do not know if the changes in the data that have yielded lower PCRs 
for non-cancer hospitals are likely to continue in future years or if, 
when data from after the PHE is available, we will see the target PCR 
increase toward its historical norm. Therefore, in the CY 2024 OPPS/ASC 
final rule with comment period, we finalized our proposal to transition 
from the target PCR of 0.89 we finalized for CYs 2020 through 2024 
(which included the 1.0 percentage point reduction as required by 
section 16002(b) of the 21st Century Cures Act) and incrementally 
reduce the target PCR by an additional 1.0 percentage point for each 
calendar year, beginning with CY 2024, until the target PCR equals the 
PCR of non-cancer hospitals calculated using the most recent data minus 
1.0 percentage point as required by section 16002(b) of the 21st 
Century Cures Act. Therefore, utilizing this methodology for the CY 
2025 OPPS/ASC proposed rule, since the target PCR that would otherwise 
apply under our standard process would be a target PCR of 0.86, we 
proposed to reduce the CY 2024 target PCR of 0.88 by 1 percentage point 
and proposed a cancer hospital target PCR of 0.87 for CY 2025.
    Comment: Commenters supported the proposed target PCR of 0.87 for 
CY 2025. One commenter requested that CMS ensure that repayments to 
340B hospitals are appropriately reflected in the final 2025 PCR 
calculation.
    Response: We thank the commenters for their support. With respect 
to the commenter's request that the final 2025 PCR calculation include 
repayments to 340B hospitals, we refer to our response to that same 
comment in the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81588).
    After consideration of the public comments we received, we are 
finalizing without modification our proposal to reduce the CY 2024 
target PCR by 1 percentage point and apply a target PCR of 0.87 to the 
11 specified cancer hospitals for CY 2025.
    Table 12 shows the estimated percentage increase in OPPS payments 
to each cancer hospital for CY 2025, due to the cancer hospital payment 
adjustment policy. The actual, final amount of the CY 2025 cancer 
hospital payment adjustment for each cancer hospital will be determined 
at cost report settlement and will depend on each hospital's CY 2025 
payments and costs from the settled CY 2025 cost report. We note that 
the requirements contained in section 1833(t)(18) of the Act do not 
affect the existing statutory provisions that provide for TOPs for 
cancer hospitals. The TOPs will be assessed, as usual, after all 
payments, including the cancer hospital payment adjustment, have been 
made for a cost reporting period.

[[Page 93980]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.017

G. Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66832 through 66834), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain dollar amount). In CY 2024, the outlier 
threshold was met when the hospital's cost of furnishing a service 
exceeded 1.75 times the APC payment amount (the multiplier threshold) 
and exceeded the APC payment amount plus $7,750 (the fixed-dollar 
amount threshold) (88 FR 81589 through 81591). If the hospital's cost 
of furnishing 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 hospital's cost of furnishing the service 
exceeds 1.75 times the APC payment amount. Beginning with CY 2009 
payments, outlier payments are subject to a reconciliation process 
similar to the IPPS outlier reconciliation process for cost reports, as 
discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68594 through 68599).
    It has been our policy to report the actual amount of outlier 
payments as a percent of total spending in the claims being used to 
model the OPPS. Our estimate of total outlier payments as a percent of 
total CY 2023 OPPS payments, using CY 2023 claims available for this CY 
2025 OPPS/ASC final rule with comment period, is approximately 0.65 
percent. Therefore, for CY 2023, we estimate that we did not meet the 
outlier target by 0.35 percent of total aggregated OPPS payments.
    For this CY 2025 OPPS/ASC final rule with comment period, using CY 
2023 claims data and CY 2024 payment rates, we estimate that the 
aggregate outlier payments for CY 2024 would be approximately 0.83 
percent of the total CY 2024 OPPS payments. We provide estimated CY 
2025 outlier payments for hospitals and CMHCs with claims included in 
the claims data that we used to model impacts in the Hospital-Specific 
Impacts--Provider-Specific Data file on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
2. Outlier Calculation for CY 2025
    For CY 2025, we proposed to continue our policy of estimating 
outlier payments to be 1.0 percent of the estimated aggregate total 
payments under the OPPS. We proposed that a portion of that 1.0 
percent, an amount equal to less than 0.01 percent of outlier payments 
(or 0.0001 percent of total OPPS payments), would be allocated to CMHCs 
for partial hospitalization program (PHP) and intensive outpatient 
program (IOP) 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

[[Page 93981]]

outlier payments. We proposed to continue our outlier policy that if a 
CMHC's cost for PHP and IOP services exceeds 3.40 times the APC payment 
rate, the outlier payment would be calculated as 50 percent of the 
amount by which the cost exceeds 3.40 times the proposed APC payment 
rate.
    For further discussion of CMHC outlier payments, we refer readers 
to section VIII.C of this final rule with comment period.
    To ensure that the estimated CY 2025 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we proposed 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 the fixed-dollar threshold.
    We calculated the proposed fixed-dollar threshold using the 
standard methodology most recently used for CY 2024 (88 FR 81589 
through 81591). For purposes of estimating outlier payments for CY 
2025, we use the hospital-specific overall ancillary CCRs available in 
the April 2024 update to the Outpatient Provider-Specific File (OPSF). 
The OPSF contains provider-specific data, such as the most current 
CCRs, which are maintained by the MACs and used by the OPPS Pricer to 
pay claims. The claims that we generally use to model each OPPS update 
lag by 2 years.
    In order to estimate the CY 2025 hospital outlier payments, we 
inflated the charges on the CY 2023 claims using the same proposed 
charge inflation factor of 1.084555 that we used to estimate the IPPS 
fixed-loss cost threshold for the FY 2025 IPPS/LTCH PPS proposed rule 
(89 FR 36572). We used an inflation factor of 1.04142 to estimate CY 
2024 charges from the CY 2023 charges reported on CY 2023 claims before 
applying CY 2024 CCRs to estimate the percent of outliers paid in CY 
2024. The proposed methodology for determining these charge inflation 
factors is discussed in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 
36572). As we stated in the CY 2005 OPPS final rule with comment period 
(69 FR 65844 through 65846), we believe that the use of the same charge 
inflation factors is appropriate for the OPPS because, with the 
exception of the inpatient routine service cost centers, hospitals use 
the same ancillary and 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 proposed to apply the same CCR 
adjustment factor that we proposed to apply for the FY 2025 IPPS 
outlier calculation to the CCRs used to simulate the proposed CY 2025 
OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2025, we proposed to apply an adjustment factor of 
1.03331 to the CCRs that were in the April 2024 OPSF to trend them 
forward from CY 2024 to CY 2025. The methodology for calculating the 
proposed CCR adjustment factor is discussed in the FY 2025 IPPS/LTCH 
PPS proposed rule (89 FR 36572 through 36573).
    To model hospital outlier payments for the CY 2025 proposed rule, 
we applied the overall CCRs from the April 2024 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 1.03331 to 
approximate CY 2025 CCRs) to charges on CY 2023 claims that were 
adjusted (using the proposed charge inflation factor of 1.084555 to 
approximate CY 2025 charges). We simulated aggregated CY 2023 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiplier threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2025 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $8,000, combined 
with the proposed multiplier threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we proposed that, if a CMHC's cost for 
partial hospitalization or intensive outpatient services exceeds 3.40 
times the APC payment rate, the outlier payment would be calculated as 
50 percent of the amount by which the cost exceeds 3.40 times the APC 
payment rate.
    Section 1833(t)(17)(A) of the Act, which applies to hospitals, as 
defined under section 1886(d)(1)(B) of the Act, requires that hospitals 
that fail to report data required for the quality measures selected by 
the Secretary, in the form and manner required by the Secretary under 
section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point 
reduction to their OPD fee schedule increase factor; that is, the 
annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that would 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 Outpatient Quality Reporting 
(OQR) Program requirements. For hospitals that fail to meet the 
Hospital OQR Program requirements, we proposed to continue the policy 
that we implemented in CY 2010 that the hospitals' costs would 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 XV of this final rule with comment 
period.
    Comment: One commenter noted that they believe the CCR adjustment 
factors used for the IPPS and OPPS proposed rules overstate the effect 
of cost increases that took place from 2022 to 2023. The commenter 
argues that the CCR adjustment factor used in each final rule has been 
below 1.0; however, we proposed a CCR adjustment factor of 1.03331. The 
commenter recommended that we substitute a different CCR adjustment 
factor or cap the CCR adjustment factor at 1.0.
    Response: As discussed in greater detail in the FY 2025 IPPS/LTCH 
PPS final rule (89 FR 69955 through 69962), consistent with our usual 
practice, we are using more recent CCR data for this final rule with 
comment period which yields a CCR adjustment factor of 1.015123. We do 
not believe it is necessary to deviate from our usual practice of using 
the CCR adjustment factor for our calculation, which was finalized 
under the IPPS for FY 2025. Therefore, we are also not accepting this 
recommendation under the OPPS.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue our policy 
of estimating outlier payments to be 1.0 percent of the estimated 
aggregate total payments under the OPPS and to use our established 
methodology to set the OPPS outlier fixed-dollar loss threshold for CY 
2025.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period for outlier calculations. For CY 2025, 
we are applying the overall ancillary CCRs from the July 2024 OPSF file 
after adjustment (using the CCR adjustment factor of 1.015123 to 
approximate CY 2025 CCRs) to charges on CY 2023 claims that were 
adjusted using a charge inflation factor of 1.08406 to

[[Page 93982]]

approximate CY 2025 charges. These are the same CCR adjustment and 
charge inflation factors that were used to set the IPPS fixed-dollar 
thresholds for the FY 2025 IPPS/LTCH PPS final rule (89 FR 69955 
through 69962). We simulated aggregated CY 2025 hospital outlier 
payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiple-threshold constant and assuming 
that outlier payments will 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 payment equaled 
1.0 percent of aggregated estimated total CY 2025 OPPS payments. We 
estimate that a fixed-dollar threshold of $7,175 combined with the 
multiple threshold of 1.75 times the APC payment rate, will allocate 
the 1.0 percent of aggregated total OPPS payments to outlier payments.
    For CMHCs, if a CMHC's cost for partial hospitalization or 
intensive outpatient services exceeds 3.40 times the APC payment rate, 
the outlier payment will be calculated as 50 percent of the amount by 
which the cost exceeds the 3.40 times the ACP payment rate.

H. Calculation of an Adjusted Medicare Payment From the National 
Unadjusted Medicare Payment

    The national unadjusted payment rate is the payment rate for most 
APCs before accounting for the wage index adjustment or any applicable 
adjustments. 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 2025 
OPPS/ASC final rule with comment period, 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 final rule with comment period and the relative payment 
weight described in section II.A of this final rule with comment 
period. The national unadjusted payment rate for most APCs contained in 
Addendum A to this final rule with comment period (which is available 
via the CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates) and for most 
HCPCS codes to which separate payment under the OPPS has been assigned 
in Addendum B to this final rule with comment period (which is 
available on the CMS website link above) is calculated by multiplying 
the final CY 2025 scaled weight for the APC by the CY 2025 conversion 
factor.
    We note that section 1833(t)(17) of the Act, which applies to 
hospitals, as defined under section 1886(d)(1)(B) of the Act, requires 
that hospitals that fail to submit data required to be submitted on 
quality measures selected by the Secretary, in the form and manner and 
at a time specified by the Secretary, incur a reduction of 2.0 
percentage points to their OPD fee schedule increase factor, that is, 
the annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that apply to certain outpatient items and services provided by 
hospitals that are required to report outpatient quality data and that 
fail to meet the Hospital OQR Program 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 
XIV of this final rule with comment period.
    Below we demonstrate the steps used to determine the APC payments 
that will be made in a CY under the OPPS to a hospital that fulfills 
the Hospital OQR Program requirements and to a hospital that fails to 
meet the Hospital OQR Program requirements for a service that has any 
of the following status indicator assignments: ``J1,'' ``J2,'' ``P,'' 
``Q1,'' ``Q2,'' ``Q3,'' ``Q4,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' 
(as defined in Addendum D1 to this final rule with comment period, 
which is available via the internet on the CMS website), in a 
circumstance in which the multiple procedure discount does not apply, 
the procedure is not bilateral, and conditionally packaged services 
(status indicator of ``Q1'' and ``Q2'') qualify for separate payment. 
We note that, although blood and blood products with status indicator 
``R'' and brachytherapy sources with status indicator ``U'' are not 
subject to wage adjustment, they are subject to reduced payments when a 
hospital fails to meet the Hospital OQR Program requirements.
    Individual providers interested in calculating the payment amount 
that they would receive for a specific service from the national 
unadjusted payment rates presented in Addenda A and B to this final 
rule with comment period (which are available via the internet on the 
CMS website) should follow the formulas presented in the following 
steps. For purposes of the payment calculations below, we refer to the 
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 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 reporting ratio of 0.9806 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 to receive the 
full CY 2025 OPPS fee schedule increase factor.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS/ASC final rule with comment period (65 FR 
18496 through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.

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

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. The wage index values assigned to each area would reflect the 
geographic statistical areas (which are based upon OMB standards) to 
which hospitals are assigned for FY 2025 in the FY 2025 IPPS, as 
corrected in the FY 2025 IPPS final rule correction (89 FR 80098), 
reclassifications through the Medicare Geographic Classification Review 
Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' hospitals, and 
reclassifications under section 1886(d)(8)(E) of the Act, as 
implemented in Sec.  412.103 of the regulations. We are continuing to 
apply for the CY 2025 OPPS wage index any adjustments for the FY 2025 
IPPS final rule post-reclassified wage index, including, but not 
limited to, the rural floor adjustment and a wage index floor of 1.00 
in frontier states, in accordance with section 10324 of the Affordable

[[Page 93983]]

Care Act of 2010. We are also including the low wage index hospital 
policy as part of the CY 2025 OPPS wage index. The adoption of this 
policy for CY 2025 for the OPPS wage index will create different 
effective wage index values for hospitals that benefit from the policy 
under the OPPS than the wage index value for those hospitals under the 
IPPS for FY 2025 as modified by the interim final action with comment 
period ``Changes to the Fiscal Year 2025 Hospital Inpatient Prospective 
Payment System (IPPS) Rates Due to Court Decision'' (89 FR 80405). For 
further discussion of the wage index we are applying for the CY 2025 
OPPS, including the low wage index hospital policy, we refer readers to 
section II.C of this final rule with comment period.
    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 the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Pub. L. 108-173). Addendum L to this final rule with comment period 
(which is available via the internet on the CMS website) contains the 
qualifying counties and the associated wage index increase developed 
for the final FY 2025 IPPS wage index, which are listed in Table 3 
associated with the FY 2025 IPPS final rule and available via the 
internet on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps. (Click on the link on 
the left side of the screen titled ``FY 2025 IPPS Final Rule Home 
Page'' and select ``FY 2025 Final Rule Tables.'') This step is to be 
followed only if the hospital is not reclassified or redesignated under 
section 1886(d)(8) or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the labor-related portion of the national unadjusted payment 
rate for the specific service by the wage index.

Xa is the labor-related portion of the national unadjusted payment rate 
(wage adjusted).
Xa = labor-portion of the 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 = 0.40 * (national unadjusted payment rate).

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

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

    Step 7. The adjusted payment rate is the sum of the wage adjusted 
labor-related portion of the national unadjusted payment rate and the 
nonlabor-related portion of the national unadjusted payment rate.

Xais the labor-related portion of the national unadjusted payment rate 
(wage adjusted).
Y is the nonlabor-related portion of the national unadjusted payment 
rate.
Adjusted Medicare Payment = Xa + Y

    We are providing examples below of the calculation of both the 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 previously. For purposes of this example, we are using a 
provider that is located in Brooklyn, New York that is assigned to CBSA 
35614. This provider bills one service that is assigned to APC 5071 
(Level 1 Excision/Biopsy/Incision and Drainage). The final CY 2025 full 
national unadjusted payment rate for APC 5071 is $703.59. The final 
reduced national adjusted payment rate for APC 5071 for a hospital that 
fails to meet the Hospital OQR Program requirements is $689.94. This 
reduced rate is calculated by multiplying the reporting ratio of 0.9806 
by the full unadjusted payment rate for APC 5071.
    Step 1. The labor-related portion of the final full national 
unadjusted payment is approximately $422.15 (0.60 * $703.59). The 
labor-related portion of the final reduced national adjusted payment is 
approximately $413.96 (0.60 * $689.94).
    Step 2 & 3. The FY 2025 wage index for a provider located in CBSA 
35614 in New York, which includes the adoption of the final IPPS 2025 
wage index policies, is 1.3056.
    Step 4. The wage adjusted labor-related portion of the final full 
national unadjusted payment is approximately $551.16 ($422.15 * 
1.3056). The wage adjusted labor-related portion of the final reduced 
national adjusted payment is approximately $540.47 ($413.96 * 1.3056).
    Step 5. The nonlabor-related portion of the final full national 
unadjusted payment is approximately $281.44 (0.40 * $703.59). The 
nonlabor-related portion of the final reduced national adjusted payment 
is approximately $275.98 (0.40 * $689.94).
    Step 6. For this example of a provider located in Brooklyn, New 
York, the rural adjustment for rural SCHs does not apply.
    Step 7. The sum of the labor-related and nonlabor-related portions 
of the final full national unadjusted payment is approximately $832.60 
($551.16 + $281.44). The sum of the portions of the final reduced 
national adjusted payment is approximately $816.45 ($540.47 + $275.98) 
as shown in Table 13.

[[Page 93984]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.018

    We did not receive any public comments on these steps under the 
methodology that we included in the proposed rule to determine the APC 
payments for CY 2025. Therefore, we are using the steps in the 
methodology specified above to demonstrate the calculation of the final 
CY 2025 OPPS payments using the same parameters.

I. 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 CYs thereafter, shall not exceed 40 percent of the APC 
payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure (including items such as drugs and biologicals) 
performed in a year to the amount of the inpatient hospital deductible 
for that year.
    Section 4104 of the Affordable Care Act eliminated the Medicare 
Part B coinsurance for preventive services furnished on and after 
January 1, 2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. For a discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, we refer readers to section XII.B of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
    Section 122 of the Consolidated Appropriations Act (CAA) of 2021 
(Pub. L. 116-260), Waiving Medicare Coinsurance for Certain Colorectal 
Cancer Screening Tests, amended section 1833(a) of the Act to offer a 
special coinsurance rule for screening flexible sigmoidoscopies and 
screening colonoscopies, regardless of the code that is billed for the 
establishment of a diagnosis as a result of the test, or for the 
removal of tissue or other matter or other procedure, that is furnished 
in connection with, as a result of, and in the same clinical encounter 
as the colorectal cancer screening test. We refer readers to section 
X.B, ``Changes to Beneficiary Coinsurance for Certain Colorectal Cancer 
Screening Tests,'' of the CY 2022 OPPS/ASC final rule with comment 
period for the full discussion of this policy (86 FR 63740 through 
63743). Under the regulation at 42 CFR 410.152(l)(5)(i)(B), the 
Medicare Part B payment percentage for colorectal cancer screening 
tests described in the regulation at Sec.  410.37(j) that are furnished 
in CY 2023 through CY 2026 is 85 percent, with beneficiary coinsurance 
equal to 15 percent.
    On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) (Pub. 
L. 117-169) was signed into law. Section 11101(a) of the IRA amended 
section 1847A of the Act by adding a new subsection (i), which requires 
the payment of rebates into the Supplementary Medical Insurance Trust 
Fund for Part B rebatable drugs if the payment limit amount exceeds the 
inflation-adjusted payment amount, which is calculated as set forth in 
section 1847A(i)(3)(C) of the Act. The provisions of section 11101 of 
the IRA thus far have primarily been implemented through program 
instruction, as permitted under section 1847A(c)(5)(C) of the Act. As 
such, we issued guidance for the computation of inflation-adjusted 
beneficiary coinsurance under section 1847A(i)(5) of the Act and 
amounts paid under section 1833(a)(1)(EE) of the Act on February 9, 
2023.12 13 For additional information regarding 
implementation of section 11101 of the IRA, please see the inflation 
rebates resources page at https://www.cms.gov/inflation-reduction-act-and-medicare/inflation-rebates-medicare.
---------------------------------------------------------------------------

    \12\ https://www.cms.gov/files/document/medicare-part-b-inflation-rebate-program-initial-guidance.pdf.
    \13\ In addition, beginning with the April 2023 ASP Drug Pricing 
file, the file includes the coinsurance percentage for each drug and 
specifies ``inflation-adjusted coinsurance'' in the ``Notes'' column 
if the coinsurance for a drug is less than 20 percent of the 
Medicare Part B payment amount. Drug pricing files are available at 
https://www.cms.gov/medicare/medicare-fee-for-service-part-b-drugs/mcrpartbdrugavgsalesprice.
---------------------------------------------------------------------------

    Section 11101(b) of the IRA amended sections 1833(i) and 1833(t)(8) 
of the Act by adding a new paragraph (9) and subparagraph (F), 
respectively. Section 1833(i)(9) requires under the ASC payment system 
that, in the case of a Part B rebatable drug, in lieu of calculation of 
coinsurance that would otherwise apply under the ASC payment system, 
the provisions of section 1847A(i)(5) of the Act shall, as determined 
appropriate by the Secretary, apply for calculation of beneficiary 
coinsurance in the same manner as the provisions of section 1847A(i)(5) 
of the Act apply under that section. Similarly, section 1833(t)(8)(F) 
of the Act requires under the OPPS that in the case of a Part B 
rebatable drug (except for a drug that has no copayment applied under 
subparagraph (E) of such section or for which payment is packaged into 
the payment for a covered OPD service or group of services), in lieu of 
the calculation of the copayment amount that would otherwise apply 
under the OPPS, the provisions of section 1847A(i)(5) of the Act shall, 
as determined appropriate by the Secretary, apply in the same manner as 
the provisions of section 1847A(i)(5) of the Act apply under that 
section. Section 1847A(i)(5) of the Act requires that for Part B 
rebatable drugs, as defined in section 1847A(i)(2)(A) of the Act, 
furnished on or after April 1, 2023, in quarters in which the payment

[[Page 93985]]

amount described in section 1847A(i)(3)(A)(ii)(I) of the Act (or, in 
the case of selected drugs described under section 1192(c) of the Act, 
the payment amount described in section 1847A(b)(1)(B) of the Act), 
exceeds the inflation-adjusted payment amount determined in accordance 
with section 1847A(i)(3)(C) of the Act, the coinsurance will be 20 
percent of the inflation-adjusted payment amount for such quarter 
(hereafter, the inflation-adjusted coinsurance amount). This inflation-
adjusted coinsurance amount is applied as a percent, as determined by 
the Secretary, to the payment amount that would otherwise apply for 
such calendar quarter in accordance with section 1847A(b)(1)(B) or (C) 
of the Act, as applicable, including in the case of a selected drug.
    Paragraph (9) of section 1833(i) of the Act and subparagraph (F) of 
section 1833(t)(8) of the Act, as added by section 11101(b) of the IRA, 
also provide that in lieu of the amounts of payment otherwise 
applicable under the ASC payment system and the OPPS, the provisions of 
paragraph (1)(EE) of subsection (a) of section 1833 of the Act shall 
apply, as determined appropriate by the Secretary. Section 11101(b) of 
the IRA amended section 1833(a)(1) of the Act by adding a new 
subparagraph (EE), which requires that if the payment amount under 
section 1847A(i)(3)(A)(ii)(I) of the Act or, in the case of a selected 
drug, the payment amount described in section 1847A(b)(1)(B) of the 
Act, for that drug exceeds the inflation-adjusted payment amount for a 
Part B rebatable drug, the Part B payment amount would, subject to the 
Part B deductible and sequestration, equal the difference between such 
payment amount and the inflation-adjusted coinsurance amount. 
Consistent with the policy adopted in section 40 of the revised 
Medicare Part B Drug Inflation Rebate Guidance, the calculation to 
determine the applicable beneficiary coinsurance amount would not be 
adjusted for sequestration. CMS codified the Medicare payment for Part 
B rebatable drugs in the CY 2024 PFS final rule by adding new paragraph 
(m) to Sec.  410.152.
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81594), we codified the OPPS program payment and cost sharing amounts 
for Part B rebatable drugs as required by section 1833(t)(8)(F) by 
adding a new paragraph (e) to Sec.  419.41, which cross-references the 
regulations adopted in the CY 2024 PFS final rule (Sec. Sec.  
410.152(m) and 489.30(b)(6)). We also amended the regulation text to 
reflect our longstanding policies for calculating the Medicare program 
payment and cost sharing amounts for separately payable drugs and 
biologicals by adding a new paragraph (d) to Sec.  419.41. Similarly, 
we codified the ASC cost sharing amounts for Part B rebatable drugs as 
required by section 1833(i)(9) of the Act by revising Sec.  416.172(d) 
to include a cross-reference to 42 CFR 489.30(b)(6), which codified the 
cost sharing amounts for Part B rebatable drugs with prices increasing 
at a rate faster than inflation.
    In the CY 2025 PFS proposed rule (89 FR 61956), CMS proposed to 
adopt new provisions at Sec. Sec.  427.200 and 427.201 to codify the 
policies regarding the computation of the inflation-adjusted 
beneficiary coinsurance, defined in Sec.  427.200, for Part B rebatable 
drugs as required by section 1847A(i)(5) of the Act. The proposed new 
provision at Sec.  427.201 includes references to the existing 
provisions at Sec. Sec.  410.152(m), 419.41(e), and 489.30(b)(6). CMS 
further proposed at Sec.  427.201(c) that any category of products that 
is excluded from the identification of Part B rebatable drugs at Sec.  
427.101(b) is not subject to the inflation-adjusted beneficiary 
coinsurance. Examples of these excluded products include separately 
payable radiopharmaceuticals, skin substitute products, and qualifying 
biosimilar biological products.
    Additionally, CMS proposed at Sec.  427.201(b) that CMS would use 
the published payment amount in quarterly pricing files 
14 15 16 to determine if a Part B rebatable drug should have 
an adjusted beneficiary coinsurance equal to 20 percent of the 
inflation-adjusted payment amount as described in section 
1847A(i)(3)(C) for a calendar quarter. The proposed approach deviates 
from the rebate calculation approach proposed in Sec.  427.302, which 
relies on the specified amount defined at Sec.  427.20 even when the 
specified amount and the published payment amount in quarterly pricing 
files differ. The approach proposed at Sec.  427.201(b) will be used 
only to determine whether there should be a coinsurance adjustment and 
will not impact the applicability or calculation of inflation rebates. 
CMS believes this approach is consistent with the statutory language 
and appropriately reflects the differences in the statutory text of 
section 1847A(i)(5) of the Act, which sets forth the payment amount 
that is used to determine whether coinsurance should be adjusted, and 
section 1847A(i)(3)(A) of the Act, which sets forth the ``specified 
amount'' used to determine rebate amounts.
---------------------------------------------------------------------------

    \14\ See: https://www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files.
    \15\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates.
    \16\ See: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-payment-rates-addenda.
---------------------------------------------------------------------------

    We did not receive any public comments related to inflation-
adjusted beneficiary coinsurance or program payment amounts.
2. OPPS Copayment Policy
    For CY 2025, we proposed 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 for a discussion of that methodology (68 FR 63458). 
In addition, we proposed to use the same standard rounding principles 
that we have historically used in instances where the application of 
our standard copayment methodology would result in a copayment amount 
that is less than 20 percent and cannot be rounded, under standard 
rounding principles, to 20 percent. We refer readers to the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66687) in which we 
discuss our rationale for applying these rounding principles. The final 
national unadjusted copayment amounts for services payable under the 
OPPS that will be effective January 1, 2025, are included in Addenda A 
and B to this final rule with comment period (which are available via 
the internet on the CMS website).
    As discussed in section XIV.E of this final rule with comment 
period, for CY 2025, the Medicare beneficiary's minimum unadjusted 
copayment and national unadjusted copayment for a service to which a 
reduced national unadjusted payment rate applies will equal the product 
of the reporting ratio and the national unadjusted copayment, or the 
product of the reporting ratio and the minimum unadjusted copayment, 
respectively, for the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates, due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS final rule with 
comment period, the development of the copayment methodology generally 
moves beneficiary copayments closer to 20 percent of OPPS APC payments 
(68 FR 63458 through 63459).
    In the CY 2004 OPPS final rule with comment period (68 FR 63459), 
we adopted a new methodology to calculate unadjusted copayment amounts 
in situations including reorganizing APCs,

[[Page 93986]]

and we finalized the following rules to determine copayment amounts in 
CY 2004 and subsequent years.
     When an APC group consists solely of HCPCS codes that were 
not paid under the OPPS the prior year because they were packaged or 
excluded or are new codes, the unadjusted copayment amount would be 20 
percent of the APC payment rate.
     If a new APC that did not exist during the prior year is 
created and consists of HCPCS codes previously assigned to other APCs, 
the copayment amount is calculated as the product of the APC payment 
rate and the lowest coinsurance percentage of the codes comprising the 
new APC.
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
equal to or greater than the prior year's rate, the copayment amount 
remains constant (unless the resulting coinsurance percentage is less 
than 20 percent).
     If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
less than the prior year's rate, the copayment amount is calculated as 
the product of the new payment rate and the prior year's coinsurance 
percentage.
     If HCPCS codes are added to or deleted from an APC and, 
after recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in a decrease in the coinsurance 
percentage for the reconfigured APC, the copayment amount would not 
change (unless retaining the copayment amount would result in a 
coinsurance rate less than 20 percent).
     If HCPCS codes are added to an APC and, after 
recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in an increase in the coinsurance 
percentage for the reconfigured APC, the copayment amount would be 
calculated as the product of the payment rate of the reconfigured APC 
and the lowest coinsurance percentage of the codes being added to the 
reconfigured APC.
    We noted in the CY 2004 OPPS final rule with comment period that we 
would seek to lower the copayment percentage for a service in an APC 
from the prior year if the copayment percentage was greater than 20 
percent. We noted that this principle was consistent with section 
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the 
national unadjusted coinsurance rate so that beneficiary liability will 
eventually equal 20 percent of the OPPS payment rate for all OPPS 
services to which a copayment applies, and with section 1833(t)(3)(B) 
of the Act, which achieves a 20-percent copayment percentage when fully 
phased in and gives the Secretary the authority to set rules for 
determining copayment amounts for new services. We further noted that 
the use of this methodology would, in general, reduce the beneficiary 
coinsurance rate and copayment amount for APCs for which the payment 
rate changes as the result of the reconfiguration of APCs and/or 
recalibration of relative payment weights (68 FR 63459).
    We did not receive any public comments on our proposal and we are 
finalizing our proposal to determine copayment amounts for new and 
revised APCs using the same methodology that we implemented beginning 
in CY 2004. The finalized national unadjusted copayment amounts for 
services payable under the OPPS that will be effective January 1, 2025, 
are included in Addenda A and B to the CY 2025 OPPS/ASC final rule 
(which are available on the CMS website).
3. Calculation of an Adjusted Copayment Amount for an APC Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its proposed 
payment rate. For example, using APC 5071, $140.72 is approximately 20 
percent of the full national unadjusted payment rate of $703.59. For 
APCs with only a minimum unadjusted copayment in Addenda A and B to 
this final rule with comment period (which are available via the 
internet on the CMS website), the beneficiary payment percentage is 20 
percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

B is the beneficiary payment percentage.
B = National unadjusted copayment for APC/national unadjusted payment 
rate for APC.

    Step 2. Calculate the appropriate wage-adjusted payment rate for 
the APC for the provider in question, as indicated in Steps 2 through 4 
under section II.H of this final rule with comment period. Calculate 
the rural adjustment for eligible providers, as indicated in Step 6 
under section II.H of this final rule with comment period.
    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 final rule with 
comment period, with and without the rural adjustment, to calculate the 
adjusted beneficiary copayment for a given service.

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

    Step 4. For a hospital that failed to meet its Hospital OQR Program 
requirements, multiply the copayment calculated in Step 3 by the 
reporting ratio of 0.9806.
    The unadjusted copayments for services payable under the OPPS that 
will be effective January 1, 2025, are shown in Addenda A and B to this 
final rule with comment period (which are available via the CMS 
website). We note that the final national unadjusted payment rates and 
copayment rates shown in Addenda A and B to this final rule with 
comment period reflect the CY 2025 OPD fee schedule increase factor 
discussed in section II.B of this final rule with comment period.
    In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act 
limits the amount of beneficiary copayment that may be collected for a 
procedure performed in a year to the amount of the inpatient hospital 
deductible for that year.
    Comment: One commenter suggested beneficiaries should not be 
responsible for drug pricing increases and that CMS should limit or 
eliminate cost-sharing for beneficiaries. The commenter also stated 
that cost-sharing has unintended consequences and negative effects on 
access to health care and health outcomes, including increased use of 
emergency rooms. The commenter also acknowledged that CMS is limited by 
statute and that our copayment methodologies ensure that copayments are 
minimal.
    Response: We thank the commenter for the input. We note that the 
beneficiary copayment is established by section 1833(t)(3)(B) of the 
Act and Sec.  419.41(d). Section 1847A(i)(5) of the Act provides for an 
adjustment to the

[[Page 93987]]

beneficiary coinsurance for Part B rebatable drugs with prices that 
have increased faster than the rate of inflation beginning April 1, 
2023. In the CY 2024 OPPS/ASC OPPS final rule and the CY 2024 Physician 
Fee Schedule final rule, CMS codified this inflation-adjusted 
coinsurance amount at Sec. Sec.  419.41(e), 410.152(m), and 
489.30(b)(6), respectively. For these drugs and biologicals, the 
beneficiary coinsurance is 20 percent of the inflation-adjusted payment 
amount, which is less than what the beneficiary would pay in 
coinsurance otherwise. Therefore, beneficiaries are insulated from 
coinsurance amounts calculated based on drug prices that outpace 
inflation. More information about the beneficiary coinsurance 
adjustment and the Medicare Part B Inflation Rebate Program is 
available at https://www.cms.gov/inflation-reduction-act-and-medicare/inflation-rebates-medicare.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New and Revised HCPCS Codes

    Payments for OPPS procedures, services, and items are generally 
based on medical billing codes, specifically, Healthcare Common 
Procedure Coding System (HCPCS) codes, that are reported on hospital 
outpatient department (HOPD) claims. HCPCS codes are used to report 
surgical procedures, medical services, items, and supplies under the 
hospital OPPS. The HCPCS is divided into two principal subsystems, 
referred to as Level I and Level II of the HCPCS. Level I is comprised 
of CPT (Current Procedural Terminology) codes, a numeric and 
alphanumeric coding system that is established and maintained by the 
American Medical Association (AMA), and consists of Category I, II, 
III, MAAA, and PLA CPT codes. Level II, which is established and 
maintained by CMS, is a standardized coding system that is used 
primarily to identify products, supplies, and services not included in 
the CPT codes. Together, Level I and II HCPCS codes are used to report 
procedures, services, items, and supplies under the OPPS payment 
system. Specifically, we recognize the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures, 
diagnostic and therapeutic services, and vaccine codes;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures;
     MAAA CPT codes, which describe laboratory multianalyte 
assays with algorithmic analyses (MAA);
     PLA CPT codes, which describe proprietary laboratory 
analyses (PLA) services; and
     Level II HCPCS codes (also known as alpha-numeric codes), 
which are used primarily to identify drugs, devices, supplies, 
temporary procedures, and services not described by CPT codes.
    The codes are updated and changed throughout the year. CPT and 
Level II HCPCS code changes that affect the OPPS are published through 
the annual rulemaking cycle and through the OPPS quarterly update 
Change Requests (CRs). Generally, these code changes are effective 
January 1, April 1, July 1, or October 1. CPT code changes are released 
by the AMA (via their website) while Level II HCPCS code changes are 
released to the public via the CMS HCPCS website. CMS recognizes the 
release of new CPT and Level II HCPCS codes outside of the formal 
rulemaking process via OPPS quarterly update CRs. Based on our review, 
we assign the new codes to interim status indicators (SIs) and APCs. 
These interim assignments are finalized in the OPPS/ASC final rules. 
This quarterly process offers hospitals access to codes that more 
accurately describe the items or services furnished and provides 
payment for these items or services in a timelier manner than if we 
waited for the annual rulemaking process. We solicit public comments on 
the new CPT and Level II HCPCS codes, status indicators, and APC 
assignments through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. The items, procedures, 
or services not exclusively paid separately under the hospital OPPS are 
assigned to appropriate status indicators. Certain payment status 
indicators provide separate payment while other payment status 
indicators do not. In section XI (CY 2025 Payment Status and Comment 
Indicators) of this final rule with comment period, we discuss the 
various status indicators and comment indicators used under the OPPS. 
We also provide a complete list of the status indicators and their 
definitions in Addendum D1 to this final rule with comment period.
1. April 2024 HCPCS Codes Proposed Rule Comment Solicitation
    For the April 2024 update, 73 new HCPCS codes were established and 
made effective on April 1, 2024. Through the April 2024 OPPS quarterly 
update CR (Transmittal 12552, Change Request 13568, dated March 21, 
2024), we recognized several new HCPCS codes for payment under the 
OPPS. We solicited public comments on the proposed APC and status 
indicator assignments for the codes listed in Table 10 (New HCPCS Codes 
Effective April 1, 2024) of the CY 2025 OPPS/ASC proposed rule (89 FR 
59239 through 59241, which are also displayed in Table 14.
    We received some public comments on the proposed OPPS APC and SI 
assignments for the new Level II HCPCS codes that were effective on 
April 1, 2024. The comments and our responses are addressed in the 
applicable sections of this final rule with comment period, which 
include, but are not limited to: sections III.C. (New Technology APCs); 
III.E. (OPPS APC-Specific Policies); and IV. (OPPS Payment for 
Devices). For those April 2024 codes for which we received no comments, 
we are finalizing the proposed APC and status indicator assignments as 
proposed. We note that several of the HCPCS C-codes have been replaced 
with HCPCS J-codes, effective January 1, 2025. Their replacement codes 
are listed in Table 14. In addition, in prior years we included the 
final OPPS status indicators and APC assignments in the coding preamble 
tables, however, because the same information can be found in Addendum 
B, we are no longer including them in Table 14. Therefore, readers are 
advised to refer to the OPPS Addendum B for the final OPPS status 
indicators, APC assignments, and payment rates for all codes reportable 
under the hospital OPPS. These new codes that were effective April 1, 
2024, were assigned to comment indicator ``NP'' in Addendum B to the CY 
2025 OPPS/APC proposed rule to indicate that the codes are assigned to 
an interim APC assignment and comments would be accepted on their 
interim APC assignments. The complete list of status indicators and 
definitions used under the OPPS can be found in Addendum D1 to this 
final rule with comment period, while the complete list comment 
indicators and definitions can be found in Addendum D2 to this final 
rule with comment period. We note that OPPS Addendum B (OPPS payment 
file by HCPCS code), Addendum D1 (OPPS Status Indicators), and Addendum 
D2 (OPPS Comment Indicators) are available via the internet on the CMS 
website.
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BILLING CODE 4120-01-C
2. July 2024 HCPCS Codes Proposed Rule Comment Solicitation
    For the July 2024 update, 130 new codes were established and made 
effective July 1, 2024. Through the July 2024 OPPS quarterly update CR 
(Transmittal 12665, Change Request 13632, dated May 31, 2024), we 
recognized several new codes for payment and assigned them to 
appropriate interim OPPS status indicators and APCs. We solicited 
public comments on the proposed APC and status indicator assignments 
for the codes listed in Table 11 (New HCPCS Codes Effective July 1, 
2024) of the CY 2025 OPPS/ASC proposed rule (89 FR 59242 through 
59249), which are also listed in Table 15.
    We received some public comments on the proposed OPPS APC and SI 
assignments for the new Level II HCPCS codes implemented on July 1, 
2024. The comments and our responses are addressed in pertinent 
sections of this final rule with comment period, which include, but are 
not limited to: sections III.C (New Technology APCs); III.E (OPPS APC-
Specific Policies); and IV (OPPS Payment for Devices). For those July 
1, 2024, codes for which we received no comments, we are finalizing the 
proposed APC and status indicator assignments. Additionally, we note 
that in prior years we included the final OPPS status indicators and 
APC assignments in the coding preamble tables, however, because the 
same information can be found in Addendum B, we are no longer including 
them in Table 15. Therefore, readers are advised to refer to the OPPS 
Addendum B for the final OPPS status indicators, APC assignments, and 
payment rates for all codes reportable under the hospital OPPS. These 
new codes that were effective July 1, 2024, were assigned to comment 
indicator ``NP'' in Addendum B to the CY 2025 OPPS/ASC proposed rule to 
indicate that the codes are assigned to an interim APC assignment and 
comments would be accepted on their interim APC assignments. The 
complete list of status indicators and definitions used under the OPPS 
can be found in Addendum D1 to this final rule with comment period, 
while the complete list of comment indicators and definitions can be 
found in Addendum D2 to this final rule with comment period. We note 
that OPPS Addendum B (OPPS payment file by HCPCS code), Addendum D1 
(OPPS Status Indicators), and Addendum D2 (OPPS Comment Indicators) are 
available via the internet on the CMS website.
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3. October 2024 HCPCS Codes Final Rule Comment Solicitation
    For the October 2024 update, 107 codes were established and made 
effective October 1, 2024. Through the October 2024 OPPS quarterly 
update CR (Transmittal 12816, Change Request 13784, dated August 29, 
2024), we recognized several new codes for separate payment and 
assigned them to appropriate interim OPPS status indicators and APCs. 
For CY 2025, consistent with our established policy, we proposed in the 
CY 2025 OPPS/ASC proposed rule (89 FR 59250) that the HCPCS codes that 
would be effective October 1, 2024, would be flagged with comment 
indicator ``NI'' in Addendum B to the CY 2025 OPPS/ASC final rule with 
comment period to indicate that we have assigned the codes to interim 
OPPS status indicators for CY 2025. Table 16 lists the codes that were 
effective October 1, 2024. We note that one of the temporary C-codes 
has been replaced with a permanent J-code effective January 1, 2025. We 
are inviting public comments in this final rule with comment period on 
the interim payment indicators, which will be finalized in the CY 2026 
OPPS/ASC final rule with comment period. We note the proposed APC 
assignments and status indicators for these same codes will be subject 
to comment in the CY 2026 OPPS/ASC proposed rule with comment period, 
and will be finalized in the CY 2026 OPPS/ASC final rule with comment 
period.

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BILLING CODE 4120-01-C
    4. January 2025 HCPCS Codes
    a. New Level II HCPCS Codes Final Rule Comment Solicitation
    Consistent with past practice, we are soliciting comments on the 
new Level II HCPCS codes that will be effective January 1, 2025, in 
this CY 2025 OPPS/ASC final rule with comment period, thereby allowing 
us to finalize the status indicators and APC assignments for the codes 
in the CY 2026 OPPS/ASC final rule with comment period. Unlike the CPT 
codes that are effective January 1 and are included in the OPPS/ASC 
proposed rules, and except for the proposed new C-codes and G-codes 
listed in Addendum O of the CY 2025 OPPS/ASC proposed rule, most Level 
II HCPCS codes are not released until sometime around November to be 
effective January 1. Because these codes are not available until 
November, we are unable to include them in the OPPS/ASC proposed rules. 
Consequently, for CY 2025, we propose to include the new Level II HCPCS 
codes that will be effective January 1, 2025 (that would be 
incorporated in the January 2025 OPPS quarterly update CR), in Addendum 
B to the CY 2025 OPPS/ASC final rule with comment period. Specifically, 
for CY 2025, we propose to continue our established policy of assigning 
comment indicator ``NI'' in Addendum B to the OPPS/ASC final rule with 
comment period to the new HCPCS codes that will be effective January 1, 
2025, to indicate that we are assigning them an interim status 
indicator, which is subject to public comment. We are inviting public 
comments in this final rule with comment period on the status 
indicators and APC assignments, which would then be finalized in the CY 
2026 OPPS/ASC final rule with comment period. Similar to the codes 
effective October 1, 2024, the proposed APC assignments and status 
indicators for these new Level II HCPCS codes that will be effective 
January 1, 2025, will also be subject to comment in the CY 2026 OPPS/
ASC proposed rule with comment period, and will be finalized in the CY 
2026 OPPS/ASC final rule with comment period.
b. New CPT Codes Proposed Rule Comment Solicitation
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 
through 66844), we finalized a revised process of assigning APCs and 
status indicators for new and revised Category I and III CPT codes that 
would be effective January 1. Specifically, for the new/revised CPT 
codes that we receive in a timely manner from the AMA's CPT Editorial 
Panel, we finalized our proposal to include the codes that would be 
effective January 1 in the OPPS/ASC proposed rules, along with proposed 
APC and status indicator assignments for them, and to finalize the APC 
and status indicator assignments in the OPPS/ASC final rules beginning 
with the CY 2016 OPPS update. For those new/revised CPT codes that were 
received too late for inclusion in the OPPS/ASC proposed rule, we 
finalized our proposal to establish and use

[[Page 94010]]

HCPCS G-codes that mirror the predecessor CPT codes and retain the 
current APC and status indicator assignments for a year until we can 
propose APC and status indicator assignments in the following year's 
rulemaking cycle. We note that even if we find that we need to create 
HCPCS G-codes in place of certain CPT codes for the PFS proposed rule, 
we do not anticipate that these HCPCS G-codes will always be necessary 
for OPPS purposes. We will make every effort to include proposed APC 
and status indicator assignments for all new and revised CPT codes that 
the AMA makes publicly available in time for us to include them in the 
proposed rule, and to avoid resorting to use of HCPCS G-codes and the 
resulting delay in utilization of the most current CPT codes. Also, we 
finalized our proposal to make interim APC and status indicator 
assignments for CPT codes that are not available in time for the 
proposed rule and that describe wholly new services (such as new 
technologies or new surgical procedures), to solicit public comments in 
the final rule, and to finalize the specific APC and status indicator 
assignments for those codes in the following year's final rule.
    For the CY 2025 OPPS update, we received the CPT codes that will be 
effective January 1, 2025, from the AMA in time to be included in the 
CY 2025 OPPS/ASC proposed rule. The new, revised, and deleted CPT codes 
were included in Addendum B to the proposed rule (which is available 
via the internet on the CMS website). We note that the new and revised 
CPT codes were assigned to comment indicator ``NP'' in Addendum B of 
the proposed rule to indicate that the code is new for the next 
calendar year or the code is an existing code with substantial revision 
to its code descriptor in the next calendar year as compared to the 
current calendar year with a proposed APC assignment, and that comments 
would be accepted on the proposed APC assignment and status indicator.
    Further, we noted that the CPT code descriptors that appeared in 
Addendum B were short descriptors and did not accurately describe the 
complete procedure, service, or item described by the CPT code. 
Therefore, we included the 5-digit placeholder codes and the long 
descriptors for the new and revised CY 2025 CPT codes in Addendum O to 
the proposed rule (which is available via the internet on the CMS 
website) so that the public could adequately comment on the proposed 
APCs and SI assignments. The 5-digit placeholder codes were included in 
Addendum O to the proposed rule, specifically under the column labeled 
``CY 2025 OPPS/ASC Proposed Rule 5- Digit AMA Placeholder Code''. We 
noted that the final CPT code numbers would be included in this CY 2025 
OPPS/ASC final rule with comment period. We also noted that not every 
code listed in Addendum O is subject to public comment. For the new and 
revised Category I and III CPT codes, we requested public comments on 
only those codes that are assigned comment indicator ``NP.''
    In summary, in the CY 2025 OPPS/ASC proposed rule, we solicited 
public comments on the proposed CY 2025 SI and APC assignments for the 
new and revised Category I and III CPT codes that would be effective 
January 1, 2025. The CPT codes were listed in Addendum B to the 
proposed rule with short descriptors only. We listed them again, with 
long descriptors, in Addendum O to the proposed rule. We also proposed 
to finalize the SI and APC assignments for these codes (with their 
final CPT code numbers) in the CY 2025 OPPS/ASC final rule with comment 
period. The proposed SI and APC assignments for these codes were 
included in Addendum B to the proposed rule (which is available via the 
internet on the CMS website). We received comments on several of the 
new CPT codes that were assigned to comment indicator ``NP'' in 
Addendum B to the CY 2025 OPPS/ASC proposed rule. We have responded to 
those public comments in sections III.C, III.E, and IV of this CY 2025 
OPPS/ASC final rule with comment period.
    The final SIs, APC assignments, and payment rates for the new CPT 
codes that are effective January 1, 2025, can be found in Addendum B to 
this final rule with comment period. In addition, the SI definitions 
can be found in Addendum D1 (OPPS Payment Status Indicators for CY 
2024) to this final rule with comment period. Addenda B and D1 are 
available via the internet on the CMS website.
    Finally, Table 17, which is a reprint of Table 12 from the CY 2025 
OPPS/ASC proposed rule (89 FR 59251), shows the comment timeframe for 
new and revised HCPCS codes. The table provides information on our 
current process for updating codes through our OPPS quarterly update 
CRs, seeking public comments, and finalizing the treatment of these 
codes under the OPPS.

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B. 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. In addition, 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 the regulation at 42 CFR 
419.31. We use Level I (also known as CPT codes) and Level II HCPCS 
codes (also known as alphanumeric 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 the regulation at 42 CFR 419.2(b). A further 
discussion of packaged services is included in section II.A.3 of this 
final rule with comment period.
    Under the OPPS, we generally pay for covered hospital outpatient 
services on a rate-per-service basis, where the service may be reported 
with one or more HCPCS codes. Payment varies according to the APC group 
to which the independent service or combination of services is 
assigned. For CY 2025, we proposed that each APC relative payment 
weight represents the hospital cost of the services included in that 
APC, relative to the hospital cost of the services included in APC 5012 
(Clinic Visits and Related Services). The APC relative payment weights 
are scaled to APC 5012 because it is the hospital clinic visit APC and 
clinic visits are among the most frequently furnished services in the 
hospital outpatient setting.
2. Application of the 2 Times Rule
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less

[[Page 94012]]

often than annually, and revise the APC groups, the relative payment 
weights, and the wage and other adjustments described in paragraph (2) 
to consider changes in medical practice, changes in technology, the 
addition of new services, new cost data, and other relevant information 
and factors. Section 1833(t)(9)(A) of the Act also requires the 
Secretary to consult with an expert outside advisory panel composed of 
an appropriate selection of representatives of providers to review (and 
advise the Secretary concerning) the clinical integrity of the APC 
groups and the relative payment weights. We note that the Advisory 
Panel on Hospital Outpatient Payment (also known as the HOP Panel or 
the Panel) recommendations for specific services for the CY 2025 OPPS 
update will be discussed in the relevant specific sections throughout 
this CY 2025 OPPS/ASC final rule with comment period.
    In addition, section 1833(t)(2) of the Act provides that, subject 
to certain exceptions, the items and services within an APC group 
cannot be considered comparable regarding 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 for low-volume items and services (but the Secretary may not make 
such an exception in the case of a drug or biological that has been 
designated as an orphan drug under section 526 of the Federal Food, 
Drug, and Cosmetic Act). In determining the APCs with a 2 times rule 
violation, we consider only those HCPCS codes that are significant 
based on the number of claims. We note that, for purposes of 
identifying significant procedure codes for examination under the 2 
times rule, we consider procedure codes that have more than 1,000 
single major claims or procedure codes that both have more than 99 
single major claims and contribute at least 2 percent of the single 
major claims used to establish the APC cost to be significant (75 FR 
71832). This longstanding definition of when a procedure code is 
significant for purposes of the 2 times rule was selected because we 
believe that a subset of 1,000 or fewer claims is negligible within the 
set of approximately 100 million single procedure or single session 
claims we use for establishing costs. Similarly, a procedure code for 
which there are fewer than 99 single claims and that comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC cost (75 FR 71832). In the CY 2025 OPPS/
ASC proposed rule, for CY 2025, we proposed to make exceptions to this 
limit on the variation of costs within each APC group in unusual cases, 
such as for certain low-volume items and services.
    For the CY 2025 OPPS update, we identified the APCs with violations 
of the 2 times rule, and we proposed changes to the procedure codes 
assigned to these APCs (with the exception of those APCs for which we 
proposed a 2 times rule exception) in Addendum B to CY 2025 OPPS/ASC 
proposed rule. We note that Addendum B does not appear in the printed 
version of the Federal Register as part of this final rule with comment 
period. Rather, it is published and made available via the internet on 
the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    To eliminate a violation of the 2 times rule and improve clinical 
and resource homogeneity in the APCs for which we did not propose a 2 
times rule exception, we proposed 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 2025 included in the CY 2025 OPPS/ASC proposed 
rule are related to changes in costs of services that were observed in 
the CY 2023 claims data available for CY 2025 ratesetting. Addendum B 
to the CY 2025 OPPS/ASC proposed rule identifies with a comment 
indicator ``CH'' those procedure codes for which we proposed a change 
to the APC assignment or status indicator, or both, that were initially 
assigned in the July 1, 2024, OPPS Addendum B Update, which is 
available via the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates.
3. APC Exceptions to the 2 Times Rule
    While considering the APC changes that we proposed for CY 2025, we 
reviewed all of the APCs for which we identified 2 times rule 
violations to determine whether any of the APCs would qualify for an 
exception. 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.
    For a detailed discussion of these criteria, we refer readers to 
the April 7, 2000 final rule (65 FR 18457 and 18458).
    Based on the CY 2023 claims data available for the CY 2025 OPPS/ASC 
proposed rule, we found 23 APCs with violations of the 2 times rule. We 
applied the criteria as described above to identify the APCs for which 
we proposed to make exceptions under the 2 times rule for CY 2025 and 
found that all of the 23 APCs we identified met the criteria for an 
exception to the 2 times rule based on the CY 2023 claims data 
available for the CY 2025 OPPS/APC proposed rule. We note that, on an 
annual basis, based on our analysis of the latest claims data, we 
identify violations to the 2 times rule and propose changes when 
appropriate. Those APCs that violate the 2 times rule are identified 
and appear in Table 18. In addition, we did not include in that 
determination those APCs where a 2 times rule violation was not a 
relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS 
codes assigned to it that have similar geometric mean costs and do not 
create a 2 times rule violation. Therefore, we have only identified 
those APCs, including those with criteria-based costs, such as device-
dependent CPT/HCPCS codes, with violations of the 2 times rule, where a 
2 times rule violation is a relevant concept.
    Table 13 of the CY 2025 OPPS/ASC proposed rule (89 FR 59253) listed 
the 23 APCs for which we proposed to make an exception under the 2 
times rule for CY 2025 based on the criteria cited above and claims 
data submitted between January 1, 2023, and December 31, 2023, and 
CCRs, if available. The proposed geometric mean costs for covered 
hospital outpatient services for these and all other APCs that were 
used in the development of the proposed rule can be found on the CMS 
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    Based on the updated final rule CY 2023 claims data used for this 
CY 2025 final rule with comment period, we found a total of 28 APCs 
with violations of the 2 times rule. Of these 28 total APCs, 23 were 
identified in the proposed rule and five are newly identified in this 
final rule with comment period. The following two APCs appeared in 
Table 13 of the CY 2025 OPPS/ASC proposed rule (89 FR

[[Page 94013]]

59253) as violating the 2 times rule, however, after conducting our 
data analysis for this final rule with comment period, we found that 
the APCs no longer violate the 2 times rule:

 APC 5303 (Level 3 Upper GI Procedures)
 APC 5822 (Health and Behavior Services)
 In addition, the following five APCs are newly identified with 
2 times rule violations using updated data for this final rule with 
comment period: APC 5024 (Level 4 Type A ED Visits)
 APC 5501 (Level 1 Extraocular, Repair, and Plastic Eye 
Procedures)
 APC 5613 (Level 3 Therapeutic Radiation Treatment Preparation)
 APC 5674 (Level 4 Pathology)
 APC 5722 (Level 2 Diagnostic Tests and Related Services)

    Although we did not receive any comments on Table 13 of the CY 
OPPS/ASC proposed rule, we did receive comments on APC assignments for 
specific HCPCS codes. The comments, and our responses, can be found in 
section III.E. of this final rule with comment period.
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    We did not receive any public comments on our proposal. Based on 
our analysis of the CY 2023 costs from hospital claims and cost report 
data available for this CY 2025 final rule with comment period, we are 
finalizing our proposals with some modifications. Specifically, we are 
finalizing our proposal to except the 23 proposed APCs that continue to 
have 2 times violations in the final rule data from the 2 times rule 
for CY 2023 claims data and also excepting five additional APCs (APCs 
5024, 5501, 5613, 5674, 5722) that did not violate the 2 times rule in 
the proposed rule data, but do violate the 2 times rule in the final 
rule data, for a total of 28 APCs for which we identified 2 times rule 
violations but that qualify for exceptions.
    In summary, Table 18 lists the 28 APCs that we are excepting from 
the 2 times rule for CY 2025 based on the criteria described earlier 
and a review of updated claims data for dates of service between 
January 1, 2023, and December 31, 2023, that were processed on or 
before June 30, 2024, and updated CCRs, if available. We note that, for 
cases in which a recommendation by the HOP Panel appears to result in 
or allow a violation of the 2 times rule, we generally accept the HOP 
Panel's recommendation because those recommendations are based on 
explicit consideration of resource use, clinical homogeneity, site of 
service, and the quality of the claims data used to determine the APC 
payment rates. The geometric mean costs for hospital outpatient 
services for these and all other APCs that were used in the development 
of this final rule with comment period can be found on the CMS website 
at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.

C. New Technology APCs

1. Background
    In the CY 2002 OPPS final rule (66 FR 59903), we finalized changes 
to the time period in which a service can be eligible for payment under 
a New Technology APC. Beginning in CY 2002, we retain services within 
New Technology APC groups until we gather sufficient claims data to 
enable us to assign the service to an appropriate clinical APC. This 
policy allows us to move a service from a New Technology APC in less 
than 2 years if sufficient data are available. It also allows us to 
retain a service in a New Technology APC for more than 2 years if 
sufficient data upon which to base a decision for reassignment have not 
been collected.
    We also adopted in the CY 2002 OPPS final rule the following 
criteria for assigning a complete or comprehensive service to a New 
Technology APC: (1) the service must be truly new, meaning it cannot be 
appropriately reported by an existing HCPCS code assigned to a clinical 
APC and does not appropriately fit within an existing clinical APC; (2) 
the service is not eligible for transitional pass-through payment 
(however, a truly new, comprehensive service could qualify for 
assignment to a new technology APC even if it involves a device or drug 
that could, on its own, qualify for pass-through payment); and (3) the 
service falls within the scope of Medicare benefits under section 
1832(a) of the Act and is reasonable and necessary in accordance with 
section 1862(a)(1)(A) of the Act (66 FR 59898 through 59903). For 
additional information about our New Technology APC policy, we refer 
readers to https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/pass-through-payment-status-new-technology-ambulatory-payment-classification-apc on the CMS website and then 
follow the instructions to access the MEARIS\TM\ system for OPPS New 
Technology APC applications.\17\
---------------------------------------------------------------------------

    \17\ Currently approved under OMB control number 0938-0860; 
expires 07/31/2024.
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    In the CY 2004 OPPS final rule with comment period (68 FR 63416), 
we restructured the New Technology APCs to make the cost intervals more 
consistent across payment levels and refined the cost bands for these 
APCs to retain two parallel sets of New Technology APCs: one set with a 
status indicator of ``S'' (Significant Procedures, Not Discounted when 
Multiple. Paid under OPPS; separate APC payment) and the other set with 
a status indicator of ``T'' (Significant Procedure, Multiple Reduction 
Applies. Paid under OPPS; separate APC payment). These current New 
Technology APC configurations allow us to price new technology services 
more appropriately and consistently.
    For CY 2024, there were 52 New Technology APC levels, ranging from 
the lowest cost band assigned to APC 1491 (New Technology--Level 1A 
($0-$10)) to the highest cost band assigned to APC 1908 (New 
Technology--Level 52 ($145,001-$160,000)). We note that the cost bands 
for the New Technology APCs, specifically, APCs 1491 through 1599 and 
1901 through 1908, vary with increments ranging from $10 to $14,999. 
These cost bands identify the APCs to which new technology procedures 
and services with estimated service costs that fall within those cost 
bands are assigned under the OPPS. Payment for each APC is made at the 
mid-point of the APC's assigned cost band. For example, payment for New 
Technology APC 1507 (New Technology--Level 7 ($501-$600)) is made at 
$550.50.
    Under the OPPS, one of our goals is to make payments that are 
appropriate for the services that are necessary for the treatment of 
Medicare beneficiaries. The OPPS, like other Medicare payment systems, 
is budget neutral and increases are limited to the annual hospital 
market basket increase reduced by the productivity adjustment. We 
believe that our payment rates reflect the costs that are associated 
with providing care to Medicare beneficiaries and are adequate to 
ensure access to services (80 FR 70374). For many emerging 
technologies, there is a transitional period during which utilization 
may be low, often because providers are first learning about the 
technologies and their clinical utility. Quite often, parties request 
that Medicare make higher payments under the New Technology APCs for 
new procedures in that transitional phase. These requests, and their 
accompanying estimates for expected total patient utilization, often 
reflect very low rates of patient use of expensive equipment, resulting 
in high per-use costs for which requesters believe Medicare should make 
full payment. Medicare does not, and we believe should not, assume 
responsibility for more than its share of the costs of procedures based 
on projected utilization for Medicare beneficiaries and does not set 
its payment rates based on initial projections of low utilization for 
services that require expensive capital equipment. For the OPPS, we 
rely on hospitals to make informed business decisions regarding the 
acquisition of high-cost capital equipment, taking into consideration 
their knowledge about their entire patient base (Medicare beneficiaries 
included) and an understanding of Medicare's and other payers' payment 
policies. We refer readers to the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68314) for further discussion regarding this 
payment policy.
    Some services assigned to New Technology APCs have low annual 
volume, which we consider to be fewer than 100 claims in the year of 
claims data used for ratesetting (86 FR 63528). Where utilization of 
services assigned to a New Technology APC is low, it can lead to wide 
variation in payment rates from year to year, resulting in even lower 
utilization and potential barriers to access to new technologies, which

[[Page 94016]]

ultimately limits our ability to assign the service to the appropriate 
clinical APC. To mitigate these issues, we finalized a policy in the CY 
2019 OPPS/ASC final rule with comment period to utilize our equitable 
adjustment authority at section 1833(t)(2)(E) of the Act to adjust how 
we determine the costs for low-volume services assigned to New 
Technology APCs (83 FR 58892 through 58893). Specifically, in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58893), we 
established that, in each of our annual rulemakings, we would calculate 
and present the result of each statistical methodology (arithmetic 
mean, geometric mean, and median) based on up to 4 years of claims data 
and solicit public comment on which methodology should be used to 
establish the payment rate for the low-volume new technology service. 
In the CY 2022 OPPS/ASC final rule (86 FR 63529), we replaced the New 
Technology APC low volume policy with the universal low volume APC 
policy. Unlike the New Technology APC low volume policy, the universal 
low volume APC policy applies to clinical APCs and brachytherapy APCs, 
in addition to procedures assigned to New Technology APCs, and uses the 
highest of the geometric mean, arithmetic mean, or median based on up 
to 4 years of claims data to set the payment rate for the APC. We refer 
readers to the CY 2022 OPPS/ASC final rule with comment period (86 FR 
63529) for further discussion regarding this policy.
    Finally, we note that, in a budget-neutral system, payments may not 
fully cover hospitals' costs in a particular circumstance, including 
those for the purchase and maintenance of capital equipment. We rely on 
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be 
careful to establish its initial payment rates, including those made 
through New Technology APCs, for new services that lack hospital claims 
data based on realistic utilization projections for all such services 
delivered in cost-efficient hospital outpatient settings. As the OPPS 
acquires claims data regarding hospital costs associated with new 
procedures, we regularly examine the claims data and any available new 
information regarding the clinical aspects of new procedures to confirm 
that our OPPS payments remain appropriate for procedures as they 
transition into mainstream medical practice (77 FR 68314). For CY 2025, 
we included the proposed payment rates for New Technology APCs 1491 to 
1599 and 1901 through 1908 in Addendum A to the proposed rule (which is 
available on the CMS website at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
    Comment: We received a comment requesting that CMS revise the New 
Technology APC criteria to accommodate for forms of algorithm-based 
healthcare services (ABHS). The commenter explained that certain ABHS, 
that provide new clinical outputs that can impact the diagnosis or 
treatment of a patient's disease, and represent additional costs to 
hospitals not currently accounted for in the provision of an underlying 
service, would most likely not meet the New Technology APC criteria 
because the service provided by the technology is occurring at the same 
time as the performance of an underlying service. The commenter also 
requested that the New Technology APC process allow for the creation of 
new procedural C-codes when needed.
    Response: We thank the commenter for their comment. As part of the 
existing New Technology APC process, CMS creates C-codes when we find 
that there is no existing code that can appropriately describe a 
service. CMS will assign a service to a New Technology APC when certain 
criteria are met, including the criterion that the service is truly 
new, meaning that it cannot be appropriately reported by an existing 
HCPCS code assigned to a clinical APC and does not appropriately fit 
within an existing clinical APC. In the past, we have found that 
several SaaS procedures, including those that are algorithm-based, meet 
the existing New Technology APC criteria. For CY 2025, we proposed to 
assign several SaaS procedures that meet our criteria to New Technology 
APCs, many of which have been assigned to New Technology APCs for 
several years. However, we recognize that software-based technologies 
are rapidly evolving and, therefore, we are considering for future 
rulemaking whether specific adjustments to payment policies, including 
our New Technology APC policies, are needed to more accurately and 
appropriately pay for these products and services across settings of 
care.
    For CY 2025, we did not propose to make any changes to the existing 
New Technology APC criteria. After consideration of the public comments 
we received, we are not finalizing any changes to the New Technology 
APC criterion at this time.
2. Policy To Exempt Services With Very Low Claims Volume From APC 
Reassignment Based on the Universal Low Volume Policy
    We continue to be concerned about payment stability for services 
assigned to New Technology APCs, specifically services with very low 
claims volume of fewer than 10 claims in the 4-year lookback period 
used under the universal low volume APC policy. Historically, we have 
used our equitable adjustment authority at section 1833(t)(2)(E) of the 
Act to exempt a number of services with very low claims volume from the 
universal low volume APC policy in instances where application of the 
universal low volume policy would lead to significant fluctuations in 
payment. Given the frequency with which we have needed to utilize our 
equitable adjustment authority to address significant fluctuations in 
payment for very low volume services, we noted in the proposed rule 
that we believed that refinements to our universal low volume policy 
for services assigned to New Technology APCs may be necessary. We also 
recognized that determining initial cost estimates for these services 
may be particularly challenging, given the lack of cost information for 
new and innovative technologies.
    To allow time for us to consider these issues, we proposed for CY 
2025 to exempt services assigned to New Technology APCs with fewer than 
10 claims over the 4-year lookback period used for the universal low 
volume policy. Instead of assigning these services to a different New 
Technology APC based on the very few claims available, we proposed that 
we would maintain the New Technology APC assignment for each service 
from the prior year, which in this case would be the New Technology APC 
assignment for CY 2024. We explained that we believed it was 
appropriate to apply this policy to New Technology APCs because 
services assigned to New Technology APCs represent new technologies for 
which it may be more challenging to determine an appropriate cost than 
for other, more established services. We believed 10 claims was an 
appropriate ceiling for exempting services from reassignment based on 
the universal low volume policy because we believed that at 10 claims a 
rough standard distribution begins to appear. We also believed that 
services with so few claims over the 4-year lookback period would be 
especially vulnerable to large changes in payment rates year-to-year as 
a result of one or two new

[[Page 94017]]

claims being available or one or two claims from what was previously 
the fourth year of the lookback period no longer being included in that 
period.
    Consistent with our overall policy regarding use of updated claims 
data in the final rule, we proposed to perform a similar analysis for 
the final rule using updated claims data, including determining whether 
specific HCPCS codes continue to meet the criteria for our universal 
low volume APC policy or our proposal to exempt services with fewer 
than 10 claims in the 4-year lookback period from the universal low 
volume APC policy and maintain their CY 2024 New Technology APC 
assignment. We noted we would update the APC placement as needed in the 
final rule.
    Comment: Commenters agreed with our concerns that the application 
of the universal low volume APC policy may result in payment 
instability for certain services assigned to New Technology APCs, but 
offered different perspectives on how to address the issue. One 
commenter, representing artificial intelligence companies, supported 
our proposal to exempt certain services from the universal low volume 
APC policy and recommended that we utilize 25 claims, rather than 10 
claims when determining whether to maintain a service's New Technology 
APC assignment from the previous year. Another commenter, representing 
manufacturers of medical imaging equipment, did not believe that the 
proposal sufficiently addressed the policy concern of payment stability 
for services assigned to New Technology APCs. This commenter also 
believed that the proposal would create a disincentive for hospitals to 
furnish the service and, therefore, discourage claims utilization where 
it would be more prudent to have no claims than to risk being assigned 
to a lower paying New Technology APC in future years by exceeding the 
10-claim threshold.
    Response: We agree with the commenters' concerns that applying the 
universal low volume APC policy can result in payment fluctuations from 
year-to-year. We also recognize that major payment fluctuations that do 
not reflect the actual cost of the service can have the effect of 
discouraging usage and keeping claims volume low, which prevents CMS 
from gathering sufficient claims data upon which to transition the 
service from a New Technology APC to an appropriate clinical APC. We 
disagree with one commenter's assertion that our proposal to maintain 
the New Technology APC placement of a service with extremely low claims 
volume would disincentivize usage of the service. By maintaining the 
APC placement for services with fewer than 10 claims in the four-year 
lookback period, we are removing the potential for a major payment 
change based on a handful of claims over multiple years, that may not 
reflect the actual cost of the service. We believe that this policy is 
an incremental step towards more stable and predictable payments while 
providers learn about these new technology services, which should have 
the effect of encouraging utilization in the long-term. We also 
disagree with the commenter's suggestion to increase the claims 
threshold from 10 to 25 claims. We proposed to exempt less than 10 
claims from the universal low volume APC policy because at 10 claims a 
rough standard distribution begins to appear, and services with an 
extremely low number of claims are most vulnerable to significant 
payment fluctuations.
    Our proposal is meant to serve as a first step to addressing the 
issue of payment stability for services assigned to New Technology 
APCs. As we stated in the proposed rule, we continue to believe that 
refinements to the universal low volume APC policy with respect to its 
application to services in New Technology APCs may be necessary. We are 
finalizing our policy as proposed for CY 2025 and will consider 
additional changes in future years.
    Comment: One commenter expressed support for the universal low 
volume APC policy.
    Response: We thank the commenter for their input.
    After consideration of the public comments we received, we are 
finalizing our proposal to exempt services assigned to New Technology 
APCs with fewer than 10 claims in the four-year lookback period from 
the universal low volume APC policy and maintain their CY 2024 New 
Technology APC assignment as proposed.
3. Procedures Assigned to New Technology APCs for CY 2025
    As we described in the CY 2002 OPPS final rule (66 FR 59902), we 
generally retain a procedure in the New Technology APC to which it is 
initially assigned until we have obtained sufficient claims data to 
justify reassignment of the procedure to a clinically appropriate APC. 
In addition, in cases where we find that our initial New Technology APC 
assignment was based on inaccurate or inadequate information (although 
it was the best information available at the time), where we obtain new 
information that was not available at the time of our initial New 
Technology APC assignment, or where the New Technology APCs are 
restructured, we may, based on more recent resource utilization 
information (including claims data) or the availability of refined New 
Technology APC cost bands, reassign the procedure or service to a 
different New Technology APC that more appropriately reflects its cost 
(66 FR 59903).
    Consistent with our current policy, for CY 2025, we proposed to 
retain services within New Technology APC groups until we obtain 
sufficient claims data to justify reassignment of the service to an 
appropriate clinical APC. The flexibility associated with this policy 
allows us to reassign a service from a New Technology APC in less than 
2 years if we have obtained sufficient claims data. It also allows us 
to retain a service in a New Technology APC for more than 2 years if we 
have not obtained sufficient claims data upon which to base a 
reassignment decision (66 FR 59902).
a. Administration of Subretinal Therapies Requiring Vitrectomy (APC 
1563)
    Effective January 1, 2021, CMS established HCPCS code C9770 
(Vitrectomy, mechanical, pars plana approach, with subretinal injection 
of pharmacologic/biologic agent) and assigned it to a New Technology 
APC based on the geometric mean cost of CPT code 67036 (Vitrectomy, 
mechanical, pars plana approach) due to similar resource utilization. 
For CY 2021, HCPCS code C9770 was assigned to APC 1561 (New 
Technology--Level 24 ($3001-$3500)). This code may be used to describe 
the administration of HCPCS code J3398 (Injection, voretigene 
neparvovec-rzyl, 1 billion vector genomes). This procedure was 
previously discussed in depth in the CY 2021 OPPS/ASC final rule with 
comment period (85 FR 85939 through 85940). For CY 2022, we maintained 
the APC assignment of APC 1561 (New Technology--Level 24 ($3001-$3500)) 
for HCPCS code C9770 (86 FR 63531 through 63532).

[[Page 94018]]

    HCPCS code J3398 (Injection, voretigene neparvovec-rzyl, 1 billion 
vector genomes) is for a gene therapy product indicated for a rare 
mutation-associated retinal dystrophy. Voretigene neparvovec-rzyl 
(Luxturna[supreg]) was approved by FDA in December of 2017 and is an 
adeno-associated virus vector-based gene therapy indicated for the 
treatment of patients with confirmed biallelic RPE65 mutation-
associated retinal dystrophy.\18\ This therapy is administered through 
a subretinal injection, which interested parties describe as an 
extremely delicate and sensitive surgical procedure. The FDA-approved 
package insert describes one of the steps for administering Luxturna 
as, ``after completing a vitrectomy, identify the intended site of 
administration. The subretinal injection can be introduced via pars 
plana.''
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    \18\ Luxturna. FDA Package Insert. Available: https://www.fda.gov/media/109906/download.
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    Interested parties, including the manufacturer of Luxturna[supreg], 
recommended CPT code 67036 (Vitrectomy, mechanical, pars plana 
approach) for the administration of the gene therapy.\19\ However, the 
manufacturer previously contended the administration was not accurately 
described by any existing codes as CPT code 67036 (Vitrectomy, 
mechanical, pars plana approach) does not account for the 
administration itself.
---------------------------------------------------------------------------

    \19\ LUXTURNA REIMBURSEMENT GUIDE FOR TREATMENT CENTERS. https://mysparkgeneration.com/uploads/2022/09/LUXTURNA-Reimbursement-Guide-for-Treatment-Centers-ISI-Update-April-2022-P-RPE65-US-320025.pdf.
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    CMS recognized the need to accurately describe the unique procedure 
that is required to administer the therapy described by HCPCS code 
J3398. Therefore, in the CY 2021 OPPS/ASC proposed rule (85 FR 48832), 
we proposed to establish a new HCPCS code, C97X1 (Vitrectomy, 
mechanical, pars plana approach, with subretinal injection of 
pharmacologic/biologic agent) to describe this process. We stated that 
we believed this new HCPCS code accurately described the unique service 
associated with intraocular administration of HCPCS code J3398. We 
recognized that CPT code 67036 represents a clinically similar 
procedure and process that approximates similar resource utilization to 
C97X1. However, we also recognized that it is not prudent for the code 
that describes the administration of this unique gene therapy, C97X1, 
to be assigned to the same C-APC to which CPT code 67036 is assigned, 
as this would package the primary therapy, HCPCS code J3398, into the 
code that represents the process to administer the gene therapy.
    Therefore, for CY 2021, we proposed to assign the services 
described by C97X1 to a New Technology APC with a cost band that 
contains the geometric mean cost for CPT code 67036. The placeholder 
code C97X1 was replaced by HCPCS code C9770. For CY 2021, we finalized 
our proposal to create HCPCS code C9770 (Vitrectomy, mechanical, pars 
plana approach, with subretinal injection of pharmacologic/biologic 
agent), and we assigned this code to APC 1561 (New Technology--Level 24 
($3001-$3500)) using the geometric mean cost of CPT code 67036. For CY 
2022, we continued to assign HCPCS code C9770 to APC 1561 (New 
Technology--Level 24 ($3001-$3500)) using the geometric mean cost of 
CPT code 67036.
    CY 2023 was the first year that claims data were available for 
HCPCS code C9770; therefore, we proposed and finalized a policy to base 
the payment rate of HCPCS code C9770 on claims data for that code 
rather than on the geometric mean cost of CPT code 67036. Given the low 
number of claims for this procedure, we designated HCPCS code C9770 as 
a low volume procedure under our universal low volume APC policy and 
used the greater of the geometric mean, arithmetic mean, or median cost 
calculated based on the available claims data to calculate an 
appropriate payment rate for purposes of assigning HCPCS code C9770 to 
a New Technology APC.
    Based on the claims data available for the CY 2023 OPPS/ASC final 
rule with comment period, we found the median was the statistical 
methodology that estimated the highest cost for the service. The 
payment rate calculated using this methodology fell within the cost 
band for New Technology APC 1562 (New Technology--Level 25 ($3501-
$4000)). Therefore, we finalized our proposal to assign HCPCS code 
C9770 to APC 1562 for CY 2023.
    For CY 2024, we proposed and finalized that we would delete HCPCS 
code C9770 effective December 31, 2023, and recognize CPT code 0810T 
(Subretinal injection of a pharmacologic agent, including vitrectomy 
and 1 or more retinotomies) starting January 1, 2024 (88 FR 81617 
through 81619). We determined the payment rate for CPT code 0810T using 
the claims data for HCPCS code C9770 and designated CPT code 0810T as a 
low volume procedure under our universal low volume APC policy and used 
the greater of the geometric mean, arithmetic mean, or median cost 
calculated based on the available claims data for HCPCS code C9770 to 
calculate an appropriate payment rate for purposes of assigning CPT 
code 0810T to a New Technology APC. For CY 2024, we finalized 
assignment of CPT code 0810T to APC 1563 (New Technology--Level 26 
($4001-$4500)) (88 FR 81617 through 81619).
    Since CMS recognized CPT code 0810T starting January 1, 2024, we do 
not have claims data for CPT code 0810T available for CY 2025 
rulemaking. However, as HCPCS code C9770 was still in use until 
December 31, 2023, we proposed to determine the payment rate for CPT 
code 0810T using the claims data for HCPCS code C9770. This is similar 
to the policy we finalized for CY 2024. For CY 2025, we proposed to 
designate CPT code 0810T as a low volume procedure under our universal 
low volume APC policy, given that there were only 34 claims available 
for HCPCS code C9770 and none for CPT code 0810T. This is below the 
threshold of 100 claims for a service within a year required to 
designate a service as a low volume service and apply our universal low 
volume APC policy. Therefore, we proposed to use the greater of the 
geometric mean, arithmetic mean, or median cost calculated based on the 
available claims data for HCPCS code C9770 to calculate an appropriate 
payment rate for purposes of assigning CPT code 0810T to a New 
Technology APC.
    Using all available claims from the 4-year lookback period, which 
was 34 claims, we determined the geometric mean cost to be $3,934, the 
arithmetic mean cost to be $4,173, and the median cost to be $4,103. 
Because the arithmetic mean is the statistical methodology that 
estimated the highest cost for the service, we proposed to use this 
cost to determine the New Technology APC placement. The arithmetic mean 
of $4,173 falls within the cost band for New Technology APC 1563 (New 
Technology--Level 26 ($4001-$4500)). Therefore, we proposed to assign 
CPT code 0810T to APC 1563 for CY 2025. Additionally, we proposed to 
perform a similar analysis using updated claims data in this final rule 
with comment period, including determining if CPT code 0810T continues 
to meet the criteria for our universal low volume APC policy, and 
update the APC assignment as needed.
    Please refer to Table 19 below for the final CY 2024 and proposed 
CY 2025 OPPS New Technology APC and status indicator assignments for 
CPT code 0810T. The proposed CY 2025 payment rates can be found in 
Addendum B to the CY 2025 OPPS/ASC proposed rule via the internet on 
the CMS website.

[[Page 94019]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.042

    We did not receive any public comments on our proposal to continue 
to assign HCPCS code 0810T to APC 1563 for CY 2025.
    Additional claims for CY 2023 have been processed since the 
proposed rule. Our analysis of the updated claims data found that the 
greater of the geometric mean, arithmetic mean, or median cost 
calculated for HCPCS code C9770 is approximately $4,240. This continues 
to fall into the cost band of New Technology APC 1563. Therefore, we 
are finalizing our proposal without modification to continue to assign 
HCPCS code 0810T to APC 1563. Please refer to Table 20 for the final 
OPPS New Technology APC and status indicator assignment for HCPCS codes 
0810T for CY 2025. The final CY 2025 payment rates can be found in 
Addendum B to this final rule with comment period via the internet on 
the CMS website. In addition, we refer readers to Addendum D1 of this 
final rule with comment period for the status indicator meanings for 
all codes reported under the OPPS. Addendum D1 can also be found via 
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.043

b. BgRT (APCs 1521 and 1525)
    Biology Guided Radiation Therapy (BgRT) uses positron-emitting 
radiopharmaceuticals to control delivery of radiation therapy to treat 
primary and metastatic lung or bone tumors. During radiation treatment 
delivery, the same system applies these firing filters to the real-time 
positron emission tomography (PET) data collected by the radiation 
treatment delivery machine. Effective January 1, 2024, CMS created 
HCPCS codes C9794 (Therapeutic radiology simulation-aided field 
setting; complex, including acquisition of PET and CT imaging data 
required for radiopharmaceutical-directed radiation therapy treatment 
planning (i.e., modeling) and C9795 (Stereotactic body radiation 
therapy, treatment delivery, per fraction to 1 or more lesions, 
including image guidance and real-time positron emissions-based 
delivery adjustments to 1 or more lesions, entire course not to exceed 
5 fractions) to describe the modeling and treatment delivery portions 
of the BgRT service. We assigned HCPCS code C9794 to APC 1521 (New 
Technology--Level 21 ($1901-$2000)) and HCPCS code C9795 to APC 1525 
(New Technology--Level 25 ($3501-$4000)) for CY 2024.
    For CY 2025, the OPPS payment rates were proposed based on 
available CY 2023 claims data. As HCPCS codes C9794 and C9795 were 
effective January 1, 2024, we do not have any claims data for the 
service. Therefore, for CY 2025, we proposed to continue to assign 
HCPCS code C9794 to APC 1521 (New Technology--Level 21 ($1901-$2000)) 
with a payment rate of $1,950.50 and HCPCS code C9795 to APC 1525 (New 
Technology--Level 25 ($3501-$4000)) with a payment rate of $3,750.50. 
Please refer to Table 21 below for the proposed

[[Page 94020]]

OPPS New Technology APC and status indicator assignment for HCPCS codes 
C9794 and C9795 for CY 2025. The proposed CY 2025 payment rates can be 
found in Addendum B to the CY 2025 OPPS/ASC proposed rule via the 
internet on the CMS website. In addition, we refer readers to Addendum 
D1 of this final rule with comment period for the status indicator 
meanings for all codes reported under the OPPS. Addendum D1 can also be 
found via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.044

    Comment: We received several comments supporting our proposal to 
maintain the APC assignments for HCPCS code C9794 and C9795 until 
claims data are received.
    Response: We thank the commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification. Specifically, for CY 2025 
we are finalizing our proposal to assign C9794 and C9795 to APCs 1521 
(New Technology--Level 21 ($1901-$2000)) and 1525 (New Technology--
Level 25 ($3501-$4000)), respectively.
    We note that, effective January 1, 2025, two new G-codes are 
replacing HCPCS codes C9794 and C9795. Specifically, effective January 
1, 2025, HCPCS codes C9794 and C9795 are being deleted and replaced by 
G0562 and G0563, respectively, to allow for payment in settings other 
than hospital outpatient departments for CY 2025. The descriptors for 
the new G-codes are the same as existing HCPCS codes C9794 and C9795.
    Please refer to Table 22 for the final OPPS New Technology APC and 
status indicator assignments for HCPCS codes G0562 and G0563 for CY 
2025. The CY 2025 payment rates can be found in Addendum B to this 
final rule with comment period via the internet on the CMS website. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Addendum D1 can also be found via the internet on the 
CMS website.

[[Page 94021]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.045

c. Blinded Procedure for NYHA Class III/IV Heart Failure (APC 1590)
    A randomized, double-blinded, controlled IDE study is currently in 
progress for the V-Wave interatrial shunt. The V-Wave interatrial shunt 
is for patients with severe symptomatic heart failure and is designed 
to regulate left atrial pressure in the heart. All participants who 
passed initial screening for the study receive a right heart 
catheterization procedure described by CPT code 93451 (Right heart 
catheterization including measurement(s) of oxygen saturation and 
cardiac output, when performed). Participants assigned to the 
experimental group also receive the V-Wave interatrial shunt procedure 
while participants assigned to the control group only receive right 
heart catheterization. The developer of V-Wave was concerned that the 
current coding of these services by Medicare would reveal to the study 
participants whether they had received the interatrial shunt because an 
additional procedure code, CPT code 93799 (Unlisted cardiovascular 
service or procedure), would be included on the claims for participants 
receiving the interatrial shunt. Therefore, for CY 2020, we created a 
temporary HCPCS code to describe the V-Wave interatrial shunt procedure 
for both the experimental group and the control group in the study. 
Specifically, we established HCPCS code C9758 (Blinded procedure for 
NYHA class III/IV heart failure; transcatheter implantation of 
interatrial shunt or placebo control, including right heart 
catheterization, trans-esophageal echocardiography (TEE)/intracardiac 
echocardiography (ICE), and all imaging with or without guidance (for 
example, ultrasound, fluoroscopy), performed in an approved 
investigational device exemption (IDE) study) to describe the service, 
and we assigned the service to New Technology APC 1589 (New 
Technology--Level 38 ($10,001-$15,000)) with a payment rate of 
$12,500.50.
    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 
85946), we stated that we believe similar resources and device costs 
are involved with the V-Wave interatrial shunt procedure and the Corvia 
Medical interatrial shunt procedure (HCPCS code C9760), except that 
payment for HCPCS codes C9758 and C9760 differs based on how often the 
interatrial shunt is implanted when each code is billed. An interatrial 
shunt is implanted one-half of the time HCPCS code C9758 is billed, 
whereas an interatrial shunt is implanted every time HCPCS code C9760 
is billed. Accordingly, for CY 2021, we reassigned HCPCS code C9758 to 
New Technology APC 1590 (New Technology--Level 39 ($15,001-$20,000)), 
which reflects the cost of furnishing the interatrial shunt one-half of 
the time the procedure is performed.
    For CY 2022, we used the same claims data from CY 2019 that we did 
for the CY 2021 OPPS/ASC final rule with comment period. Because there 
were no claims reporting HCPCS code C9758, we continued to assign HCPCS 
code C9758 to New Technology APC 1590 with a payment rate of $17,500.50 
for CY 2022. For CY 2023 we used claims data from CY 2019 through CY 
2022. Because there were no claims reporting HCPCS code C9758 in CY 
2023 or CY 2024, we continued to assign HCPCS code C9758 to New 
Technology APC 1590 with a payment rate of $17,500.50 for CY 2023 and 
2024.
    For CY 2025, the OPPS payment rates were proposed based on 
available CY 2023 claims data. There were only three claims for HCPCS 
code C9758 within this time period. As this is below the threshold of 
100 claims for a service within a year, we would designate C9758 as a 
low volume service and apply our universal low volume APC policy. Under 
this policy, we would use the highest of the geometric mean cost, 
arithmetic mean cost, or median cost based on up to 4 years of claims 
data to assign HCPCS code C9758 to the appropriate New Technology APC. 
Given our proposal, which we are finalizing, to maintain current New 
Technology APC assignments for CY 2025 for New Technology APC services 
with fewer than 10 claims in the 4-year lookback period applicable for 
the universal low volume APC policy, we proposed to continue assigning 
HCPCS code C9758 to New Technology APC 1590 with a proposed payment 
rate of $17,500.50.
    Please refer to Table 23 for the proposed OPPS New Technology APC 
and status indicator assignments for HCPCS code C9758 for CY 2025.

[[Page 94022]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.046

    Comment: We received one comment supporting our proposal to 
continue to assign HCPCS code C9758 to New Technology APC 1590.
    Response: We thank the commenter for their support. Our updated 
claims data for the 4-year lookback period for the universal low volume 
APC policy continues to show only 3 claims for HCPCS code C9758. 
Therefore, we are finalizing our proposal without modification to 
continue assigning HCPCS code C9758 to New Technology APC 1590. Please 
refer to Table 24 for the final OPPS New Technology APC and status 
indicator assignment for HCPCS code C9758 for CY 2025. The final CY 
2025 payment rates can be found in Addendum B to this final rule with 
comment period via the internet on the CMS website. In addition, we 
refer readers to Addendum D1 of this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Addendum D1 can also be found via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.047

d. Bronchoscopy With Transbronchial Ablation of Lesion(s) by Microwave 
Energy (APC 1562)
    Effective January 1, 2019, CMS established HCPCS code C9751 
(Bronchoscopy, rigid or flexible, transbronchial ablation of lesion(s) 
by microwave energy, including fluoroscopic guidance, when performed, 
with computed tomography acquisition(s) and 3-D rendering, computer-
assisted, image-guided navigation, and endobronchial ultrasound (EBUS) 
guided transtracheal and/or transbronchial sampling (e.g., 
aspiration[s]/biopsy[ies]) and all mediastinal and/or hilar lymph node 
stations or structures and therapeutic intervention(s)). This microwave 
ablation procedure utilizes a flexible catheter to access the lung 
tumor via a working channel and may be used as an alternative procedure 
to a percutaneous microwave approach. Based on our review of the New 
Technology APC application for this service and the service's clinical 
similarity to existing services paid under the OPPS, we estimated the 
likely cost of the procedure would be between $8,001 and $8,500. We 
assigned the procedure to New Technology APC 1571 (New Technology--
Level 34 ($8001-$8500)) for CY 2019.
    In claims data available from CY 2019 for the CY 2021 OPPS/ASC 
final rule with comment period, there were four claims reported for 
bronchoscopy with transbronchial ablation of lesions by microwave 
energy. Given the low volume of claims for the service, we proposed for 
CY 2021 to apply the universal low volume APC policy we adopted in CY 
2019, under which we utilize our equitable adjustment

[[Page 94023]]

authority under section 1833(t)(2)(E) of the Act to calculate the 
geometric mean, arithmetic mean, and median costs to determine an 
appropriate payment rate for purposes of assigning bronchoscopy with 
transbronchial ablation of lesions by microwave energy to a New 
Technology APC. We found the geometric mean cost for the service to be 
approximately $2,693, the arithmetic mean cost to be approximately 
$3,086, and the median cost to be approximately $3,708. The median was 
the statistical methodology that estimated the highest cost for the 
service. The payment rate calculated using this methodology fell within 
the cost band for New Technology APC 1562 (New Technology--Level 25 
($3501-$4000)). Therefore, we assigned HCPCS code C9751 to APC 1562 for 
CY 2021.
    In CY 2022, we again used the claims data from CY 2019 for HCPCS 
code C9751. Because the claims data was unchanged from when it was used 
in CY 2021, the values for the geometric mean cost ($2,693), the 
arithmetic mean cost ($3,086), and the median cost ($3,708) for the 
service described by HCPCS code C9751 remained the same. The highest 
cost metric using these methodologies was again the median and within 
the cost band for New Technology APC 1562 (New Technology--Level 25 
($3,501-$4,000)). Therefore, we continued to assign HCPCS code C9751 to 
APC 1562 (New Technology--Level 25 ($3501-$4000)), with a payment rate 
of $3,750.50 for CY 2022.
    There were no new claims for HCPCS code C9751 for the CY 2024 OPPS/
ASC final rule with comment period. Therefore, we continued to use 
claims from CY 2019 to determine the payment rate for the service; and 
continued to assign HCPCS code C9751 to APC 1562 (New Technology--Level 
25 ($3501-$4000)), with a payment rate of $3,750.50.
    There continue to be no separately payable claims for HCPCS code 
C9751 since 2019. Consistent with our proposal to maintain current New 
Technology APC assignments for CY 2025 for New Technology APC services 
with fewer than 10 claims in the 4-year lookback period applicable for 
the universal low volume APC policy, we proposed, for CY 2025, to 
continue to assign HCPCS code C9751 to APC 1562 (New Technology--Level 
25 ($3501-$4000)), with a payment rate of $3,750.50.
    Please refer to Table 25 for the proposed OPPS New Technology APC 
and status indicator assignments for HCPCS code C9751 for CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.048

    We did not receive any public comments on our proposal to continue 
to assign HCPCS code C9751 to APC 1562 (New Technology--Level 25 
($3501-$4000)). Additionally, our updated claims data continues to show 
that there are no new claims for C9751 for CY 2025. Therefore, we are 
finalizing our proposal without modification to continue to assign 
HCPCS code C9751 to APC 1562. Please refer to Table 26 for the final 
OPPS New Technology APC and status indicator assignment for HCPCS codes 
C9751 for CY 2025. The final CY 2025 payment rates can be found in 
Addendum B to this final rule with comment period via the internet on 
the CMS website. In addition, we refer readers to Addendum D1 of this 
final rule with comment period for the status indicator meanings for 
all codes reported under the OPPS. Addendum D1 can also be found via 
the internet on the CMS website.

[[Page 94024]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.049

e. Cardiac Positron Emission Tomography (PET)/Computed Tomography (CT) 
Studies (APCs 1520 and 1522)
    For CY 2025, the OPPS payment rates for the service described by 
CPT codes 78431, 78432, and 78433 were proposed to be based on 
available CY 2023 claims data. CPT code 78431 had over 26,000 single 
frequency claims in CY 2023. The geometric mean cost for CPT code 78431 
was approximately $2,350. The geometric mean falls within APC 1522 (New 
Technology--Level 22 ($2001-$2500)) with a payment rate of $2,250.50, 
which is the current APC assignment for this service. Therefore, we 
proposed, for CY 2025, to continue to assign CPT code 78431 to APC 1522 
(New Technology--Level 22 ($2001-$2500)) with a payment rate of 
$2,250.50.
    There were only 19 single frequency claims in CY 2023 for CPT code 
78432. As this is below the threshold of 100 claims for a service 
within a year, we proposed to apply our universal low volume New 
Technology APC policy and used the highest of the geometric mean cost, 
arithmetic mean cost, or median cost based on up to 4 years of claims 
data to assign CPT code 78432 to the appropriate New Technology APC. 
Using available claims data from CY 2021, CY 2022, and CY 2023, our 
analysis found the geometric mean cost of the service was approximately 
$1,760, the arithmetic mean cost of the service was approximately 
$1,920, and the median cost of the service was approximately $1,540. 
The arithmetic mean was the statistical methodology that estimated the 
highest cost for the service. The arithmetic mean cost of $1,923, is an 
amount that is above the cost band for APC 1520 (New Technology--Level 
20 ($1801-$1900)), where the procedure is currently assigned for CY 
2024. Therefore, we proposed, for CY 2025, to assign CPT code 78432 to 
APC 1521 (New Technology--Level 21 ($1901-$2000)) with a payment rate 
of $1950.50.
    There were over 1,400 single frequency claims for CPT code 78433 in 
CY 2023. The geometric mean cost for CPT code 78433 was approximately 
$2,010, which is an amount that is above the current New Technology APC 
cost band for APC 1521 (New Technology--Level 21 ($1901-$2000)) to 
which it is assigned for CY 2024. Therefore, for CY 2025, we proposed 
to reassign CPT code 78433 to APC 1522 (New Technology--Level 22 
($2001-$2500)) with a payment rate of $2,250.50.
    Please refer to Table 27 below for the proposed OPPS New Technology 
APC and status indicator assignments for CPT codes 78431, 78432, and 
78433 for CY 2025. The proposed CY 2025 payment rates can be found in 
Addendum B to the CY 2025 OPPS/ASC proposed rule via the internet on 
the CMS website.
BILLING CODE 4120-01-P

[[Page 94025]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.050

BILLING CODE 4120-01-C
    Comment: We received comments supporting our proposals to assign 
CPT codes 78431 and 78433 to APC 1522 (New Technology--Level 22 ($2001-
$2500)) and to assign CPT code 78432 to APC 1521 (New Technology--Level 
21 ($1901-$2000)). One commenter noted that the geometric mean costs 
and hospital reporting for PET/CT services is stabilizing and that the 
claims data will support stable payment rates in future years.
    Response: We thank the commenters for their support. We agree that 
the claims data for these services have been stabilizing in recent 
years, and any payment adjustments have been, generally, minor. As we 
have begun to gather adequate claims data, we will consider whether to 
assign CPT codes 78431 and 78433 to clinical APCs in future rulemaking.
    Comment: One commenter supported our proposals to assign CPT codes 
78431 and 78433 to APC 1522 but did not support our proposal to assign 
CPT code 78432 to APC 1521. The commenter explained that CPT code 78431 
should be assigned to APC 1522 or higher because, from a clinical 
workflow perspective, CPT code 78432 requires more resources than CPT 
code 78431. The commenter explained that they believe the low claims 
volume is responsible for the lower payment rate for CPT codes 78432.
    Response: We thank the commenter for their input. We note that New 
Technology APCs are cost bands rather than clinical groupings. Unlike 
when we assign a service to a clinical APC and consider resource and 
clinical similarities to other services in a clinical APC, we assign 
services to New Technology APCs based on cost. While we appreciate the 
commenter's information regarding the clinical differences between CPT 
codes 78431 and 78432, we adjust New Technology APC assignments based 
on the claims

[[Page 94026]]

data available rather than clinical characteristics of a service.
    We note that additional claims for CPT codes 78431 through 78433 
have been processed since the proposed rule. Based on updated claims 
data, CPT code 78431 has an updated geometric mean cost of 
approximately $2,300. Because the geometric mean cost of CPT code 78431 
is still within the range for APC 1522, the proposed APC assignment for 
CPT code 78431 for CY 2025, we are finalizing the proposed APC 
assignment of CPT code 78431 without modification.
    There were close to 15 additional single frequency claims for CY 
2023 processed for CPT code 78432 since the proposed rule, bringing the 
total number of single frequency claims to approximately 33 for CPT 
code 78432 for CY 2023. Based on the updated claims data for CPT code 
78432, the geometric mean cost is approximately $1,750; the arithmetic 
mean cost is approximately $1,890; and the median cost is approximately 
$1,590. Of these, the highest statistical methodology is the arithmetic 
mean cost of $1,890. Since the updated arithmetic mean cost for CPT 
code 78432 is outside of the cost band for APC 1521 (New Technology--
Level 21 ($1901-$2000), we are not finalizing our proposal to assign 
CPT code 78432 to APC 1521 for CY 2025. Based on the updated 
statistical methodologies, we are assigning CPT code 78432 to APC 1520 
for CY 2025 (New Technology--Level 20 ($1801-$1900)) with a payment 
rate of $1,850.50.
    For CPT code 78433, the geometric mean cost based on the updated 
claims data has changed to approximately $1964, down from approximately 
$2010 at the time of the proposed rule. Therefore, we are not 
finalizing the assignment of CPT code 78433 to APC 1522 as proposed 
because the geometric mean cost falls outside of the cost band for 
proposed APC 1522 (New Technology--Level 22 ($2001-$2500)). We are 
assigning CPT code 78433 to APC 1521 (New Technology--Level 21 ($1901-
$2000)) for CY 2025, which is the same New Technology APC to which it 
is currently assigned for CY 2024.
    Please refer to Table 28 for the final OPPS New Technology APC and 
status indicator assignments for CPT codes 7843, 78432, and 78433 for 
CY 2025. The final CY 2025 payment rates can be found in Addendum B to 
this final rule with comment via the internet on the CMS website. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Addendum D1 can also be found via the internet on the 
CMS website.
BILLING CODE 4120-01-P

[[Page 94027]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.051

BILLING CODE 4120-01-C
f. CardiAMP (APC 1590)
    The CardiAMP cell therapy IDE studies are two randomized, double-
blinded, controlled IDE studies: the CardiAMP Cell Therapy Chronic 
Myocardial Ischemia Trial \20\ and the CardiAMP Cell Therapy Heart 
Failure Trial.\21\ The two trials are designed to investigate the 
safety and efficacy of autologous bone marrow mononuclear cell 
treatment for the following: (1) patients with medically refractory and 
symptomatic ischemic cardiomyopathy; and (2) patients with refractory 
angina pectoris and chronic myocardial ischemia. On April 1, 2022, we 
established HCPCS code C9782 to describe the CardiAMP cell therapy IDE 
studies and assigned HCPCS code C9782 to APC 1574 (New Technology--
Level 37 ($9,501-$10,000)) with the status indicator ``T.'' We 
subsequently revised the descriptor for HCPCS code C9782 to: (Blinded 
procedure for New York Heart Association (NYHA) Class II or III heart 
failure, or Canadian Cardiovascular Society (CCS) Class III or IV 
chronic refractory angina; transcatheter intramyocardial 
transplantation of autologous bone marrow cells (e.g., mononuclear) or 
placebo control, autologous bone marrow harvesting and preparation for 
transplantation, left heart catheterization including ventriculography, 
all laboratory services, and all imaging with or without guidance 
(e.g., transthoracic

[[Page 94028]]

echocardiography, ultrasound, fluoroscopy), all device(s), performed in 
an approved Investigational Device Exemption (IDE) study) to clarify 
the inclusion of the Helix trans endocardial injection catheter device 
in the descriptor. Additionally, we determined that APC 1590 (New 
Technology--Level 39 ($15,001-$20,000)) most accurately accounted for 
the resources associated with furnishing the procedure described by 
HCPCS code C9782.
---------------------------------------------------------------------------

    \20\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial 
of Autologous Bone Marrow Cells Using the CardiAMP Cell Therapy 
System in Patients With Refractory Angina Pectoris and Chronic 
Myocardial Ischemia.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT03455725?term=NCT03455725&rank=1.
    \21\ ClinicalTrials.gov. ``Randomized Controlled Pivotal Trial 
of Autologous Bone Marrow Mononuclear Cells Using the CardiAMP Cell 
Therapy System in Patients With Post Myocardial Infarction Heart 
Failure.'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/NCT02438306.
---------------------------------------------------------------------------

    For CY 2025, the proposed OPPS payment rates were based on 
available CY 2023 claims data. We identified three single frequency 
paid claims for C9782 for ratesetting for CY 2025. As this is below the 
threshold of 100 claims for a service within a year, we would designate 
C9782 as a low volume service and apply our universal low volume APC 
policy. Under this policy, we would use the highest of the geometric 
mean cost, arithmetic mean cost, or median cost based on up to 4 years 
of claims data to assign CPT codes C9782 to the appropriate New 
Technology APC. Our analysis of the data found the geometric mean cost 
of the service is approximately $18,045, the arithmetic mean cost of 
the service is approximately $18,332, and the median cost of the 
service is approximately $20,394. The median was the statistical 
methodology that estimated the highest cost for the service. However, 
because there are only three claims for HCPCS code C9782 from the CY 
2023 claims data, we had concerns that the universal low volume APC 
policy calculations would not accurately capture the cost of the 
service. Given our proposal to maintain current New Technology APC 
assignments for CY 2025 for New Technology APC services with fewer than 
10 claims in the 4-year lookback period applicable for the universal 
low-volume APC policy, we proposed to continue to assign HCPCS code 
C9782 to New Technology APC 1590 with a payment rate of $17,050.50.
    Please refer to Table 29 below for the proposed OPPS New Technology 
APC and status indicator assignments for HCPCS code C9782 for CY 2025. 
The proposed CY 2025 payment rates can be found in Addendum B to the CY 
2025 OPPS/ASC proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.052

    We did not receive any public comments on our proposal and are 
finalizing it without modification. HCPCS code C9782 will be assigned 
to New Technology APC 1590 with a status indication of ``T'' for CY 
2025. Please refer to Table 30 for the final OPPS New Technology APC 
and status indicator assignment for CPT code C9782. The final CY 2025 
payment rates can be found in Addendum B to this final rule with 
comment via the internet on the CMS website.

[[Page 94029]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.053

g. Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT) 
(APC 1511)
    Atherosclerosis Imaging-Quantitative Computer Tomography (AI-QCT) 
is a Software as a Service (SaaS) that assesses the extent of coronary 
artery disease severity. This procedure is performed to quantify the 
extent of coronary plaque and stenosis in patients who have undergone 
coronary computed tomography analysis (CCTA). The AMA CPT Editorial 
Panel established the following four codes associated with this 
service, effective January 1, 2021:
    0623T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; data preparation 
and transmission, computerized analysis of data, with review of 
computerized analysis output to reconcile discordant data, 
interpretation, and report.
    0624T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; data preparation 
and transmission.
    0625T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; computerized 
analysis of data from coronary computed tomographic angiography.
    0626T: Automated quantification and characterization of coronary 
atherosclerotic plaque to assess severity of coronary disease, using 
data from coronary computed tomographic angiography; review of 
computerized analysis output to reconcile discordant data, 
interpretation and report.
    Of these four CPT codes, only CPT code 0625T was determined to be 
separately payable in the OPPS and was assigned to status indicator = 
``S'' (Procedure or Service, Not Discounted When Multiple) starting 
October 1, 2022. We assigned CPT code 0625T to a separately payable 
status indicator based on the technology and its potential utilization 
in the HOPD setting, our evaluation of the service, as well as input 
from our medical advisors. The procedure was assigned to APC 1511 (New 
Technology--Level 11 ($900-$1000)) with a payment rate of $950.50.
    For CY 2024, the OPPS payment rates were proposed to be based on 
available CY 2022 claims data. There were 37 claims for CPT code 0625T 
during this time period. As this was below the threshold of 100 claims 
for a service within a year, we explained that we could propose to 
designate CPT code 0625T as a low volume service under our universal 
low volume New Technology APC policy and use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost based on up 
to 4 years of claims data to assign code 0625T to the appropriate New 
Technology APC. We found the geometric mean cost for the service to be 
approximately $3.70, the arithmetic mean cost to be approximately 
$4.10, and the median cost to be approximately $3.50. Under our 
universal low volume New Technology APC policy, we would use the 
greatest of the statistical methodologies, the arithmetic mean, to 
assign CPT code 0625T to New Technology 1491 (New Technology Level 1A--
(0-$10)) with a payment rate of $5.00. However, we acknowledged that, 
because CPT code 0625T was only made separately payable as part of the 
OPPS in October 2022, and, therefore, the claims available only reflect 
two months of data, we were concerned that we did not have sufficient 
claims data to justify reassignment to another New Technology APC (66 
FR 69902). Therefore, consistent with our current policy to retain 
services within New Technology APC groups until we obtain sufficient 
claims data to justify reassignment (66 FR 59902), for CY 2024 we 
adopted as final our proposal

[[Page 94030]]

to maintain CPT code 0625T's current assignment to APC 1511 (New 
Technology--Level 11 ($901-$1000) with a payment rate of $950.50.
    For setting CY 2025 payment rates, there were only three separately 
payable claims in the CY 2023 data reported for CPT code 0625T 
indicating a geometric mean cost of approximately $180, which is 
substantially lower than the code's current payment rate of $950.50. 
Additionally, in CY 2022 and CY 2023, there were a total of 40 
separately payable claims reported for CPT code 0625T, but it is 
unlikely that a service with a current payment rate of $950.50 would 
have a geometric mean of $4.20, an arithmetic mean of $6.60, and a 
median of $3.52. These findings lead to uncertainty about the 
appropriate payment rate for the service described by CPT code 0625T. A 
review of the evidence submitted by the developer of the procedure when 
this procedure was originally assigned to a New Technology APC, and 
before any claims data were available, indicated the procedure had a 
cost between $901 and $1,000. Claims for CPT code 0625T from CY 2021 
and CY 2022 indicate that the cost of the procedure is less than $10, 
which would not appear to cover the basic cost of this procedure, 
including computing time, generating a report, and having medical 
personnel interpret the report. For CY 2023, the geometric mean cost of 
approximately $180 based on three claims may better reflect the cost of 
the procedure described by CPT code 0625T, but there were not enough 
claims to be confident about the result. Therefore, we proposed to use 
our authority under section 1833(t)(2)(E) for CY 2025 to continue to 
assign CPT code 0625T to APC 1511 (New Technology--Level 11 ($901-
$1000) with a payment rate of $950.50 based on the data currently 
available to us, which we believe best reflects the cost of the service 
as described by the New Technology APC application.
    Refer to Table 31 for the proposed OPPS New Technology APC and 
status indicator assignments for CPT code 0625T for CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.054

    Comment: We received several comments supporting the assignment of 
CPT code 0625T to APC 1511 (New Technology--Level 11 ($901-$1000) for 
CY 2025.
    Response: We thank the commenters for their support. We note that 
since the CY 2025 OPPS/ASC proposed rule was issued, two additional 
claims for CPT code 0625T have been processed, with the updated 
geometric mean cost increasing to approximately $498. Although we have 
two additional claims, we are not certain that we have enough claims 
data to be confident in the calculated geometric mean cost for CPT code 
0625T. Therefore, we are finalizing our proposal, without modification, 
to continue to assign CPT code 0625T to APC 1511 (New Technology--Level 
11 ($901-$1000). Please refer to Table 32 for the final OPPS New 
Technology APC and status indicator assignment for CPT code 0625T. The 
final CY 2025 payment rates can be found in Addendum B to this final 
rule with comment period via the internet on the CMS website.

[[Page 94031]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.055

h. Corvia Medical Interatrial Shunt Procedure (APC 1592)
    On July 1, 2020, we established HCPCS code C9760 (Non-randomized, 
non-blinded procedure for nyha class ii, iii, iv heart failure; 
transcatheter implantation of interatrial shunt, including right and 
left heart catheterization, transeptal puncture, trans-esophageal 
echocardiography (tee)/intracardiac echocardiography (ice), and all 
imaging with or without guidance (for example, ultrasound, fluoroscopy) 
performed in an approved investigational device exemption (ide) study, 
performed in an approved investigational device exemption (ide) study) 
to facilitate payment for the implantation of the Corvia Medical 
interatrial shunt.
    As we stated in the CY 2021 OPPS final rule with comment period (85 
FR 85947), we believe that similar resources and device costs are 
involved with the Corvia Medical interatrial shunt procedure and the V-
Wave interatrial shunt procedure. Unlike the V-Wave interatrial shunt, 
which is implanted half the time the associated interatrial shunt 
procedure described by HCPCS code C9758 is billed, the Corvia Medical 
interatrial shunt is implanted every time the associated interatrial 
shunt procedure (HCPCS code C9760) is billed. Therefore, for CY 2021, 
we assigned HCPCS code C9760 to New Technology APC 1592 (New 
Technology--Level 41 ($25,001-$30,000)) with a payment rate of 
$27,500.50. We also modified the code descriptor for HCPCS code C9760 
to remove the phrase ``or placebo control,'' from the descriptor. In CY 
2022, we generally used the same claims data as was used in the CY 2021 
OPPS final rule to set the payment rates for that year. Accordingly, 
because there were no claims for this service in CY 2019, we continued 
to assign HCPCS code C9760 to New Technology APC 1592 in CY 2022. There 
continued to be no claims data for this service in CY 2021, so we 
continued to assign HCPCS code C9760 to New Technology APC 1592 in CY 
2023, the year for which we used CY 2021 data for ratesetting. While 
there was one claim in CY 2022, we continued to assign HCPCS code C9760 
to New Technology APC 1592 for CY 2024 due to the extremely limited 
claims data available.
    For CY 2025, the OPPS payment rates were proposed to be based on 
available CY 2023 claims data. There were no claims for HCPCS code 
C9760 in CY 2023. Therefore, we proposed to continue assigning HCPCS 
code C9760 to New Technology APC 1592.
    Please refer to Table 33 for the proposed OPPS New Technology APC 
and status indicator assignments for HCPCS code C9760. The proposed CY 
2025 payment rates can be found in Addendum B to the CY 2025 OPPS/ASC 
proposed rule via the internet on the CMS website.

[[Page 94032]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.056

    We did not receive any public comments on our proposal, and we 
still do not have any claims for the service. Therefore, for CY 2025, 
we are finalizing our proposal without modification. Specifically for 
CY 2025, we are assigning HCPCS code C9760 to APC 1592 (New 
Technology--Level 41 ($25,001-$30,000)) with a payment rate of 
$27,500.50.
    Please refer to Table 34 below for the final OPPS New Technology 
APC and status indicator assignments for HCPCS code C9760 for CY 2025. 
The CY 2025 payment rates can be found in Addendum B to this final rule 
with comment period via the internet on the CMS website. In addition, 
we refer readers to Addendum D1 of this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Addendum D1 can also be found via the internet on the CMS 
website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.057

i. DARI Motion Procedure (APC 1505)
    Effective January 1, 2022, CPT code 0693T (Comprehensive full body 
computer-based markerless 3D kinematic and kinetic motion analysis and 
report) is associated with the DARI Motion Procedure, a service that 
provides human motion analysis to aid clinicians in pre- and post-
operative surgical intervention and in making other treatment 
decisions, including selecting the best course of physical therapy and 
rehabilitation. The technology consists of eight cameras that surround 
a patient, which send live video to a computer workstation that 
analyzes the video to create a 3D reconstruction of the patient without 
the need for special clothing, markers, or devices attached to the 
patient's clothing or skin. For CY 2022, we assigned CPT code 0693T to 
New Technology APC 1505 (New Technology--Level 5 ($301-$400)). For CY 
2023, the OPPS payment rates were based on claims submitted between 
January 1, 2021, and December 31, 2021, processed through June 30, 
2022. Due to its effective date of January 1, 2022, there were no 
claims available for CPT

[[Page 94033]]

code 0693T for rate setting in CY 2023. Therefore, in CY 2023, we 
continued to assign CPT code 0693T to New Technology APC 1505. For CY 
2024, there were no claims available, so we again continued to assign 
CPT code 0693T to New Technology APC 1505.
    For CY 2025, the OPPS payment rates were proposed based on 
available CY 2023 claims data. Although CPT code 0693T was effective 
January 1, 2022, we have no claims data at this time. Because we have 
no claims data, for CY 2025, we proposed to continue to assign CPT code 
0693T to APC 1505 with a proposed payment rate of $350.50.
    Refer to Table 35 for the proposed OPPS New Technology APC and 
status indicator assignments for CPT code 0693T for CY 2025. The 
proposed CY 2025 payment rates can be found in Addendum B to the CY 
2025 OPPS/ASC proposed rule via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.058

    We did not receive any public comments on our proposal, and we 
still do not have any claims for the service. Therefore, for CY 2025, 
we are finalizing our proposal without modification. Specifically, for 
CY 2025, we are assigning CPT code 0693T to APC 1505 with a status 
indicator of ``S''. The final New Technology APC and status indicator 
assignments for CPT code 0693T for CY 2025 are found in Table 36. The 
CY 2025 payment rates can be found in Addendum B to this final rule 
with comment period via the internet on the CMS website. In addition, 
we refer readers to Addendum D1 of this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Addendum D1 can also be found via the internet on the CMS 
website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.059

j. Instillation of Anti-Neoplastic Pharmacologic/Biologic Agent Into 
Renal Pelvis (APC 1558)
    Effective October 1, 2023, CMS established HCPCS code C9789 
(Instillation of anti-neoplastic pharmacologic/biologic agent into 
renal pelvis, any method, including all imaging guidance, including 
volumetric measurement if performed) and assigned it to New Technology 
APC 1559 (New Technology--Level 22 ($2001-$2500)), with a payment rate 
of $2,250.50 based on our review of the clinical and resource 
characteristics of this service.
    This code may be used to describe the unique procedure associated 
with the administration of the drug described by HCPCS code J9281 
(Mitomycin pyelocalyceal instillation, 1 mg) or similar products. HCPCS 
code J9281 may be used to describe the product, Jelmyto (mitomycin for 
pyelocalyceal solution). The FDA approved Jelmyto in 2020, and the FDA 
approved indication and usage for Jelmyto is as an alkylating drug 
indicated for the treatment of adult patients with low-grade Upper 
Tract Urothelial Cancer (LG-UTUS).\22\
---------------------------------------------------------------------------

    \22\ Jelmyto Package Insert. 01/14/2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/211728s002lbl.pdf.
---------------------------------------------------------------------------

    Because we created HCPCS code C9789 effective October 1, 2023, we 
have limited claims data from CY 2023 available for CY 2025 rulemaking. 
Specifically, we only had 6 claims available. Given our proposal to

[[Page 94034]]

maintain current New Technology APC assignments for CY 2025 for New 
Technology APC services with fewer than 10 claims in the 4-year 
lookback period applicable for the universal low-volume APC policy, we 
proposed to continue to assign HCPCS code C9789 to New Technology APC 
1559 (New Technology--Level 22 ($2001-$2500)).
    Please refer to Table 37 for the proposed OPPS New Technology APC 
and status indicator assignments for CPT code C9789 for CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.060

    Comment: We received one comment in support of our proposal.
    Response: We thank the commenter for their support.
    Our updated claims data during the 4-year lookback period 
applicable for the universal low-volume APC policy continues to show 
only 6 claims for HCPCS code C9789. Therefore, we are finalizing our 
proposal without modification to continue assigning HCPCS code C9758 to 
New Technology APC 1559 (New Technology--Level 22 ($2001-$2500)). 
Please refer to Table 38 below for the final OPPS New Technology APC 
and status indicator assignment for HCPCS code C9789 for CY 2025. The 
final CY 2025 payment rates can be found in Addendum B to this final 
rule with comment period via the internet on the CMS website. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the status indicator meanings for all codes reported 
under the OPPS. Addendum D1 can also be found via the internet on the 
CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.061

k. LimFlow TADV Procedure CPT Code 0620T (APC 1579)
    The LimFlow TADV procedure, which is described by CPT code 0620T 
(Endovascular venous arterialization, tibial or peroneal vein, with 
transcatheter placement of intravascular stent graft(s) and closure by 
any method, including percutaneous or open vascular access, ultrasound 
guidance for vascular access when performed, all catheterization(s) and 
intraprocedural roadmapping and imaging guidance necessary to complete 
the intervention, all associated radiological supervision and 
interpretation, when performed), is an endovascular procedure that is 
used

[[Page 94035]]

to treat patients with chronic limb-threatening ischemia. According to 
the developer, these patients are no longer eligible for conventional 
endovascular or open bypass surgery to treat their artery blockage, and 
without this procedure, they are likely to face limb amputation.
    CPT code 0620T was established in January 2021 and was assigned to 
APC 5194 (Level 4 Endovascular Procedures) with a payment rate of 
approximately $17,400, which is the highest-paying APC for endovascular 
procedures. While we proposed to continue to assign CPT code 0620T to 
APC 5194 for CY 2024, we finalized a reassignment from a clinical APC 
to a New Technology APC with a higher payment rate based on comments 
received expressing concern that the low payment rate of the procedure 
would discourage providers from performing the procedure and deny 
access to the procedure. To determine the appropriate New Technology 
APC assignment for CY 2024, we looked at the available cost 
information. There were only 15 claims for the procedure for CY 2021 
and CY 2022, so the LimFlow TADV procedure was subject to our new 
technology procedure low volume APC policy. An analysis of the median, 
arithmetic mean, and geometric mean of CPT code 0620T for CY 2024 
rulemaking found that the median was approximately $25,800, the 
arithmetic mean was approximately $28,600, and the geometric mean was 
approximately $26,700. Because the arithmetic mean had the highest 
value of the three cost statistics, for CY 2024, we assigned CPT code 
0620T to New Technology APC 1578 (New Technology--Level 41 ($25,001-
$30,000)) with a payment rate of $27,500.50.
    For CY 2025, the OPPS payment rates were proposed to be based on 
available CY 2023 claims data. We identified only six single frequency 
claims for CPT code 0620T in the CY 2023 claims data. As this is below 
the threshold of 100 claims for a service within a year, we proposed to 
again apply our universal low volume APC policy and use the highest of 
the geometric mean cost, arithmetic mean cost, or median cost based on 
up to 4 years of claims data to assign the service to the appropriate 
New Technology APC. Based on our review of the available claims, we 
determined that the arithmetic mean was approximately $35,000; the 
median was approximately $36,000; and the geometric mean cost was 
approximately $33,000. Of these, the median was the statistical 
methodology that estimated the highest cost for the service. The 
payment rate calculated using this methodology fell within the cost 
band for New Technology APC 1579 (New Technology--Level 42 ($30,001-
$40,000)) with a payment rate of $35,000.50. Therefore, for CY 2025, we 
proposed to designate this service as a low volume service under our 
universal low volume APC policy and to assign HCPCS code 0620T to New 
Technology APC 1579.
[GRAPHIC] [TIFF OMITTED] TR27NO24.062

    Comment: We received a comment from the manufacturer supporting our 
proposal to designate CPT code 0620T as a low volume service under the 
universal low volume APC policy and assign the service to New 
Technology APC 1579 for CY 2025, as they believe the proposed 
assignment more accurately reflects the resources used in the 
procedure.
    Response: We thank the commenter for their support.
    We note that there are an additional five claims for CPT code 0620T 
for CY 2023 that have been processed since the proposed rule. Based on 
the 11 single frequency claims available for CY 2023, in addition to 
the other 26 claims in the 4-year lookback period, we determined that 
the arithmetic mean is $35,700; the median is $36,400; and the 
geometric mean cost is $33,900. Since the total number of claims for 
CPT code 0620T for CY 2023 is still below the 100-claim threshold, we 
are finalizing our proposal to designate 0620T as a low volume service 
under the universal low volume APC policy. The payment rate calculated 
using the highest of these methodologies, the median, continues to fall 
within the cost band for New Technology APC 1579 (New Technology--Level 
42 ($30,001-$40,000)) with a payment rate of $35,000.50. Therefore, we 
are also finalizing our proposal without modification to assign CPT 
code 0620T to New Technology APC 1579 for CY 2025.
    Please refer to Table 40 for the final OPPS New Technology APC and 
status indicator assignments for CPT code

[[Page 94036]]

0662T for CY 2025. The final CY 2025 payment rates can be found in 
Addendum B to this final rule with comment period via the internet on 
the CMS website. In addition, we refer readers to Addendum D1 of this 
final rule with comment period for the status indicator meanings for 
all codes reported under the OPPS. Addendum D1 can also be found via 
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.063

l. Liver Histotripsy Service (APC 1576)
    CPT code 0686T (Histotripsy (i.e., non-thermal ablation via 
acoustic energy delivery) of malignant hepatocellular tissue, including 
image guidance) was first effective July 1, 2021, and describes the 
histotripsy service associated with the use of the HistoSonics system. 
Histotripsy is a non-invasive, non-thermal, mechanical process that 
uses a focused beam of sonic energy to destroy cancerous liver tumors 
and is currently in a non-randomized, prospective clinical trial to 
evaluate the efficacy and safety of the device for the treatment of 
primary or metastatic tumors located in the liver.\23\ When HCPCS code 
0686T was first effective, the histotripsy procedure was designated as 
a Category A IDE clinical study (NCT04573881). Since devices in 
Category A IDE studies are excluded from Medicare payment, payment for 
CPT code 0686T only reflected the cost of the service that is performed 
(absent the cost of the device) each time it is reported on a claim. On 
March 2, 2023, the histotripsy IDE clinical study was re-designated as 
a Category B (Non-experimental/Investigational) IDE study. Due to this 
new designation, payment for CPT code 0686T in CY 2024 reflects payment 
for both the service that is performed and the device used each time it 
is reported on a claim. For CY 2024, we assigned CPT code 0686T to New 
Technology APC 1576 (New Technology--Level 39 ($15,001-$20,000)) with a 
payment rate of $17,500.50.
---------------------------------------------------------------------------

    \23\ ClinicalTrials.gov. ``The HistoSonics System for Treatment 
of Primary and Metastatic Liver Tumors Using Histotripsy 
(#HOPE4LIVER) (#HOPE4LIVER).'' Accessed May 10, 2022. https://clinicaltrials.gov/ct2/show/study/NCT04573881.
---------------------------------------------------------------------------

    For CY 2025, proposed OPPS payment rates were based on available CY 
2023 claims data. We have identified one claim for CPT code 0686T 
within the CY 2023 claims data. As the available claims data is below 
the threshold of 100 claims for a service within a year, we would 
propose to designate CPT code 0686T as a low volume service under our 
universal low volume APC policy, and use the highest of the geometric 
mean cost, arithmetic mean cost, or median cost to assign CPT code 
0686T to the appropriate New Technology APC. However, because there is 
only a single claim in the CY 2023 data, we have concerns that the 
universal low volume APC policy calculations do not accurately capture 
the cost of the service.
    Given our proposal to maintain current New Technology APC 
assignments for CY 2025 for New Technology APC services with fewer than 
10 claims in the 4-year lookback period applicable for the universal 
low volume APC policy, and based on the fact that there have only been 
3 claims for CPT code 0686T in the prior 4-year period, we proposed to 
continue to assign CPT code 0686T to APC 1576 (New Technology--Level 39 
($15,001-$20,000)) with a payment rate of $17,500.50 as shown in Table 
25.
    Please refer to Table 41 for the proposed OPPS New Technology APC 
and status indicator assignments for CPT code 0686T for CY 2025. The 
proposed CY 2025 payment rates can be found in Addendum B to the CY 
2025 OPPS/ASC proposed rule.

[[Page 94037]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.064

    We did not receive any public comments on our proposal and are 
finalizing it without modification. HCPCS code 0686T will be assigned 
to New Technology APC 1576 with a status indication of ``S'' for CY 
2025. Please refer to Table 42 below for the final OPPS New Technology 
APC and status indicator assignment for CPT code 0686T. The final CY 
2025 payment rates can be found in Addendum B to this final rule with 
comment via the internet on the CMS website. In addition, we refer 
readers to Addendum D1 of this final rule with comment period for the 
status indicator meanings for all codes reported under the OPPS. 
Addendum D1 can also be found via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.065

m. LiverMultiScan Service (APC 1511)
    Effective July 1, 2021, CPT codes 0648T (Quantitative magnetic 
resonance for analysis of tissue composition (e.g., fat, iron, water 
content), including multiparametric data acquisition, data preparation 
and transmission, interpretation and report, obtained without 
diagnostic mri examination of the same anatomy (e.g., organ, gland, 
tissue, target structure) during the same session; single organ) and 
0649T (Quantitative magnetic resonance for analysis of tissue 
composition (e.g., fat, iron, water content), including multiparametric 
data acquisition, data preparation and transmission, interpretation and 
report, obtained with diagnostic mri examination of the same anatomy 
(e.g., organ, gland, tissue, target structure); single organ (list 
separately in addition to code for primary procedure)) are associated 
with the LiverMultiScan service. LiverMultiScan is a Software as a 
medical Service (SaaS) that is intended to aid the diagnosis and 
management of chronic liver disease, the most prevalent of which is 
Non-Alcoholic Fatty Liver Disease (NAFLD). It provides standardized, 
quantitative imaging biomarkers for the characterization and assessment 
of inflammation, hepatocyte ballooning, and fibrosis, as well as 
steatosis, and iron accumulation. LiverMultiScan receives MR images 
acquired from patients' providers and analyzes the images using their 
proprietary Artificial Intelligence (AI) algorithms. It then sends the 
providers a quantitative metric report of the patient's liver fibrosis 
and inflammation. In accordance with our SaaS add-on codes policy (87 
FR 72032 to 72033), SaaS CPT add-on codes are assigned to the same APCs 
and status indicators as their standalone codes. Thus, CPT code 0649T, 
the add-on code for LiverMultiScan, is assigned to the identical APC 
and status indicator as CPT code 0648T, the standalone code for the 
same service. For CY 2024, we assigned CPT codes 0648T and 0649T to New 
Technology APC 1511 (New Technology--Level 11 ($901-$1,000) with a 
payment rate of $950.50.
    For CY 2025, the OPPS payment rates were proposed to be based on 
available CY 2023 claims data. We identified 71 claims for CPT code 
0648T and 72 claims for CPT code 0649T for CY 2023. As this is below 
the threshold of 100 claims for each code within a year, we

[[Page 94038]]

proposed to utilize our universal low volume APC policy and use the 
highest of the geometric mean cost, arithmetic mean cost, or median 
cost based on up to 4 years of claims data to assign CPT codes 0648T 
and 0649T to the appropriate New Technology APC. There are available 
claims data from CY 2021 and CY 2022 for CPT codes 0648T and 0649T. Our 
analysis of the combined data, 114 claims for CPT code 0648T and 115 
claims for CPT code 0649T, yielded a geometric mean cost of 
approximately $180, an arithmetic mean cost of approximately $234, and 
a median cost of approximately $197. We explained that we believed it 
was appropriate to utilize our universal low volume APC policy to 
assign the LiverMultiScan service to a New Technology APC because we 
stated that we believed that the combined claims data from CY 2021 to 
CY 2023 provided sufficient claims to capture the cost of the service. 
The arithmetic mean was the statistical methodology that estimated the 
highest cost for CPT codes 0648T and 0649T. Therefore, we proposed to 
reassign CPT codes 0648T and 0649T to New Technology APC 1504 (New 
Technology--Level 4 ($201-$300)) with a payment rate of $250.50 as 
shown in Table 43.
[GRAPHIC] [TIFF OMITTED] TR27NO24.066

    Comment: We received several comments, including a comment from the 
manufacturer, requesting that we maintain the APC assignment for the 
CPT codes 0648T and 0649T at APC 1511. Many commenters stated that the 
cost of each of the services is at least $950, and that the proposed 
payment rate of $250 would be inadequate to ensure patient access. 
Commenters noted that the claims data used to determine the CY 2025 
OPPS proposed APC assignment for this service represent an insufficient 
number of claims to estimate the cost for this service. One commenter 
expressed concern about the wide data variability present in the claims 
data for CPT codes 0648T and 0649T. One commenter requested that we 
develop a payment policy for SaaS like CPT codes 0648T and 0649T that 
results in appropriate and consistent payment for innovative new 
services. We also received one comment signed by ten radiologists 
stating that the current payment rate for the procedures was too high.
    Response: We recognize that software-based technologies, like those 
described by CPT codes 0648T and 0649T, are rapidly evolving and, 
therefore, we are considering for future rulemaking whether specific 
adjustments to payment policies, including our New Technology APC 
policies, are needed to more accurately and appropriately pay for these 
products and services across settings of care. For CY 2025, we 
recognize that the few claims available for CPT codes 0648T and 0649T 
may not truly represent the cost of this service. While we received a 
comment expressing concern over the potential overpayment of the 
service, we do not believe we have sufficient claims to justify a 
reassignment at this time. Therefore, we agree with the commenters 
that, for both CPT codes 0648T and 0649T, we should maintain the 
payment rates for CY 2025 until we have additional claims data.
    Comment: One commenter supported the proposed reassignment of CPT 
codes 0648T and 0649T to New Technology APC 1504. The commenter stated 
that the payment rate of $950 created a paradigm where the third-party 
automated quantitative analytic service was valued greater than the MRI 
procedure that included technologist staffing, professional 
interpretation and liability. The commenter believed that the payment 
of the service should be

[[Page 94039]]

based on the true cost of these automated digital quantitative services 
at New Technology APC 1504.
    Response: We thank the commenter for its support of our proposal. 
We reiterate that the few claims for CPT codes 0648T and 0649T may not 
truly represent the cost of this service or justify a reassignment at 
this time.
    After consideration of the public comments we received, we are 
finalizing our proposal with modifications. We are using our equitable 
adjustment authority under section 1833(t)(2)(E) to continue to assign 
CPT codes 0648T and 0649T to New Technology APC 1511 (New Technology--
Level 11 ($901-$1,000) with a payment rate of $950.50 for CY 2025. 
Please refer to Table 44 below for the final OPPS New Technology APC 
and status indicator assignments for CPT codes 0648T and 0649T for CY 
2025. The final CY 2025 payment rates can be found in Addendum B to 
this final rule via the internet on the CMS website. In addition, we 
refer readers to Addendum D1 of this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Addendum D1 can also be found via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.067

n. Optellum Lung Cancer Prediction (LCP) (APC 1508)
    CPT codes 0721T (Quantitative computed tomography (CT) tissue 
characterization, including interpretation and report, obtained without 
concurrent CT examination of any structure contained in previously 
acquired diagnostic imaging) and 0722T (Quantitative computed 
tomography (CT) tissue characterization, including interpretation and 
report, obtained with concurrent CT examination of any structure 
contained in the concurrently acquired diagnostic imaging dataset (list 
separately in addition to code for primary procedure)) became effective 
July 1, 2022, and are associated with the Optellum LCP technology. The 
Optellum LCP applies an algorithm to a patient's CT scan to produce a 
raw risk score for a patient's pulmonary nodule. The physician uses the 
risk score to quantify the risk of lung cancer and to determine what 
the next management step should be for the patient (for example, CT 
surveillance versus invasive procedure). In accordance with our SaaS 
add-on codes policy (87 FR 72032 and 72033), SaaS CPT add-on codes are 
assigned to the same APCs and status indicators as their standalone 
codes. Thus, CPT code 0722T, the add-on code for the Optellum LCP 
service, is assigned to the identical APC and status indicator as CPT 
code 0721T, the standalone code for the same service. For CY 2024, we 
assigned CPT codes 0721T and 0722T to APC New Technology 1508 (New 
Technology--Level 8 ($601-$700)).
    For CY 2025, the OPPS payment rates were proposed based on 
available CY 2023 claims data. We identified three claims for CPT codes 
0721T and 0722T for ratesetting for CY 2025. As this is below the 
threshold of 100 claims for a service within a year, we would usually 
propose to apply our universal low volume APC policy and use the 
highest of the geometric mean cost, arithmetic mean cost, or median 
cost based on up to 4 years of claims data to assign CPT codes 0721T 
and 0722T to the appropriate New Technology APC. There are available 
claims data only from CY 2023 for CPT codes 0721T and 0722T. Our 
analysis of the data for CPT code 0721T found the geometric mean cost 
of the service is approximately $84, the arithmetic mean cost of the 
service is approximately $98, and the median

[[Page 94040]]

cost of the service is approximately $130. We did not identify any 
reported claims for CPT code 0722T. However, because there were only 
three claims for the Optellum LCP service and these claims show a much 
lower cost than would be expected based on the current APC assignment 
of this service, we have concerns that the universal low volume APC 
policy calculations do not accurately capture the cost of the service. 
Given our proposal to maintain current New Technology APC assignments 
for CY 2025 for New Technology APC services with fewer than 10 claims 
in the 4-year lookback period applicable for the universal low-volume 
APC policy, we proposed to continue to assign CPT codes 0721T and 0722T 
to New Technology APC 1508 (New Technology--Level 8 ($601-$700)) with a 
proposed payment rate of $650.50.
    Please refer to Table 45 below for the proposed OPPS New Technology 
APC and status indicator assignments for HCPCS codes 0721T and 0722T 
for CY 2025. The proposed CY 2025 payment rates can be found in 
Addendum B to the CY 2025 OPPS/ASC proposed rule via the internet on 
the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.068

    We did not receive any public comments on our proposal, and we are 
finalizing our proposal without modification. We are assigning HCPCS 
codes 0721T and 0722T to New Technology APC 1508 with a status 
indication of ``S'' for CY 2025. Please refer to Table 46 below for the 
final OPPS New Technology APC and status indicator assignment for CPT 
codes 0721T and 0722T. The final CY 2025 payment rates can be found in 
Addendum B to this final rule with comment via the internet on the CMS 
website. In addition, we refer readers to Addendum D1 of this final 
rule with comment period for the status indicator meanings for all 
codes reported under the OPPS. Addendum D1 can also be found via the 
internet on the CMS website.

[[Page 94041]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.069

o. Quantitative Magnetic Resonance (QMR) for Analysis of Tissue 
Composition (APC 1511)
    Effective January 1, 2022, CPT codes 0697T (Quantitative magnetic 
resonance for analysis of tissue composition (e.g., fat, iron, water 
content), including multiparametric data acquisition, data preparation 
and transmission, interpretation and report, obtained without 
diagnostic mri examination of the same anatomy (e.g., organ, gland, 
tissue, target structure) during the same session; multiple organs) and 
0698T (Quantitative magnetic resonance for analysis of tissue 
composition (e.g., fat, iron, water content), including multiparametric 
data acquisition, data preparation and transmission, interpretation and 
report, obtained with diagnostic mri examination of the same anatomy 
(e.g., organ, gland, tissue, target structure); multiple organs (list 
separately in addition to code for primary procedure)) are associated 
with the CoverScan Software as a medical Service (SaaS). This service 
is a medical image management and processing software package that 
analyzes MR data and provides quantified metrics of multiple organs 
such as the heart, lungs, liver, spleen, pancreas, and kidney. In 
accordance with our SaaS add-on codes policy (87 FR 72032 to 72033), 
SaaS CPT add-on codes are assigned to the same APCs and status 
indicators as their standalone codes. Thus, CPT code 0698T, the add-on 
code for CoverScan is be assigned to the same APC and status indicator 
as CPT code 0697T, the standalone code for the same service. For CY 
2024, we assigned CPT codes 0697T and 0698T to New Technology APC 1511 
(New Technology--Level 11 ($900-$1,000)).
    For CY 2025, the proposed OPPS payment rates were based on 
available CY 2023 claims data. We identified 48 claims for CPT code 
0698T and no claims for CPT code 0697T in CY 2023. As this is below the 
threshold of 100 claims for a service within a year, we proposed to 
apply our universal low volume APC policy and use the highest of the 
geometric mean cost, arithmetic mean cost, or median cost based on up 
to 4 years of claims data to assign CPT codes 0697T and 0698T to the 
appropriate New Technology APC. There are also available claims data 
from CY 2022 for CPT code 0698T. Our analysis of the combined data, 
approximately 80 claims, yielded a geometric mean cost of approximately 
$444, an arithmetic mean cost of approximately $622, and a median cost 
of approximately $786. The median cost is the statistical methodology 
that estimates the highest cost for CPT codes 0697T and 0698T. 
Therefore, we proposed, for CY 2025, to reassign CPT codes 0697T and 
0698T to APC 1509 (New Technology--Level 9 ($701-$800)) with a payment 
rate of $750.50.
    Refer to Table 47 below for the proposed OPPS New Technology APC 
and status indicator assignments for CPT codes 0697T and 0698T for CY 
2025. The proposed CY 2025 payment rates can be found in Addendum B to 
the CY 2025 OPPS/ASC proposed rule via the internet on the CMS website.

[[Page 94042]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.070

    Comment: Commenters requested that we maintain the APC assignment 
for the CPT codes 0697T and 0698T at APC 1511 for CY 2025. Many 
commenters stated that the cost of each of the services is at least 
$950, and that the proposed payment rate of $750 does not cover the 
cost of this service. One commenter noted that the claims data used to 
determine the CY 2025 OPPS proposed rate for this service represent an 
insufficient number of claims to estimate the cost for this service. 
Additionally, the commenter stated that wide variability in claims data 
distorts the applicability of the universal low volume APC policy and 
skews the arithmetic mean value. Commenters were concerned that the 
proposed payment rate would hinder patient access to these services.
    Response: We recognize that software-based technologies, like those 
described by CPT codes 0697T and 0698T, are rapidly evolving and, 
therefore, we are considering for future rulemaking whether specific 
adjustments to payment policies, including our New Technology APC 
policies, are needed to more accurately and appropriately pay for these 
products and services across settings of care. For CY 2025, we 
recognize that the few claims available for CPT codes 0697T and 0698T 
may not truly represent the cost of this service. We agree with the 
commenters that, for both CPT codes 0697T and 0698T, we should maintain 
the payment rates for CY 2025 until we have additional claims data.
    After consideration of the public comments we received, we are 
finalizing our proposal with modifications. We will use our equitable 
adjustment authority under section 1833(t)(2)(E) to continue to assign 
CPT codes 0697T and 0698T to New Technology APC 1511 (New Technology--
Level 11 ($901-$1,000) with a payment rate of $950.50 for CY 2025. 
Please refer to Table 48 below for the final OPPS New Technology APC 
and status indicator assignments for CPT codes 0697T and 0698T for CY 
2025. The final CY 2025 payment rates can be found in Addendum B to 
this final rule via the internet on the CMS website. In addition, we 
refer readers to Addendum D1 of this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Addendum D1 can also be found via the internet on the CMS website.

[[Page 94043]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.070

p. Quantitative Magnetic Resonance Cholangiopancreatography (QMRCP) 
(APC 1511)
    Effective July 1, 2022, CPT codes 0723T (Quantitative magnetic 
resonance cholangiopancreatography (QMRCP) including data preparation 
and transmission, interpretation and report, obtained without 
diagnostic magnetic resonance imaging (MRI) examination of the same 
anatomy (e.g., organ, gland, tissue, target structure) during the same 
session) and 0724T (Quantitative magnetic resonance 
cholangiopancreatography (QMRCP), including data preparation and 
transmission, interpretation and report, obtained with diagnostic 
magnetic resonance imaging (MRI) examination of the same anatomy (e.g., 
organ, gland, tissue, target structure) (list separately in addition to 
code for primary procedure)) are associated with the QMRCP Software as 
a medical Service (SaaS). The service performs quantitative assessment 
of the biliary tree and gallbladder. It uses a proprietary algorithm 
that produces a three-dimensional reconstruction of the biliary tree 
and pancreatic duct and also provides precise quantitative information 
of biliary tree volume and duct metrics. In accordance with our SaaS 
add-on codes policy (87 FR 72032 and 72033), SaaS CPT add-on codes are 
assigned to the same APCs and status indicators as their standalone 
codes. Consistent with our SaaS add-on codes policy, CPT code 0724T, 
the add-on code for QMRCP is assigned to the identical APC and status 
indicator as CPT code 0723T, the standalone code for the same service. 
For CY 2024, we assigned CPT codes 0723T and 0724T to New Technology 
APC 1511 (New Technology--Level 11 ($900-$1,000)).
    For CY 2025, the proposed OPPS payment rates were based on 
available CY 2023 claims data. We identified 3 claims for CPT code 
0724T and no claims for CPT code 0723T in CY 2023. As this is below the 
threshold of 100 claims for a service within a year, we would usually 
propose to apply our universal low volume APC policy and use the 
highest of the geometric mean cost, arithmetic mean cost, or median 
cost based on up to 4 years of claims data to assign CPT codes 0723T 
and 0724T to the appropriate New Technology APC. There is only one 
single claim from CY 2022 for CPT code 0724T and no claims for CPT code 
0723T. For CY 2023, we received 3 claims for CPT code for CPT 0724T and 
no claims for CPT code 0723T. Our analysis of the combined CY 2022 and 
CY 2023 data for CPT code 0723T and 0724T found the geometric mean cost 
of the service is approximately $26, the arithmetic mean cost of the 
service is approximately $26, and the median cost of the service is 
approximately $27. Given our proposal to maintain current New 
Technology APC assignments for CY 2025 for New Technology APC services 
with fewer than 10 claims in the 4-year lookback period applicable for 
the universal low volume APC policy, we proposed to continue to assign 
the CPT codes 0723T and 0724T to New Technology APC 1511 (New 
Technology--Level 11 ($901-$1,000)) with a payment rate of $950.50.
    Refer to Table 49 for the proposed OPPS New Technology APC and 
status indicator assignments for CPT codes 0723T and 0724T for CY 2025.

[[Page 94044]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.072

    We did not receive any public comments on our proposal to continue 
to assign the CPT codes 0723T and 0724T to New Technology APC 1511 (New 
Technology--Level 11 ($901-$1,000)). Our updated claims data did not 
show any additional claims for CY 2023 for CPT codes 0723T and 0724T. 
Therefore, we are finalizing our proposal without modification to 
continue to assign CPT codes 0723T and 0724T to APC 1511. Please refer 
to Table 50 for the final OPPS New Technology APC and status indicator 
assignment for CPT codes 0723T and 0724T for CY 2025. The final CY 2025 
payment rates can be found in Addendum B to this final rule with 
comment period via the internet on the CMS website. In addition, we 
refer readers to Addendum D1 of this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Addendum D1 can also be found via the internet on the CMS website.

[[Page 94045]]

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q. Scalp Cooling (APC 1519)
    CPT code 0662T (Scalp cooling, mechanical; initial measurement and 
calibration of cap) became effective on July 1, 2021, to describe 
initial measurement and calibration of a scalp cooling device for use 
during chemotherapy administration to prevent hair loss. According to 
Medicare's National Coverage Determination (NCD) policy, specifically, 
NCD 110.6 (Scalp Hypothermia During Chemotherapy to Prevent Hair Loss), 
the scalp cooling cap itself is classified as an incident to supply to 
a physician service, and would not be paid under the OPPS; however, 
interested parties have indicated that there are substantial resource 
costs of around $1,900 to $2,400 associated with calibrating and 
fitting the cap. CPT guidance states that CPT code 0662T should be 
billed once per chemotherapy session, which we interpret to mean once 
per course of chemotherapy. Therefore, if a course of chemotherapy 
involves, for example, 6 or 18 sessions, HOPDs should report CPT 0662T 
only once for that 6 or 18 therapy sessions.
    For CY 2022, we assigned CPT code 0662T to APC New Technology 1520 
(New Technology--Level 20 ($1,801-$1,900)) with a payment rate of 
$1,850.50. For CY 2023, we did not have any claims data, so we 
continued to assign CPT code 0662T to APC 1520. For CY 2024 we 
finalized reassignment of CPT code 0662T to APC 1514 (New Technology--
Level 14 ($1,201-$1,300)) with a payment rate of $1,250.50 based on 11 
single frequency claims.
    For CY 2025, the OPPS payment rates were proposed to be based on 
available CY 2023 claims data. The Scalp Cooling service became 
effective in the OPPS in CY 2022, and we identified 38 single frequency 
paid claims for CPT code 0662T for CY 2023. As this is below the 
threshold of 100 claims for a service within a year, we proposed to 
designate CPT code 0662T as a low volume service under our universal 
low volume APC policy and to use the highest of the geometric mean 
cost, arithmetic mean cost, or median cost based on up to 4 years of 
claims data to assign the service to the appropriate New Technology 
APC. Based on our review of the available claims, we determined that 
the geometric mean cost for CPT code 0662T was approximately $841; the 
median was approximately $1,351; and the arithmetic mean was 
approximately $1,361. Therefore, for CY 2025, we proposed to designate 
this service as a low volume service under our universal low volume APC 
policy and to reassign CPT code 0662T to APC 1515 (New Technology--
Level 15 ($1301-$1400)) with a payment rate of $1,350.50 for CY 2025 
based on the arithmetic mean of approximately $1,361.Please refer to 
Table 51 below for the proposed OPPS New Technology APC and status 
indicator assignment for CPT code 0662T. The proposed CY 2025 payment 
rates can be found in Addendum B CY 2025 OPPS/ASC proposed rule via the 
internet on the CMS website.

[[Page 94046]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.074

    We did not receive any public comments on our proposal. We note 
that additional claims for CPT code 0662T have been processed since the 
proposed rule. Specifically, there are 50 single frequency claims for 
CPT code 0662T for CY 2023. Since this is below the threshold of 100 
claims, we are finalizing our proposal to designate CPT code 0662T as a 
low volume service under our universal low volume APC policy and use 
the greater of the geometric mean, arithmetic mean, or median cost 
based on the available claims data for CPT code 0662T to calculate an 
appropriate payment rate for purposes of assigning CPT code 0662T to a 
New Technology APC. Based on the updated claims data available for this 
final rule, we found the geometric mean cost to be approximately 
$1,110, the median to be $1,750, and the arithmetic mean to be $1,420. 
The median was the statistical methodology that estimated the highest 
cost for the service. The payment rate calculated using this 
methodology falls within the cost band for New Technology APC 1519 (New 
Technology--Level 19 ($1701-$1800)). Therefore, we are assigning CPT 
code 0662T to APC 1519 for CY 2025.
    Please refer to Table 52 for the final OPPS New Technology APC and 
status indicator assignments for CPT code 0662T for CY 2025. The final 
CY 2025 payment rates can be found in Addendum B to this final rule 
with comment period via the internet on the CMS website. In addition, 
we refer readers to Addendum D1 of this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Addendum D1 can also be found via the internet on the CMS 
website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.075

r. Supervised Visits for Esketamine Self-Administration (APCs 1513 and 
1518)
    On March 5, 2019, FDA approved SpravatoTM (esketamine) 
nasal spray, used in conjunction with an oral antidepressant, for 
treatment of depression in adults who have tried other antidepressant 
medicines but have not benefited from them (treatment-resistant 
depression (TRD)). This is the first FDA approval of esketamine for any 
use.
    Esketamine is a noncompetitive N-methyl D-aspartate (NMDA) receptor 
antagonist. It is a nasal spray supplied as an aqueous solution of 
esketamine hydrochloride in a vial with a nasal spray device. Each 
device delivers two sprays containing a total of 28 mg of esketamine. 
Patients would require either two (2) devices (for a 56 mg dose) or 
three (3) devices (for an 84 mg dose) per treatment.
    Because of the risk of serious adverse outcomes resulting from 
sedation and dissociation caused by esketamine nasal spray 
administration, and the potential for misuse of the product, it is only 
available through a restricted distribution system under a Risk 
Evaluation and Mitigation Strategy (REMS). A REMS is a drug safety 
program that the FDA can require for certain medications with serious 
safety concerns to help ensure the benefits of the medication outweigh 
its risks. The SpravatoTM REMS program requires the 
esketamine nasal spray to be dispensed and administered to enrolled 
patients in health care settings that are certified in the REMS. See 
www.fda.gov for more information regarding the SpravatoTM 
REMS program compliance requirements.
    A treatment session of esketamine consists of instructed nasal 
self-administration by the patient followed by a period of at least 2 
hours post-administration observation of the patient under direct 
supervision of a health care professional in the certified health care 
setting. Refer to the CY 2020 PFS final rule and interim final rule for

[[Page 94047]]

more information about supervised visits for esketamine nasal spray 
self-administration (84 FR 63102 through 63105).
    To facilitate prompt beneficiary access to the new, potentially 
life-saving treatment for TRD using esketamine, we created two new 
HCPCS G codes, G2082 and G2083, effective January 1, 2020. HCPCS code 
G2082 is for an outpatient visit for the evaluation and management of 
an established patient who requires the supervision of a physician or 
other qualified health care professional and provision of up to 56 mg 
of esketamine through nasal self-administration and includes 2 hours of 
post-administration observation. For CY 2020, HCPCS code G2082 was 
assigned to New Technology APC 1508 (New Technology--Level 8 ($601-
$700)) with a payment rate of $650.50. HCPCS code G2083 describes a 
similar service to HCPCS code G2082 but involves the administration of 
more than 56 mg of esketamine. For CY 2020, HCPCS code G2083 was 
assigned to New Technology APC 1511 (New Technology--Level 11 ($901-
$1000)) with a payment rate of $950.50. Updates to the APC assignments 
for G2082 and G2083 have been made in past rules. See the CY 2021 OPPS/
ASC final rule with comment period (85 FR 85948), CY 2022 OPPS/ASC 
final rule with comment period (86 FR 63538), CY 2023 OPPS/ASC final 
rule with comment period (87 FR 71816-71817), and CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81628--81630) for these updates.
    For CY 2025, the OPPS payment rates were proposed based on 
available CY 2023 claims data as the available single frequency claims 
exceed the 100 claims threshold generally used for our universal low 
volume policy. Therefore, for CY 2025, we proposed to assign HCPCS 
codes G2082 and G2083 to New Technology APCs based on the codes' 
geometric mean costs. Specifically, we proposed to assign HCPCS code 
G2082 to New Technology APC 1512 (New Technology--Level 12 ($1001-
$1100)) with a payment rate of $1,050.50 based on its geometric mean 
cost of $1,087, which was calculated using the available 424 single 
frequency claims from CY 2023 claims data. We also proposed to assign 
HCPCS code G2083 to New Technology APC 1518 (New Technology--Level 18 
($1601-$1700)) with a payment rate of $1,650.50 based on its geometric 
mean cost of $1,643, which was calculated using the available 2,482 
single frequency claims from CY 2023 claims data.
    Refer to Table 53 for the New Technology APC and status indicator 
assignments for HCPCS codes G2082 and G2083. The proposed CY 2025 
payment rates for these HCPCS codes can be found in Addendum B to the 
CY 2025 OPPS/ASC proposed rule.

[[Page 94048]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.076

    We did not receive any public comments on our proposal. We note 
however that the geometric mean costs for both HCPCS code G2082 and 
HCPCS code G2083 have changed since the proposed rule. Based on the 
updated claims data available for this final rule, the geometric mean 
cost for HCPCS code G2082 is $1,104.71 and the geometric mean cost for 
G2083 is $1,448.83. Based on updated claims data available for this 
final rule with comment period, we are finalizing a New Technology APC 
assignment for HCPCS code G2082 to APC 1513 (New Technology--Level 13 
($1101-$1200)) with a payment of $1150.50 and we are finalizing a New 
Technology APC assignment for HCPCS code G2083 to APC 1516 (New 
Technology--Level 16 ($1401-$1500)) with a payment of $1450.50.
    Please refer to Table 54 for the CY 2025 proposed and final APC and 
SI assignments for HCPCS codes G2082 and G2083. The CY 2025 payment 
rates can be found in Addendum B to this final rule with comment period 
via the internet on the CMS website.
    Finally, we note that because we have gathered additional claims 
data and seen increases in claims volume, we are considering placing 
HCPCS codes G2082 and G2083 into clinical APCs through future 
rulemaking.

[[Page 94049]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.077

s. Surfacer[supreg] Inside-Out[supreg] Access Catheter System (APC 
1534)
    HCPCS code C9780 (Insertion of central venous catheter through 
central venous occlusion via inferior and superior approaches (e.g., 
inside-out technique), including imaging guidance) describes the 
procedure associated with the use of the Surfacer[supreg] Inside-
Out[supreg] Access Catheter System that is designed to address central 
venous occlusion. HCPCS code C9780 was established on October 1, 2021, 
and since its establishment the code has been assigned to New 
Technology APC 1534 (New Technology--Level 34 ($8001-$8500)).
    For CY 2025, there were only 3 single frequency claims in CY 2023 
for HCPCS code C9780. There were no available claims from CY 2021 or CY 
2022. Given our proposal to maintain current New Technology APC 
assignments for CY 2025 for New Technology APC services with fewer than 
10 claims in the 4-year lookback period applicable for the universal 
low volume APC policy, we proposed to continue to assign HCPCS code 
C9780 to APC 1534 (New Technology--Level 34 ($8001-$8500)) with a 
payment rate of $8,250.50. Refer to Table 55 for the proposed New 
Technology APC and status indicator assignments for HCPCS code C9780.

[[Page 94050]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.078

    We did not receive any public comments on our proposal to continue 
to assign CPT code C9870 to APC 1534 (New Technology--Level 34 ($8001-
$8500)). We note that there was one additional claim in our updated 
claims data, however, the total number of claims for CY 2023 is still 
under 10. Therefore, given our new policy to maintain current New 
Technology APC assignments for CY 2025 for New Technology APC services 
with fewer than 10 claims in the 4-year lookback period applicable for 
the universal low volume APC policy, we are finalizing as proposed to 
continue to assign CPT code C9870 to APC 1534. Please refer to Table 56 
below for the final OPPS New Technology APC and status indicator 
assignment for HCPCS code C9780. The final CY 2025 payment rates can be 
found in Addendum B to this final rule with comment period via the 
internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.079

t. TASS (APC 1537)
    The Transcatheter Atrial Shunt System (TASS) is a nitinol self-
expanding cardiovascular implant consisting of four arms including two 
left atrial (LA) arms and two coronary sinus (CS) arms placed between 
the left atrium and coronary sinus to create a 7mm flow diameter 
channel for blood to flow from the high pressure region of the left 
atrium to the lower pressure region of the right atrium via the 
coronary sinus. TASS is currently in a Category B IDE clinical trial. 
Effective October 1, 2023 CMS created HCPCS code C9792 (Blinded or 
nonblinded procedure for symptomatic New York Heart Association (NYHA) 
Class II, III, IV a heart failure; transcatheter implantation of left 
atrial to coronary sinus shunt using jugular vein access, including all 
imaging necessary to intra procedurally map the coronary sinus for 
optimal shunt placement (e.g., TEE or ICE ultrasound, fluoroscopy), 
performed under general anesthesia in an approved investigational 
device exemption (IDE) study) to describe the TASS service and assigned 
it to APC 1537 (New Technology--Level 37 ($9501-$10000)) with a payment 
rate of $9,750.50.
    For CY 2025, the proposed OPPS payment rates were based on 
available CY 2023 claims data. Due to the effective date of the code of 
October 1, 2023, there were no claims available for HCPCS code C9792 
for rate setting in CY 2024. Therefore, in CY 2025, we proposed to 
continue to assign HCPCS code C9792 to APC 1537.
    Please refer to Table 57 below for the current and proposed OPPS 
New Technology APC and status indicator assignments for HCPCS code 
C9792. The proposed CY 2025 payment rates can be found in Addendum B to 
the proposed rule via the internet on the CMS website.

[[Page 94051]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.080

    Comment: We received a comment supporting our proposal to continue 
to assign HCPCS code C9792 to APC 1537.
    Response: We appreciate the commenter's support for our proposal.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification to assign CPT code C9792 
to APC 1537 (New Technology--Level 37 ($9501-$10000)) with a payment 
rate of $9,750.50 for CY 2025. Please refer to Table 58 for the final 
OPPS New Technology APC and status indicator assignment for HCPCS code 
C9792. The final CY 2024 payment rates can be found in Addendum B to 
this final rule with comment period via the internet on the CMS 
website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.081

u. Magnetic Resonance Imaging With Inhaled Hyperpolarized Xenon-129 
Contrast Agent (APC 1551)
    HCPCS code C9791 (Magnetic resonance imaging with inhaled 
hyperpolarized xenon-129 contrast agent, chest, including preparation 
and administration of agent) was established on October 1, 2023. For CY 
2023, we assigned HCPCS code C9791 to New Technology APC 1551 (New 
Technology--Level 14 ($1201-$1300)). For CY 2024, the OPPS payment 
rates were based on claims submitted between January 1, 2022, and 
December 31, 2022, processed through June 30, 2023. Due to the 
effective date of the service of October 1, 2023, there were no claims 
available for HCPCS code C9791 for rate setting in CY 2024. Therefore, 
in CY 2024, we continued to assign HCPCS code C9791 to New Technology 
APC 1551.
    For CY 2025, the proposed OPPS payment rates were based on 
available CY 2023 claims data. Although HCPCS code C9791 was effective 
October 1, 2023, we did not have any claims data for the service for 
the proposed rule. Therefore, for CY 2025, we proposed to continue to 
assign HCPCS code C9791 to New Technology APC 1551 (New Technology--
Level 14) with a proposed payment rate of $1,250.50.

[[Page 94052]]

    Please refer to Table 59 for the proposed OPPS New Technology APC 
and status indicator assignment for HCPCS code C9791 for CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.082

    We did not receive any public comments on our proposal, and we 
still do not have any claims for the service. Therefore, for CY 2025, 
we are finalizing our proposal without modification to assign HCPCS 
code C9791 to New Technology APC 1551 (New Technology--Level 14 ($1201-
$1300)) and SI ``T''. The final New Technology APC and status indicator 
assignments for HCPCS code C9791 for CY 2025 are found in Table 60. The 
CY 2025 payment rates can be found in Addendum B to this final rule 
with comment period via the internet on the CMS website. In addition, 
we refer readers to Addendum D1 of this final rule with comment period 
for the status indicator meanings for all codes reported under the 
OPPS. Addendum D1 can also be found via the internet on the CMS 
website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.083

v. SAINT Neuromodulation System
    The SAINT Neuromodulation System is a non-invasive repetitive 
transcranial magnetic stimulation (rTMS) system that identifies an 
individualized target and delivers navigationally directed repetitive 
magnetic pulses to that individualized target located within the left 
dorsolateral prefrontal cortex to treat major depressive disorder 
(MDD). The patient first receives structural MRI and functional MRI 
scans that are analyzed by the provider to identify and localize the 
personalized stimulation target in the patient's dorsolateral 
prefrontal cortex. Once the areas targeted for treatment are 
identified, the patient receives non-invasive magnetic stimulation in 
the targeted area. The patient has 10 treatment sessions per day with 
each treatment session lasting 10 minutes followed by 50 minutes of 
rest before another treatment session occurs. The treatment is 
administered over five days for a total of 50 sessions of non-invasive 
magnetic stimulation therapy. There are four CPT codes listed in Table 
61 that describe the MRI scans that are used to target the treatment 
and describe the administration of the non-invasive magnetic 
stimulation therapy.

[[Page 94053]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.084

    For CY 2025, the OPPS payment rates were proposed based on 
available CY 2023 claims data. However, CPT codes 0889T, 0890T, 0891T, 
and 0892T did not become effective until July 1, 2024, which means 
there was no claims data for the procedures described these CPT codes. 
We assigned our proposed rates for these services based on our 
evaluation of the resources needed to perform these services. Table 62 
lists CPT codes 0889T, 0890T, 0891T, and 0892T and our proposed status 
indicator and APC assignment for CY 2025.

[[Page 94054]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.085

    Comment: Several commenters, including clinicians and other 
interested parties, believe that the payment rate of $2,250.50 for the 
proposed APC assignment to New Technology APC 1522 (New Technology--
Level 22 ($2001-$2500)) for CPT codes 0890T, 0891T, and 0892T that 
describes the administration of the non-invasive magnetic stimulation 
therapy is too low. The commenters are concerned that the proposed 
payment rate will discourage providers from using the SAINT 
neuromodulation system to treat MDD. The commenters supported assigning 
CPT codes 0890T, 0891T, and 0892T to New Technology APC 1528 (New 
Technology--Level 28 ($5001-$5500)) with a payment rate of $5,250.50 to 
better reflect the resource cost of each of these three services. 
Multiple commenters also felt that the IPPS new technology add-on 
payment amount for the SAINT neuromodulation system acknowledged the 
cost of the SAINT system.
    Response: We do not have any claims data to directly determine the 
cost of the procedures described by CPT codes 0890T, 0891T, and 0892T. 
Therefore, we make our assessment of the resource costs to perform the 
procedure based on our judgment of the clinical and resource 
information presented to us about the SAINT neuromodulation system and 
the treatment approach in the manufacturer's OPPS New Technology APC 
application and through comments on the proposed rule. We agree with 
the commenters that the cost per case used for purposes of determining 
the IPPS maximum new technology add-on payment amount (88 FR 58938) was 
a more appropriate estimate of the cost of the SAINT neuromodulation 
system than our original cost estimate for the procedure in the CY 2025 
OPPS proposed rule. For purposes of determining the new technology add-
on payment amount, the cost estimate for the entire SAINT course of 
treatment, which included fifty sessions over five days of the non-
invasive magnetic stimulation therapy and related operating costs, was 
$19,500.
    Our review has determined that the cost estimate of the procedure 
described by CPT code 0899T should remain the same and CPT code 0899T 
should

[[Page 94055]]

continue to be assigned to New Technology APC 1511 (New Technology--
Level 11 ($901-$1000)) with a payment rate of $950.50. However, we now 
have determined that the per day cost of the services described by CPT 
codes 0890T, 0891T, and 0892T is around $3,710 instead of our proposed 
estimate of around $2,250. We are changing the APC assignment for CPT 
codes 0890T, 0891T, and 0892T to New Technology APC 1525 (New 
Technology--Level 25 ($3501-$4000)) with a payment rate of $3,750.50.
    Comment: Several commenters described their experiences with MDD 
and receiving treatment for their MDD using the SAINT neuromodulation 
system. All of these commenters claimed that the SAINT therapy was 
beneficial to them and helped to reduce the symptoms of MDD, which 
substantially improved their mental health. Many of these commenters 
were able to receive SAINT because they participated in clinical trials 
for the therapy or were able to afford the treatment even if it was not 
covered by health insurance. The commenters want us to ensure that 
SAINT will be affordable to patients who receive treatment, and that 
SAINT will be widely available throughout the United States, so those 
who have MDD are able to access this therapy.
    Response: We thank commenters for their input, and we are committed 
to establishing appropriate payment for the services described by CPT 
codes 0890T, 0891T, and 0892T.
    After consideration of the public comments we received, we are 
finalizing our proposal with modification for CY 2025 to assign CPT 
code 0899T to New Technology APC 1511 (New Technology--Level 11 ($901-
$1000)) and SI of ``S'' and to assign CPT codes 0890T, 0891T and 0892T 
to New Technology APC 1525 (New Technology--Level 25 ($3501-$4000)) and 
SI of ``S''. The final New Technology APC and status indicator 
assignments for CPT codes 0889T, 0890T, 0891T, and 0892T for CY 2025 
are found in Table 63. The CY 2025 payment rates can be found in 
Addendum B to this final rule with comment period via the internet on 
the CMS website. In addition, we refer readers to Addendum D1 of this 
final rule with comment period for the status indicator meanings for 
all codes reported under the OPPS. Addendum D1 can also be found via 
the internet on the CMS website.

[[Page 94056]]

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D. Universal Low Volume APC Policy for Clinical and Brachytherapy APCs

    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 
through 63747), we adopted a policy to designate clinical and 
brachytherapy APCs as low volume APCs if they have fewer than 100 
single claims that can be used for ratesetting purposes in the claims 
year used for ratesetting for the prospective year. For the CY 2025 
OPPS/ASC proposed rule, CY 2023 claims are generally the claims used 
for ratesetting; and clinical and brachytherapy APCs with fewer than 
100 single claims from CY 2023 that can be used for ratesetting would 
be low volume APCs subject to our universal low volume APC policy. As 
we stated in the CY 2022 OPPS/ASC final rule with comment period, we 
adopted this policy to reduce the volatility in the payment rate for 
those APCs with fewer than 100 single claims. Where a clinical or 
brachytherapy APC has fewer than 100 single claims that can be used for 
ratesetting, under our low volume APC payment adjustment policy, we 
determine the APC cost as the greatest of the geometric mean cost, 
arithmetic mean cost, or median cost based on up to 4 years of claims 
data. We excluded APC 5853 (Partial Hospitalization for CMHCs) and APC 
5863 (Partial Hospitalization for Hospital-based PHPs) from our 
universal low volume APC policy given the different nature of policies 
that affect the partial hospitalization program. We also excluded APC 
2698 (Brachytx, stranded, nos) and APC 2699 (Brachytx, non-stranded, 
nos) as our current methodology for determining payment rates for non-
specified brachytherapy sources is appropriate.
    Based on claims data available for the CY 2025 OPPS/ASC proposed 
rule, we proposed to designate six brachytherapy APCs and five clinical 
APCs as low volume APCs under the OPPS. The six brachytherapy APCs and 
five clinical APCs meet our criteria of having fewer than 100 single 
claims in the claims' year used for ratesetting (CY 2023 for the CY 
2025 OPPS/ASC proposed rule). Nine of the 11 APCs were designated as 
low volume APCs in CY 2024. Based on data for the CY 2025 OPPS/ASC 
proposed rule, APC 2645 (Brachytx,

[[Page 94057]]

non-stranded, gold-198) and APC 5881 (Ancillary Outpatient Services 
When Patient Dies) met our criteria to be designated a Low Volume APCs; 
and we proposed to designate those APCs as such for CY 2025.
    We did not receive any public comments on our proposal. Based on CY 
2023 claims data available for this final rule with comment period, we 
are finalizing our proposal to designate six brachytherapy APCs and 
five clinical APCs as low volume APCs under the OPPS. Table 64 includes 
the CY 2023 claims available for ratesetting for each of the APCs we 
are designating as Low Volume APCs for CY 2025. The final cost 
statistics for our CY 2025 Low Volume APCs, such as the median, 
arithmetic mean, and geometric mean cost are available for download 
with this final rule with comment period on the CMS website. We refer 
readers to our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; 
click on the relevant regulation to download the low volume APC cost 
statistics under the comprehensive (OPPS) ratesetting methodology in 
the downloads section of the web page.
[GRAPHIC] [TIFF OMITTED] TR27NO24.087

E. APC-Specific Policies

1. Cardiac CT Services, CPT Codes 75572, 75573, and 75574 (APC 5572)
    For the 2006 coding update, the AMA's CPT Editorial Panel 
established six Category III CPT codes to describe cardiac computed 
tomography angiography with contrast materials (cardiac CT services) 
effective January 1, 2006. The codes were active and separately payable 
under the OPPS between January 1, 2006, and December 31, 2009. The CPT 
Editorial Panel deleted the Category III CPT codes and replaced them 
with Category I CPT codes 75572 through 75574 effective January 1, 
2010. With the deletion of the Category III CPT codes on December 31, 
2009, we crosswalked the APC assignments from the Category III CPT 
codes (predecessor codes) to the new Category I CPT codes effective 
January 1, 2010. Since 2010, the Category I CPT codes describing 
cardiac CT services are CPT codes 75572, 75573, and 75574. The codes 
and their long descriptors are listed below.
     75572: Computed tomography, heart, with contrast material, 
for evaluation of cardiac structure and morphology (including 3D image 
postprocessing, assessment of cardiac function, and evaluation of 
venous structures, if performed).
     75573: Computed tomography, heart, with contrast material, 
for evaluation of cardiac structure and morphology in the setting of 
congenital heart disease (including 3D image postprocessing, assessment 
of left ventricular (LV) cardiac function, right ventricular (RV) 
structure and function and evaluation of vascular structures, if 
performed).
     75574: Computed tomographic angiography, heart, coronary 
arteries and bypass grafts (when present), with contrast material, 
including 3D image postprocessing (including evaluation of cardiac 
structure and morphology, assessment of cardiac function, and 
evaluation of venous structures, if performed).
    Like the predecessor codes, CPT codes 75572, 75573, and 75574 have 
been paid separately under the OPPS since 2010. From CY 2015 through CY 
2024, the OPPS payment rate, based on the geometric mean cost for the 
cardiac CT codes, has ranged between $175 and $265 for these codes, as 
listed in Table 65 below.

[[Page 94058]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.088

    We note that the OPPS payment rate applies only to the hospital 
outpatient facility and does not include the physician service payment. 
Physician services are paid under Medicare's Physician Fee Schedule 
(PFS).
    We update the OPPS payment rates on an annual basis consistent with 
the requirements set forth in section 1833(t)(9)(A) of the Act, which 
requires the HHS Secretary to review, not less often than annually, and 
revise the APC 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. Because of the annual updates, 
OPPS payment rates for services may fluctuate from year to year. We 
note that we generally use the latest claims data available to set the 
annual payment rates. Payment rates for this CY 2025 OPPS/ASC final 
rule with comment period are based on claims with dates of service 
between January 1, 2023, and December 31, 2023, processed through June 
30, 2024.
    Over the years we have received comments noting that the payment 
for these codes has declined since 2017. Comments on previous OPPS 
proposed rules have indicated that the payment amount is insufficient 
to cover the cost of providing the service and have stated that the 
payment amount does not consider the hospital resources required to 
perform these services, including the use of the equipment, medication 
administration, staff time, and scanner time. We have maintained over 
the years that an analysis of our claims data for these three codes 
have shown geometric mean costs consistent with the geometric mean cost 
for APC 5571 (Level 1 Imaging with Contrast), the APC to which the 
cardiac CT codes have been assigned since 2015.
    We have also received comments in the past urging CMS to allow 
hospitals the flexibility to submit charges for cardiac CT services 
with a revenue code other than CT scan (035X) and Radiology Diagnostic 
(032X) revenue codes, implying that MACs had applied edits to the 
cardiac CT codes that prevented hospitals from reporting a cardiology 
(048X) revenue code when appropriate. It is longstanding CMS policy 
that hospital outpatient facilities are responsible for reporting the 
appropriate cost centers and revenue codes on claims. As stated in 
section 20.5 in Chapter 4 (Part B Hospital) of the Medicare Claims 
Processing Manual, CMS ``does not instruct hospitals on the assignment 
of HCPCS codes to revenue codes for services provided under OPPS since 
hospitals' assignments of cost vary. Where explicit instructions are 
not provided, HOPDs should report their charges under the revenue code 
that will result in the charges being assigned to the same cost center 
to which the cost of those services are assigned in the cost report.'' 
We have consistently stated that hospital outpatient facilities must 
determine the most appropriate cost center and revenue code for the 
cardiac CT codes (87 FR 71849, 88 FR 81664).
    After we issued the CY 2024 OPPS/ASC final rule, interested parties 
notified us of a specific claims edit that may have limited the revenue 
codes reported with the cardiac CT codes in prior years' claims data. 
CMS removed the revenue code edit in early December 2023 to allow for 
the cardiac CT codes to be billed with any appropriate revenue code. We 
informed the public of our findings and the changes that we made in the 
January 2024 OPPS Update (Transmittal 12421, Change Request 13488), 
dated December 21, 2023. We believe the edit may have prevented some 
providers from reporting the cardiology revenue code (048X), which maps 
to the cardiology cost center (03140), when billing for cardiac CT 
services. In the past, commenters have indicated that the cardiology 
cost center has a higher cost-to-charge ratio (CCR) than the imaging 
cost centers, and they believe the inability to report the cardiology 
revenue code has resulted in a lower payment rate for cardiac CT 
services. Since the OPPS ratesetting process utilizes the applicable 
cost center's CCR to reduce the charges on the claim to estimated cost, 
utilizing cost centers with lower CCRs results in a lower OPPS payment 
compared to utilizing cost centers with higher CCRs. With the edit no 
longer in place, hospitals may bill for cardiac CT services with 
whichever revenue code they believe appropriate for CY 2024, including 
cardiology revenue code 048X, and the CY 2026 OPPS payment rates (which 
most likely will be based on CY 2024 claims) will reflect those updated 
revenue code billing patterns. We note that for CY 2025, based on our 
standard ratesetting methodology using claims submitted during CY 2023, 
our analysis reveals that the angiocardiography and CT scan revenue 
codes were reported with CPT codes 75572 through 75574, which were 
mapped to angiography and CT scan cost centers, as shown in Table 66.

[[Page 94059]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.089

    Because we wanted to determine whether the revenue edit could have 
affected the geometric mean costs for CPT codes 75572 through 75574, we 
conducted studies prior to the CY 2025 proposed rule and during the 
comment period to calculate HCPCS geometric mean costs for these codes 
based on a simulation that assumed that differing numbers of HOPDs 
(specifically 25 percent, 50 percent, and 75 percent of the total 
number of HOPDs billing for these services) would have assigned these 
services to the cardiology revenue code (048X) and cardiology cost 
center (03140). Based upon the results of the studies, we found that if 
50 percent or more of HOPDs had billed these services with the 
cardiology revenue code (048X) and cardiology cost center (03140), the 
geometric mean cost for these codes would have increased and would have 
resulted in a revised APC assignment from APC 5571 (Level 1 Imaging 
with Contrast) to APC 5572 (Level 2 Imaging with Contrast). As noted in 
Table 67, under our standard ratesetting methodology, the geometric 
mean cost for the cardiac CT codes would be approximately $182, which 
maps to APC 5571, while an assumption that 50 percent of HOPDs billed 
with the cardiology revenue code (048X) and cardiology cost center 
(03140) on CY 2023 claims would result in a geometric mean cost of 
about $386, which maps to APC 5572.
    We also reviewed the limited CY 2024 claims data for cardiac CT 
services available to determine the percentage of HOPDs that are 
utilizing the cardiology revenue code (048X) and cardiology cost center 
(03140) with the understanding that many HOPDs may still be updating 
their current billing practices. We did not find any appreciable change 
in current billing practices.
[GRAPHIC] [TIFF OMITTED] TR27NO24.090

[[Page 94060]]

    Because the RTP edit associated with the cardiac CT codes may have 
affected the CY 2023 data we have available to establish the CY 2025 
OPPS payment rates for these services, in the CY 2025 OPPS/ASC proposed 
rule, we requested information on the following topics regarding 
hospitals' billing practices for cardiac CT services:
    (1) Where are cardiac CT services performed in a hospital? Are 
cardiac CT services performed in a dedicated cardiology department, 
radiology department, or some other hospital outpatient department?
    (2) What factors determine the revenue code assignment for cardiac 
CT services (i.e., the department in which the service is performed, 
the type of service that is performed, or some other factor)?
    (3) What revenue codes are HOPDs reporting for these services in CY 
2024? Are HOPDs using the cardiology revenue code on claims for cardiac 
CT services now that they are no longer restricted from using this 
revenue code?
    We stated in the CY 2025 OPPS/ASC proposed rule that we would use 
the comments received and the information from the CY 2024 claims data 
to help us identify whether the current OPPS payment is appropriate for 
the cardiac CT codes, or whether we should revise the payment 
methodology for the CY 2025 OPPS. We received a significant number of 
comments in response to our Request for Information. While a major 
portion of the comments were part of a large write-in campaign, 
commenters provided information specific to their experiences in their 
facilities. We appreciate all the feedback and address the comments 
below.
    Comment: We received a significant number of comments in response 
to our Request for Information about cardiac CT services and the 
billing practices for these services. Commenters ranged from specialty 
societies to healthcare providers who practice in a variety of settings 
of different sizes and in various locations throughout the United 
States.
    In terms of where cardiac CT services are performed, commenters 
shared that cardiac CT services may be performed in a radiology 
department, an interventional radiology department, a cardiology 
department, or a clinic setting. Resources to furnish the services, 
such as staff, are utilized from both the cardiology and radiology 
departments. Many commenters described the test being performed in 
radiology departments utilizing cardiology nursing staff to prepare the 
patient, administer medications (such as IV beta blockers and 
nitroglycerin), and monitor the patient during and after the procedure.
    In terms of the factors that determine the revenue code assignment 
for cardiac CT services, most commenters stated that the resources used 
for these services are very similar to other cardiac procedures such as 
cardiac stress tests or even cardiac catheterizations, which are 
assigned to the cardiology revenue code. Commenters described cardiac 
CT services as resource intensive, stating that the cross-department 
coordination between cardiology and radiology, the skill level of staff 
(technicians, nurses, and physicians), the expense of up-to-date CT 
equipment, and the amount of testing time involved is comparable to 
other more expensive and invasive cardiac tests.
    In response to our request for the revenue codes hospital 
outpatient departments are reporting with cardiac CT services now that 
there is not an edit in place prohibiting them from using the 
cardiology revenue code, commenters stated that they want to use the 
cardiology revenue code when billing cardiac CT services, but they are 
unable to due to third-party edits (billing and payer) in place from 
clearinghouses, billing companies, or billing software companies. Some 
stated that they have continued to use the radiology revenue codes to 
prevent receiving claims denials. Another commenter stated their coding 
staff expressed compliance concerns with assigning cardiac CT services 
to a cardiology revenue code versus the CT revenue code. Commenters 
requested that CMS provide education about revenue code use for 
providers, healthcare facilities, clearinghouses, and health plans and 
indicated that explicit education would facilitate use of the cardiac 
revenue code with cardiac CT services.
    Many commenters shared how many cardiac CT services are completed 
per year at their facilities. They expressed concern about the 
declining payment for such a complex, resource-intensive test that is 
used to accurately diagnose and manage coronary artery disease and the 
impact that insufficient payment could have on beneficiary access. 
Commenters noted that cardiac CT has been identified by the American 
College of Cardiology as a first line approach to manage patients with 
chest pain and asserted that cardiac CT is more clinically useful than 
more expensive, invasive tests such as cardiac catheterizations.
    Response: We thank the commenters for their feedback regarding the 
clinical value cardiac CT services provide for clinicians diagnosing 
and managing patients with chest pain and coronary artery disease. We 
also thank commenters for describing the process of cardiac CT tests 
and all the resources used in providing those services and sharing 
information about selection of revenue code assignment when billing for 
CT services.
    We acknowledge commenters' concerns that, even with the revenue 
code edit removed for CY 2024, there are a number of procedural and 
logistical hurdles to providers billing with the cardiology revenue 
codes in CY 2024 and that it would not be realistic to expect a 
majority of providers to be billing with the cardiology revenue codes 
at this point due to those issues. We acknowledge that process changes 
often happen slowly and that it may take time for facilities to update 
their billing practices, even if the majority of providers would prefer 
to bill these codes with the cardiology revenue code.
    We appreciate commenters sharing their concerns about third-party 
edits that are still affecting the billing process and understand their 
request for additional guidance from CMS. We remind readers that we 
informed the public of our findings and the changes that we made in the 
January 2024 OPPS Update (Transmittal 12421, Change Request 13488), 
dated December 21, 2023. Specifically, we stated the following: ``We 
recently identified an outdated return-to-provider (RTP) Healthcare 
Common Procedure Coding System-to-revenue code edit that resulted in 
certain claims submissions being limited to specific revenue codes for 
CPT codes 75572, 75573, and 75574. These claims were returned to the 
providers for resubmission. The outdated edit has been removed; and 
providers, when appropriate, may begin billing these codes with any 
appropriate revenue code.'' We have also stated in section 20.5 in 
Chapter 4 (Part B Hospital) of the Medicare Claims Processing Manual, 
CMS ``does not instruct hospitals on the assignment of HCPCS codes to 
revenue codes for services provided under OPPS since hospitals' 
assignments of cost vary. Where explicit instructions are not provided, 
HOPDs should report their charges under the revenue code that will 
result in the charges being assigned to the same cost center to which 
the cost of those services are assigned in the cost report.'' We have 
consistently stated that hospital outpatient facilities must determine 
the most appropriate cost center and revenue code for the cardiac CT 
codes (87 FR 71849, 88 FR 81664). While we believe that this 
information should suffice for education to third parties who may have 
edits in place that affect the selection of a cardiology

[[Page 94061]]

revenue code when billing for cardiac CT services and for other 
interested parties who have compliance concerns, we will be providing 
public education and instruction through the CMS Medicare Learning 
Network (MLN).
    We are persuaded after a review of the comments submitted that a 
majority of providers who bill these codes would prefer to bill them 
with the cardiology revenue code but have not been able to do so due to 
the prior revenue code edit and remaining procedural hurdles that flow 
from the prior revenue code edit. As stated above, if there had not 
been a systems edit in place preventing providers from choosing the 
cardiology revenue code (048X) and cardiology cost center (03140) and 
50 percent or more of HOPDs had billed these services with the 
cardiology revenue code and cardiology cost center, the geometric mean 
cost for these codes would have increased and would have resulted in a 
revised APC assignment from APC 5571 (Level 1 Imaging with Contrast) to 
APC 5572 (Level 2 Imaging with Contrast). Therefore, for CY 2025, we 
are using our equitable adjustment authority under section 
1833(t)(2)(E) of the Act to utilize an alternative methodology to 
calculate the payment for the cardiac CT services in CY 2025 and 
subsequent years. Specifically, we are finalizing a temporary 
reassignment of the cardiac CT codes (CPT code 75572 through 75574) to 
APC 5572 (Level 2 Imaging with Contrast). See Table 68 for the CY 2025 
Proposed and Final OPPS SI and APC assignments for CPT codes 75572 
through 75574. We anticipate that it may take 3 to 4 years to see an 
impact from changes in billing practices from providers based on the 
comments we received on the proposed rule. If we do not see a 
significant change in the geometric mean costs after several years, we 
would revert payment for these services to the standard OPPS payment 
methodology and assign the cardiac CT codes to appropriate APCs based 
on their geometric mean costs. We note that this APC reassignment will 
not involve reprocessing of claims with dates prior to January 1, 2025.

[[Page 94062]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.091

    The final CY 2025 payment with rates for the cardiac CT CPT codes 
can be found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the SI definitions for all codes reported under the 
OPPS. Addenda B and D1 are available via the internet on the CMS 
website.
2. Neurostimulator and Related Procedures (APCs 5461 Through 5465)
    In the CY 2021 OPPS/ASC final rule with comment period, we 
finalized a five-level APC structure for the Neurostimulator and 
Related Procedures series (85 FR 85968 through 85970). For a detailed 
discussion of the history of neurostimulators policy, we refer readers 
to the CY 2015, CY 2020, CY 2021, CY 2023, and CY 2024 OPPS/ASC final 
rules with comment period (79 FR 66807 through 66808; 84 FR 61162 
through 6116, 85 FR 85968 through 85970; 87 FR 71869; 88 FR 81645 
through 81658).
    In the CY 2024 OPPS/ASC final rule with comment period, we did not 
make any changes to the 5 level APC structure for the Neurostimulator 
and Related Procedures series. However, we made temporary changes to 
services previously assigned to the neurostimulator APCS: reassigning 
HCPCS code 33276 (Insertion of phrenic nerve stimulator system (pulse 
generator and stimulating lead[s]), including vessel catheterization, 
all imaging guidance, and pulse generator initial analysis with 
diagnostic mode activation, when performed), with predecessor code 
0424T, and 33287 (Removal and replacement of phrenic nerve stimulator, 
including vessel

[[Page 94063]]

catheterization, all imaging guidance, and interrogation and 
programming, when performed; pulse generator), from New Technology APC 
1581 to New Technology APC 1580 (88 FR 81645 through 81647) and 
assigning HCPCS code 0266T (Implantation or replacement of carotid 
sinus baroreflex activation device; total system (includes generator 
placement, unilateral or bilateral lead placement, intra-operative 
interrogation, programming, and repositioning, when performed)) to New 
Tech APC 1580 (88 FR 81658).
    For the CY 2025 OPPS/ASC proposed rule, we proposed to maintain the 
5 level APC structure for the Neurostimulator series. We proposed to 
assign HCPCS codes 0266T and 33276 to the APC 5465 (Level 5 
Neurostimulator and Related Procedures), given the cost and coding 
changes associated with those codes. We noted that while we have claims 
data available for HCPCS codes in the neurostimulator APC series that 
are no longer active, there would also be cost and coding changes 
associated with new CPT codes as their claims data become available.
    While we continued to believe that a five-level structure for the 
Neurostimulator and Related Procedures APC series remained appropriate, 
we also solicited comments from interested parties in CY 2025 OPPS/ASC 
proposed rule on the need for a Level 6 APC, given the clinical and 
estimated cost characteristics of the services currently assigned to 
APC 5465 (Level 5 Neurostimulator and Related Procedures).
    In summary, for the CY 2025 OPPS, we proposed to maintain the 
current 5-level structure for the Neurostimulator and Related Procedure 
APC series, assign HCPCS codes 0266T and 33276 to APC 5465, and 
solicited comment creating an additional Level 6 Neurostimulator APC.
    See Table 69 for the services that we proposed to reassign to the 
Level 5 APC and Table 70 below for the proposed CY 2025 Neurostimulator 
and Related Procedures APCs.
[GRAPHIC] [TIFF OMITTED] TR27NO24.092

[[Page 94064]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.093

    At the August 26, 2024, HOP Panel Meeting, several presenters 
provided information to the Panel regarding HCPCS codes 33276 
(Insertion of phrenic nerve stimulator system (pulse generator and 
stimulating lead[s]), including vessel catheterization, all imaging 
guidance, and pulse generator initial analysis with diagnostic mode 
activation, when performed), 64568 (Open implantation of cranial nerve 
(e.g., vagus nerve) neurostimulator electrode array and pulse 
generator), and 0266T (Implantation or replacement of carotid sinus 
baroreflex activation device; total system (includes generator 
placement, unilateral or bilateral lead placement, intra-operative 
interrogation, programming, and repositioning, when performed)). The 
presenters advised the Panel to request that CMS either create a new 
Level 6 Neurostimulator and Related Procedures APC and consider 
including the three codes mentioned above in the Level 6 
Neurostimulator APC, or alternatively assign the three codes mentioned 
above to New Technology APC 1580 (New Technology--Level 43 ($40,001-
$50,000)). The HOP Panel agreed with the presenter and made that 
recommendation.
    Comment: Many commenters requested the creation of a Level 6 
Neurostimulator and Related Procedures APC, noting that creating an 
additional APC would align payment more closely with costs incurred 
while maintaining access to services assigned to that APC. Many of 
these commenters requested that if a Level 6 APC could not be created, 
that HCPCS code 0266T be maintained in New Technology APC 1580 for an 
additional year. Other commenters asked that CMS reconsider the 
proposed assignment of HCPCS code 33276 to APC 5465 and place the code 
in an APC consistent with the resources required for the procedure. One 
of those commenters specifically requested an APC assignment to New 
Technology APC 1580 until a more permanent solution to address 
disparity between payment and resource costs could be determined. Some 
commenters requested that HCPCS code 64568 be moved from APC 5465 
(Level 5 Neurostimulator and Related Procedures) to New Technology APC 
1580. Two commenters supported maintaining the current 5 level APC 
structure for the Neurostimulator series. One of those commenters 
recommended that HCPCS codes 33276 and 0266T continue to be assigned to 
New Technology APC 1580 to maintain beneficiary access while additional 
claims data are collected, while the other recommended more broadly 
that New Technology APCs be used for similar scenarios where codes had 
high cost but low volume. One commenter believed that HCPCS code 64568 
should remain assigned to APC 5465 (Level 5 Neurostimulator and Related 
Procedures) since it is a long-established procedure and would not be 
expected to have changes in cost or volume the way ``new'' technologies 
would.
    Response: We appreciate the thoughtful responses commenters have 
provided with regard to the proposed policy and our requests for 
comments. While we understand the concerns and issues commenters have 
raised, we believe that the 5 level APC structure for the series 
continues to remain appropriate in grouping together procedures with 
similar cost and clinical characteristics. Therefore, we are finalizing 
the 5 level APC structure for the Neurostimulator and Related 
Procedures APCs.
    However, we also recognize the concerns commenters have raised 
regarding HCPCS codes 0266T and 33276 and in particular, the request 
that we return those codes to their current New Technology APC 
placements should we establish a final policy of not creating an 
additional APC level. Thus, we are assigning these codes to New Tech 
APC 1580, the same APC these codes were assigned to in CY 2024, in this 
CY 2025 OPPS/ASC final rule with comment period.
    For HCPCS code 64568, we believe its current assignment to the 
Level 5 APC remains appropriate. The code has been assigned to the 
Neurostimulator and Related Procedures APC series for many years and 
the claims volume we have for the procedure allow for an estimate of 
the associated resource costs. Therefore, we do not believe a New Tech 
APC assignment is appropriate at this time, as New Technology APC 
placements are typically used when insufficient cost and claims data 
are available to make appropriate clinical APC assignments. We will 
continue to monitor the data as additional claims become available for 
these codes.
    After consideration of the public comments we received, we are 
finalizing our proposal with modification. We are finalizing the

[[Page 94065]]

proposed 5 level APC structure for the Neurostimulator and Related 
Procedures APC series. However, we are continuing to assign HCPCS codes 
33276 and 0266T to New Technology APC 1580 (New Technology--Level 43 
($40,001-$50,000)) in CY 2025 rather than finalizing our proposal to 
assign them to APC 5465. See Table 71 for the status indicators and APC 
assignments for HCPCS codes 0266T and 33276. We note that we have 
previously discussed the placement of these codes in New Technology 
APCs until such time that sufficient claims data were available to 
assign those codes to clinical APCs (87 FR 81769, 88 FR 81645 through 
81647, 88 FR 81658). We will continue to monitor the data as more 
claims for these codes become available. Finally, we are maintaining 
the APC assignment of HCPCS code 64568 to APC 5465 (Level 5 
Neurostimulator and Related Procedures). Please see Table 74 for the 
final CY 2025 OPPS APC and SI assignments for HCPCS codes 0266T and 
33276.
[GRAPHIC] [TIFF OMITTED] TR27NO24.094

3. Focal Laser Ablation, CPT Code 0655T (APC 5375)
    Focal laser ablation is an MRI directed and image guided, minimally 
invasive procedure that targets prostate cancer tissue. The focal laser 
ablation procedure, represented by CPT code 0655T (Transperineal focal 
laser ablation of malignant prostate tissue, including transrectal 
imaging guidance, with mr-fused images or other enhanced ultrasound 
imaging), became effective July 1, 2021, and describes the destruction 
of localized prostate cancer tissue with the high energy source of 
focal laser radiation. The procedure utilizes real-time intraoperative 
prostate ultrasound fused with MRI guidance to allow the surgeon to 
plan the ablation and guide the laser targeting as well as providing 
real-time feedback to minimize changes to the tissues outside of the 
targeted ablation zone. This procedure offers another therapy option 
for select patients with localized intermediate risk prostate cancer.
    For the CY 2025 OPPS/ASC proposed rule, we reviewed the CY 2023 
claims submitted between January 1, 2023, through December 31, 2023, 
that were processed on or before December 31, 2023, for CPT code 0655T 
and found seven single frequency claims available for ratesetting, with 
a resulting geometric mean cost of $12,777. Additionally, for the CY 
2025 OPPS/ASC proposed rule, we examined the procedures assigned to the 
Urology Procedures APCs. Based on our examination of the procedures 
assigned to Urology and Related Procedures APCs and the available CY 
2023 claims data, we stated that we believe it is appropriate to move 
CPT code 0655T to APC 5375 (Level 5 Urology and Related Services) from 
APC 5374 (Level 4 Urology and Related Services) because 0655T shares 
more resource cost and clinical homogeneity with procedures in APC 
5375. Specifically, we explained that we believe CPT code 0655T shares 
resources and is clinical homogeneous with CPT code 0714T 
(Transperineal laser ablation of benign prostatic hyperplasia, 
including imaging guidance), and CPT code 52648 (Laser vaporization of 
prostate, including control of postoperative bleeding, complete 
(vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or 
dilation, internal urethrotomy and transurethral resection of prostate 
are included if performed)). We noted that the seven available CY 2023 
single frequency claims for CPT code 0655T would not significantly 
impact the geometric mean cost calculations for APC 5374 and APC 5375. 
Therefore, for CY 2025, we proposed to reassign CPT code 0655T from APC 
5374 (Level 4 Urology and Related Services) to APC 5375 (Level 5 
Urology and Related Services).
    Comment: One commenter supported our proposal to reassign CPT code 
0655T from APC 5374 (Level 4 Urology and Related Services) to APC 5375 
(Level 5 Urology and Related Services), citing the clinical and 
resource homogeneity with CPT codes 52648 and 0714T. Furthermore, the 
commenter suggested we monitor the impact of the

[[Page 94066]]

reassignment on the geometric mean cost for APCs 5374 and 5375 to 
ensure payment stability.
    Response: We thank the commenter for the support. Based on 
evaluation of their clinical and resource similarities, and taking into 
account updated claims data for this final rule with comment period, we 
continue to believe it is appropriate to reassign CPT code 0655T to APC 
5375.
    After consideration of the public comment we received, we are 
finalizing our policy without modification for CPT code 0655T. Please 
refer to Table 72 below for the final OPPS APC and status indicator 
assignments for HCPCS code 0655T for CY 2025. The final CY 2025 payment 
rates can be found in Addendum B to this final rule with comment period 
via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.095

4. Bone Mass Measurement: Biomechanical Computed Tomography (BCT) 
Analysis With and Without Vertebral Fracture Assessment, CPT Codes 
0554T-0558T, 0743T (APCs 5521, 5523, and 5731)
    CPT code 0743T (Bone strength and fracture risk using finite 
element analysis of functional data and bone mineral density (BMD), 
with concurrent vertebral fracture assessment, utilizing data from a 
computed tomography scan, retrieval and transmission of the scan data, 
measurement of bone strength and BMD and classification of any 
vertebral fractures, with overall fracture-risk assessment, 
interpretation and report) became effective January 1, 2023. This code 
describes the service associated with biomechanical computed tomography 
(BCT) analysis with concurrent vertebral fracture assessment (VFA).
    In the CY 2023 OPPS/ASC final rule (87 FR71844 through 71846), we 
stated that, based on our review and understanding of the service, BCT 
analysis does not meet Medicare's definition of bone mass measurement, 
as specified in Sec.  410.31(a), which specifies the coverage of, and 
payment for, bone mass measurements for Medicare beneficiaries. 
Therefore, we assigned the BCT codes (CPT codes 0554T-0558T) and CPT 
code 0743T to status indicator ``E1'' to indicate that these codes are 
not covered by Medicare, and not paid by Medicare when submitted on 
outpatient claims (any outpatient bill type). The complete long 
descriptors for the codes can be found below:
    0554T: Bone strength and fracture risk using finite element 
analysis of functional data and bone-mineral density utilizing data 
from a computed tomography scan; retrieval and transmission of the scan 
data, assessment of bone strength and fracture risk and bone-mineral 
density, interpretation and report.
    0555T: Bone strength and fracture risk using finite element 
analysis of functional data and bone-mineral density utilizing data 
from a computed tomography scan; retrieval and transmission of the scan 
data.
    0556T: Bone strength and fracture risk using finite element 
analysis of functional data and bone-mineral density utilizing data 
from a computed tomography scan; assessment of bone strength and 
fracture risk and bone mineral density.
    0557T: Bone strength and fracture risk using finite element 
analysis of functional data and bone-mineral density utilizing data 
from a computed tomography scan; interpretation and report.
    0558T: Computed tomography scan taken for the purpose of 
biomechanical computed tomography analysis.
    In the CY 2024 OPPS/ASC proposed rule, we proposed to continue to 
assign the codes to status indicator ``E1'' to indicate non-coverage 
and non-payment for the services. (See Addendum B for CY 2024/ASC 
proposed rule via the internet on the CMS website.) However, as 
discussed in the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81660 through 81661), based on comments received and further review of 
the issue, we did not finalize our proposal. We instead assigned CPT 
code 0555T to APC 5731 (Level 1 Minor Procedures) and SI of ``S,'' 
(Procedure or Service, Not Discounted When Multiple; Paid under OPPS; 
separate APC payment), CPT code 0556T to APC 5523 (Level 3 Imaging 
without Contrast) and SI of ``S,'' and CPT code 0558T to APC 5521 
(Level 1 Imaging without Contrast) with SI of ``S,'' which were the 
same APC assignments for the codes between CY 2019 and CY 2022. In 
addition, we assigned CPT codes 0554T, 0557T, and 0743T to SI of ``M'' 
(Items and Services Not Billable to the MAC. Not paid under OPPS) to 
indicate that these codes are not payable under the OPPS because they 
describe physician-only services. The final payment rates for these 
codes were listed in the OPPS Addendum B that was released with the CY 
2024 OPPS/ASC final rule via the internet on the CMS website.
    For the CY 2025 OPPS/ASC proposed rule, we proposed to assign CPT 
codes 0554T and 0557T to status indicator of ``M'' as the codes include 
or describe a professional component of the service

[[Page 94067]]

that is provided by a physician as evidenced by ``interpretation and 
report'' in the descriptor. It is important to note that CPT code 0554T 
is a comprehensive code (or ``parent code'') that includes both 
technical and professional components. Because there are additional CPT 
codes (``child codes'') that facilities can use to describe the 
technical components of BCT analysis, we explained that we believed it 
was appropriate for the comprehensive code that includes the 
professional component to be assigned a SI of ``M''. In addition, we 
proposed to assign CPT code 0555T to APC 5731 (Level 1 Minor 
Procedures) and a SI of ``S,'' CPT code 0556T to APC 5523 (Level 3 
Imaging without Contrast) and a SI of ``S,'' and CPT code 0558T to APC 
5521 (Level 1 Imaging without Contrast) with a SI of ``S.''
    For the CY 2025 OPPS/ASC proposed rule, we explained that we 
believe the service described by CPT code 0743T is a comprehensive code 
and involves both a technical component and a professional component 
that are performed by hospital outpatient facilities. Unlike CPT 0554T, 
there are no additional codes to describe the technical component(s) of 
this service (BCT analysis and VFA) and there is a parenthetical note 
instructing facilities to not report the BCT analysis codes (0554T-
0557T) with CPT code 0743T. Consequently, we proposed to assign CPT 
code 0743T to APC 5523 (Level 3 Imaging without Contrast) and we 
proposed to change the status indicator for 0743T from ``M'' to ``S'' 
(Procedure or Service, Not Discounted When Multiple; Paid under OPPS; 
separate APC payment) for CY 2025. See Table 73 below.
    Comment: We received several comments describing support for the 
use of BCT services to assess bone strength, bone mineral density, and 
fracture risk indicating that these services were cost-effective and 
provided valuable clinical information. Commenters noted the 
significant impact that osteoporosis has on Medicare beneficiaries, 
especially women. They shared that BCT is effective in clinical 
practice when determining use and approval of anti-osteoporotic 
medications that are dependent on bone density assessments. They also 
noted that DXA (dual-energy X-ray absorptiometry) scans (most common 
test used to measure bone mineral density) may be difficult to do when 
patients have scoliosis or extensive degenerative diseases and thus 
prefer to use BCT.
    Response: We appreciate the feedback supporting BCT services.
    Comment: We received one comment requesting that we assign payable 
status indicators for CPT codes 0554T and 0557T.
    Response: We thank the commenter for their request. As stated 
above, we proposed to continue to assign CPT codes 0554T and 0557T a 
status indicator of ``M'' as the codes include or describe a 
professional component of the service that is provided by a physician 
as evidenced by ``interpretation and report'' in the descriptor. CPT 
code 0554T is a comprehensive code (or ``parent code'') that includes 
both technical and professional components. Because there are 
additional CPT codes (``child codes'') that facilities can use to 
describe the technical components of BCT analysis, it is appropriate 
for the comprehensive code that includes the professional component to 
be assigned a SI of ``M''. CPT code 0557T describes only the 
professional component of the BCT analysis code and therefore, is 
appropriately assigned a SI of ``M''.
    Comment: We received several comments expressing support for the 
proposed APC and status indicator assignments.
    Response: We thank the commenters for their support.
    Comment: Several commenters believe that Medicare has limited 
access to some BCT services in the hospital outpatient setting by 
assigning non-payable status indicators. Consequently, they are 
requesting that the pertinent codes be allowed through national 
coverage.
    Response: We appreciate these comments. In Transmittal 2362 dated 
September 19, 2019, we note the BCT codes, specifically CPT codes 
0554T, 0555T, 0556T, 0557T, and 0558T were listed as covered effective 
July 1, 2019 under NCD 150.3 Bone Mineral Density Studies. These 
services were added in error and were retracted due to ``added in 
error'' in Transmittal 11952 dated April 12, 2023. We apologize for the 
confusion this has caused and the mistaken belief that ``coverage was 
revoked'' when in fact these services had not been approved for 
national coverage.
    While CMS further considers the issue of national coverage, we will 
finalize our proposed status indicator and (if applicable) APC 
assignments for CPT codes 0554T-0558T and CPT code 0743T as listed in 
Table G42 below.
    The regulation at 42 CFR 410.31(f) (Bone mass measurement: 
Conditions for coverage and frequency standards) recognizes that CMS 
may use the Medicare National Coverage Determination (NCD) process to 
examine additional BMM systems for coverage. The public may request an 
NCD for a particular item or service by following the procedures 
established at 78 FR 48164 (August7, 2013). The commenter may request a 
new NCD (or seek reconsideration of an existing NCD). As a reminder to 
our readers, National Coverage Determinations do not include coding and 
payment decisions.
    In summary, after consideration of the public comments, we are 
finalizing our proposed status indicator and (if applicable) APC 
assignments for CPT codes 0554T-0558T and CPT code 0743T without 
modification. The final payment rates for the separately payable codes 
can be found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the status indicator (SI) meanings for all codes 
reported under the OPPS. Addenda B and D1 are available via the 
internet on the CMS website.

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[[Page 94069]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.097

5. 3D Contour Simulation, CPT Code 0944T (APC 5523)
    CAS-One[supreg] IR is Software as a Service (SaaS) that assists a 
physician or other qualified health care professional during 
percutaneous liver ablation treatments by providing 3D images that 
allow the physician to visualize the liver lesions, as well as define 
suitable margins and pathways to perform the ablation procedure. The 
AMA CPT Editorial Panel established CPT code 0944T effective January 1, 
2025:
    The long descriptor for CPT code 0944T is as follows: 3D contour 
simulation of target liver lesion(s) and margin(s) for image-guided 
percutaneous microwave ablation.
    In the CY 2025 OPPS/ASC proposed rule with comment period, we 
proposed to assign 0944T to status indicator ``E1'' to indicate that 
the code is not payable by Medicare when submitted on outpatient claims 
because the service had not received FDA clearance at the time of the 
assignment.
    Comment: We received one comment from the manufacturer. The 
commenter states that the 3D simulation is always performed with CPT 
code 47382 (Ablation, 1 or more liver tumor(s), percutaneous, 
radiofrequency) which is assigned to APC 5361 (Level 1 Laparoscopy and 
Related Services) and has a payment rate of approximately $5,800. The 
manufacturer asserts the costs for the 3D simulation service are 
approximately $3,000 which include a CT of the abdomen with contrast, 
utilization of the CAS-One[supreg] system, sterile accessories (patient 
markers, instrument markers, drapes, and marker templates), and annual 
services for the system (including maintenance, warranty, software 
subscription, and clinical support). They have requested that we 
reassign CPT code 0944T to APC 5362 (Level 2 Laparoscopy and Related 
Service) with a payment rate of approximately $10,400 and a status 
indicator of J1, representing a comprehensive service that includes 
both the ablation procedure (CPT code 47382) and the 3D simulation 
service (CPT code 0944T).
    Response: We thank the commenter for their input. We disagree that 
we should consider adding the costs of both the ablation procedure (CPT 
code 47382) and the 3D simulation service (CPT code 0944T) to determine 
the appropriate payment for the 3D simulation service. The ablation 
procedure (CPT code 47382) is a primary service as identified by the 
OPPS status indicator ``J1'' (Hospital Part B Services Paid Through a 
Comprehensive APC; Paid under OPPS). The ablation procedure can be done 
with or without 3D simulation services, but 3D simulation services are 
never provided without the primary ablation services. Under our C-APC 
policy, we designate a service described by a HCPCS code assigned to a 
C-APC as the primary service when the service is identified by OPPS 
status indicator ``J1''. Because the 3D simulation service is always 
performed with the ablation service, we believe the 3D simulation could 
be considered an adjunctive service. (See 78 FR 74865 and 79 FR 66799.) 
Payments for adjunctive services are generally packaged into the 
payments for the primary services.
    After review of the procedure description for 3D simulation and 
input from our CMS medical officers, we do not believe it would be 
appropriate to always package the costs of the 3D simulation procedure 
into the ablation procedure. Based on the technology and its potential 
use in the HOPD setting, we used CPT code 75557 (Cardiac magnetic 
resonance imaging for morphology and function without contrast 
material) as a comparator code to determine an APC and status indicator 
assignment for CPT 0944T. While we realize that there are significant 
differences between these two codes, we believe that both codes use a 
type of imaging service to provide valuable information for the 
clinician to assist in further diagnosing and treating patients. CPT 
code 75557 is assigned to APC 5523 (Level 3 Imaging without Contrast) 
and a status indicator of ``Q1'' (STV-Packaged Codes; Paid under OPPS). 
We also note that the CAS-One[supreg] IR has received 510(k) Premarket 
Notification from the FDA and should no longer be assigned status 
indicator ``E1''.
    In summary, we are revising the status indicator for CPT code 0944T 
from status indicator ``E1'' to status indicator ``Q1'' (STV-Packaged 
Codes; Paid under OPPS), indicating a conditionally packaged procedure. 
CPT code 0944T will be packaged when it is provided with a significant 
procedure but will be separately paid when the service appears on the 
claim without a significant procedure (see Table 74). We are assigning 
CPT code 0944T to APC 5523 (Level 3 Imaging without Contrast) with a 
final payment rate of around $240.00. Please refer to Table G43 for the 
code descriptor, APC assignment, and status indicator assignment for 
CPT code 0944T for CY 2025. The final payment rate for 0944T can be 
found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the status indicator (SI) meanings for all codes 
reported under the OPPS. Addenda B and D1 are available via the 
internet on the CMS website.

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[GRAPHIC] [TIFF OMITTED] TR27NO24.098

6. Administration of Lacrimal Ophthalmic Insert Into Lacrimal 
Canaliculus, CPT Code 68841(APC 5503)
    Dextenza, which is described by HCPCS code J1096 (Dexamethasone, 
lacrimal ophthalmic insert, 0.1 mg), is a drug indicated for ``the 
treatment of ocular inflammation and pain following ophthalmic 
surgery'' and for ``the treatment of ocular itching associated with 
allergic conjunctivitis.'' \24\ The drug manufacturer previously 
asserted that this drug is administered and described by CPT code 0356T 
(Insertion of drug-eluting implant (including punctal dilation and 
implant removal when performed) into lacrimal canaliculus, each). 
Interested parties also previously stated that Dextenza is inserted in 
a natural opening in the eyelid (called the punctum) and that the drug 
is designed to deliver a tapered dose of dexamethasone to the ocular 
surface for up to 30 days. CPT code 0356T was deleted December 31, 
2021, and replaced with CPT code 68841 (Insertion of drug-eluting 
implant, including punctal dilation when performed, into lacrimal 
canaliculus, each), effective January 1, 2022.
---------------------------------------------------------------------------

    \24\ FDA Package Insert. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/208742s007lbl.pdf.
---------------------------------------------------------------------------

    Interested parties currently assert that the drug, Dextenza, is 
administered and described by CPT code 68841. We refer readers to the 
CY 2023 OPPS/ASC final rule with comment period for a detailed history 
of CMS payment assignments for CPT code 0356T and CPT code 68841 (87 FR 
71840). See section XIII.F. of this final rule with comment period for 
the CY 2025 payment status of the drug, Dextenza, which may be 
described by HCPCS code J1096.
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81651 
through 81653), we stated that based on the claims data available at 
the time, we continued to believe that the assignment of CPT code 68841 
to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures) 
was appropriate based on the geometric mean costs. We also reiterated 
our reasoning that CPT code 68841 was appropriately assigned to an OPPS 
status indicator of ``Q1'' and ASC payment indicator of ``N1.'' We 
continued to believe that CPT code 68841 is mostly performed during 
ophthalmic surgeries, such as cataract surgeries. A status indicator 
``Q1,'' indicating a conditionally packaged procedure, 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 generally packaged (payment indictor 
``N1'') under the ASC payment system. Although stakeholders stated this 
is an independent surgical procedure and should not be packaged into 
the primary ophthalmic procedure in which the drug and drug 
administration are associated, we did not agree based on observed 
clinical patterns of how the drug is used. Based on CY 2024 claims 
data, out of over 7,000 total frequency claims, CPT code 68841 was used 
independently only about 2 percent of the time, meaning that the other 
98 percent of the time CPT code 68841 had its payment packaged into the 
primary procedure with which it is associated.
    These data reinforced our belief that Dextenza and CPT code 68841 
are not furnished independently of a surgical procedure and should be 
packaged into the primary ophthalmic procedure with which the drug and 
drug administration are associated. While we recognized that there are 
some claims that may only include CPT code 68841 without a primary 
ophthalmic surgery on the claim, we did not believe that this is a 
frequent occurrence based on our claims data and clinical use patterns; 
as previously mentioned, our claims data showed that only 2 percent of 
claims are performed independently of another primary procedure.
    For CY 2025, we proposed to continue to assign CPT code 68841 to 
APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures). We 
also proposed to continue to assign CPT code 68841 to OPPS status 
indicator ``Q1'' and an ASC payment indicator of ``N1.'' The issue of 
payment for CPT code 68841 was brought to the Advisory Panel on 
Hospital Outpatient Payment (also known as HOP Panel) in 2024 for CY 
2025 rulemaking. At the August 2024 meeting, based on the information 
presented, the Panel made no recommendation to CMS regarding changing 
the proposed status indicator assignment, Q1, for HCPCS code 68841 for 
CY 2025.
    Comment: We received input from several interested parties 
contending that increased and separate payment for CPT code 68841, the 
code that can be used to describe the administration of the drug 
Dextenza, is required to ensure continued beneficiary access to 
Dextenza (HCPCS code J1096) in both the HOPD and ASC settings. 
Commenters emphasized that the lack of payment disproportionately and 
negatively affects the ASC setting. Several commenters pointed to the 
clinical importance of providing Dextenza to patients, noting that it 
reduces ocular pain and inflammation and reduces the burden of topical 
eyedrop application. Additionally, commenters stated that they usually 
perform the procedure to administer Dextenza in conjunction with 
ophthalmic surgeries.
    Commenters generally did not disagree with the proposed APC 
assignment, but rather recommended CMS pay separately for the 
procedure.

[[Page 94071]]

Many of these commenters recommended CMS assign CPT code 68841 to a 
status indicator of ``J1,'' indicating a comprehensive APC procedure. 
Commenters believed that ``J1'' would be the most accurate status 
indicator assignment and would generate consistency within APC 5503 
(Level 3 Extraocular, Repair, and Plastic Eye Procedures), as all other 
codes in APC 5503 are assigned to status indicator ``J1.'' Commenters 
stated that CPT code 68841 required an additional 5 minutes of 
operating time and the assistance of an ophthalmic technician, and 
without payment for those costs, it was difficult to provide the drug 
to Medicare beneficiaries.
    Commenters did not agree with CMS that the fact that CPT code 68841 
was performed as a standalone procedure only two percent of the time 
was an adequate justification for assigning a ``Q1'' status indicator. 
They believed, and provided examples, that there are many other 
procedures that are performed independently at that frequency or a 
lower percentage of the time, that are assigned to a payable status 
indicator for hospital outpatient purposes and thus also are paid 
separately in the ASC setting. For example, commenters mentioned CPT 
code 64415 (Injection(s), anesthetic agent(s) and/or steroid; brachial 
plexus, including imaging guidance when performed) as an example of a 
procedure with a lower percentage of single frequency claims and that 
is assigned to a payable status indicator; a status indicator of ``T'' 
in this example. Commenters also believed that CPT code 68841 was 
similar to other procedures for introducing a product to the eye, such 
as CPT code 66020 (Injection, anterior chamber of eye (separate 
procedure); air or liquid) and should be paid in a similar manner. 
Commenters believed the procedure described by CPT code 68841 is a 
distinct surgical procedure that requires additional operating room 
time and resources. These commenters believed that the cataract surgery 
is conducted and concluded, and then the procedure described by CPT 
code 68841 begins.
    Response: We thank commenters for their feedback. We have long 
maintained that Dextenza is a drug that functions as a surgical supply 
and should be packaged under our packaging policy at 42 CFR 419.2(b), 
which lists the types of items and services for which payment is 
packaged under the OPPS. Specifically, Sec.  419.2(b)(16) includes 
drugs and biologicals that function as supplies when used in a surgical 
procedure as packaged costs. Historically, we have stated that we 
consider all items related to the surgical outcome and provided during 
the hospital stay in which the surgery is performed, including 
postsurgical pain management drugs, to be part of the surgery for 
purposes of our drug and biological surgical supply packaging policy 
(79 FR 66875). As such, the drug administration procedure, CPT code 
68841, is also supporting the main ocular procedure being performed. 
CPT code 68841 should, therefore, be packaged as an intraoperative 
service under Sec.  419.2(b)(14).
    Based on the rationale provided in the CY 2024 OPPS/ASC final rule 
with comment period, (88 FR 81651 through 81653), the procedure 
described by CPT code 68841 had its payment packaged into another 
procedure 98 percent of the time, meaning that it is not an independent 
surgical procedure as commenters assert. Rather, CPT code 68841 is used 
to support the primary procedure being performed and is a supportive 
intraoperative service that is a part of that primary procedure. We 
reiterate that both Dextenza and its administration impact the surgical 
outcome of the primary procedure and are provided during the hospital 
stay in which the surgery is performed, which we consider to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy. Although interested parties state this is an 
independent surgical procedure and should not be packaged into the 
primary ophthalmic procedure in which the drug and drug administration 
are associated, based on expected and observed clinical patterns as to 
how the drug is used, we do not agree.
    When revaluating the claims data available for CY 2025, CPT code 
68841 has 94 single frequency claims in the OPPS out of over 4200 total 
frequency claims, meaning that 98 percent of the time CPT code 68841 
was furnished with another primary procedure into which CPT code 
68841's payment was packaged. This confirms our belief that CPT code 
68841 is a component of another primary procedure, supportive of that 
procedure, and should have its payment packaged into that procedure.
    Additionally, as commenters were most concerned about a financial 
disincentive, we note that utilization has been increasing year over 
year based on utilization patterns of Dextenza in the ASC setting. For 
example, from claims year CY 2022 to claims year CY 2023, the number of 
units of Dextenza billed increased from approximately 260,000 to 
approximately 320,000 units, which reflects a nearly 20 percent year 
over year increase in utilization. Therefore, we do not believe that 
our packaging policies are hindering appropriate utilization as 
suggested by commenters. We note that HCPCS code J1096, which may be 
used to describe the drug, Dextenza, is a qualifying product for 
separate payment in both the OPPS and ASC under our policy to implement 
section 4135 of the CAA, 2023. Please see section XIII.F. of this final 
rule with comment period, for additional information.
    For the reasons discussed, we continue to believe that it is 
appropriate to assign CPT code 68841 to a status indicator ``Q1,'' 
indicating a conditionally packaged procedure, which 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 generally packaged (payment indictor 
``N1'') under the ASC payment system. We do not believe the HCPCS codes 
suggested by commenters that are not conditionally packaged are 
analogous to CPT code 68841. Therefore, our analysis was based on 
claims data specific to CPT code 68841 in order to confirm the 
appropriateness of the assignment to an OPP SI = ``Q1'' and ASC PI = 
``N1.''
    After consideration of the public comments, we are finalizing our 
proposal, without modification, to assign CPT code 68841 to APC 5503 
with OPPS status indicator ``Q1'' (STV Packaged Codes) for CY 2025, 
which typically means there will be a packaged APC payment if this code 
is billed on the same claims as a HCPCS code assigned to status 
indictor ``S,'' ``T,'' or ``V'' (Clinic or Emergency Department Visit). 
In addition, based on the OPPS assignments, we are finalizing an ASC 
payment indicator of ``N1'' (Packaged service/item; no separate payment 
made) for CPT code 68841 for CY 2025.
    For the final CY 2025 OPPS payment rates, we refer readers to OPPS 
Addendum B to this final rule with comment period. In addition, we 
refer readers to OPPS Addendum D1 to this final rule with comment 
period for the status indicator definitions for all codes reported 
under the OPPS. For the final CY 2025 ASC payment rates and payment 
indicators, we refer readers to Addendum AA and Addendum BB for the ASC 
payment rates, and Addendum DD1 for the ASC payment indicator and their 
definitions. The OPPS Addenda B and D1 and ASC Addenda AA, BB, and

[[Page 94072]]

DD1 are available via the internet on the CMS website.
    Please refer to Table 75 for the code descriptor, APC assignment, 
status indicator assignment, and payment indicator assignment for CPT 
code 68841 for CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.099

7. Application of Rigid Total Contact Leg Cast, CPT Code 29445 (APC 
5102)
    CPT code 29445 describes the procedure of applying a rigid leg 
cast. This code specifically refers to the process of immobilizing a 
leg fracture or injury by encasing the affected area in a hard cast, 
which helps to stabilize the bone and promote healing.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to continue to 
assign CPT code 29445 to APC 5102 (Level 2 Strapping and Cast 
Application) with status indicator ``T'' (Procedure or service, 
multiple procedure reduction applies; with a separate APC payment under 
OPPS) and proposed payment rate of $266.86.
    Payment for CPT code 29445 was brought to the Advisory Panel on 
Hospital Outpatient Payment (also known as HOP Panel) at the August 
2024 meeting. Based on the information presented, the HOP Panel 
recommended that ``CMS consider HCPCS code 29445, (Application of rigid 
total contact leg cast), a separately payable code when performed 
concurrently on the same date of service as any of the following: HCPCS 
codes 11402, 11403,11404, 11405, 11406, 11407, 97597, 97598, 15271, 
15272, 15273, 15274, 15275, 15276, 15277, 15278.''
    We received two public comments endorsing the recommendation of the 
HOP Panel.
    Comment: One commenter requested that CMS ensure that hospital 
outpatient departments are able to receive separate payment for the CPT 
code 29445 when a debridement or graft is performed on the same date of 
service, which they are currently are unable to do because of a 
National Correct Coding Initiative (NCCI) edit that has been put in 
place.
    Another commenter stated that if a wound debridement is performed 
(codes 11042-11047, 97597-97598), any primary or secondary dressing 
materials used to cover the wound would be included in the debridement 
and would not be separately reported. However, a TCC is not considered 
a wound dressing and is not included in the debridement procedure. 
Therefore, the commenter believed the cast application should be 
reported in addition to the code for the appropriate level of 
debridement, if performed, and should be mapped to APC 5102.
    Response: We thank the commenters for providing this information 
related to CPT code 29445. We will take commenters' suggestions into 
consideration for the future rulemaking.
8. Aquabeam Waterjet Ablation Procedure, CPT Code 0421T (APC 5376)
    CPT code 0421T (Transurethral waterjet ablation of prostate, 
including control of post-operative bleeding, including ultrasound 
guidance, complete (vasectomy, meatotomy, cystourethroscopy, urethral 
calibration and/or dilation, and internal urethrotomy are included when 
performed) describes the Aquabeam waterjet ablation procedure. 
According to the manufacturer, Aquabeam is for treating lower urinary 
tract symptoms (LUTS) due to benign prostatic hyperplasia (BPH) by 
using a high-velocity water stream to ablate and remove tissue from 
enlarged prostates.
    For the CY 2025 proposed rule, we estimated the geometric mean cost 
for CPT code 0421T to be $10,438 based on 4,743 single claims and 
proposed to assign the service to APC 5376 (Level 6 Urology and Related 
Services), which has a geometric mean cost of $9,356.
    Comment: One commenter supported our proposal to assign CPT code 
0421T to APC 5376 due to the clinical and resource similarities to 
other procedures assigned to APC 5376.
    Response: We appreciate the commenter's feedback on CPT code 0421T 
and we agree with the commenter's recommendation to finalize the APC 
assignment.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification to assign CPT code 0421T 
to APC 5376. Please refer to Table 76 below for the final OPPS APC and 
status indicator assignment for HCPCS code 0421T for CY 2025. We refer 
readers to Addendum B of this final rule with comment period for the 
payment rates for all codes reportable under the OPPS. Addendum B is 
available via the internet on the CMS website.

[[Page 94073]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.100

9. Aqueous Shunt to Extraocular Plate Reservoir Procedure, CPT Code 
66180 (APC 5493)
    For CY 2024, we assigned CPT code 66180 (Aqueous shunt to 
extraocular equatorial plate reservoir, external approach; with graft) 
to APC 5492 (Level 2 Intraocular Procedures). For CY 2025, as shown in 
OPPS Addendum B that was released with the CY 2025 OPPS/ASC proposed 
rule with comment period, we proposed to maintain the APC assignment to 
APC 5492 with a payment rate of $3,873.90 for CPT code 66180.
    Comment: We received two comments requesting that we reassign CPT 
code 66180 to APC 5493 (Level 3 Intraocular Procedures) due to the 
code's similarity to CPT code 66179 (Aqueous shunt to extraocular 
equatorial plate reservoir, external approach; without graft), which we 
proposed to assign to APC 5493 for CY 2025. The commenters explained 
that the procedures are the same except that CPT code 66180 requires 
additional clinical work, time, and resources, associated with suturing 
a patch graft to the eye. The commenters also explained that the 
available claims data from the CY 2025 OPPS/ASC proposed rule support 
assigning CPT code 66180 to APC 5493. For example, per the commenters, 
the geometric mean cost for CPT code 66180 ($5,026.75) is closer to the 
geometric mean cost of APC 5493 ($5,298.63) than the geometric mean 
cost of APC 5492 ($4,159.32).
    Response: We agree with the commenters that APC 5493 is a more 
appropriate placement for CPT code 66180 due to the additional clinical 
work and resources utilized to furnish the service due to its 
similarity to CPT code 66179. We also agree with the commenters that 
the geometric mean cost of CPT code 66180 confirms that the resources 
necessary to furnish the service more closely match the geometric mean 
cost of APC 5493 than APC 5492.
    After consideration of the public comments received, we are 
finalizing an APC assignment for CPT code 66180 to APC 5493 for CY 
2025. We refer readers to Addendum B of this final rule with comment 
period for the payment rates for all codes reportable under the OPPS. 
Addendum B is available via the internet on the CMS website.
10. Arteriovenous Fistula (AVF) Creation Procedures, CPT Codes 36836 
and 36837 (APC 5194)
    CPT codes 36836 (Percutaneous arteriovenous fistula creation, upper 
extremity, single access of both the peripheral artery and peripheral 
vein, including fistula maturation procedures (e.g., transluminal 
balloon angioplasty, coil embolization) when performed, including all 
vascular access, imaging guidance and radiologic supervision and 
interpretation) and 36837 (Percutaneous arteriovenous fistula creation, 
upper extremity, separate access sites of the peripheral artery and 
peripheral vein, including fistula maturation procedures (e.g., 
transluminal balloon angioplasty, coil embolization) when performed, 
including all vascular access, imaging guidance and radiologic 
supervision and interpretation) describe a percutaneous arteriovenous 
fistula creation of an upper extremity. CPT code 36836 replaced HCPCS 
codes C9754 and G2170, while CPT code 36837 replaced HCPCS codes C9755 
and G2171.
    In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61246 
through 61247), in response to public comment, input from our medical 
advisors, and the available claims data, we reassigned C9754 and C9755 
from APC 5193 to APC 5194. In the CY 2021 OPPS/ASC final rule with 
comment period (85 FR 85954 through 95955), we used our equitable 
adjustment authority to maintain the assignment of HCPCS codes G2170 
and G2171 to APC 5194 (Level 4 Endovascular Procedures), given that 
both procedures are for ESRD patients that need dialysis, the 
predecessor codes had very similar median costs, and there were low 
claims data available. We continued the assignment of CPT codes 36836 
and 36837 to APC 5194, with commenter support, for CY 2022.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 71863 
through 71864), we assigned the newly established \25\ CPT codes 36836 
and 36837 to APC 5194 based on our assessment of the CY 2023 geometric 
mean cost of predecessor codes HCPCS codes G2170 ($12,055.90) and G2171 
($13,486.08) and their APC assignment. For CY 2024, we continued 
assignment to APC 5194 for HCPCS codes G2170 and G2171, with commenter 
support.
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    \25\ The AMA's CPT Editorial Panel established CPT codes 36836 
and 36837 during the January 2023 update and CMS deleted HCPCS codes 
G2170 and G2171, effective January 1, 2023.
---------------------------------------------------------------------------

    For CY 2025, we proposed to continue assignment of both CPT codes 
36836 and 36837 to APC 5194 (Level 4 Endovascular) with a proposed 
payment rate of around $17,956. For the CY 2025 proposed rule, CPT code 
36836 had227 single claims for ratesetting, a geometric mean cost (GMC) 
of around $11,234, and CPT code 36837 had 121 single claims for 
ratesetting and a GMC of around $16,770.
    Comment: A few commenters supported our assignment of CPT code 
36837 to APC 5194.
    Response: We thank the commenters for their support.
    Comment: Several commenters requested that we avoid a proposed 
payment reduction for CPT code 36837 by maintaining its CY 2024 APC 
assignment.
    Response: We note that for CY 2025 we proposed to maintain the 
assignment

[[Page 94074]]

of CPT code 36837 to APC 5194 and did not propose to reassign CPT code 
36837 to a lower-paying APC.
    Comment: Several commenters indicated that CPT codes 36836 and 
36837 do not have similar resource costs and that CPT code 36836 would 
be more appropriately assigned to APC 5193, which had a proposed 
payment rate of $11,478.26, as opposed to continuing to assign the code 
to APC 5194, which had a proposed payment rate of $18,167.36. A 
commenter further suggested that the volume of current claims data is 
sufficient to support reassigning CPT code 36836 to APC 5193. The 
commenter believed that the proposed rule geometric mean cost data 
illustrated distinct differences in required resources to perform the 
procedures described CPT code 36836 (GMC: $10,123.79) and CPT code 
36837 (GMC: $16,849.60) and that CPT code 36836 is significantly 
overpaid in APC 5194 and would be overpaid in APC 5193, but to a lesser 
degree.
    Response: We thank the commenters for their comments. We reiterate 
that we review, on an annual basis, the APC assignments for all 
services and items paid under the OPPS based on our analysis of the 
latest claims data and review of the clinical characteristics of the 
procedure. After further clinical review, we continue to believe that 
CPT code 36836 is more similar clinically to services in APC 5194, 
which includes more complex endovascular procedures, than those in APC 
5193, which primarily contains less complex revascularization and 
embolization procedures. Further, while CPT code 36836 does have more 
available claims than what was available for the initial assignment of 
CPT code 36836 to APC 5194, we believe additional claims and clinical 
data would be useful before proposing to move this code to a different 
APC.
    However, we note that we review the APC assignments for all items 
and services paid under the OPPS on an annual basis. We will reevaluate 
the APC assignment for CPT code 36836 in the next rulemaking cycle.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal, without modification, to continue to 
assign CPT code 36836 and CPT code 36837 to APC 5194 for CY 2025. We 
refer readers to Addendum B of this final rule with comment period for 
the payment rate for all codes paid under the OPPS.
11. Arthroscopic Subacromial Balloon Implant, HCPCS Code C9781 (APC 
5115)
    HCPCS code C9781 describes the implantation of a subacromial 
spacer, such as a balloon, in the shoulder to treat a torn rotator 
cuff. The procedure may also include debridement, acromioplasty, 
subacromial decompression, and biceps tenodesis.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to continue to 
assign HCPCS code C9781 (Arthroscopy, shoulder, surgical; with 
implantation of subacromial spacer (e.g., balloon), includes 
debridement (e.g., limited or extensive), subacromial decompression, 
acromioplasty, and biceps tenodesis when performed) to APC 5115 (Level 
5 Musculoskeletal Procedures) with a proposed payment rate of 
$12,755.58.
    We received two comments in support of our proposal.
    Comment: Both commenters endorsed our proposal to assign HCPCS code 
C9781, which describes InSpaceTM Subacromial Tissue Spacer 
System, to APC 5115 for CY 2025. They encouraged CMS to maintain this 
assignment in the final rule.
    Response: Based on our analysis of the latest CY 2023 claims data 
available for CY 2025 OPPS ratesetting, the geometric mean cost 
associated with HCPCS code C9781 is $12,757.71based on 493 single 
claims, which is consistent with the geometric mean cost of 
$13,022.88for APC 5115.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal to assign HCPCS code C9781 to APC 5115 
without modification. The final CY 2025 OPPS payment rate for this code 
can be found in Addendum B to this final rule with comment period.
12. Artificial Iris Insertion Procedures, CPT Code 66683 (APC 5496)
    For the CY 2025 OPPS proposed rule, we proposed to assign 
placeholder CPT code 6X004 (Implantation of iris prosthesis, including 
suture fixation and repair or removal of iris, when performed) to APC 
5496 (Level 6 Intraocular Procedures) with a payment rate of around 
$16,416. CPT code 66683 is the final code for 6X004 and will replace 
CPT code 0616T (Insertion of iris prosthesis, including suture fixation 
and repair or removal of iris, when performed; without removal of 
crystalline lens or intraocular lens, without insertion of intraocular 
lens); CPT code 0617T (Insertion of iris prosthesis, including suture 
fixation and repair or removal of iris, when performed; with removal of 
crystalline lens and insertion of intraocular lens); and CPT code 0618T 
(Insertion of iris prosthesis, including suture fixation and repair or 
removal of iris, when performed; with secondary intraocular lens 
placement or intraocular lens exchange).
    Comment: One commenter supported our proposal to assign placeholder 
CPT code 6X004 (CPT code 66683) to APC 5496.
    Response: We appreciate the support of the commenter for our 
proposal.
    After consideration of the public comments we received, we are 
implementing our proposal without modification to assign CPT code 66683 
to APC 5496 (Level 6 Intraocular Procedures). Table 77 shows the 
finalized status indicator and APC assignment for CPT code 66683. We 
refer readers to Addendum B of this final rule for the payment rates 
for all codes reportable under the OPPS. Addendum B is available via 
the internet on the CMS website.

[[Page 94075]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.101

13. Bronchoscopy With Needle Biopsy, CPT Code 31629 (APC 5154)
    CPT code 31629 describes the use of diagnostic rigid or flexible 
bronchoscope to obtain one or more biopsies from the trachea, main 
stem, and/or lobar bronchus using a transbronchial needle aspiration 
technique. In the CY 2025 OPPS/ASC proposed rule, we proposed to 
continue to assign CPT code 31629 to APC 5154 (Level 4 Airway 
Endoscopy) with a proposed payment rate of $3,681.38.
    Comment: We received one public comment that requested CMS reassign 
CPT code 31629 from APC 5154 (Level 4 Airway Endoscopy) to APC 5155 
(Level 5 Airway Endoscopy) in the CY 2025 ASC/OPPS final rule. The 
commenter stated that CPT code 31629 is the highest cost significant 
procedure in APC 5154 with a geometric mean cost of $5,123.33. The 
geometric mean cost of CPT code 31629 exceeds the geometric mean cost 
of the lowest cost significant procedure in APC 5155, CPT code 31267 
with a geometric mean cost of $5,031.74.
    According to the commenter, given the intraoperative service time 
and physician skill level required for the procedure, this procedure is 
aligned with procedures already assigned to APC 5155 including balloon 
dilation and stenting procedures. The commenter stated that the 
reassignment of CPT code 31629 from APC 5154 to APC 5155 would better 
support resource homogeneity within the Airway Endoscopy Procedures APC 
series.
    Response: Although the geometric mean cost of the CPT code 31629 is 
$1,300 higher than the geometric mean cost of APC 5154, it is $1,974 
lower than the geometric mean cost of APC 5155. CPT code 31629 also 
does not violate the 2 times rule in its current assignment in APC 
5154. In addition, we believe that CPT code 31629 fits appropriately in 
APC 5154 based on clinical similarity and resource homogeneity with the 
procedures in that APC.
    Therefore, after consideration of the public comment we received, 
we are finalizing our proposal without modification, to assign CPT code 
31629 to APC 5154 for CY 2025. We refer readers to Addendum B of this 
final rule with comment period for the CY 2025 final payment rate for 
this code. Addendum B is available via the internet on the CMS website.
14. CADScor System, CPT Code 0716T (APC 5733)
    The CADScor System is intended as a diagnostic aid in symptomatic 
patients suspected of stable coronary artery disease (CAD) and is 
designed to help reduce invasive and costly diagnostic procedures. The 
CADScor System is a diagnostic aid that uses sensitive acoustics and 
advanced computational processing to analyze coronary blood flow to 
rule out obstructive CAD. CPT code 0716T describes the service that 
utilizes the CADScor System: Cardiac acoustic waveform recording with 
automated analysis and generation of coronary artery disease risk 
score. For CY 2025, we proposed to assign CPT 0716T to APC 5733--Level 
3 Minor Procedures, with a payment rate of $59.07 and a status 
indicator of ``Q1'' (conditionally packaged).
    Comment: Commenters disagreed with our proposal to assign CPT code 
0716T to APC 5733 with a status indicator of ``Q1.'' Commenters 
suggested that CPT code 0716T should be assigned to APC 5722 based on 
clinical and resource homogeneity with other services assigned to APC 
5722. Commenters also expressed that status indicator ``S'' (separately 
payable) would be most appropriate for CPT code 0716T. They contended 
that status indicator ``Q1'' essentially unconditionally packages the 
code because CPT code 0716T is never furnished without an emergency 
department visit.
    Response: Although CPT code 0716T was effective July 1, 2022, we 
have no claims data for the code. The OPPS payment rates are proposed 
based on available CY 2023 claims data. Because we have no claims data, 
we believe that we should continue to assign CPT code 0716T to APC 5733 
for CY 2024. We review, on an annual basis, the APC assignments for all 
services and items paid under the OPPS. As a result, we will reevaluate 
the APC assignment for CPT code 0716T for the next rulemaking cycle.
    In addition, as listed in OPPS Addendum D1 of the CY 2025 OPPS/ASC 
proposed rule, codes assigned to status indicator ``Q1'' may be 
packaged, assigned to a composite APC, or paid separately under the 
OPPS. Specifically, a ``Q1'' status indicator may indicate a:
     Packaged APC payment if billed on the same claim as a 
HCPCS code assigned status indicator ``S'', ``T'', or ``V''; or
     Composite APC payment if billed with specific combinations 
of services based on OPPS composite-specific payment criteria. Payment 
is packaged into a single payment for specific combinations of 
services; or
     In other circumstances, payment is made through a separate 
APC payment
    After reviewing the public comments, we believe that it is 
appropriate for the procedure described by CPT code 0716T to be paid 
separately. We agree with commenters that it is unlikely that CPT code 
0716T would be furnished without an emergency department (ED) visit and 
should not be always be packaged with an ED visit. Therefore, we are 
revising the status indicator for the code from ``Q1'' (conditionally 
packaged) to ``S'' (Procedure or Service, Not Discounted When Multiple) 
to indicate that the service is paid separately.
    In summary, after consideration of the public comments, we are 
finalizing the APC and status indicator assignment for

[[Page 94076]]

CPT code 0716T with modification. Specifically, we are finalizing the 
assignment of CPT code 0716T to APC 5733 and we are revising the status 
indicator assignment for CPT code 0716T to ``S'' (separately payable). 
Please refer to Table 78 for the code descriptor, APC assignment, 
status indicator assignment, and payment indicator assignment for CPT 
code 0716T for CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.102

15. Cardiac Magnetic Resonance Imaging Procedures, CPT Codes 75561 and 
75563 (APCs 5572 and 5573)
    CPT code 75561 (Cardiac magnetic resonance imaging for morphology 
and function without contrast material(s), followed by contrast 
material(s) and further sequences) and CPT code 75563 (Cardiac magnetic 
resonance imaging for morphology and function without contrast 
material(s), followed by contrast material(s) and further sequences; 
with stress imaging) both describe cardiac MRI procedures.
    For CY 2024, we assigned CPT code 75561 to APC 5572 (Level 2 
Imaging with Contrast), and CPT code 75563 to APC 5573 (Level 3 Imaging 
with Contrast). For the CY 2025 OPPS/ASC proposed rule, we proposed to 
maintain the current APC assignments for both cardiac MRI codes.
    Comment: We received one comment requesting that we reassign CPT 
code 75561 to APC 5573 (Level 3 Imaging with Contrast). The commenter 
indicated that the other services in APC 5572 (Level 2 Imaging with 
Contrast) are not clinically similar or similar in resource use to the 
service described by CPT code 75561.
    Response: We thank the commenter for their input. The OPPS payment 
rates are proposed based on available CY 2023 claims data. Our claims 
data show a geometric mean cost of about $450 for CPT code 75561 based 
on 27,543 single claims. We believe that the geometric mean cost of 
about $450 for CPT code 75561 is more consistent with the geometric 
mean cost of approximately $361 for APC 5572, than the geometric mean 
cost of approximately $800 for APC 5573. We continue to believe that 
the clinical and resource characteristics of CPT code 75561 are 
sufficiently like other procedures assigned to APC 5572 and should 
continue to be assigned to APC 5572.
    Comment: The same commenter requested that CPT code 75563 (Cardiac 
magnetic resonance imaging for morphology and function without contrast 
material(s), followed by contrast material(s) and further sequences; 
with stress imaging) be reassigned to APC 5593 (Level 3 Nuclear 
Medicine and Related Services) because of lack of clinical homogeneity 
and resource utilization with other services currently assigned to APC 
5573. The commenter notes that CPT code 75563 was previously assigned 
to the Nuclear Medicine APC family until the imaging services were 
restructured during a comprehensive review of the APC series that took 
place in CY 2016. The purpose of the restructuring of the OPPS APC 
groupings for imaging services was to improve the clinical and resource 
homogeneity of the services classified within the imaging APCs (80 FR 
70392 and 81 FR 7928).
    The commenter cites the following reasons to support the 
reassignment of 75563 to APC 5593:
    (1) the clinical labor and resources (acquisition time, staffing, 
medications, and perfusion agents) are very similar to CPT code 78452 
which describes myocardial perfusion imaging;
    (2) both tests are indicated for patients with cardiac angina or 
coronary artery disease; and
    (3) both tests provide the same clinical information.
    We disagreed with a similar argument in the past (81 FR 79630) 
where commenters asserted that cardiac MRI with stress imaging is very 
similar to myocardial perfusion imaging because both tests are 
performed under a stress protocol and therefore should be assigned to 
APC 5593. APC 5593 contains procedures that describe nuclear medicine 
tests, and CPT code 75563 is a specific type of MRI and not a nuclear 
medicine test. Additionally, the geometric mean cost of CPT code 75563 
is approximately $887 and the geometric mean cost of the APC to which 
it is assigned, APC 5573, is approximately $800. These geometric mean 
costs are very similar. However, the geometric mean cost of APC 5593 is 
approximately $1,321, which is significantly higher than the geometric 
mean cost of CPT code 75563. Therefore, assigning CPT code 75563 to APC 
5593 would assign the procedure to an APC with clinically dissimilar 
nuclear medicine tests that have a geometric mean cost of $1,321 (as 
compared to the $887 geometric mean cost of CPT code 75563).
    In summary, after consideration of the public comment, we are 
finalizing our proposal without modification to assign CPT code 75561 
to APC 5572 and CPT code 75563 to APC 5573 for CY 2025. The final CY 
2025 payment rates for the codes can be found in Addendum B to this 
final rule with comment period. In addition, we refer readers to 
Addendum D1 of this final rule with comment period for the SI 
definitions for all codes reported under the OPPS. Addenda B and D1 are 
available via the internet on the CMS website.

[[Page 94077]]

16. CardioMEMS, HCPCS Code GMEM1, CPT Code 93264 (APCs 5724 and 5741)
    The CardioMEMS Heart Failure System allows practitioners treating 
heart failure patients to wirelessly monitor and measure pulmonary 
artery pressure and heart rate in patients with heart failure and 
transmit the information to the physician to inform the treatment plan 
for the patient. The system includes two critical components: first, a 
miniaturized, wireless monitor, which is implanted into a patient's 
pulmonary artery, and second, a smart pillow (the CardioMEMS Patient 
Electronics System), which captures and transmits readings via safe 
radio frequency from the patient's implanted CardioMEMS Heart Failure 
System. The CardioMEMS Heart Failure System enables patients to 
transmit critical heart failure status information to clinicians 
regularly, potentially eliminating the need for frequent clinic or 
hospital visits. The CardioMEMS Heart Failure System is described by 
CPT code 33289 (Transcatheter implantation of wireless pulmonary artery 
pressure sensor for long-term hemodynamic monitoring, including 
deployment and calibration of the sensor, right heart catheterization, 
selective pulmonary catheterization, radiological supervision and 
interpretation, and pulmonary artery angiography, when performed).
    Interested parties have met with CMS and highlighted the critical 
importance of the device for heart failure patients who require close 
monitoring of weight and blood pressure to prevent fluid buildup around 
the heart and have requested that CMS establish coding to describe when 
practitioners and hospitals incur costs during clinical scenarios when 
crucial components of the system require replacement. Given that these 
components are crucial for system functionality and there is no 
existing coding framework to address their replacement, we believe that 
establishing appropriate coding and payment mechanisms can facilitate 
the provision of these services more effectively in the office and 
hospital settings. In the CY 2025 Physician Fee Schedule (PFS) proposed 
rule, we proposed a new code, HCPCS code GMEM1 (Provision of 
replacement patient electronics system (for example, system pillow) for 
home pulmonary artery pressure monitoring including provision of 
materials for use in the home and reporting of test results to 
physician or qualified health care professional). The CY 2025 PFS 
proposed rule (89 FR 61956) sought comment from interested parties 
regarding direct costs from invoices for the replacement component 
referenced above, utilization estimates, and potential indicators.
    CPT Code 93264 (Remote monitoring of a wireless pulmonary artery 
pressure sensor for up to 30 days, including at least weekly downloads 
of pulmonary artery pressure recordings, interpretation(s), trend 
analysis, and report(s) by a physician or other qualified health care 
professional) can be used by hospitals to bill for the ongoing analysis 
and monitoring performed with CardioMEMS.
    While we did not discuss the GMEM1 code in the CY 2025 OPPS 
proposed rule preamble it was included in Addendum B with an assignment 
to APC 5741 (Level 1 Electronic Analysis of Devices) with a payment 
rate of $36.90 and assigned a status indicator of Q1. CPT code 93264 
was included in Addendum B with a status indicator of ``M'' to indicate 
that this code is not payable under the OPPS.
    The issue of payment for GMEM1 was brought to the Advisory Panel on 
Hospital Outpatient Payment (also known as HOP Panel) in 2024 for CY 
2025 rulemaking. At the August 2024 meeting, based on the information 
presented, the Panel did not make any recommendations on GMEM1.
    We note that HCPCS code G0555 is replacing the placeholder code 
GMEM1.
    Comment: In their comment letters on the CY 2025 OPPS proposed 
rule, commenters indicated that the G0555 (placeholder codeGMEM1) code 
descriptor proposed in the CY 2025 PFS proposed rule introduces 
confusion by also referencing reporting test results to the physician, 
which is a separate function furnished by a different party than the 
replacement Patient Electronics System (PES). Commenters requested that 
CMS revise the proposed code descriptor for G0555 (placeholder code 
GMEM1) to clarify that it is for the replacement PES only and remove 
the following language from the descriptor: ``and reporting of test 
results to physician or qualified health care professional''). 
Commenters requested that if the code is finalized under OPPS (and PFS) 
with the revised descriptor, that CMS assign it to APC 1528, New 
Technology--Level 28 ($5001-$5500), which they believe is reflective of 
the cost of the replacement PES.
    Response: We agree that assignment to APC 5741 is likely not 
reflective of the cost of the replacement PES. However, assignment to 
New Technology APCs usually occurs when there is no existing clinical 
APC that is appropriate in terms of clinical similarity or resources. 
Based on the nature of the procedure, we believe that the service 
associated with GMEM1 is more appropriately in APC 5724 (Level 4 
Diagnostic Tests and Related Services). We believe that the service 
described by HCPCS code G0555 (placeholder code GMEM1) shares similar 
resource costs and clinical characteristics with services included in 
APC 5724. Assignment to APC 5741 may not have sufficiently covered the 
cost of the replacement of the PES. Therefore, for CY 2025, we are 
revising the assignment for HCPCS code G0555 (placeholder code GMEM1) 
to APC 5724, with a status indicator of ``S''.
    Comment: Commenters recommend that CMS revise the OPPS status 
indicator for CPT 93264, which CMS proposed to designate as ``M'' (not 
payable under the OPPS). They argued that this classification is 
contrary to CMS's treatment of similar monitoring procedures (e.g., CPT 
codes 93297 and 93298), which have status indicator ``Q1'' and are 
assigned to APC 5741 (Level 1 Electronic Analysis of Devices).
    Response: As listed in OPPS Addendum D1 of the CY 2025 OPPS/ASC 
proposed rule, codes assigned to status indicator ``Q1'' may be 
packaged, assigned to a composite APC, or paid separately under the 
OPPS. Specifically, a ``Q1'' status indicator may indicate a:
     Packaged APC payment if billed on the same claim as a 
HCPCS code assigned status indicator ``S'', ``T'', or ``V''; or
     Composite APC payment if billed with specific combinations 
of services based on OPPS composite-specific payment criteria. Payment 
is packaged into a single payment for specific combinations of 
services; or
     In other circumstances, payment is made through a separate 
APC payment
    After reviewing the public comments, we agree with commenters that 
it is appropriate for the procedure described by CPT code 93264 to be 
assigned to status indicator Q1(conditionally packaged). Therefore, we 
are revising the status indicator for the code from ``M'' (not payable 
under the OPPS'') to ``Q1'' (conditionally packaged). The conditional 
packaging of this code supports our overarching goal to make payments 
for all services paid under the OPPS and ASC payment system more 
consistent with those of a prospective payment system and less like 
those of a per-service fee schedule. We believe that packaging 
encourages efficiency and is an essential component of a prospective 
payment system, and that packaging payments for items and services that 
are typically integral, ancillary, supportive, dependent, or adjunctive 
to a primary service is a

[[Page 94078]]

fundamental part of the OPPS. We therefore believe packaging of CPT 
code 93264 is appropriate.
    Because CPT code 93264 was assigned status indicator ``M'' (not 
payable under the OPPS) we have no claims data to use for making an APC 
assignment for CPT code 93264 in CY 2025. We agree with commenters that 
the code is similar in clinical and resource use to CPT codes 93297 and 
93298. Therefore, we will be assigning CPT code 93264 to APC 5741 
(Level 1 Electronic Analysis of Devices) for CY 2025.
    In summary, after consideration of the public comment, we are 
finalizing the APC assignment for HCPCS code G0555 (placeholder code 
GMEM1) with modification. Specifically, we are revising the APC 
assignment for HCPCS code G0555 (placeholder code GMEM1) to APC 5724 
and assigning the code to status indicator ``S'' for CY 2025. We are 
revising the status indicator for CPT 93264 and assigning a status 
indicator of ``Q1'' for CY 2025. Lastly, we are assigning CPT 93264 to 
APC 5741 for CY 2025. The final CY 2025 OPPS payment rate for this code 
can be found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the SI meanings for all codes reported under the 
OPPS. Addendum D1 is available via the internet on the CMS website.
    We refer readers to Table 79 for the code descriptor, APC 
assignment, status indicator assignment, and payment indicator 
assignment for CPT codes G0555 (placeholder code GMEM1) and 93264 for 
CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.103

17. Caregiver Training Services, HCPCS Codes GCTD1, GCTD2, and GCTD3 
(APC 5731)
    The CY 2025 Physician Fee Schedule (PFS) proposed rule (89 FR 
61956) proposed to establish new coding and payment for caregiver 
training for direct care services and supports. The topics of training 
could include, but would not be limited to, techniques to prevent 
decubitus ulcer formation, wound dressing changes, and infection 
control. Unlike other caregiver training codes that are currently paid 
under the PFS, the caregiver training codes for direct care services 
and supports focus on specific clinical skills aimed at the caregiver 
effectuating hands-on treatment, reducing complications, and monitoring 
the patient when the patient is not capable to do so themselves. Three 
new HCPCS codes were proposed: GCTD1 (Caregiver training in direct care 
strategies and techniques to support care for patients with an ongoing 
condition or illness and to reduce complications (including, but not 
limited to, techniques to prevent decubitus ulcer formation, wound 
dressing changes, and infection control) (without the patient present), 
face-to-face; initial 30 minutes), GCTD2 (Caregiver training in direct 
care strategies and techniques to support care for patients with an 
ongoing condition or illness and to reduce complications (including, 
but not limited to, techniques to prevent decubitus ulcer formation, 
wound dressing changes, and infection control) (without the patient 
present), face-to-face; each additional 15 minutes (List separately in 
addition to code for primary service) (Use GCTD2 in conjunction with 
GCTD1)), and GCTD3 (Group caregiver training in direct care strategies 
and techniques to support care for patients with an ongoing condition 
or illness and to reduce complications (including, but not limited to, 
techniques to prevent

[[Page 94079]]

decubitus ulcer formation, wound dressing changes, and infection 
control) (without the patient present), face-to-face with multiple sets 
of caregivers)). We did not propose APC or status indicator assignments 
for these G codes in the CY 2025 OPPS proposed rule (89 FR 59186).
    We note that the HCPCS codes G0541, G0542, and G0543 are replacing 
their respective placeholder codes GCTD1, GCDT2, and GCTD3.
    Comment: We received several comments related to the CY 2025 
Physician Fee Schedule (PFS) proposal suggesting that we begin 
providing payment for Caregiver Training Services (CTS) G0541, G0542, 
and G0543placeholder codes GCTD1, GCTD2, and GCTD3) under the OPPS. 
Commenters asked for clarification on whether these codes would be 
given the OPPS status indicator ``A,'' which would limit their use for 
outpatient hospital payment purposes to therapists only, or whether CMS 
will assign separately payable status indicators to those codes. 
Commenters stated that assigning separately payable status would 
recognize the different types of hospital staff that can render 
appropriate CTS. Commenters requested that CMS make the newly proposed 
CTS codes G0541, G0542, and G0543 (placeholder codes GCTD1, GCTD2, and 
GCTD3) payable under the OPPS.
    Response: HCPCS codes G0541, G0542, and G0543 (placeholder codes 
GCTD1, GCTD2, and GCTD3) will be effective on January 1, 2025. Based on 
our evaluation of these new codes, we are proposing an interim 
assignment of HCPCS codes G0541, G0542, and G0543 (placeholder codes 
GCTD1, GCTD2, and GCTD3) to status indicator ``A'' to indicate that 
these codes are payable under a fee schedule or payment system other 
than the OPPS. These services are covered Medicare services and will be 
assigned payable indicators under the Physician Fee Schedule (PFS). 
While these services are not payable under the OPPS, they are payable 
under the PFS; therefore, we are proposing to assign them status 
indicator of ``A.'' Sections 1834(k) and 1833(a)(8) of the Act require 
that payment be made for outpatient therapy services (physical therapy, 
speech language pathology, and occupational therapy) furnished by 
providers of therapy services, including a hospital (to its outpatients 
and inpatients not under a Part A stay), be made under the PFS.
    In summary, we are proposing an interim assignment of HCPCS codes 
G0541, G0542, and G0543 (placeholder codes GCTD1, GCTD2, and GCTD3) to 
status indictor ``A'' to indicate that the code is payable under a fee 
schedule or payment system other than the OPPS. Because we were not 
able to propose APC and status indicator assignments in the CY 2025 
OPPS proposed rule, we will be assigning HCPCS codes G0541, G0542, and 
G0543 (placeholder codes GCTD1, GCTD2, and GCTD3) comment indicator 
``NI'' in Addendum B of this final rule. This comment indicator is for 
new HCPCS codes that will be effective January 1, 2025, to indicate 
that we are assigning them an interim status indicator and APC 
assignment, which is subject to public comment. We invite public 
comment on the interim proposed status indicators for HCPCS codes 
G0541, G0542, and G0543 (placeholder codes GCTD1, GCTD2, and GCTD3), 
which will then be finalized in the CY 2026 OPPS/ASC final rule with 
comment period.
    Please refer to Table 80 below for the proposed interim status 
indicator assignments for HCPCS codes G0541, G0542, and G0543 
(placeholder codes GCTD1, GCTD2, and GCTD3) for CY 2025.

[[Page 94080]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.104

18. Chimeric Antigen Receptor Therapy (CAR-T), CPT Codes 0537T, 0538T, 
0539T, and 0540T (APC 5694)
    Chimeric Antigen Receptor T-Cell (CAR T-cell) therapy is a cell-
based gene therapy in which T-cells are collected and genetically 
engineered to express a chimeric antigen receptor that will bind to a 
certain protein on a patient's cancerous cells. The CAR T-cells are 
then administered to the patient to attack certain cancerous cells, and 
the individual is observed for potential serious side effects that 
would require medical intervention. We refer readers to previous 
discussions in the OPPS/ASC final rules with comment period for 
background regarding the specific CAR T-cell products, in both the CY 
2020 OPPS/ASC final rule with comment period (84 FR 61231 through 
61234) and the CY 2019 OPPS/ASC final rule with comment period (83 FR 
58904 through 58908). In addition, for discussion about CY 2022 OPPS 
payment policies for separately paid drugs with pass-through status 
expiring or continuing in CY 2022, please see sections V.A.4 and V.A.5 
of this final rule with comment period. The AMA created four Category 
III CPT codes that are related to CAR T-cell therapy, effective January 
1, 2019. As discussed in the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 58904 through 58908), the CY 2020 OPPS/ASC final rule 
with comment period (84 FR 61231 through 61234), and the CY 2021 OPPS/
ASC final rule with comment period (85 FR 85949 through 85951) we 
finalized our proposal to assign procedures described by CPT codes 
0537T, 0538T, and 0539T to status indicator ``B'' (Codes that are not 
recognized by OPPS when submitted on an outpatient hospital Part B bill 
type (12x and 13x)) to indicate that the services are not paid under 
the OPPS. The procedures described by CPT codes 0537T, 0538T, and 0539T 
describe the various steps required to collect and prepare the 
genetically modified T-cells, and Medicare does not generally pay 
separately for each step used to

[[Page 94081]]

manufacture a drug or biological. We also finalized that the procedures 
described by CPT code 0540T would be assigned status indicator ``S'' 
(Procedure or Service, Not Discounted when Multiple) and APC 5694 
(Level 4 Drug Administration) for CY 2019 through CY 2024 and made no 
proposal to change the assignment for CY 2025. Additionally, the 
National Uniform Billing Committee (NUBC) established CAR T-cell-
related revenue codes and a value code to be reportable on Hospital 
Outpatient Department (HOPD) claims effective for claims received on or 
after April 1, 2019.
    Category III CPT codes 0537T, 0538T, 0539T, and 0540T are being 
replaced by Category I CPT codes 38225, 38226, 38227, and 38228, which 
were previously represented by placeholder codes 3X018, 3X019, 3X020, 
and 3X021. As such, we made no specific proposal related to the CAR T-
cell preparation codes but proposed to apply the existing APC and 
status indicator assignments for the predecessor Category III CPT codes 
to the replacement Category I CPT codes.
    As listed in Addendum B of the CY 2025 OPPS/ASC proposed rule, we 
proposed to continue to assign procedures described by these CPT codes, 
3X018, 3X019, and 3X020, to status indicator ``B'' (Codes that are not 
recognized by OPPS when submitted on an outpatient hospital Part B bill 
type (12x and 13x)) to indicate that the services are not paid under 
the OPPS. We proposed to continue to assign CPT code 3X021 to status 
indicator ``S'' (Procedure or Service, Not Discounted when Multiple) 
and APC 5694 (Level IV Drug Administration).
    Comment: Some commenters provided input on the proposed policies in 
the physician office setting regarding the dose preparation procedures 
associated with CAR T-cell therapy and other billing topics in the 
office setting, such as the expansion of digits on MAC claims 
processing screens for physician office claims.
    Response: Comments related to the CY 2025 PFS payment policies are 
out of scope.
    Comment: Several commenters opposed our proposal to continue to 
assign status indicator ``B'' to CPT codes 38225, 38226, and 38227, for 
CY 2025. Many commenters provided alternate status indicator assignment 
recommendations, such as ``S'', as well as APC assignment 
recommendations. Commenters stated that by allowing these codes to be 
billable and paid, CMS could use claims data collected to assign the 
codes to more accurate APCs. Some commenters explained that CMS's 
overall practice and billing process should be reevaluated, with some 
recommending revisions to, or the retirement of, MLN Matters Number 
SE19009 \26\ which they believed caused confusion, raised numerous 
program integrity concerns, including confusion regarding what can be 
included in ASP reporting, increased inconsistencies with Medicare 
requirements for under arrangement services and with charges reported 
and hospital billing, and commenters believed the elimination of this 
guidance, including separate payment of 38225, 38226, and 38227, would 
reduce hospital burden. One commenter raised the concern that some 
manufacturers will pay hospitals for the dose preparation services, 
while other manufacturers will not. In their view, this raises 
potential program integrity concerns and could influence medical 
decision making.
---------------------------------------------------------------------------

    \26\ https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2019-transmittals-items/se19009.
---------------------------------------------------------------------------

    Commenters stated that the cell collection required as part of the 
CAR T-cell therapy process is done by leukapheresis, a costly and 
labor-intensive procedure in commenters' view. Commenters also 
communicated that the hospital in which the preparation procedure 
occurs is not always the same facility in which the final infusion of 
the therapy occurs. In their view, this could disincentivize hospitals 
from providing the preparation procedures if they are not the hospital 
ultimately providing the final product. A few commenters emphasized 
that manufacturers do not provide these services, hospitals do. 
Commenters believed ``under-arrangements'' made between hospitals were 
infeasible long term given the likely growth in the volume of these 
therapies and the costs incurred. Commenters also discussed that the 
preparation procedures could occur months apart from the final 
administration of the product.
    Many of these commenters also stated that 10-15 percent of the time 
a finalized CAR T-cell therapy product is never administered to a 
beneficiary, which could occur for a multitude of reasons, such as a 
manufacturing failure, or disease progression potentially resulting in 
death or ineligibility for treatment while the CAR T-cell therapy 
product is being manufactured.
    Commenters also recommended CMS revise the product specific Q-codes 
to remove ``leukapheresis and dose preparation procedures'' and they 
believe it is inappropriate for these services to be described by the 
HCPCS Level II codes when they can be described by Level I HCPCS codes. 
Additional commenters recommended CMS transition the product specific 
Q-codes to permanent J-codes.
    Several commenters discussed other therapies, such as stem cell 
transplant, and therapies such as those described by HCPCS codes J3394 
(Injection, lovotibeglogene autotemcel, per treatment) and J3393 
(Injection, betibeglogene autotemcel, per treatment), which in 
commenter's view is similar to CAR T-cell therapy and requires similar 
dose preparation procedures.
    Commenters supported the 2024 Advisory Panel on Hospital Outpatient 
Payment recommendation to assign CPT code 38225/3X018, Chimeric antigen 
receptor T-cell therapy; harvesting of blood-derived T lymphocytes for 
development of genetically modified autologous CAR-T cells, per day, an 
SI of S and place the code in APC 5242, Level 2 Blood Product Exchange 
and Related Services. The Panel further recommended that CMS assign CPT 
code 38226/3X019, Chimeric antigen receptor T-cell therapy; preparation 
of blood-derived T lymphocytes for transportation (e.g., 
cryopreservation, storage); and CPT code 38227/3X020, Chimeric antigen 
receptor T-cell therapy; receipt and preparation of CAR-T cells for 
administration; an SI of S and place these codes in APC 5241, Level 1 
Blood Product Exchange and Related Services.
    Response: We thank the commenters for their feedback. CMS continues 
to believe that the procedures described by CPT codes 0537T, 0538T, and 
0539T and replacement CPT codes 38225, 38226, and 38227, describe the 
various steps required to collect and prepare the genetically modified 
T-cells, and Medicare does not generally pay separately for each step 
used to manufacture a drug or biological product. Therefore, CMS does 
not believe that separate or packaged payment under the OPPS is 
necessary for the procedures described by CPT codes 38225, 38226, and 
38227, for CY 2025. However, we thank commenters for providing their 
unique perspectives and experiences in situations where the 
manufacturing process does not result in a final product being 
administered to a beneficiary.
    We note that the current HCPCS coding for the currently approved 
CAR T-cell therapies include leukapheresis and dose preparation 
procedures, as these services are included in the manufacturing of 
these biologicals. Therefore, payment for these services is

[[Page 94082]]

incorporated into the drug codes. CMS is not revising the descriptors 
for the Q-codes to remove leukapheresis and dose preparation procedures 
nor are we transitioning the Q-codes to J-codes at this time.
    We note that, although there is no payment associated with CPT 
codes 38225, 38226, and 38227, for reasons stated previously, these 
codes can still be reported to CMS for tracking purposes. We thank 
commenters for their feedback and for raising concerns related to our 
guidance contained in MLN Matters Article SE19009. We are not revising 
this document at this time as we believe these instructions are 
consistent with our longstanding policies, but we understand the 
feedback provided. Accordingly, we are not accepting the 
recommendations at this time to revise the status indicators for 
procedures described by CPT codes 38225, 38226, and 38227. We will 
continue to evaluate and monitor payment for CAR T-cell therapies. In 
summary, after consideration of the public comments we received, we are 
finalizing our proposal to assign status indicator ``B'' to CPT codes 
38225, 38226, and 38227 for CY 2025 without modification.
    Additionally, we are continuing our policy from CY 2019 to assign 
status indicator ``S'' to CPT code 38228 for CY 2025. Table 81 shows 
the final SI and APC assignments for HCPCS codes 38225, 38226, 38227, 
and 38228 for CY 2025. For more information on CY 2025 OPPS final 
status indicators, APC assignments, and payment rates for HCPCS codes, 
including the CAR T-cell drug codes, we refer readers to Addendum B to 
this final rule with comment period. In addition, the status indicator 
definitions can be found in Addendum D1 (OPPS Payment Status Indicators 
for CY 2025) to this final rule with comment period. Both Addendum B 
and D1 are available via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.105

19. Complex Bunion Correction Procedure CPT Code 28297 (APC 5115)
    CPT code 28297 describes a surgical procedure to correct a bunion, 
or hallux valgus, in the foot. The procedure involves:

 Removing the bunion
 Realigning the big toe
 Correcting the bony prominence at the base of the toe

[[Page 94083]]

 Fusing the joint between the first metatarsal bone and the 
medial cuneiform bone
 Removing the sesamoid bones, which are pea-shaped bones under 
the big toe joint
    In the CY 2025 OPPS/ASC proposed rule, we proposed to move CPT code 
28297 (Correction, hallux valgus with bunionectomy, with sesamoidectomy 
when performed; with first metatarsal and medial cuneiform joint 
arthrodesis, any method) from APC 5114 (Level 4 Musculoskeletal 
Procedures) to APC 5115 (Level 5 Musculoskeletal Procedures) with the 
proposed payment rate of $12,755.58.
    We received several comments supporting the proposed reassignment 
of CPT code 28297 from APC 5114 (Level 4 Musculoskeletal Procedures) to 
APC 5115 (Level 5 Musculoskeletal Procedures).
    Comment: One commenter stated that CPT code 28297 clearly meets the 
criteria for reassignment. The total frequency of CPT code 28297 
exceeded the significance threshold of 1,000 procedures. The geometric 
mean cost of CPT code 28297 exceeded two times the geometric mean cost 
of the lowest significant procedure in APC 5114 (Level 4 
Musculoskeletal Procedures). Furthermore, the geometric mean cost of 
CPT code 28297 was nearly equal to the geometric mean cost of APC 5115 
(Level 5 Musculoskeletal Procedures). Several other commenters also 
supported assigning CPT code 28297 to APC 5114 ((Level 5 
Musculoskeletal Procedures).
    Response: We agree with the commenters, and we thank them for their 
support. In summary, after consideration of the public comments that we 
received, we are finalizing our proposal without modification and are 
assigning CPT code 28297 to APC 5115 (Level 5 Musculoskeletal 
Procedures) for CY 2025. The final CY 2025 payment rate for this code 
can be found in Addendum B of this final rule with comment period.
20. Computational Electrocardiogram (ECG) Analysis System (vMap), CPT 
Code 0897T (APC 5724)
    CPT code 0897T (Noninvasive augmentative arrhythmia analysis 
derived from quantitative computational cardiac arrhythmia simulations, 
based on selected intervals of interest from 12-lead electrocardiogram 
and uploaded clinical parameters, including uploading clinical 
parameters with interpretation and report) utilizes ECG data to 
identify potential arrhythmia focal points for patients. The vMap 
provides augmented information which enables physicians to characterize 
arrhythmia and assists in triage and treatment of abnormal rhythm. CPT 
code 0897T became effective July 1, 2024 and since its establishment, 
the code has been assigned to APC 5724 (Level 4 Diagnostic Tests and 
Related Services) for CY 2024. Because this is a new code for CY 2024, 
there are no claims available. For CY 2025, we proposed to maintain the 
assignment to APC 5724, with a payment rate of $1,012.27.
    Comment: One commenter supported our proposal to assign CPT code 
0897T to APC 5724, due to the resource similarity of this technology to 
other procedures assigned to APC 5724.
    Response: We appreciate the commenter's feedback on CPT code 0897T 
and we agree with the commenter's recommendation to finalize the APC 
assignment.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification for CPT code 0897T. Please 
refer to Table 82 below for the final OPPS APC and status indicator 
assignment for HCPCS code 0897T for CY 2025. We refer readers to 
Addendum B of this final rule with comment period for the payment rates 
for all codes reportable under the OPPS. Addendum B is available via 
the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.106

21. Computed Tomographic Colonography, CPT Code 74263 (APC 5523)
    For CY 2024, we assigned CPT code 74263 (Computed tomographic (CT) 
colonography, screening, including image postprocessing) to status 
indicator ``E1'' indicating that the service was not covered and not 
payable by Medicare under the OPPS. For the CY 2025 OPPS/ASC proposed 
rule, we proposed to assign CPT code 74263 to APC 5522 (Level 2 Imaging 
without Contrast) and a status indicator of ``S'' (Procedure or 
Service, Not Discounted When Multiple. Paid under OPPS; separate APC 
payment) to indicate that the code is separately payable under OPPS 
based on the proposed coverage changes for the colorectal cancer 
screening. (We refer our readers to section X.E. of this final rule 
with comment period for a full discussion of the coverage changes for 
colorectal cancer screening services.)
    For the CY 2025 OPPS/ASC proposed rule, we believed the time and 
resources associated with performing a screening virtual colonoscopy is 
similar to those necessary to furnish a diagnostic virtual colonoscopy, 
which is described by CPT code 74261 (Computed tomographic (ct) 
colonography, diagnostic, including image postprocessing; without 
contrast material). Consequently, we proposed to

[[Page 94084]]

assign CPT code 74263 to APC 5522 (Level 2 Imaging without Contrast) 
based on its clinical and resource homogeneity to CPT code 74261, which 
is assigned to the same clinical APC.
    Comment: We received one comment requesting to reassign CPT code 
74263 to APC 5571 (Level 1 Imaging with Contrast). The commenter is 
concerned that the proposed payment for the screening CT colonography 
is insufficient to cover the costs of providing the service. The 
commenter believed that other services within that APC family such as 
CT abdomen with contrast have greater clinical homogeneity with CPT 
code 74263.
    Response: We thank the commenter for their input. We disagree with 
the commenter that CPT code 74263 should be placed in APC 5571 (Level 1 
Imaging with Contrast) as it is a procedure that is completed without 
contrast. However, we do believe that this newly covered screening test 
for colorectal cancer should be assigned to an APC where payment is 
more comparable to the purported resource costs. Given that any claims 
data in CY 2023 would be from before the service was payable in the 
OPPS, it would be difficult to rely on the claims data to determine the 
APC assignment for this code. Based on our review of the service (CT 
colonography) compared to other services assigned to the Imaging 
without Contrast APC series, we believe CPT code 74176 (Computed 
tomography, abdomen and pelvis; without contrast material) is an 
appropriate crosswalk code for CPT code 74263.
    In summary, after consideration of the public comment, we are 
finalizing our proposal with modification to assign CPT code 74263 to 
APC 5523 (Level 3 Imaging without Contrast) and a status indicator of 
``S'' for CY 2025. The final CY 2025 payment with rates for this code 
can be found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the SI definitions for all codes reported under the 
OPPS. Addenda B and D1 are available via the internet on the CMS 
website.
22. Concurrent Optical and Magnetic Stimulation (COMS) Therapy, CPT 
Codes 0906T and 0907T (APC 5051)
    On June 20, 2023, CMS approved for Medicare coverage the Category B 
Investigational Device Exemption (IDE) study associated with concurrent 
optical and magnetic stimulation (Study Title: \27\ Concurrent Optical 
and Magnetic Stimulation (COMS) for Treatment of Refractory Diabetic 
Foot Ulcer; a Prospective Randomized, Sham-controlled, Double-blinded, 
Pivotal Clinical Trial; NCT number NCT05758545; IDE number G220277 
\28\). For the July 2024 update, the AMA CPT Editorial Panel 
established 0906T (placeholder code XX18T) (Concurrent optical and 
magnetic stimulation therapy, wound assessment and dressing care; first 
application, total wound(s) surface area less than or equal to 50 sq 
cm) and 0907T (placeholder code XX37T) (Concurrent optical and magnetic 
stimulation (COMS) therapy, wound assessment and dressing care; each 
additional application, total wound(s) surface area less than or equal 
to 50 sq cm (List separately in addition to code for primary 
procedure)) for COMS, effective January 1, 2025.
---------------------------------------------------------------------------

    \27\ ClinicalTrials.gov. ``Trial to Evaluate the Safety and 
Effectiveness of Treatment With COMS One Device in Subjects With 
Diabetic Foot Ulcers (Mavericks).'' Accessed September 24, 2024. 
https://clinicaltrials.gov/study/NCT05758545
    \28\ Approved IDE Studies- ``G220277-NCT05758545.'' Accessed 
September 24, 2024. https://www.cms.gov/medicare/coverage/ide/approved-ide-studies/683545095/g220277-nct05758545
---------------------------------------------------------------------------

    For the CY 2025 OPPS/ASC proposed rule, CMS proposed to assign the 
SIs and APCs listed in Table 83 below for the new codes based on the 
clinical characteristics of the procedures.
[GRAPHIC] [TIFF OMITTED] TR27NO24.107

    We note that at the August 28, 2024, HOP Panel Meeting, a 
presentation was made requesting the reassignment to APC 5053 for CPT 
code 0906T (placeholder code XX18T). Based on the information presented 
at the meeting, the Panel made no recommendation on the APC assignment 
for the code.

[[Page 94085]]

    Comment: We received a comment from the manufacturer of COMS on our 
proposed assignments for the codes listed in Table 83. The commenter 
stated that the COMS procedures include extensive wound examination, 
wound bed preparation, and dressing management. With the inclusion of 
standard wound care administered before and after each active COMS 
device treatment, the commenter estimates that the total time required 
for a COMS procedure is 35-50 minutes, during which considerable 
medical supplies and facility resources are utilized. The manufacturer 
suggested that the total resource code for CPT code 0906T is $627, with 
$392 in hospital facility resource costs and $235 specifically for the 
COMS device-associated costs. The commenter maintains that the 
assignment to APC 5051, which has a proposed CY 2025 payment rate of 
$201.14, does not cover the costs of the procedure.
    The commenter claims that CPT code 0906T is sufficiently similar in 
terms of resources and time to CPT codes 11043 (Debridement, muscle 
and/or fascia (includes epidermis, dermis, and subcutaneous tissue, if 
performed); first 20 sq cm or less) and 12044 (Repair, intermediate, 
wounds of neck, hands, feet and/or external genitalia; 7.6 cm to 12.5 
cm), both assigned to APC 5053 ((Level 3 Skin Procedures, proposed CY 
2025 payment rate of $619.63), to warrant the reassignment of CPT code 
0906T to APC 5053. The commenter further stated that assigning these 
procedures to APC 5053 would align with other wound care procedures 
with similar resource costs and procedural time.
    Response: We thank the commenter for their input. We have no claims 
data for CPT code 0906T available for this final rule. However, based 
on this code's similarity to CPT code 0521T (Extracorporeal shock wave 
for integumentary wound healing, including topical application and 
dressing care; initial wound) and CPT code 97610 (Low frequency, non-
contact, non-thermal ultrasound, including topical application(s), when 
performed, wound assessment, and instruction(s) for ongoing care, per 
day) which are both assigned to APC 5051, we continue to believe CPT 
code 0906T has clinical and resource similarities to procedures 
assigned to APC 5051. Therefore, for CY 2025, we are finalizing our 
proposal without modification and assigning CPT code 0906T to APC 5051. 
Table 84 lists the final CY 2025 OPPS payment rate for 0906T and 0907T.
    In summary, after consideration of the public comment that we 
received, we are finalizing the APC and SI assignments for CPT codes 
0906T to APC 5051. As we do every year, we will reevaluate the APC 
assignments for these codes in the next rulemaking cycle. We remind 
hospitals that we review, on an annual basis, the APC assignments for 
all items and services paid under the OPPS. The final payment rates for 
the codes can be found in Addendum B to this final rule with comment 
period. In addition, we refer readers to Addendum D1 of this final rule 
with comment period for the status indicator meanings for all codes 
reported under the OPPS. Both Addendum B and D1 are available via the 
internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.108

[[Page 94086]]

23. Cystourethroscopy With Temporarily Implanted Nitinol Device 
Procedure, HCPCS Code C9769 (APC 5376)
    Cystourethroscopy temporarily implanted nitinol device (iTIND) is a 
minimally invasive surgery to treat bothersome lower urinary tract 
symptoms (LUTS) caused by benign prostate enlargement. The iTIND serves 
to re-model the bladder neck and the prostatic urethra. The HCPCS Code 
C9769 (Cystourethroscopy, with insertion of temporary prostatic 
implant/stent with fixation/anchor and incisional struts) became 
effective October 1, 2020.
    For CY 2025, the proposed OPPS payment rates are based on available 
CY 2023 claims data. For CY 2025, based on our analysis of claims data, 
we found a total of 96 single frequency claims and a geometric mean 
cost of approximately $4,902 for HCPCS code C9769. For CY 2025, we 
proposed to continue to assign HCPCS code C9769 to APC 5376 (Level 6 
Urology and Related Services) with a proposed payment rate of 
approximately $9,209.
    Comment: One commenter pointed out that the AMA CPT created a new 
code, CPT code 5XX05 effective January 1, 2025, to describe the 
cystourethroscopy with iTIND service represented by HCPCS code C9769. 
CPT code 5XX05 (Cystourethroscopy with insertion of temporary device 
for ischemic remodeling (i.e., pressure necrosis) of bladder neck and 
prostate) becomes effective January 1, 2025. The commenter stated that 
CMS may either sunset HCPCS code C9769 and reassign the underlying 
claims to CPT code 5XX05 or maintain HCPCS code C9769 active and assign 
CPT code 5XX05 to a non-payable status in the OPPS.
    Response: We thank the commenter for pointing out that CPT code 
5XX05 (53865) will become effective January 1, 2025. We note that we 
will replace HCPCS code C9769 with CPT code 5XX05 (53865) effective 
January 1, 2025, as well as assign the underlying claims associated 
with HCPCS code C9769 to CPT code 5XX05 (53865). Therefore, for CY 
2025, we are reassigning CPT code 5XX05 (53865) to Level 6 Urology and 
Related Services (APC 5376). We note that we will continue to evaluate 
and monitor the cost for CPT code 5XX05 (53865) for future rulemaking.
    After consideration of the public comment we received, we are 
finalizing our policy to assign CPT code 5XX05 (53865) to APC 5376 
(Level 6 Urology and Related Services) and we will be sunsetting HCPCS 
code C9769. Please refer to Table 85 for the final OPPS APC and status 
indicator assignment for CPT code 5XX05 (53865) for CY 2025. We refer 
readers to Addendum B of this final rule with comment period for the 
payment rates for all codes reportable under the OPPS. Addendum B is 
available via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.109

24. Dental Alveoloplasty and Exostosis Removal Procedures, CDT Codes 
D7320, D7321, and D7471 (APCs 5163, 5164)
    Effective January 1, 2024, we made 229 additional dental codes 
payable under the OPPS when payment and coverage requirements are met, 
as provided in the relevant PFS payment rules regarding Medicare Part B 
payment for dental services (88 FR 81540-82185). For CY 2025, we did 
not propose to make additional dental codes payable under the OPPS. As 
a result, we proposed to continue to assign many dental services to 
non-payable status indicators, including CDT codes D7320 (Alveoloplasty 
not in conjunction with extractions--four or more teeth or tooth 
spaces, per quadrant), D7321(Alveoloplasty not in conjunction with 
extractions--one to three teeth or tooth spaces, per quadrant), and 
D7471 (Removal of lateral exostosis (maxilla or mandible), which we 
proposed to assign to status indicator ``B,'' indicating the service is 
not paid under OPPS, for CY 2025.
    Comment: We received a comment from an association representing 
oral and maxillofacial surgeons requesting that we make CDT codes 
D7320, D7321, and D7471 payable under the OPPS. The commenter stated 
that these codes may contribute to the elimination of an oral or dental 
infection. The commenter explained that alveoloplasty and the removal 
of lateral exostosis are often necessary procedures for medically 
compromised patients undergoing tooth removal prior to radiation 
treatment. Failure to perform these procedures, per the commenter, can 
put patients at risk for osteoradionecrosis following radiation 
therapy. In addition, the commenter explained that not performing an 
alveoloplasty or removing the exostosis when clinically indicated may 
impede the patient's ability to receive a removable prosthesis due to 
the risk of tissue trauma. The procedures may also be required to 
address common sequelae following dental extractions. Per the 
commenters, excluding the services described by CDT codes D7320, D7321, 
and D7471 from OPPS payment places patients at considerable risk and 
diminishes the effectiveness of initial treatments aimed at eliminating 
oral or dental infections. Finally, the commenters stated that there 
are existing CPT codes that describe these procedures. Specifically, 
per the commenters, CPT code 41874 (Alveoloplasty, each quadrant 
(specify)) may describe alveoloplasty procedures and CPT code 41823 
(Excision of osseous tuberosities, dentoalveolar structures) may 
describe the removal of exostosis.
    Response: We appreciate the commenter's input. We note that the 
commenter submitted a similar public comment to the CY 2024 OPPS/ASC 
final rule to assign several codes, including CDT codes D7320, D7321, 
and

[[Page 94087]]

D7471, to APCs for CY 2024. In the CY 2024 OPPS/ASC final rule, we 
agreed to assign to clinical APCs the codes for which we agreed with 
the commenter may be considered medically necessary diagnostic and 
treatment services immediately necessary to eliminate or eradicate an 
oral or dental infection prior to, or contemporaneously with certain 
Medicare-covered medical services specified in the CY 2023 PFS final 
rule (42 CFR 411.15). We also specified we needed more information on 
how certain codes the commenter recommended for APC assignment, 
including CDT codes D7320, D7321, and D7471, were consistent with 
existing dental payment polices.
    The comment to the CY 2025 OPPS/ASC proposed rule provided 
additional information regarding how dental surgical procedures 
including surgical interventions to facilitate tooth eruption, 
alveoloplasty or ridge preparation and removal of lateral exostosis of 
the jaw may contribute to the elimination of an oral or dental 
infection. Based on the additional information provided, we agree with 
the commenter that t CDT codes D7320, D7321 and D7471 should be 
assigned to clinical APCs for CY 2025 as we believe there may be 
instances where these services may be considered medically necessary 
diagnostic and treatment services immediately necessary to eliminate or 
eradicate an oral or dental infection prior to, or contemporaneously 
with, certain Medicare-covered medical services specified in the CY 
2023 and CY 2024 PFS final rules. For CY 2025, we are assigning CDT 
codes D7320 and D7321 to APC 5163 (Level 3 ENT Procedures), based on 
clinical and resource similarities to other alveoloplasty codes 
currently assigned to the same clinical APC, specifically CDT codes 
D7310 (Alveoloplasty in conjunction with extractions--four or more 
teeth or tooth spaces, per quadrant) and D7311 (Alveoloplasty in 
conjunction with extractions--one to three teeth or tooth spaces, per 
quadrant). We are also assigning CDT code D7471 to APC 5164 (Level 4 
ENT Procedures) based on clinical and resource similarities to other 
exostosis services assigned to the same clinical APC, specifically CPT 
codes 21031 (Remove exostosis mandible) and 21032 (Remove exostosis 
maxilla).
    We note that Medicare Part B does not pay for removable prostheses, 
such as dentures. While we understand that services like alveoloplasty 
and the removal of the exostosis can improve the fit and stability of 
dentures and other dental prosthetics as the commenter explained, we 
are not finalizing APC assignments for CPT codes D7320, D7321 and D7471 
so that these services may be furnished in preparation for a patient's 
denture or dental implant, and billing Medicare for that purpose would 
not meet our payment and coverage requirements. As we have consistently 
stated in past rules (87 FR 71879) and quarterly change requests to 
assign new codes to APCs (see, e.g., Pub 100-04 Medicare Claims 
Processing, Transmittal 11937), the fact that a drug, device, procedure 
or service is assigned a HCPCS code and a payment rate under the OPPS 
does not imply coverage by the Medicare program, but indicates only how 
the product, procedure, or service may be paid if covered by the 
program. Medicare Administrative Contractors (MACs) determine whether a 
drug, device, procedure, or other service meets all program 
requirements and conditions for coverage and payment. Accordingly, we 
emphasize that HOPDs would only receive payment for a dental service 
assigned to an APC when the appropriate MAC determines that the service 
meets the relevant conditions for coverage and payment.
    After consideration of the public comment received, for CY 2025, we 
are finalizing clinical APC assignments for CDT codes D7320, D7321, and 
D7471. Please refer to Table 86for the final APC assignments and status 
indicators for CDT codes D7320, D7321, and D7471. We refer readers to 
Addendum D1 to this final rule with comment period for a complete list 
of status indicators and their definitions. Addendum D1 is available 
via the internet on the CMS website.
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25. Digital Mental Health Treatment Devices, HCPCS Codes GMBT1, GMBT2, 
and GMBT3 (APC 5012)
    In CY 2025 Medicare Physician Fee Schedule proposed rule (89 FR 
61956) we stated that we recognize that digital therapeutics may offer 
innovative means to access certain behavioral health care services. We 
noted that given nationwide behavioral health workforce shortages 
combined with increasing demand for behavioral health care services, 
some Medicare beneficiaries may have limited access to these services. 
To that end, we proposed to create three new HCPCS codes for Digital 
Mental Health Treatment Devices (DHMT): GMBT1 (Supply of digital mental 
health treatment device and initial education and onboarding, per 
course of treatment that augments a behavioral therapy plan) for 
furnishing a DMHT device; GMBT2 (First 20

[[Page 94088]]

minutes of monthly treatment management services directly related to 
the patient's therapeutic use of the digital mental health treatment 
(DMHT) device that augments a behavioral therapy plan, physician/other 
qualified health care professional time reviewing data generated from 
the DMHT device from patient observations and patient specific inputs 
in a calendar month and requiring at least one interactive 
communication with the patient/caregiver during the calendar month) and 
GMBT3 (Each additional 20 minutes of monthly treatment management 
services directly related to the patient's therapeutic use of the 
digital mental health treatment (DMHT) device that augments a 
behavioral therapy plan, physician/other qualified health care 
professional time reviewing data generated from the DMHT device from 
patient observations and patient specific inputs in a calendar month 
and requiring at least one interactive communication with the patient/
caregiver during the calendar month). We did not address the new 
proposed DMHT device G-codes or propose APC or Status Indicator 
assignments in the CY 2025 OPPS proposed rule (89 FR 59186).
    The HCPCS codes G0552, G0553, and G0554 are replacing the 
respective placeholder codes GMBT1, GMBT2, and GMBT3.
    Comment: We received several comments on the DHMT codes with 
different suggestions on how these codes be treated in the OPPS. One 
commenter recommended that CMS assign code G0552 (placeholder code 
GMBT1) to APC 1511--New Technology Level 11--with a CY 2025 proposed 
payment rate of $950.50. This commenter went on to say that CMS could 
then update the applicable APC assignment for DMHT devices over time 
after it obtains hospital claims data. Commenters who suggested CMS 
assign HCPCS code G0552 (placeholder code GMBT1) to a New Technology 
APC explained that this approach is similar to ones the agency has 
taken in the past--most notably for reimbursing for the technical/
facility components of remote therapeutic monitoring (RTM) and remote 
physiological monitoring (RPM) codes. One commenter supported 
contractor pricing for HCPCS code G0552 (placeholder code GMBT1). 
Commenters urged CMS to establish a payment for the DMHT device supply 
in the hospital outpatient setting in the CY 2025 OPPS final rule.
    Response: HCPCS codes G0552, G0553, and G0554 (placeholder codes 
GMBT1, GMBT2, and GMBT3) will be effective on January 1, 2025. Based on 
our evaluation of these new codes and in response to commenters' 
requests, we are proposing an interim assignment of HCPCS code G0552 
(placeholder code GMBT1) to status indicator ``V'' (Clinic or Emergency 
Department Visit; Paid under OPPS; separate APC payment) and APC 5012 
(Clinic Visits and Related Services). We are proposing an interim 
assignment of HCPCS code G0553 (placeholder code GMBT2) to status 
indicator ``V'' (Clinic or Emergency Department Visit; Paid under OPPS; 
separate APC payment) and APC 5012 (Clinic Visits and Related 
Services). Finally, we are proposing an interim assignment of HCPCS 
code G0554 (placeholder code GMBT3) to status indictor ``N'' to 
indicate that the code is packaged since it is an add-on service to the 
primary code, and payment for add-on codes is always packaged with 
their associated primary service codes under regulation at 
419.2(b)(18).
    Because we were not able to propose APC and status indicator 
assignments in the CY 2025 OPPS proposed rule, we will be assigning 
HCPCS codes G0552, G0553, and G0554 (placeholder codes GMBT1, GMBT2, 
and GMBT3) comment indicator ``NI'' in Addendum B of this final rule. 
This comment indicator is for new HCPCS codes that will be effective 
January 1, 2025, to indicate that we are assigning them an interim 
status indicator and APC assignment, which is subject to public 
comment. We invite public comment on the interim proposed status 
indicators and APC assignments for HCPCS codes G0552, G0553, and G0554 
(placeholder codes GMBT1, GMBT2, and GMBT3), which will then be 
finalized in the CY 2026 OPPS/ASC final rule with comment period.
    Please refer to Table 87 for the proposed interim APC and status 
indicator assignments for HCPCs codes G0552, G0553, and G0554 
(placeholder codes GMBT1, GMBT2, and GMBT3) for CY 2025. The final CY 
2025 payment rates can be found in Addendum B to this final rule with 
comment period.

[[Page 94089]]

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26. Drug-Coated Balloon for Esophageal and Bowel Strictures, CPT Codes 
0884T, 0885T, and 0886T (APC 5331)
    ProTractX3\TM\ TTS is a drug-coated balloon that is used to treat 
strictures in the esophagus, small intestine, and large intestine. For 
the CY 2025 OPPS proposed rule, we proposed to assign CPT code 0884T 
(Esophagoscopy, flexible, transoral, with initial transendoscopic 
mechanical dilation (e.g., nondrug-coated balloon) followed by 
therapeutic drug delivery by drug-coated balloon catheter for 
esophageal stricture, including fluoroscopic guidance, when performed) 
with no claims data for CY 2025 to APC 5303 (Level 3 Upper GI 
Procedures) with a payment rate of around $3,805804. In addition, we 
proposed to assign both CPT code 0885T (Colonoscopy, flexible, with 
initial transendoscopic mechanical dilation (e.g., nondrug-coated 
balloon) followed by therapeutic drug delivery by drug-coated balloon 
catheter for colonic stricture, including fluoroscopic guidance, when 
performed) and CPT code 0886T (Sigmoidoscopy, flexible, with initial 
transendoscopic mechanical dilation (e.g., nondrug-coated balloon) 
followed by therapeutic drug delivery by drug-coated balloon catheter 
for colonic stricture, including fluoroscopic guidance, when performed) 
with no claims data for CY 2025 to APC 5313 (Level 3 Lower GI 
Procedures) with a payment rate of around $2,742.
    Comment: One commenter, the manufacturer of the ProTractX3\TM\ TTS, 
requested that the procedures described CPT codes 0884T-0886T be 
reassigned to APC 5331 (Complex GI Procedures) with a payment rate of 
around $5,953. The commenter stated that the cost of the ProTractX3\TM\ 
TTS is $3,100. The commenter based their cost estimate for the 
ProTractX3\TM\ TTS on similar drug-coated balloons used for other 
medical procedures. The commenter believes the cost of ProTractX3\TM\ 
TTS should be added to the geometric mean cost of the existing 
procedures that correspond to the procedures described by CPT codes 
0884T-0886T, but do not describe the use of a drug-coated balloon with 
the procedures. These procedures are CPT code 43220 (Esophagoscopy, 
flexible, transoral; with transendoscopic balloon dilation (less than 
30 mm diameter) with a geometric mean cost of around $2,175 that 
corresponds to procedure described by CPT code 0884T; CPT code 45386 
(Colonoscopy, flexible; with transendoscopic balloon dilation) with a 
geometric mean cost of around $1,662 that corresponds to the procedure 
described by CPT code 0885T; and CPT code 45340 (Sigmoidoscopy, 
flexible; with transendoscopic balloon dilation) with a geometric mean 
cost of around $1,518 that corresponds to the procedure described by 
CPT code 0886T. The commenter also noted that additional operating room 
time needed to use the drug-coated balloon adds another $806 to the 
cost of each of these procedures.
    According to the commenter, when the cost of ProTractX3\TM\ TTS 
drug-coated balloon and the cost of the additional operating room time 
to use the drug-coated balloon is added to the geometric cost of CPT 
code 43220, the estimated cost of CPT code 0884T is $6,081. The 
commenter performed similar calculations for CPT code 0885T reporting 
an estimated procedure cost of $5,568, and for CPT code 0886T, the 
commenter reported an estimated procedure cost is $5,424. The commenter 
made the case that these procedure costs are much closer to the payment 
rate of APC 5331 of $5,953, than the payment rate of $3,805 for APC 
5303 where we proposed to assign CPT code 0884T. Likewise, the 
commenter showed that the procedure costs for CPT codes 0885T and 0886T 
are much closer to the payment rate of APC 5331 of $5,953, than the 
payment rate of APC 5313 of $2,742 where we had proposed to assign 
those CPT codes.
    Response: We appreciate the detailed analysis by the commenter 
which demonstrated the additional costs of the ProTractX3\TM\ TTS drug-
coated balloon, as well as the use of the drug-coated

[[Page 94090]]

balloon when compared to the corresponding procedures where no drug-
coated balloon is used. Based on the additional cost data provided by 
the commenter, we agree with the commenter that CPT codes 0884T-0886T 
should be assigned to APC 5331.
    After consideration of the public comments we received, we are 
implementing our proposal with modification to assign CPT codes 0884T, 
0885T, and 0886T to APC 5331 (Complex GI Procedures). Table 88 shows 
the finalized status indicator and APC assignment for all of the 
procedure codes. We refer readers to Addendum B of this final rule for 
the payment rates for all codes reportable under the OPPS. Addendum B 
is available via the internet on the CMS website.
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27. EchoGo Echocardiography Image Processing Service, HCPCS Code C9786 
(APC 5743)
    Effective July 1, 2023, based on a New Technology application 
received by CMS for an echocardiography image processing service, CMS 
established HCPCS code C9786 (Echocardiography image post processing 
for computer aided detection of heart failure with preserved ejection 
fraction, including interpretation and report) and assigned it to APC 
5742 (Level 2 Electronic Analysis of Devices). In CY 2024, CMS 
reassigned HCPCS code C9786 to APC 5743 (Level 3 Electronic Analysis of 
Devices).
    For CY 2025, CMS is deleting HCPCS code C9786 because the CPT 
Editorial Panel established new Category III CPT code, specifically, 
0932T (Noninvasive detection of heart failure derived from augmentative 
analysis of an echocardiogram that demonstrated preserved ejection 
fraction, with interpretation and report by a physician or other 
qualified health care professional) to describe the same service, which 
will be effective January 1, 2025. Because the final CY 2025 CPT code 
number was not available when we published the CY 2025 OPPS/ASC 
proposed rule, the code was listed as placeholder code XX68T in the 
OPPS Addendum B of the CY 2025 OPPS/ASC proposed rule.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to assign CPT 
code XX68T (Noninvasive detection of heart failure derived from 
augmentative analysis of an echocardiogram that demonstrated preserved 
ejection

[[Page 94091]]

fraction, with interpretation and report by a physician or other 
qualified health care professional) to APC 5743 (Level 3 Electronic 
Analysis of Devices), the same APC to which HCPCS code C9786 is 
assigned.
    We note that because both HCPCS code C9786 and CPT code 0932T 
describe the same service, effective January 1, 2025, CMS will delete 
HCPCS code C9786 and only CPT code 0932T will be used to bill for the 
service. We received one public comment in support of our proposal.
    Comment: The commenter noted that the assignment of XX68T to APC 
5743 appropriately reflects the resources required to perform this 
advanced artificial intelligence (AI) analysis, as well as the clinical 
value it provides. and stated that this APC assignment would help 
ensure adequate reimbursement for hospitals, supporting broader access 
to this important diagnostic tool for Medicare beneficiaries. The 
commenter appreciated CMS's consideration of this new technology and 
its potential impact on patient care.
    Response: We thank the commenter for the support.
    In summary, after consideration of the public comment we received, 
we are finalizing our proposal, without modification, to assign CPT 
code 0932T to APC 5743 for CY 2025. We note that the final CY 2025 
payment rate for the code can be found in Addendum B of this final rule 
with comment period. In addition, we refer readers to Addendum D1 of 
this final rule with comment period for the SI meanings for all codes 
reported under the OPPS. Addenda B and D1 are available via the 
internet on the CMS website.
28. Endoscopic Submucosal Dissection (ESD) Procedure, HCPCS Code C9779 
(APC 5303)
    CMS established HCPCS code C9779 (Endoscopic submucosal dissection 
(ESD), including endoscopy or colonoscopy, mucosal closure, when 
performed) effective October 1, 2021, to describe the endoscopic 
submucosal dissection (ESD) performed during an endoscopy or 
colonoscopy. HCPCS code C9779 was established based on a New Technology 
application that was submitted to CMS for New Technology consideration 
under the OPPS. Based on our assessment, we assigned the code to APC 
5313 (Level 3 Lower GI Procedures) because we believed the ESD 
procedure had similar clinical characteristics and resource costs as 
the surgical procedures assigned to APC 5313. We announced the 
assignment to APC 5313 in the October 2021 OPPS quarterly update CR 
(Transmittal 10997, Change Request 12436, dated September 16, 2021). In 
CY 2022, we continued to assign the code to APC 5313.
    For CY 2023, we assigned HCPCS code C9779 to APC 5303 (Level 3 
Upper GI Procedures) after receiving public comments that stated that 
the ESD procedure's resource requirements and geometric mean cost were 
more similar to the resource requirements and geometric mean costs of 
procedures found in APC 5303. Further, commenters noted that the ESD 
procedure is technically more demanding, requires advanced skills to 
perform, and is clinically similar to CPT code 43497 (Lower esophageal 
myotomy, transoral (i.e., peroral endoscopic myotomy [POEM])), which 
was assigned to APC 5303. For CY 2025, we proposed to maintain HCPCS 
code C9779 (with a geometric mean cost (GMC) of around $5,093) in APC 
5303 (Level 3 Upper GI Procedures).
    Comment: We received one comment requesting that we reassign HCPCS 
code C9779 from APC 5303 (Level 3 Upper GI Procedures) to APC 5361 
(Level 1 Laparoscopy and Related Procedures). The commenter states that 
resource requirements for HCPCS code C9779 are well-aligned with other 
procedures in APC 5361, noting that the geometric mean cost of HCPCS 
code C9779 is higher than 4 procedures with significant volume assigned 
to APC 5361. The commenter believes that based on resource cost and 
clinical homogeneity, HCPCS code C9779 should be reassigned to APC 
5361.
    Response: We thank the commenter for their input. We disagree with 
the commenter that HCPCS code C9779 should be assigned to APC 5361. 
Specifically, we do not believe that endoscopic submucosal dissection 
is a laparoscopic procedure and should not be assigned to a 
laparoscopic APC family. Additionally, we believe HCPCS code C9779 is 
appropriately assigned, based on both clinical similarity and resource 
costs, to APC 5303 (Level 3 Upper GI Procedures).
    In summary, after consideration of the public comment, we are 
finalizing our proposal without modification to assign HCPCS code C9779 
to APC 5303 (Level 3 Upper GI Procedures). We note that we review, on 
an annual basis, the APC assignments for all services and items paid 
under the OPPS based on our analysis of the latest claims data. The 
final CY 2025 OPPS payment rate for the code can be found in Addendum B 
to this final rule with comment period. In addition, we refer readers 
to Addendum D1 of this final rule with comment period for the status 
indicator (SI) meanings for all codes reported under the OPPS. Both 
Addendum B and D1 are available via the internet on the CMS website.
29. Esophageal Balloon Distention Study, CPT Code 91040 (APC 5723)
    Esophageal balloon distension studies are used to diagnose 
conditions of the esophagus and may be used to determine the source of 
certain types of pain, such as chest pain. The esophageal balloon study 
is often performed in conjunction with esophagogastroduodenoscopy 
procedures. For CY 2025, we proposed to assigned CPT code 91040 
(Esophageal balloon distension study, diagnostic, with provocation when 
performed) to APC 5723 (Level 3 Diagnostic Tests and Related Services) 
with a proposed payment rate of around $530.
    Comment: We received one public comment requesting that CPT code 
91040 be reassigned from APC 5723 (Level 3 Diagnostic Tests and Related 
Services) to APC 5724 (Level 4 Diagnostic Tests and Related Services), 
stating that the costs of this procedure significantly exceed the APC 
5723 assignment. The commenter suggested that a higher payment would 
more closely align with the costs of the resources utilized to perform 
this test.
    Response: We thank the commenter for their input. We note that the 
geometric mean cost (GMC) for CPT code 91040 is around $1,500, and the 
GMC for APC 5723 is around $537. While this is a significant 
difference, our claims data show that approximately 70 percent of the 
costs for this procedure are made up of higher cost items (equipment, 
drugs, and supplies) that are packaged with the procedure costs.
    In addition, claims data for CY 2025, show that out of all the 
claims billed with CPT code 91040 (3,429 total frequency), only 2.7 
percent (approximately 95) of those claims were billed with only CPT 
code 91040. We believe that in addition to the higher costs of the 
items that are packaged, the costs from the other procedures that are 
performed with CPT code 91040 have driven up the GMC of CPT code 91040.
    Based on review of the service and other services in the same APC 
family, input from CMS medical advisors, and the claims data, we 
believe that the clinical and resource characteristics of CPT code 
91040 are sufficiently like other procedures assigned to APC 5723 and 
should continue to be assigned to APC 5723. For CY 2025, based on our 
evaluation, we are finalizing our proposal, without modification, to 
assign CPT code 91040 to APC 5723.

[[Page 94092]]

The final CY 2025 payment rate for the code can be found in Addendum B 
to this final rule with comment period. In addition, we refer readers 
to Addendum D1 of this final rule with comment period for the SI 
meanings for all codes reported under the OPPS. Addenda B and D1 are 
available via the internet on the CMS website.
30. Esophagogastroduodenoscopy With Optical Endomicroscopy, CPT Code 
43252 (APC 5302)
    An esophagogastroduodenoscopy is a procedure to view the esophagus, 
stomach, and duodenum by means of a flexible endoscope passed through 
the mouth. The provider uses an endomicroscopy system to evaluate the 
structures during this procedure. This procedure is reported with CPT 
code 43252 (Esophagogastroduodenoscopy, flexible, transoral; with 
optical endomicroscopy).
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81685), we reassigned CPT code 43252 from APC 5303 (Level 3 Upper GI 
Procedures) to APC 5302 (Level 2 Upper GI Procedures). In the 2025 
OPPS/ASC proposed rule, we proposed to continue to assign this code to 
APC 5302 with a proposed payment rate of $1,884.11. We received two 
public comments that disagreed with our proposal.
    Comment: Both commenters noted that the significant payment 
reduction for this service could impede access to this service for 
beneficiaries. One commenter noted that just a few hospital outpatient 
facilities are offering this procedure and that over 70 percent of 
cases are performed in ASCs.
    One commenter stated that CPT code 43252 is similar in clinical 
intensity, resource utilization and costs to CPT code 0654T 
(Esophagogastroduodenoscopy, flexible, transnasal; with insertion of 
intraluminal tube or catheter) which is assigned to APC 5303. This 
commenter also claimed that some hospitals are underreporting their 
costs for CPT code 43252. Both commenters requested that CMS reassign 
CPT code 43252 to APC 5303.
    Response: We note that the CY 2025 OPPS payment rates are proposed 
based on available CY 2023 claims data. Based on our latest review of 
the claims data, we found the geometric mean cost of approximately 
$1,839.38for CPT code 43252 based on 246 single claims, is consistent 
with the geometric mean cost of about $1,920.00for APC 5302. We note 
that the geometric mean cost of APC 5303 is approximately 
$3,850.67which is about $2,011 more than the geometric mean cost of CPT 
code 43252.
    In summary, we are finalizing without modification our proposal to 
assign CPT code 43252 to APC 5302 for CY 2025. The CY 2025 final 
payment rate for this code can be found in Addendum B of this final 
rule with comment period.
31. Extracorporeal Shock Wave Lithotripsy (SWL), CPT Code 50590 (APC 
5374)
    Extracorporeal shock wave lithotripsy is a procedure used to break 
up stone in the urinary tract using directed shock wave therapy. Shock 
waves are generated by a lithotripter which is a machine and capital 
equipment for the provider. The procedure is described by CPT code 
50590 (Lithotripsy, extracorporeal shock wave).
    For CY 2025, the OPPS payment rates are proposed based on available 
CY 2023 claims data. For the CY 2025 OPPS/ASC proposed rule, we found a 
total of 26,669 single frequency claims and a geometric mean cost of 
approximately $3,536 for CPT code 50590. For CY 2025, we proposed to 
continue to assign CPT code 50590 to APC 5374 (Level 4 Urology and 
Related Services) with a proposed payment rate of approximately $3,438.
    Comment: One commenter disagreed with our APC assignment of CPT 
code 50590 to APC 5374 (Level 4 Urology and Related Services) and 
suggested that CPT code 50590 should be assigned to APC 5375 (Level 5 
Urology and Related Services) like CPT code 52353 (Cystourethroscopy, 
with ureteroscopy and/or pyeloscopy; with lithotripsy (ureteral 
catheterization is included)) and CPT code 52356 (Cystourethroscopy, 
with ureteroscopy and/or pyeloscopy; with lithotripsy including 
insertion of indwelling ureteral stent (e.g., gibbons or double-j 
type)). The commenter stated that higher payment for CPT codes 52353 
and 52356 has driven service volume toward those codes and away from 
CPT code 50590.
    Response: We thank the commenter for the input. We note that, with 
over 25,000 single claims in CY 2025, the geometric mean cost of CPT 
code 50590 very closely aligns with the geometric mean cost of the APC 
to which it is assigned, APC 5374. Furthermore, CPT code's geometric 
mean cost is well below that of CPT code 52356, which is the primary 
driver of the geometric mean cost of APC 5375.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification for CPT code 50590. Please 
refer to Table 89 for the final OPPS APC and status indicator 
assignment for CPT code 50590 for CY 2025. We refer readers to Addendum 
B of this final rule with comment period for the payment rates for all 
codes reportable under the OPPS. Addendum B is available via the 
internet on the CMS website.
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[[Page 94093]]

32. Female Intraurethral Valve-Pump, Insertion and Replacement, CPT 
Codes 0596T and 0597T (APC 5372)
    For CY 2025, we proposed to assign CPT codes 0596T (Temporary 
female intraurethral valve-pump (i.e., voiding prosthesis); initial 
insertion, including urethral measurement) and 0597T (Temporary female 
intraurethral valve-pump (i.e., voiding prosthesis); replacement) to 
status indicator ``J1'', APC 5372 (Level 2 Urology and Related 
Services) with a proposed payment rate of $675.64.
    Comment: Commenters shared support for the proposal to assign CPT 
code 0597T to APC 5372 and agreed that the proposed assignment to APC 
5372 aligns with costs incurred by hospitals to perform this service.
    Response: We thank commenters for their support.
    Comment: Commenters, the manufacturer and a trade association, 
expressed concerns that the proposed assignment of CPT code 0597T to 
APC 5372 does not sufficiently consider the targeted device cost of 
$1,885 and is not appropriate from a resource perspective, which the 
commenters feel may limit access to the procedures. The commenters 
requested reassignment of CPT code 0596T to APC 5373 (Level 3 Urology 
and Related Services) with a proposed payment rate of $2,074.53 as they 
believe that APC 5373 would be appropriate from a clinical and resource 
perspective and would more appropriately reflect the device costs to 
hospitals to furnish the service.
    Response: We thank the commenter for their comment. For this final 
rule with comment period, we have no claims data for CPT code 0596T for 
OPPS ratesetting purposes. We continue to believe that CPT code 0596T 
shares similar clinical characteristics and resource costs to the 
services assigned to APC 5372.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal, without modification, to continue to 
assign CPT codes 0596T and 0597T to APC 5372 for CY 2025. We refer 
readers to Addendum B of this final rule with comment period for the 
payment rates for all codes reported under the OPPS. In addition, we 
refer readers to Addendum A of this final rule with comment period for 
the status indicator meanings for all codes reported under the OPPS. 
Both Addendum A and Addendum B are available via the internet on the 
CMS website.
33. Fractional Flow Reserve (FFR) With 3D Coronary Mapping, CPT Code 
0523T
    The fractional flow reserve (FFR) with 3D coronary mapping 
procedure is described by CPT code 0523T (Intraprocedural coronary 
fractional flow reserve (ffr) with 3d functional mapping of color-coded 
ffr values for the coronary tree, derived from coronary angiogram data, 
for real-time review and interpretation of possible atherosclerotic 
stenosis(es) intervention (list separately in addition to code for 
primary procedure)). CPT code 0523T became effective January 1, 2019. 
For CY 2024, CPT code 0523T was assigned the status indicator ``N'' 
(packaged).
    Comment: One commenter requested that the packaging exemption for 
SaaS add-on codes policy should be applied to CPT code 0523T. The 
commenter further requested that CPT code 0523T be assigned to status 
indicator ``J1'' (Comprehensive APC) and assigned to APC 5191 (Level 1 
Endovascular Procedures) for CY 2025.
    Response: We note that CPT code 0523T is an add-on code. Add-on 
codes represent services that are always performed in addition to the 
primary service or procedure and must never be reported as a stand-
alone code. As specified under 42 CFR 419.2(b)(18), add-on codes are 
generally packaged under the OPPS, and payment for the codes are 
bundled with the primary codes. Consequently, CPT code 0523T is not 
paid separately under the OPPS, but instead, has its payment packaged 
into the payment for the primary code.
    Under the packaging exemption for SaaS add-on codes (87 FR 72027 to 
72035), we adopted a policy that services represented by SaaS add-on 
codes are not among the ``certain services described by add-on codes'' 
for which we package payment with the related procedures or services 
under the regulation at 42 CFR 419.2(b)(18). Specifically, the SaaS CPT 
add-on codes will be assigned to identical APCs and have the same 
status indicator assignments as their standalone SaaS codes. As such, 
the policy exempts SaaS add-on codes for which a standalone SaaS code 
is separately payable under the OPPS for the identical SaaS service 
furnished without concurrent imaging and described by the standalone 
CPT code. In summary, the packaging exemption for SaaS add-on codes 
policy only exempts SaaS add-on codes when the identical SaaS procedure 
is also represented by a standalone SaaS code and payable under the 
OPPS because the procedure requires the same resources regardless of 
whether it is furnished with or without the imaging service.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification for CPT codes 0523T. 
Please refer to Table 90 below for the final OPPS APC and status 
indicator assignment for CPT codes 0523T for CY 2025. We refer readers 
to Addendum B of this final rule with comment period for the payment 
rates for all codes reportable under the OPPS. Addendum B is available 
via the internet on the CMS website.

[[Page 94094]]

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34. Fractional Flow Reserve Derived From Computed Tomography (FFRCT), 
CPT Code 75580 (APC 5724)
    Fractional Flow Reserve Derived from Computed Tomography (FFRCT), 
also known by the trade name HeartFlow[supreg], is a noninvasive 
diagnostic service that allows physicians to measure coronary artery 
disease in a patient through the use of coronary CT scans. The 
HeartFlow[supreg] service is indicated for clinically stable 
symptomatic patients with coronary artery disease, and, in many cases, 
may avoid the need for an invasive coronary angiogram procedure. 
HeartFlow[supreg] uses a proprietary data analysis process performed at 
a central facility to develop a three-dimensional image of a patient's 
coronary arteries, which allows physicians to identify the fractional 
flow reserve to assess whether patients should undergo further invasive 
testing (that is, a coronary angiogram).
    HeartFlow[supreg] is currently described by CPT code 75580 
(Noninvasive estimate of coronary fractional flow reserve (FFR) derived 
from augmentative software analysis of the data set from a coronary 
computed tomography angiography, with interpretation and report by a 
physician or other qualified health care professional). On January 1, 
2024, CPT code 75580 replaced CPT code 0503T ((Noninvasive estimated 
coronary fractional flow reserve (ffr) derived from coronary computed 
tomography angiography data using computation fluid dynamics 
physiologic simulation software analysis of functional data to assess 
the severity of coronary artery disease; analysis of fluid dynamics and 
simulated maximal coronary hyperemia, and generation of estimated ffr 
model).
    HeartFlow[supreg] was assigned to APC 5724 (Level 4 Diagnostic 
Tests and Related Services) for CY 2024, and we proposed for CY 2025 to 
continue to assign HeartFlow[supreg] (CPT code 75580) to APC 5724.
    Comment: We received one comment stating that several of the 
Medicare Administrative Contractors (MACs) have an edit in place that 
prohibits the use of the cardiology revenue code (0480) when billing 
CPT code 75580 as evidenced by claims denials with ``Invalid Revenue 
Code'' errors. The commenter asked that we provide guidance that 
explicitly allows CPT code 75580 to be billed with any appropriate 
revenue code just as we did for cardiac CT services. (See January 2024 
Update (Transmittal 12421, Change Request 13488, dated December 21, 
2023.)
    Response: Based on the information the commenter provided, we were 
able to identify the outdated edit and remove it. Facilities may bill 
CPT 75580 with any appropriate revenue code. As a reminder, it is 
longstanding CMS policy that hospital outpatient facilities are 
responsible for reporting the appropriate cost centers and revenue 
codes on claims. As stated in section 20.5 in Chapter 4 (Part B 
Hospital) of the Medicare Claims Processing Manual, CMS ``does not 
instruct hospitals on the assignment of HCPCS codes to revenue codes 
for services provided under OPPS since hospitals' assignment of cost 
vary. Where explicit instructions are not provided, HOPDs should report 
their charges under the revenue code that will result in the charges 
being assigned to the same cost center to which the cost of those 
services are assigned in the cost report.'' In addition to referring 
readers to the Medicare Claims Processing Manual, we will be providing 
public education and instruction through the CMS Medicare Learning 
Network (MLN).
    Comment: Multiple commenters supported our proposal to continue to 
assign CPT code 75580 to APC 5724 for CY 2025.
    Response: We thank the commenters for their input and for their 
support of our policy.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification. We refer readers to 
Addendum B of this final rule with comment period for the payment rates 
for all codes reportable under the OPPS. Addendum B is available via 
the internet on the CMS website.
35. Gastric Electrophysiology Mapping With Simultaneously Validated 
Patient System Profiling (GEMS) Service, CPT Code 0868T (APC 5723)
    Effective July 1, 2023, based on a New Technology application 
received by CMS for the GEMS service, CMS established HCPCS code C9787 
(Gastric electrophysiology mapping with simultaneous patient symptom 
profiling) and assigned it to APC 5723 (Level 3 Diagnostic Tests and 
Related Services). Effective July 1, 2024, HCPCS code C9787 was deleted 
and replaced by CPT code 0868T (High-resolution gastric 
electrophysiology mapping with simultaneous patient symptom profiling, 
with interpretation and report). CMS assigned CPT code 0868T to APC 
5723, the same APC to which its predecessor code, HCPCS code C9787, was 
assigned. For CY 2025, CMS proposed to continue to assign CPT code 
0868T to APC 5723 with a proposed payment rate of $527.44 for CY 2025.
    Comment: We received several comments, including a comment from the 
manufacturer, requesting that we reassign CPT code 0868T from APC 5723 
to APC 1520 (New Technology--Level 20 ($1801-$1900)) with a payment 
rate of $1850.50, based on the purported cost of the technology and the

[[Page 94095]]

fact that it is a new service with a low volume of claims. The 
commenters explained that the proposed payment rate for CPT code 0868T 
would not cover the costs of the device, supplies, and clinical staff 
expenses. One commenter explained that the available claims data 
supports the conclusion that the proposed APC placement is inadequate. 
Specifically, the commenter pointed to one single frequency claim that 
shows a geometric mean cost of approximately $1,800 to demonstrate that 
CPT code 0868T should be assigned to APC 1520. The commenters suggested 
that if CMS did not agree to finalize an assignment to APC 1520, they 
would then suggest that CPT code 0868T be assigned to APC 5724 (Level 4 
Diagnostic Tests and Related Services) with a proposed payment rate of 
approximately $1,000 or APC 5302 (Level 2 Upper GI Procedures) with a 
proposed payment rate of approximately $1,800 for CY 2025. Finally, one 
commenter drew differences between the clinical characteristics of CPT 
code 0868T and the other services assigned to APC 5723, including CPT 
code 0799T. For example, the commenter stated that CPT code 0799T 
involves a low-resolution electrode patch generating data comparable to 
traditional legacy electrogastrography, whereas C9787/0868T uses a 
high-resolution 64-lead array and sophisticated software to provide 
detailed multimodal diagnostic data.
    Response: We appreciate the commenters' input. We disagree with the 
APC assignments recommended by commenters based on the purported costs 
of the service. Since we issued the proposed rule, additional claims 
data have been processed which, we believe, confirm that the proposed 
APC assignment is appropriate for HCPCS code C9787/CPT code 0868T for 
CY 2025. Our analysis of the available claims data demonstrates that 
the geometric mean cost for HCPCS code C9787 is approximately $310 
based on 5 single frequency claims, which is below the geometric mean 
cost of $530 for APC 5723, but within the range of geometric mean costs 
of services assigned to APC 5723 which vary from approximately $150 to 
$2000. We note that given the effective date of payment, we have only 
one year of claims data for HCPCS code C9787/CPT code 0868T with an 
extremely low level of single frequency claims.
    We will continue to monitor the claims data and adjust the APC 
placement for CPT code 0868T, based on the claims data in future 
rulemaking. Additionally, based on our review of the technology used as 
part of the service, input from CMS medical advisors, and review of all 
other information available to us, we continue to believe that CPT code 
0868T is similar to services assigned to APC 5723. Based on the 
resource and clinical similarities to other services assigned to APC 
5723, including CPT code 0779T (Gi myoelectrical actv study), as well 
as the available claims data, we believe that our proposal to assign 
CPT code 0868T is appropriate for CY 2025.
    After consideration of the public comments, we are finalizing our 
proposal without modification to continue to assign CPT code 0868T to 
APC 5723. The final CY 2025 payment rate for the code can be found in 
Addendum B to this final rule with comment period. We also refer 
readers to Addendum D1 of this final rule with comment period for the 
SI meanings for all codes reported under the OPPS. Addenda B and D1 are 
available via the internet on the CMS website.
36. Hernia Repair Procedures, CPT Codes 49593, 49595, and 49615 (APCs 
5342 and 5361)
    Effective January 1, 2023, the AMA created new abdominal hernia 
repair CPT codes 49593 (Repair of anterior abdominal hernia(s) (i.e., 
epigastric, incisional, ventral, umbilical, spigelian), any approach 
(i.e., open, laparoscopic, robotic), initial, including implantation of 
mesh or other prosthesis when performed, total length of defect(s); 3 
cm to 10 cm, reducible), 49595 (Repair of anterior abdominal hernia(s) 
(i.e., epigastric, incisional, ventral, umbilical, spigelian), any 
approach (i.e., open, laparoscopic, robotic), initial, including 
implantation of mesh or other prosthesis when performed, total length 
of defect(s); greater than 10 cm, reducible), and 49615 (Repair of 
anterior abdominal hernia(s) (i.e., epigastric, incisional, ventral, 
umbilical, spigelian), any approach (i.e., open, laparoscopic, 
robotic), recurrent, including implantation of mesh or other prosthesis 
when performed, total length of defect(s); 3 cm to 10 cm, reducible). 
For CY 2023, we assigned these codes to APC 5341 (Level 1 Abdominal/
Peritoneal/Biliary and Related Procedures). For CY 2025, we proposed to 
reassign these codes to APC 5342 (Level 2 Abdominal/Peritoneal/Biliary 
and Related Procedures) to resolve a 2-times violation for APC 5341.
    Comment: We received two comments supporting the reassignment of 
CPT codes 49593, 49595, and 49615 to APC 5342 for CY 2025.
    Response: We thank the commenters for their support.
    Comment: The two commenters recommended that we also reassign CPT 
codes 49650 (Laparoscopy, surgical; repair initial inguinal hernia) and 
49651 (Laparoscopy, surgical; repair recurrent inguinal hernia) from 
APC 5361 (Level 1 Laparoscopy and Related Services) to APC 5342. The 
commenters noted that with the addition of the three ventral hernia 
procedures, APC 5342 would now contain both open and laparoscopic 
surgical procedures.
    Response: We thank the commenter for their suggestions. After 
further clinical review, we continue to believe that CPT codes 49650 
and 49651 are still appropriately assigned to APC 5361 based on 
clinical and resource homogeneity to the procedures in the APC 5361.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification to reassign CPT codes 
49593, 49595 and 49615 to APC 5342 (Level 2 Abdominal/Peritoneal/
Biliary and Related Procedures). We are also finalizing our proposal 
without modification to continue to assign CPT codes 49650 and 49651 to 
APC 5361 (Level 1 Laparoscopy and Related Services). Table 91 shows the 
finalized status indicator and APC assignment for the procedure code. 
We refer readers to Addendum B of this final rule with comment period 
for the payment rates for all codes reportable under the OPPS. Addendum 
B is available via the internet on the CMS website.

[[Page 94096]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.115

37. Imaging of Retina for Detection or Monitoring of Disease, CPT Code 
92229 (APC 5733)
    CPT code 92229 (Imaging of retina for detection or monitoring of 
disease; point-of-care autonomous analysis and report, unilateral or 
bilateral) is performed to screen patients with diabetes for signs of 
diabetic retinopathy and other eye diseases. The code was established 
on January 1, 2021 and assigned to APC 5733 (Level 3 Minor Procedures). 
The code was assigned to Level 3 Minor Procedures because the service 
had clinical and resource similarity to long-established CPT code 92227 
(Imaging of retina for detection or monitoring of disease; with remote 
clinical staff review and report, unilateral or bilateral) which also 
is assigned to APC 5733 (Level 3 Minor Procedures).
    In the CY 2023 claims data, there were 370 (single frequency) 
claims for CPT code 92229 and the geometric mean for the service was 
$28.53. For CY 2025, we proposed to maintain CPT code 92229 in APC 5733 
(Level 3 Minor Procedures) and wait for more claims data to be 
available before adjusting the payment rates for this service.
    Comment: We received several comments supporting our decision to 
maintain CPT 92229 in APC 5733 (Level 3 Minor Procedures). Commenters 
noted that this service provides potentially sight saving technology to 
beneficiaries with diabetes in rural and underserved communities.
    Response: We thank the commenters for their input.
    Comment: We received one comment requesting that CPT code 92229 be 
removed from the Deficit Reduction Act (DRA) cap.
    Response: We thank the commenter for their input, but we note that 
this comment is out of scope for purposes of this CY 2025 OPPS/ASC 
final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification to assign CPT code 92229 
to APC 5733. We refer readers to Addendum B of this final rule with 
comment period for the payment rates for all codes reportable under the 
OPPS. Addendum B is available via the internet on the CMS website.
38. Implantable Cardiac Alert System, CPT Codes 0525T and 0527T (APCs 
5224 and 5222)
    The implantable cardiac alert system is a cardiac monitoring and 
alerting device to detect acute coronary syndrome (ACS) events and 
alerts the patient to seek urgent medical attention. The CPT codes 
0525T (Insertion or replacement of intracardiac ischemia monitoring 
system, including testing of the lead and monitor, initial system 
programming, and imaging supervision and interpretation; complete 
system (electrode and implantable monitor)) and 0527T (Insertion or 
replacement of intracardiac ischemia monitoring system, including 
testing of the lead and monitor, initial system programming, and 
imaging supervision and interpretation; implantable monitor only) 
became effective January 1, 2019.
    For CY 2025, the OPPS payment rates are proposed based on available 
CY 2023 claims data. For the CY 2025 OPPS/ASC proposed rule, based on 
our

[[Page 94097]]

analysis of claims data, we found a total of 15 single frequency claims 
and an estimated geometric mean cost of $3,244 for CPT code 0525T and a 
total of three single frequency claims and an estimated geometric mean 
cost of $3,433 for CPT code 0527T. For CY 2025, we proposed to continue 
to assign CPT code 0525T to Level 3 Pacemaker and Similar Procedures 
(APC 5223) and CPT code 0527T to Level 2 Pacemaker and Similar 
Procedures (APC 5222).
    Comment: One Commenter disagreed with our APC's assignments of CPT 
codes 0525T and 0527T, suggesting that we did not account for the cost 
of the device represented by HCPCS code C1833 in the proposed rule. The 
commenter also stated that we erroneously assigned the status indicator 
of ``H'' to HCPCS code C1833 in the CY 2025 OPPS/ASC proposed rule. The 
commenter noted the Transitional Pass-Through period for C1833 expires 
December 31, 2024, and that HCPCS code C1833 should have been assigned 
the status indicator of ``N'' for CY 2025.
    Additionally, the commenter argued that the proposed payment rates 
for CPT codes 0525T and 0527T are insufficient to cover the procedures' 
cost because we did not account for the device cost in the proposed CY 
2025 payment rates. They claimed that the procedures represented by 
0525T and 0527T are similar procedures and should both be assigned to 
APC 5231 (Level 1 ICD and Similar Procedures).
    Response: We appreciate the commenter pointing out that HCPCS code 
C1833's Transitional Pass-through Status expires December 31, 2024. 
Therefore, we are revising the HCPCS code C1833's status indicator to 
``N'' (packaged) for CY 2025.
    We agree with the commenter the CY 2025 proposed APC assignments 
for 0525T and 0527T erroneously omitted the device cost (HCPCS code 
C1833) associated with these procedures. With the updated final rule 
data including the HCPCS code C1833 device cost, the revised geometric 
mean cost for CPT code 0525T is approximately $15,167 and the geometric 
mean cost for 0527T is approximately $7,242. Therefore, we believe an 
appropriate APC assignment for CPT code 0525T would be APC 5224 (Level 
4 Pacemaker and Similar Procedures); and an appropriate assignment for 
CPT code 0527T would be APC 5222 (Level 2 Pacemaker and Similar 
Procedures).
    We disagree with the commenter that CPT code 0525T is similar 
clinically and in resource costs to CPT code 0527T. We note that CPT 
code 0525T is for insertion of the complete system while CPT code 0527T 
is for insertion of the implantable monitor only.
    After consideration of the public comments we received, we are 
finalizing a revision to our proposed APC assignment for CPT code 0525T 
and assigning this code to APC 5224 (Level 4 Pacemaker and Similar 
Procedures). We are finalizing the assignment of CPT code 0527T to APC 
5222 (Level 2 Pacemaker and Similar Procedures) as proposed. Please 
refer to Table 92 for the final OPPS APC and status indicator 
assignment for CPT codes 0525T, 0527T and C1833 for CY 2025. The final 
CY 2025 payment rates can be found in Addendum B to this final rule 
with comment period via the internet on the CMS website.

[[Page 94098]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.116

39. Implantable Glucose Monitoring System, CPT Codes 0446T and 0448T 
(APC 5054)
    In 2017, the AMA CPT Editorial Panel established CPT codes 0446T 
and 0448T. CPT code 0446T (Creation of subcutaneous pocket with 
insertion of implantable interstitial glucose sensor, including system 
activation and patient training) and CPT code 0448T (Removal of 
implantable interstitial glucose sensor with creation of subcutaneous 
pocket at different anatomic site and insertion of new implantable 
sensor, including system activation) describe an implantable glucose 
sensor for diabetic patients. The current codes are used to describe 
both 90-day and 180-day sensors. The FDA recently approved a 365-day 
sensor that is not currently on the market.
    For CY 2025, we proposed to maintain both CPT codes in APC 5054 
(Level 4 Skin Procedures) with a status indicator of ``T'' (Procedure 
or Service, Multiple Procedure Reduction Applies; Paid under OPPS; 
separate APC payment.).
    Comment: We received one comment from the manufacturer requesting 
that we reassign CPT codes 0446T and 0448T from APC 5054 (Level 4 Skin 
Procedures) to APC 1531 (New Technology--Level 31 ($6501-$7000)) with a 
payment of $6,750.50 to reflect the increased expense of the 
implantable sensor that has quadrupled the life of the 90-day sensor. 
The manufacturer reiterated the value of the longer sensor duration, 
including fewer insertion and removal procedures and increased 
adherence to therapy.
    Response: We appreciate the request of the commenter and understand 
the implicated value that a longer life sensor brings to Medicare 
beneficiaries. Because the current CPT codes do not designate the 
increased battery life of the sensor, we believe it is more appropriate 
to create 2 new HCPCS G codes effective January 1, 2025 to describe the 
implantable interstitial glucose sensor with a 365-day battery life 
than to make APC reassignments and potentially overpay for the current 
codes that could be used to describe the 90-day, 180-day, or 365-day 
sensor. Specifically, we created the following G codes to describe the 
365-day sensor:
     G0564 (Creation of subcutaneous pocket with insertion of 
365 day implantable interstitial glucose sensor, including system 
activation and patient training); and
     G0565 (Removal of implantable interstitial glucose sensor 
with creation of subcutaneous pocket at different anatomic site and 
insertion of new 365 day implantable sensor, including system 
activation).
    The manufacturer asserts the supply costs of the 365-day system 
will be equivalent to two 180-day systems or four 90-day systems. While 
we agree that there would be inherently increased costs to the new 
technology of a 365-day system, we do not agree that those costs would 
be 4 times more than the 90-day system.
    After reviewing the device and procedure and obtaining input from 
our medical officers, we are assigning HCPCS codes G0564 and G0565 to 
APC 1561 (New Technology--Level 24 ($3001-$3500)) with a payment rate 
of $3,250.50.

[[Page 94099]]

    We currently have very little claims information available for CPT 
codes 0446T and 0448T as there has only been 1 single frequency claim 
for CPT 0448T (with a geometric mean cost of around $1,320) and no 
single frequency claims for 0446T. The geometric mean cost for APC 5054 
(Level 4 Skin Procedures) is around $1,850 so we believe APC 5054 is an 
appropriate assignment. We will continue to monitor these codes as we 
gather adequate claim information and other relevant clinical 
information that would be useful in determining appropriate APC 
assignments.
    In summary, after consideration of the public comment, we are 
finalizing our proposal, without modification, to assign CPT code 0446T 
and 0448T to APC 5054 (Level 4 Skin Procedures) for CY 2025 and 
finalizing APC assignments for G0564 and G0565. The final CY 2025 
payment rate for these codes can be found in Addendum B to this final 
rule with comment period. In addition, we refer readers to Addendum D1 
of this final rule with comment period for the SI meanings for all 
codes reported under the OPPS. Addenda B and D1 are available via the 
internet on the CMS website.
40. Integrated Sacral Neurostimulators, CPT Code 0786T
    Effective January 1, 2024, the CPT Editorial Panel separated 
integrated from non-integrated (i.e., traditional) sacral 
neurostimulator procedure by establishing new CPT code, 0786T to report 
procedures using integrated sacral neurostimulator devices, while CPT 
code 64590 was updated to reflect the use of traditional technology:
     0786T: Insertion or replacement of percutaneous electrode 
array, sacral, with integrated neurostimulator, including imaging 
guidance, when performed.
     64590: Insertion or replacement of peripheral, sacral, or 
gastric neurostimulator pulse generator or receiver, requiring pocket 
creation and connection between electrode array and pulse generator or 
receiver
    In the CY 2025 OPPS/ASC proposed rule Addendum B, we proposed to 
continue to assign CPT code 0786T to APC 5463 (Level 3 Neurostimulator 
and Related Procedures) with a proposed payment rate of $13,029.81. We 
received several comments related to the proposal.
    Comment: One commenter disagreed with our proposal. The commenter 
stated that the proposed assignment for this technology would reduce 
reimbursement and limit access for Medicare and Medicaid patients 
seeking care in the outpatient surgery setting. The commenter thought 
that this decision may have been based on the concept that the Neuspera 
system is an integrated system, requiring no intra-operative 
connection. Although physical connections are not required, they stated 
a considerable amount of time and effort is expended on creating 
wireless connections and re-positioning the device once partially 
deployed.
    One commenter asserted that the integrated sacral neuromodulation 
system (SNM) represents a disruptive technology that should improve 
patient satisfaction, with similar efficacy, lower risk, and as a ``one 
and done'' procedure that will reduce the need for 2-3 devices per 
patient to only one Neuspera devices per patient. The commenter stated 
the lead placement takes the majority of the procedure time, while the 
implantable pulse generator (IPG) placement requires very little time 
and expertise. Given their claim that the integrated system is nearly 
identical to the current non-integrated systems, they requested it 
should be paid on par with the current non-integrated system.
    Other commenters maintained that the integrated SNM system 
anticipated to reach the market in 2025 has time and resources 
substantially equivalent to those for traditional SNM systems. Given 
this, they noted keeping CPT code 0786T in a lower APC with a lower 
device-intensive designation than traditional SNM systems will create 
an economic barrier and restrict hospitals and ASCs from offering this 
new less invasive form of SNM to patients.
    Several commenters urged CMS to reassign CPT code 0786T to APC 5464 
(Level 4 Neurostimulator and Related Procedures) to reflect the most 
accurate procedure and cost information related to this novel sacral 
neuromodulation system. They stated that there is a high degree of 
parity and similarity in time, work, staffing, costs, and resources 
required for the Neuspera procedure, compared to traditional sacral 
neuromodulation systems, which are currently assigned to APC 5464. The 
commenters also pointed out that if CMS is not willing to reassign CPT 
code 0786T to APC 5464, status indicator ``E1'' may provide CMS the 
ability to postpone APC assignment until there is FDA cleared 
technology to make a decision. Currently no FDA approved ``integrated'' 
sacral neuromodulation system exists.
    Response: We proposed to continue to assign CPT code 0786T to APC 
5463 for CY 2025, based on input from our clinicians and based on our 
evaluation of the code. We inadvertently listed Neuspera integrated 
sacral nerve stimulation system as receiving FDA-approval. However, it 
is still pending FDA approval and therefore, we agree with most of the 
commenters who recommended to reassign CPT code 0786T to status 
indicator ``E1'' until FDA approval has been received.
    In summary, after consideration of the public comments that we 
received, we are finalizing our proposal with modification and are 
reassigning CPT code 0786T from APC 5463 to status indicator ``E1'' 
(Not covered by any Medicare outpatient benefit category; Statutorily 
excluded by Medicare; Not reasonable and necessary; Not paid by 
Medicare when submitted on outpatient claims (any outpatient bill 
type)) for CY 2025 because this service is not yet FDA approved.
    We refer readers to Addendum D1 of this final rule with comment 
period for the status indicator (SI) meanings for all codes reported 
under the OPPS. Addendum D1 is available via the internet on the CMS 
website.
41. Laparoscopic Appendectomy, CPT Code 44970 (APC 5361)
    CPT code 44970 (Laparoscopy, surgical, appendectomy) describes the 
procedure for laparoscopic appendectomy. Using CY 2023 claims data, CPT 
code 44970 had a geometric mean cost of $6,499.86 in the CY 2025 OPPS/
ASC proposed rule. For CY 2025, we believed this was still 
appropriately assigned to APC 5361 (Level 1 Laparoscopy and Related 
Services), which had a proposed payment rate of $5,798.13. Therefore, 
we proposed to continue assigning CPT code 44970 to APC 5361.
    Comment: We received one comment requesting that we reassign CPT 
code 44970 to APC 5342 (Level 2 Abdominal/Peritoneal/Biliary and 
Related Procedures). The commenter argued that CPT code 44970 had 
clinical homogeneity and resource utilization similar to CPT code 44950 
(Appendectomy), which is currently assigned to APC 5342.
    Response: We thank the commenter for their input. CPT code 44970 
has an updated GMC of $6,404.30 in the final rule data. While this is 
closer to the payment rate for APC 5342, after clinical review of this 
procedure, we did not find APC 5342 to be the clinically appropriate 
APC family for CPT code 44970. We continue to believe that this 
procedure belongs in the Laparoscopy and Related Procedures family.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification to continue to assign CPT 
code 44970 to APC 5361 (Level 1 Laparoscopy and Related Services). 
Table 93 shows the

[[Page 94100]]

finalized status indicator and APC assignment for the procedure code. 
We refer readers to Addendum B of this final rule with comment period 
for the payment rates for all codes reportable under the OPPS. Addendum 
B is available via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.117

42. Litholapaxy Procedure, CPT Code 52318 (APC 5374)
    Litholapaxy is a procedure that involves crushing bladder stones 
and extracting the fragmented stones. CPT code 52318 (Litholapaxy: 
crushing or fragmentation of calculus by any means in bladder and 
removal of fragments; complicated or large (over 2.5 cm)) became 
effective January 1, 1985.
    For CY 2025, OPPS payment rates are proposed based on available CY 
2023 claims data. For CY 2025, based on our analysis of claims data, we 
found a total of 4,215 single frequency claims and a geometric mean 
cost of approximately $4,298 for CPT code 52318. For CY 2025, we 
proposed to continue to assign CPT code 52318 to Level 4 Urology and 
Related Services (APC 5374) with a proposed payment rate of 
approximately $3,438.
    Comment: One commenter requested the APC assignment of CPT code 
52318 to Level 5 Urology and Related Services (APC 5375). The commenter 
stated that the complexity and resources required for CPT code 52318 is 
comparable to CPT code 52601 (Transurethral electrosurgical resection 
of prostate, including control of postoperative bleeding, complete 
(vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or 
dilation, and internal urethrotomy are included)), which is assigned to 
APC 5375. Moreover, the commenter alleged that CPT code 52318 is two 
times greater than the lowest geometric mean of CPT code 54670 (Suture 
or repair of testicular injury) in APC 5375, which is a two times rule 
violation.
    Response: We appreciate the commenter's recommendation regarding 
the APC assignment of CPT code 52318, but we disagree that the 
complexity and resources required for CPT code 52318 are comparable to 
CPT code 52601. Based on the claims data, we believe that CPT code 
52318 fits more appropriately in APC 5374, rather than in APC 5375, 
based on resource cost and clinical similarity to the procedures in APC 
5374.
    Furthermore, CPT codes 52318 and 54670 are currently assigned to 
APC 5374 (Level 4 Urology and Related Services). We note that APC 5374 
does not currently have a 2 times rule violation in the final rule 
data. In addition, both CPT codes 52318 and 54670 do not meet the 
requirements for cost significance for 2 times rule violation purposes, 
under the requirements described in section III.B.2. of this final rule 
with comment period. We have reviewed the codes' geometric mean cost 
based on the available CY 2023 claims data within APC 5374 and believe 
that their current APC assignment continues to be appropriate.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification for CPT code 52318 to be 
reassigned to APC 5374 (Level 4 Urology and Related Services). Please 
refer to Table 94 for the final OPPS APC and status indicator 
assignment for CPT code 52318 for CY 2025. We refer readers to Addendum 
B of this final rule with comment period for the payment rates for all 
codes reportable under the OPPS. Addendum B is available via the 
internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.118

43. LIXELLE[supreg] Apheresis
    LIXELLE[supreg] [beta]2-microglobulin Apheresis Column is indicated 
for use in the treatment of dialysis-related amyloidosis (DRA), a 
disease that affects people with end-stage renal disease (ESRD). DRA is 
a metabolic disorder from the failure of the kidney to filter and 
remove [beta]2-microglobulin, typically from chronic hemodialysis 
(typically 5 years or longer). The LIXELLE[supreg] device is used in an 
apheresis procedure that selectively removes [beta]2-microglobulin from 
circulating blood and is used pursuant to a physician prescription in 
conjunction with hemodialysis. It is intended to be used at each 
hemodialysis session (that is, frequency

[[Page 94101]]

of treatment is expected to be 3 times per week). In March 2015, FDA 
approved LIXELLE[supreg] as a Class III Humanitarian Use Device (HUD) 
with an approved Humanitarian Device Exemption (HDE). For CY 2025, 
there are currently no specific HCPCS or CPT codes that represent the 
LIXELLE[supreg] apheresis service.
    Comment: We received one comment, from the manufacturer, requesting 
CMS provide reimbursement for LIXELLE[supreg] apheresis procedure under 
the ESRD payment system or the OPPS to benefit patients with DRA. 
Specifically, the commenter requested that CMS provide separate payment 
under the OPPS for the procedure, and offered the following options:
    (1) establish a new HCPCS C code or G code for the LIXELLE[supreg] 
apheresis procedure and assign the code to APC 5242 (Level 2 Blood 
Product Exchange and Related Services); or
    (2) pay separately for the apheresis procedure used with the 
LIXELLE[supreg] device through CPT code 36516 (Therapeutic apheresis 
with extracorporeal immunoadsorption, selective adsorption or selective 
filtration and plasma reinfusion), assigned to APC 5243 (Level 3 Blood 
Product Exchange and Related Services) for CY 2025, and require the use 
of a modifier or add-on code when the LIXELLE[supreg] apheresis 
procedure is billed to reduce the procedure payment APC 5242 (Level 2 
Blood Product Exchange and Related Services) payment rate; or
    (3) allow separate payment for the dialysis performed as part of 
LIXELLE[supreg] apheresis procedure through HCPCS code G0257 
(Unscheduled or emergency dialysis treatment for an ESRD patient in a 
hospital outpatient department that is not certified as an ESRD 
facility), which is assigned to APC 5401 (Dialysis) for CY 2025 and 
require the use of a modifier or add-on code to provide additional 
payment beyond that provided for APC 5401; or
    (4) assign CPT 90947 (Dialysis procedure other than hemodialysis 
(e.g., peritoneal dialysis, hemofiltration, or other continuous renal 
replacement therapies) requiring repeated evaluations by a physician or 
other qualified health care professional, with or without substantial 
revision of dialysis prescription) to APC 5242 (Level 2 Blood Product 
Exchange and Related Services).
    The commenter also noted the FDA has approved a clarification to 
the Instructions for Use (IFU) since last year's comment and 
rulemaking. The IFU for LIXELLE[supreg] expands the list of personnel 
who can supervise the patient while connected to the extracorporeal 
system to include not only a physician, but a qualified health care 
professional such as a physician assistant, nurse practitioner, or 
registered nurse who is qualified to supervise hemodialysis procedures.
    Response: We appreciate the thoughtful recommendations and will 
consider them for future rulemaking. We note this complex, ongoing 
issue is still under consideration and continues to merit a thorough 
evaluation to ensure an appropriate Medicare benefit category and 
payment pathway for the service is determined.
44. Low Ejection Fraction AI-ECG Service, CPT Codes 0764T and 0765T 
(APC 5734)
    The low ejection fraction AI-ECG Service is intended to aid in 
screening for Left Ventricular Ejection Fraction (LVEF) less than or 
equal to 40 percent in adults at risk for heart failure. The low 
ejection fraction AI-ECG Service is an algorithmic SaaS service that 
aims to detect hidden diseases using algorithms to enhance and improve 
interventional procedures through real-time AI insights. CPT codes 
0764T (Assistive algorithmic electrocardiogram risk-based assessment 
for cardiac dysfunction (e.g., low ejection fraction, pulmonary 
hypertension, hypertrophic cardiomyopathy); related to concurrently 
performed electrocardiogram (List separately in addition to code for 
primary procedure)) and 0765T (Assistive algorithmic electrocardiogram 
risk-based assessment for cardiac dysfunction (e.g., low ejection 
fraction, pulmonary hypertension, hypertrophic cardiomyopathy); related 
to previously performed electrocardiogram) became effective January 1, 
2023 and were assigned to status indicator ``E1'' (Not paid by Medicare 
when submitted on outpatient claims). For CY 2025, we proposed that CPT 
codes 0764T and 0765T continue to be assigned to status indicator E1.
    Comment: One Commenter provided documentation that AI-ECG has been 
FDA approved on September 28, 2023. The commenter requested separate 
payment for the low ejection fraction AI-ECG service for CY 2025. In 
addition, the commenter referenced our CY 2023 packaging exemption for 
SaaS add-on codes policy and requested separate payment for the add-on 
CPT code 0764T.
    Response: We appreciate the commenter providing the FDA 
documentation for the AI-ECG approval. We agree that CPT code 0765T 
should be payable for CY 2025. Consistent with our SaaS Add-on Codes 
policy, CPT code 0764T, the add-on code for the low ejection fraction 
AI-ECG service would be assigned to the identical APC and status 
indicator to CPT code 0765T, the standalone code for the same service.
    After consideration of the public comments we received, we are 
finalizing revised status indicator and APC assignments for CPT codes 
0764T and 0765T. Please refer to Table 95 for the final OPPS APC and 
status indicator assignment for HCPCS codes 0764T and 0765T for CY 
2025. The final CY 2025 payment rates can be found in Addendum B to 
this final rule with comment period via the internet on the CMS 
website.

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45. Lower Esophageal Myotomy (POEM), CPT 43497 (APC 5331)
    CPT code 43497 (Lower esophageal myotomy, transoral (i.e., peroral 
endoscopic myotomy [POEM]) describes a minimally invasive endoscopic 
procedure that treats swallowing disorders caused by muscle problems in 
the esophagus.
    For CY 2025, we proposed to assign CPT code 43497 to APC 5331 
(Complex GI Procedures) with a proposed payment rate of around $5,838.
    Comment: We received one comment requesting that we reassign CPT 
code 43497 to APC 5361 (Level 1 Laparoscopy and Related Services) with 
a proposed payment of around $5,798. The commenter stated that the 
procedure utilizes techniques that are surgical in nature and that APC 
5361 would be a more appropriate APC assignment, based on clinical 
homogeneity and resource utilization with other services in APC 5361.
    Response: The OPPS is a prospective payment system that provides 
payment for groups of services that share clinical and resource use 
characteristics. Based on our understanding of the service and input 
from our medical advisors, we do not agree that CPT code 43497 has 
clinical and resource homogeneity to other services in APC 5361 such 
that it should be assigned to APC 5361.
    In summary, after consideration of the public comment, we are 
finalizing our proposal, without modification, to assign CPT code 43497 
to APC 5331 for CY 2025. The final CY 2025 payment rate for the code 
can be found in Addendum B to this final rule with comment period. In 
addition, we refer readers to Addendum D1 of this final rule with 
comment period for the SI meanings for all codes reported under the 
OPPS. Addenda B and D1 are available via the internet on the CMS 
website.
46. Magnetic Resonance Exam Safety Procedures, CPT Codes 76014 Through 
76019 (APCs 5521, 5523, 5731, 5733, and 5742)
    For CY 2025, the AMA CPT Editorial Panel created six codes to 
report magnetic resonance (MR) examination safety procedures, effective 
January 1, 2025. The new codes did not have a predecessor code or a 
one-to-one match to an existing code. When determining the proposed 
status indicators and APC assignments for CY 2025, we reviewed the 
clinical and resource characteristics of the procedures, considered 
input from our medical advisors, and reviewed existing APC 
classifications to identify similar and closely related procedures. The 
codes, their long descriptors, and their proposed CY 2025 OPPS status 
indicators and APC assignments are listed in Table 96.
    We note that CPT codes 76014, 76015, 76016, 76017, 76018, and 76019 
were listed as placeholder codes 7XX00, 7XX01, 7XX02, 7XX03, 7XX04, and 
7XX05 respectively, in OPPS Addendum B and Addendum O that were 
released with the CY 2025 OPPS/ASC proposed rule. Because we had not 
received the final CPT code numbers from AMA for the new codes that 
would be effective January 1, 2025, in time for the publication of the 
proposed rule, we listed the new CPT codes with their respective 
placeholder codes in OPPS Addendum B and Addendum O.
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    Comment: Some commenters disagreed with the proposed assignments 
for the five separately payable codes and provided

[[Page 94104]]

recommendations for APC reassignments. They stated that the proposed 
APC assignments for the new codes would be insufficient to cover the 
cost of furnishing the procedures and would impact beneficiary access. 
Commenters detailed that the proposed APC assignments for CPT codes 
76017, 76018, and 76019 did not reflect the facility costs associated 
with these procedures, including additional staff time, MR room time 
and clinical resources for planning, preparation, and patient 
positioning.
    The commenters requested that CMS reassign CPT codes 76014 
(placeholder code 7XX00) and 76016 (placeholder code 7XX05) to APC 
5611(Level 1 Therapeutic Radiation Treatment Preparation) with a 
proposed payment rate of $89.12. Commenters requested that CMS reassign 
CPT codes 76017 (placeholder code 7XX03) and 76019 (placeholder code 
7XX05) to APC 5612 (Level 2 Therapeutic Radiation Treatment 
Preparation; proposed payment rate of around $370). Commenters shared 
that CPT codes 76017 (placeholder code 7XX03) and 76019 (placeholder 
code 7XX05) require additional staff time and clinical resources for 
planning, preparation, and positioning which warrants reassignment to 
APC 5612.
    One commenter requested that CMS reassign CPT code 76018 
(placeholder code 7XX04) to APC 5612 (Level 2 Therapeutic Radiation 
Treatment Preparation; proposed payment rate of around $370), Another 
commenter requested a reassignment of CPT code 76018 to APC 5742 (Level 
2 Electronic Analysis of Devices; proposed payment rate of around $92). 
The commenter stated that CPT code 76018 involves interrogation and 
programming of an implanted device to protect the device and patient 
against interactions with the MRI scanner and would therefore fit well 
within APC 5612.
    Response: We thank the commenters for their feedback and 
recommendations. In determining the appropriate APC placement for new 
codes, we rely on input from a variety of sources, including, but not 
limited to, review of the resource costs and clinical similarity of the 
service to existing procedures; input from CMS medical advisors; and 
information from interested specialty societies. We evaluated the 
recommendations, modeled the suggestions, analyzed the cost results of 
the suggested APC reassignments, and received additional input from our 
medical advisors. Because we believe that the services assigned to the 
Therapeutic Radiation Treatment Preparation APC family have higher 
degrees of technicality, require higher levels of trained professional 
staff, and therefore have additional facility costs beyond those 
described by the CPT codes 76014 through 76019, we disagree with the 
commenter requests to assign these CPT codes to APCs 5611 and 5612. And 
while we recognize that there is not currently a one-to-one match to 
crosswalk to the new codes, we based the proposed APC assignments for 
CPT codes 76014, 76016, and 76019 on crosswalks to CPT codes that have 
similar service and resource elements, as well as required staff, to 
the new codes.
    Specifically, we continue to believe that:
     CPT code 76014 is similar to the service described by CPT 
code 0521T (Interrogation device evaluation (in person) with analysis, 
review and report, includes connection, recording, and disconnection 
per patient encounter, wireless cardiac stimulator for left ventricular 
pacing), which is assigned to APC 5731.
     CPT code 76016 is similar to the service described by CPT 
code 77091 (Trabecular bone score (tbs), structural condition of the 
bone microarchitecture; technical calculation only), which is assigned 
to APC 5521.
     CPT code 76019 is similar to CPT code 29520 (Strapping; 
hip), which is assigned to APC 5733.
    After consideration of the public comments, our review of CPT code 
76017 identified procedures in APC 5523 (Level 3 Imaging without 
Contrast) that we believe better align with the clinical 
characteristics and resources required for CPT code 76017, including 
CPT code 73718 (Magnetic resonance (e.g., proton) imaging, lower 
extremity other than joint; without contrast material(s)). After 
further input from CMS medical advisors, we believe that it may be 
appropriate to assign CPT code 76017 to APC 5523.
    Additionally, we believe that we have identified additional 
procedures in APC 5742 that share similar resource and clinical 
characteristics with CPT code 76018. Specifically, we believe that CPT 
code 76018 shares resource and clinical similarities to the service 
described by CPT code 29125 (Application of short arm splint (forearm 
to hand); static). Based on our assessment, we believe it appropriate 
to assign CPT code 76018 to APC 5742, based on shared resource and 
clinical characteristics.
    In summary, we believe that the below assignment of the new codes 
in Table 97 are the most appropriate, in terms of clinical and resource 
homogeneity. We note that we review our claims data on an annual basis 
to establish the OPPS payment rates and we will reevaluate the status 
indicator and APC assignments annually.
    After consideration of the public comments we received, we are 
finalizing our proposal with modification for CPT codes 76014 through 
76019. Table 97 shows the finalized status indicators and APC 
assignments for all of the procedure codes. The final CY 2025 payment 
rates for these codes can be found in Addendum B to this final rule 
with comment period. We also refer readers to Addendum D1 of this final 
rule with comment period for the SI meanings for all codes reported 
under the OPPS. Addenda B and D1 are available via the internet on the 
CMS website.
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47. MindMotion GO Neurorehabilitative Remote Therapy Service, CPT Code 
0733T (APC 1505)
    Effective July 1, 2022, the AMA established CPT code 0733T (Remote 
real-time, motion capture-based neurorehabilitative therapy ordered by 
a physician or other qualified health care professional; supply and 
technical support, per 30 days) to describe the procedure associated 
with the use of MindMotion GO, which provides remote real-time, motion 
capture-based neurorehabilitative therapy. In the CY 2025 OPPS/ASC 
proposed rule, CMS proposed to continue to assign CPT code 0733T to APC 
5741 (Level 1 Electronic Analysis of Devices) with a proposed payment 
rate of $36.90, due to its similarity to CPT code 98976 (Remote 
therapeutic monitoring (e.g., therapy adherence, therapy response); 
device(s) supply with scheduled (e.g., daily) recording(s) and/or 
programmed alert(s) transmission to monitor respiratory system, each 30 
days).
    Comment: We received one comment from the manufacturer of 
MindMotion GO requesting that CMS reassign CPT code 0733T to APC 1510 
(New Technology--Level 10 ($801-$900)). The commenter stated that the 
resource costs of this service are $849 and that the MindMotion GO 
technology will not be commercially available until early 2025, so 
there is currently no claims data available to assign this service to a 
clinical APC. The commenter also believed that CPT code 0733T was not 
clinically homogeneous with APC 5741 as the procedures in the APC are 
for monitoring services, while CPT code 0733T also describes a device 
used primarily for treatment of neurological conditions.
    Response: We thank the commenter for their input. We agree with the 
commenter that the current assignment of APC 5741 would result in too 
low of a payment for CPT code 0733T. After further review, we believe 
this procedure is similar to the procedure described by CPT code 0693T 
(Comprehensive full body computer-based markerless 3d kinematic and 
kinetic motion analysis and report), which describes technology for 
DARI Motion. CPT code 0693T is currently assigned to APC 1505 (New 
Technology--Level 5 ($301--$400)). Therefore, we are reassigning CPT 
code 0733T to APC 1505 until we are able to obtain claims data for this 
procedure.
    After consideration of the public comment we received, we are 
finalizing our proposal with modification to reassign CPT code 0733T to 
APC 1505 (New Technology--Level 5 ($301-$400)). Table 98 shows the 
finalized status indicator and APC assignment for the procedure code. 
We refer readers to Addendum B of this final rule with comment period 
for the payment rates for all codes reportable under the OPPS. Addendum 
B is available via the internet on the CMS website.
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48. Musculoskeletal Procedures (APCs 5111 Through 5116)
    Prior to the CY 2016 OPPS, payment for musculoskeletal procedures 
was primarily divided according to anatomy and the type of 
musculoskeletal procedure. As part of the CY 2016 reorganization to 
better structure the OPPS payments to utilize prospective payment 
packages, we consolidated these individual APCs so that they became a 
general Musculoskeletal APC series (80 FR 70397 and 70398).
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59300), we continued to apply a six-level structure for the 
Musculoskeletal APCs because doing so provided an appropriate 
distinction for resource costs at each level and provided clinical 
homogeneity. However, we indicated that we would continue to review the 
structure of these APCs to determine whether additional granularity 
would be necessary. In the CY 2019 OPPS proposed rule (83 FR 37096), we 
recognized that commenters had previously expressed concerns regarding 
the granularity of the current APC levels and, therefore, requested 
comment on the establishment of additional levels. Specifically, we 
solicited comments on the creation of a new APC level between the 
current Level 5 and Level 6 within the Musculoskeletal APC series. 
While some commenters suggested APC reconfigurations and requested 
changes to APC assignments, many commenters requested that we maintain 
the current six-level structure and continue to monitor the claims data 
as they become available. Therefore, in the CY 2019 OPPS/ASC final rule 
with comment period, we maintained the six-level APC structure for the 
Musculoskeletal Procedures APCs (83 FR 58920 and 58921).
    For CY 2025, based on the claims data available for the CY 2024 
OPPS/ASC proposed rule, we continued to believe that the six-level APC 
structure for the Musculoskeletal Procedures APC series is appropriate, 
and we proposed to maintain it for the CY 2025 OPPS update.
    Comment: Several commenters supported the assignment of HCPCS code 
0737T (Xenograft implantation into the articular surface) to APC 5115 
(Level 5 Musculoskeletal Procedures) and recommended that we finalize 
the assignment in the CY 2025 OPPS.
    Response: We appreciate the commenters' support of our proposal. We 
agree and are finalizing the proposed assignment of HCPCS code 0737T 
(Xenograft implantation into the articular surface) to APC 5115 (Level 
5 Musculoskeletal Procedures). We refer

[[Page 94107]]

readers to section III.E.67 of this final rule with comment period for 
a detailed discussion of this issue.
    Comment: A commenter supported the continued assignment of HCPCS 
code C9781 (Arthroscopy, shoulder, surgical; with implantation of 
subacromial spacer (e.g., balloon), includes debridement (e.g., limited 
or extensive), subacromial decompression, acromioplasty, and biceps 
tenodesis when performed) to APC 5115 (Level 5 Musculoskeletal 
Procedures).
    Response: We appreciate the commenter's support of our proposal. We 
agree and are finalizing the proposed assignment of HCPCS code C9781 
(Arthroscopy, shoulder, surgical; with implantation of subacromial 
spacer (e.g., balloon), includes debridement (e.g., limited or 
extensive), subacromial decompression, acromioplasty, and biceps 
tenodesis when performed) to APC 5115 (Level 5 Musculoskeletal 
Procedures). We refer readers to section III.E.11. of this final rule 
with comment period for a detailed discussion of this issue.
    Comment: A few commenters recommended that CMS consider the 
creation of additional musculoskeletal APC levels. Commenters noted 
that additional APCs should be considered with the goal of reducing 
payment gaps and volatility, while aligning cost and clinical 
homogeneity in the APCs. One commenter recommended that an additional 
APC level be considered between the current levels 4 and 5 with costs 
ranging from $7,000 to $12,000. Another commenter requested that we 
create an additional Musculoskeletal APC level from codes currently in 
APC 5116 (Level 6 Musculoskeletal Procedures) with geometric mean costs 
above $22,000, while moving codes with geomean costs above $14,000 in 
the current level 5 APC to the level 6 APC.
    Response: We appreciate the commenters' recommendations. We also 
appreciate the goal of developing APC levels that properly group 
procedures by clinical and resource similarity. At this time, we 
believe the six-level structure for the Musculoskeletal APCs that we 
proposed continues to provide an appropriate distinction between the 
resource costs at each level and clinical homogeneity and are therefore 
finalizing that six-level structure for the Musculoskeletal Procedures 
APC series in the CY 2025 OPPS. However, we will take these comments 
into consideration for future rulemaking and continue to monitor the 
claims data as they are available.
    After consideration of the public comments, we are finalizing our 
proposal to maintain the six-level Musculoskeletal Procedures APC 
structure. We are also finalizing the assignment of HCPCS code 0737T 
(Xenograft implantation into the articular surface) to APC 5115 and 
HCPCS code C9781 (Arthroscopy, shoulder, surgical; with implantation of 
subacromial spacer (e.g., balloon), includes debridement (e.g., limited 
or extensive), subacromial decompression, acromioplasty, and biceps 
tenodesis when performed) to APC 5115 for the CY 2025 OPPS.
49. Noncontact Near-Infrared (NIR) Spectroscopy, CPT 0640T (APC 5732)
    Effective CY 2024, there are three codes that describe the service 
related to NIR spectroscopy: CPT codes 0640T (Noncontact near-infrared 
spectroscopy (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, 
and ratio of tissue oxygenation), other than for screening for 
peripheral arterial disease, image acquisition, interpretation, and 
report; first anatomic site, 0859T (Noncontact near-infrared 
spectroscopy (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, 
and ratio of tissue oxygenation), other than for screening for 
peripheral arterial disease, image acquisition, interpretation, and 
report; each additional anatomic site (list separately in addition to 
code for primary procedure)), and 0860T (Noncontact near-infrared 
spectroscopy (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, 
and ratio of tissue oxygenation), for screening for peripheral arterial 
disease, including provocative maneuvers, image acquisition, 
interpretation, and report, one or both lower extremities). Only CPT 
code 0640T is separately paid under the OPPS. For CY 2025, CMS proposed 
to assign CPT code 0640T to APC 5732 (Level 2 Minor Procedures) and 
status indicator ``S'' with a $39 payment rate.
    Comment: We received one comment regarding the proposed APC 
assignment for CPT code 0640T. The commenter requested that we reassign 
0640T to APC 5722 (Level 2 Imaging without contrast) with a proposed 
payment rate of approximately $310 for CY 2025 based on a crosswalk to 
CPT code 0598T (Noncontact real-time fluorescence wound imaging, for 
bacterial presence, location, and load, per session; first anatomic 
site (e.g., lower extremity)). The commenter explained that CPT code 
0598T is an appropriate crosswalk code because it yields diagnostic 
images without contrast, is newer, and utilizes a Category III CPT 
code.
    Response: We thank the commenter for their input. First, we note 
that prior to the AMA's CPT Editorial Panel descriptor revision for CPT 
code 0640T, the technical service associated with NIR spectroscopy was 
described by CPT code 0641T, which was assigned to APC 5732 for CY 
2023, prior to being deleted for CY 2024. Under the OPPS, the 
predecessor code for CPT code 0640T is CPT code 0641T. We note for CY 
2025, OPPS payment rates are proposed based on available CY 2023 claims 
data. Based on our analysis of the claims data for this final rule with 
comment period, we found a geometric mean cost of about $16 for 
predecessor CPT code 0641T, based on 32 single frequency claims (out of 
445 total claims). In contrast, we found a geometric mean cost of 
approximately $170 for CPT code 0598T based on 1109 single frequency 
claims (out of 2531 total claims). Based on the data, the resource cost 
associated with noncontact real-time fluorescence imaging (CPT code 
0598T), is significantly higher compared to noncontact near-infrared 
(NIR) spectroscopy (CPT code 0640T/0641T). We disagree that the 
resource cost for NIR spectroscopy is similar to noncontact real-time 
fluorescence imaging. Therefore, we do not agree that both technologies 
should be placed in the same APC. We believe that the code describing 
NIR spectroscopy, specifically, CPT code 0640T, is appropriately placed 
in APC 5732.
    In consideration of the public comment we received, we are 
finalizing our proposal without modification for CPT code 0640T. 
Specifically, for CY 2025, we are finalizing our proposal to assign CPT 
code 0640T to APC 5732. The final CY 2025 OPPS payment rate for all the 
codes payable under the OPPS can be found in Addendum B to this final 
rule with comment period. In addition, we refer readers to Addendum D1 
of this final rule with comment period for the SI meanings for all 
codes reported under the OPPS. Addendum D1 is available via the 
internet on the CMS website.
50. Percutaneous Coronary Revascularization Services by Intracoronary 
Antiproliferative Drug Delivery, CPT Codes 0913T and 0914T (APC 5192)
    For the July 2024 update, the AMA's CPT Editorial Panel established 
two Category III codes to describe percutaneous coronary 
revascularization services by intracoronary antiproliferative drug 
delivery, performed for occlusive disease of the coronary vessels 
(major coronary arteries, coronary artery branches) using

[[Page 94108]]

drug-delivery balloon (e.g., drug-coated, drug-eluting) for 
intracoronary antiproliferative drug delivery:
     CPT code 0913T (placeholder code XX23T) (Percutaneous 
transcatheter therapeutic drug delivery by intracoronary drug-delivery 
balloon (e.g., drug-coated, drug-eluting), including mechanical 
dilation by nondrug-delivery balloon angioplasty, endoluminal imaging 
using intravascular ultrasound (IVUS) or optical coherence tomography 
(OCT) when performed, imaging supervision, interpretation, and report, 
single major coronary artery or branch)); and,
     CPT code 0914T (placeholder code XX40T) (Percutaneous 
transcatheter therapeutic drug delivery by intracoronary drug-delivery 
balloon (e.g., drug-coated, drug-eluting) performed on a separate 
target lesion from the target lesion treated with balloon angioplasty, 
coronary stent placement or coronary atherectomy, including mechanical 
dilation by nondrug-delivery balloon angioplasty, endoluminal imaging 
using intravascular ultrasound (IVUS) or optical coherence tomography 
(OCT) when performed, imaging supervision, interpretation, and report, 
single major coronary artery or branch (List separately in addition to 
code for percutaneous coronary stent or atherectomy intervention)).
    In the CY 2025 OPPS/ASC proposed rule, we proposed to assign CPT 
code 0913T (placeholder code XX23T) to APC 5192 (Level 2 Endovascular 
Procedures; geometric mean cost of $5,771.29) based on clinical and 
resource similarity to other Percutaneous Coronary Intervention (PCI) 
procedures, including CPT code 92920 (Percutaneous transluminal 
coronary angioplasty; single major coronary artery or branch). 
Additionally, as an add-on code, we proposed to assign CPT code 0914T 
to status indicator ``N.''
    We note that a transitional device pass-through application was 
submitted for the AGENTTM Paclitaxel-Coated Balloon Catheter 
for CY 2025 to request separate payment for the device under the OPPS, 
in addition to the surgical CPT codes. We direct readers to section 
IV.A (Pass-Through Payment for Devices) of this final rule with comment 
period for a more detailed discussion of the transitional device pass-
through applications and the status of the CY 2025 device pass-through 
application for the AGENTTM Paclitaxel-Coated Balloon 
Catheter.
    We also note that a presenter provided information to the Panel on 
the description of the service and the cost of the AgentTM 
device and procedure at the August 28, 2024, HOP Panel Meeting. At the 
conclusion of the presentation, the presenter asked the Panel to 
request that CMS reassign CPT code 0913T from APC 5192 to APC 5193 
(Level 3 Endovascular Procedures). Based on the information presented 
at the HOP Panel meeting, the HOP Panel recommended reassigning CPT 
0913T to APC 5193.
    Comment: We received several comments from interested parties, 
including the manufacturer, a trade association, and several 
practitioners. One commenter reiterated information shared during the 
2024 HOP Panel. Commenters stated that coronary drug-delivery by drug-
coated balloon (DCB) is a clinically similar procedure to a drug-
eluting stent (DES) implant, which is reported with HCPCS code C9600 
(Percutaneous transcatheter placement of drug eluting intracoronary 
stent(s), with coronary angioplasty when performed; single major 
coronary artery or branch) and is assigned to APC 5193 (Level 3 
Endovascular Procedures). The manufacturer also provided a cost 
analysis of one facility's Medicare outpatient claims for coronary DCB. 
Their provided cost analysis included eleven claims and indicated that 
the geometric mean cost of those eleven claims was $18,935.69.
    Response: We thank the commenters for their comments. After 
consideration of the public comments, we continue to believe that CPT 
code 0913T is appropriately assigned to APC 5192. We note that the long 
descriptor for CPT code 0913T describes a service similar to other 
codes in APC 5192. After review of the service and input from our CMS 
medical officers, we believe that CPT code 92920 (Percutaneous 
transluminal coronary angioplasty; single major coronary artery or 
branch) which is assigned to APC 5192 is a good crosswalk code for CPT 
code 0913T because it is clinically similar.
    In summary, we are finalizing our proposal to assign CPT code 0913T 
to status indicator ``J1,'' and APC 5192. The final CY 2025 payment 
rate for CPT code 0913T can be found in Addendum B to this final rule 
with comment period. We also refer readers to Addendum D1 of this final 
rule with comment period for the SI meanings for all codes reported 
under the OPPS. Addendums B and D1 are available via the internet on 
the CMS website.
51. Potential Two-Times Rule Violations (APCs 5302, 5415, 5092, and 
5114)
    We received comments on the APC assignments we proposed in the CY 
2025 OPPS/ASC proposed rule, which commenters believe result in 2-times 
rule violations.
Endoscopic Esophageal Procedures
    CPT code 43254 (Esophagogastroduodenoscopy, flexible, transoral; 
with endoscopic mucosal resection) with a geometric mean cost of around 
$2,632; CPT code 43270 (Esophagogastroduodenoscopy, flexible, 
transoral; with ablation of tumor(s), polyp(s), or other lesion(s) 
(includes pre- and post-dilation and guide wire passage, when 
performed)) with a geometric mean cost of around $2,985; and CPT code 
43275 (Endoscopic retrograde cholangiopancreatography (ERCP); with 
removal of foreign body(s) or stent(s) from biliary/pancreatic duct(s)) 
with a geometric mean cost of around $2,886 describe endoscopic 
procedures that are performed on the esophagus. For the CY 2025 OPPS/
ASC proposed rule, we proposed to assign all 3 procedures to APC 5302 
(Level 2 Upper GI Procedures), which had a proposed a payment rate of 
around $1,884.
    Comment: One commenter requested that we reassign CPT codes 43254, 
43270, and 43275 to APC 5303 (Level 3 Upper GI Procedures) with a 
proposed payment rate of around $3,648, due to the geometric mean costs 
of these codes being more than 2 times that of CPT code 0653T 
(Esophagogastroduodenoscopy, flexible, transnasal; with biopsy, single 
or multiple). CPT code 0653T has a geometric mean cost of around 
$1,212.
    Response: We appreciate the commenter's request. We did not 
identify a 2-times rule violation for APC 5302. Since the release of 
the CY 2025 OPPS proposed rule, we have updated our 2-times analysis of 
claims from CY 2023 that are used to set rates for CY 2025. Our updated 
claims data found CPT code 0653T has fewer than 100 claims and does not 
meet the significance threshold for the two times rule evaluation, and 
therefore is not considered the lowest cost significant procedure for 
APC 5302.
Vaginal Hysterectomy Procedures
    CPT code 58260 (Vaginal hysterectomy, for uterus 250 g or less) 
with a geometric mean cost of around $6,083 and CPT code 58262 (Vaginal 
hysterectomy, for uterus 250 g or less; with removal of tube(s), and/or 
ovary(s)) with a geometric mean cost of around $6,753 describe vaginal 
hysterectomy procedures. For the CY 2025 OPPS/ASC proposed rule, we 
proposed to assign both procedures to APC 5415 (Level 5 Gynecologic 
Procedures) with a

[[Page 94109]]

proposed payment rate of around $4,902.
    Comment: A commenter requested that we reassign CPT codes 58260 and 
58262 to APC 5416 (Level 6 Gynecologic Procedures) with a proposed 
payment rate of around $7,312, citing the geometric mean cost of CPT 
code 57550 (Excision of cervical stump, vaginal approach) which is 
around $1,879.
    Response: We appreciate the commenter's request. We did not 
identify a 2-times rule violations for APC 5415. Our updated claims 
data found CPT code 57550 has fewer than 100 claims and does not meet 
the significance threshold for the 2-times rule evaluation, and 
therefore is not considered the lowest cost significant procedure for 
APC 5415.
Mastectomy Procedures
    CPT code 19303 (Mastectomy, simple, complete) with a geometric mean 
cost of around $7,236 and CPT code 19307 (Mastectomy, modified radical, 
including axillary lymph nodes, with or without pectoralis minor 
muscle, but excluding pectoralis major muscle) with a geometric mean 
cost of around $7,412 describe mastectomy procedures. For the CY 2025 
OPPS/ASC proposed rule, we proposed to assign both procedures to APC 
5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures) with a 
proposed payment rate of around $6,473.
    Comment: Another commenter requested that we reassign CPT code 
19303 and 19307 to APC 5093 (Level 3 Breast/Lymphatic Surgery and 
Related Procedures) with a proposed payment rate of around $9,417, 
citing the geometric mean cost of CPT code 38555 (Excision of cystic 
hygroma, axillary or cervical; with deep neurovascular dissection) 
which is around $3,475.
    Response: We appreciate the commenter's request. We did not 
identify a 2-times rule violations for APC 5092. Our updated claims 
data found CPT code 38555 has fewer than 100 claims and does not meet 
the significance threshold for the two times rule evaluation and 
therefore is not considered the lowest cost significant procedure for 
APC 5092.
Arthrodesis Procedure
    CPT code 28740 (Arthrodesis, midtarsal or tarsometatarsal, single 
joint), which has a geometric mean cost of around $11,058, describes an 
arthrodesis procedure performed in the foot. For the CY 2025 OPPS/ASC 
proposed rule, we proposed to assign this procedure to APC 5114 (Level 
4 Musculoskeletal Procedures) with a proposed payment rate of around 
$7,090.
    Comment: A commenter requested that CPT code 28740 be reassigned to 
APC 5115 (Level 5 Musculoskeletal Procedures) with a proposed payment 
rate of around $12,755, citing the geometric mean cost of CPT code 
27385 which is around $5,616.
    Response: We appreciate the commenter's request. Our updated claims 
data did not identify a 2-times rule violation for APC 5115. We also 
found that the geometric mean cost for CPT code 28740 is $11,074. This 
is less than two times the updated cost of the suggested code CPT code 
27385, which is $5,616.
    In summary, after consideration of these public comments, we are 
finalizing our proposal without modification to assign CPT codes 43254, 
43270, and 43275 to APC 5302 (Level 2 Upper GI Procedures); CPT codes 
58260 and 58262 to APC 5415 (Level 5 Gynecologic Procedures); CPT codes 
19303 and 19307 to APC 5092 (Level 2 Breast/Lymphatic Surgery and 
Related Procedures); and CPT code 28740 to APC 5114 (Level 4 
Musculoskeletal Procedures). We refer readers to Addendum B of this 
final rule with comment period for the payment rates for all codes 
reportable under the OPPS. Addendum B is available via the internet on 
the CMS website.
52. Prostate Laser Enucleation Procedure, CPT Code 52649 (APC 5375)
    Prostate laser enucleation procedure utilizes laser to remove the 
prostate tissue to treat benign prostatic hyperplasia. The procedure is 
described by CPT code 52649 (Laser enucleation of the prostate with 
morcellation, including control of postoperative bleeding, complete 
(vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or 
dilation, internal urethrotomy and transurethral resection of prostate 
are included if performed)).
    For CY 2025, the OPPS payment rates are proposed based on available 
CY 2023 claims data. For the CY 2025 proposed rule, based on our 
analysis of claims data, we found a total of 7,494 single frequency 
claims and a geometric mean cost of approximately $6,812 for CPT code 
52649. For CY 2025, we proposed to continue to assign CPT code 52649 to 
Level 5 Urology and Related Services (APC 5375) with a proposed payment 
rate of approximately $5,057.
    Comment: One commenter disagreed with the proposed APC assignment 
to APC 5375 (Level 5 Urology and Related Services) and requested the 
reassignment of CPT code 52649 to APC 5376 (Level 6 Urology and Related 
Services). The commenter argued that CPT code 52649 shared more 
clinical and resource similarities with CPT code 50562 (Renal endoscopy 
through established nephrostomy or pyelostomy, with or without 
irrigation, instillation, or ureteropyelography, exclusive of 
radiologic service; with resection of tumor) and CPT code 55873 
(Cryosurgical ablation of the prostate (includes ultrasonic guidance 
and monitoring)), which are currently assigned to APC 5376. Moreover, 
the commenter argued that there is more work involved in CPT code 52649 
than CPT code 52601 (Transurethral electrosurgical resection of 
prostate, including control of postoperative bleeding, complete 
(vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or 
dilation, and internal urethrotomy are included)) which is currently 
assigned to APC 5375 (Level 5 Urology and Related Services).
    Response: The CY 2025 OPPS payment rates were proposed based on 
available CY 2023 claims data. We analyzed the claims data for this 
final rule, and based on our review, we found a geometric mean cost of 
approximately $6,812 for CPT code 52649 based on 7,494 single claims 
(out of 7,564 total claims), is consistent with the geometric mean cost 
of about $5,145 for APC 5375, rather than the geometric mean cost of 
approximately $9,356 for APC 5376. Based on the claims data, we believe 
that CPT code 52649 fits more appropriately in APC 5375, rather than in 
APC 5376, based on resource cost and clinical similarity to CPT code 
52601 in APC 5375. We note that we review, on an annual basis, the APC 
assignments for all services and items paid under the OPPS based on our 
analysis of the latest claims data.
    We also disagree that CPT code 52649 is sufficiently clinically 
similar to CPT code 50562 because the latter code involves a surgical 
treatment of the kidney rather than the prostate. Furthermore, we 
disagreed that CPT code 52649 shares resource similarity with CPT code 
55873, as cryosurgical ablation requires many more resources than the 
prostate laser enucleation procedure.
    In summary, after consideration of the public comment, we are 
finalizing our proposal, without modification, to assign CPT code 52649 
to APC 5375 for CY 2025. Please refer to Table 99 below for the final 
OPPS APC and status indicator assignment for HCPCS code 52649 for CY 
2025. The final CY 2025 payment rate for the code can be found in 
Addendum B to this final rule with comment period. In addition, we 
refer

[[Page 94110]]

readers to Addendum D1 of this final rule with comment period for the 
SI meanings for all codes reported under the OPPS. Both Addendum B and 
D1 are available via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.123

53. Remote Uroflowmetry Service, CPT Code 0812T (APC 5721)
    Remote uroflowmetry is a service that allows patients to measure 
urine output while remotely monitored by health professionals. This 
service aids in the diagnosis and management of lower urinary tract 
issues, such as benign prostatic hyperplasia. It is described by CPT 
code 0812T (Remote multi-day complex uroflowmetry (e.g., calibrated 
electronic equipment); device supply with automated report generation, 
up to 10 days) which became effective January 1, 2024. For CY 2025, we 
proposed to assign CPT code 0812T to APC 5741 (Level 1 Electronic 
Analysis of Devices).
    Comment: One commenter disagreed with our proposed APC assignment 
of APC 5741 (Level 1 Electronic Analysis of Devices), citing higher 
equipment and labor cost associated with the CPT code 0812T than 
services assigned to APC 5741. The commenter requested CPT code 0812T 
be reassigned to APC 5722 (Level 2 Diagnostic Tests and Related 
Services), citing resource similarity to CPT code 51741(Complex 
uroflowmetry (e.g., calibrated electronic equipment)).
    Response: We appreciate the commenter's recommendation regarding 
the APC assignment for CPT code 0812T. However, we disagree with the 
commenter that CPT code 51741 shares similar resource requirements with 
CPT code 0812T, although both CPT codes describe the uroflowmetry 
service. CPT code 51741 is a more complex procedure than CPT code 
0812T, which is why we proposed to assign CPT code 51741 to APC 5722 
(Level 2 Diagnostic Tests and Related Services)). However, we also 
believe CPT code 0812T shares more resource similarity with CPT code 
51703 (Insertion of temporary indwelling bladder catheter; complicated 
(e.g., altered anatomy, fractured catheter/balloon)) than CPT code 
51741. Therefore, for CY 2025, we are reassigning CPT code 0812T to APC 
5721 (Level 1 Diagnostic Tests and Related Services).
    After consideration of the public comment we received, we are 
finalizing our proposal with modification and reassigning CPT code 
0812T to APC 5721 (Level 1 Diagnostic Tests and Related Services). 
Please refer to Table 100 below for the final OPPS APC and status 
indicator assignment for CPT code 0821T for CY 2025. We refer readers 
to Addendum B of this final rule with comment period for the payment 
rates for all codes reportable under the OPPS. Addendum B is available 
via the internet on the CMS website.
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[[Page 94111]]

54. Skin Cell Suspension Autograft (SCSA) Procedures, CPT Codes 15011 
Through 15018 (APCs 5051, 5054, and 1567)
    The RECELL System is a device used for skin cell suspension 
autograft (SCSA) procedures. Skin cell suspension autograft procedures 
treat acute thermal burn injuries by adhering skin cell solutions to 
the wound site without use of fixation. There are three steps to 
perform a SCSA procedure: (1) skin harvesting, (2) SCSA preparation 
(utilizing the RECELL System), and (3) SCSA application to the wound 
bed.
    The RECELL System is on transitional pass-through (TPT) effective 
January 1, 2022, to December 31, 2024. While on TPT, each time the 
RECELL device is used, providers must bill device code HCPCS C1832 
(Autograft suspension, including cell processing and application, and 
all system components) and either CPT code 15110 (Epidermal autograft, 
trunk, arms, legs; first 100 sq cm or less, or 1% of body area of 
infants and children) or CPT code 15115 (Epidermal autograft, face, 
scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/
or multiple digits; first 100 sq cm or less, or 1% of body area of 
infants and children),as provided in the January 2022 OPPS Change 
Request 12552 (Transmittal R11150CP).
    While HCPCS code C1832 describes the RECELL System that prepares 
the SCSA, CPT codes 15110 and 15115 describe the autograft procedure, 
which includes both the skin harvesting and SCSA application components 
of the service. For CY 2024, CPT codes 15510 and 15115 were assigned to 
APC 5054 (Level 4 Skin Procedures), with a payment rate of 
approximately $1,800. HCPCS code C1832 can also be billed with CPT 
codes 15100 (Split-thickness autograft, trunk, arms, legs; first 100 sq 
cm or less, or 1% of body area of infants and children (except 15050)) 
or 15120 (Split-thickness autograft, face, scalp, eyelids, mouth, neck, 
ears, orbits, genitalia, hands, feet, and/or multiple digits; first 100 
sq cm or less, or 1% of body area of infants and children (except 
15050)), so long as it is billed with one of the two preceding codes 
(CPT codes 15110 or 15115).
    In September 2023, AMA's CPT Editorial Panel created eight new 
Category 1 CPT codes to describe SCSA procedures, effective January 1, 
2025. The eight new codes are provided in Table 101.
[GRAPHIC] [TIFF OMITTED] TR27NO24.125

[[Page 94112]]

    In creating these eight new CPT codes, the harvesting, preparation, 
and application components of the service are each split into separate 
codes. The harvesting of the skin is described by CPT codes 15011 and 
15012, the preparation of the SCSA is described by CPT codes 15013 and 
15014, and the application of the SCSA is described by CPT codes 15015 
through 15018. While the RECELL System is on TPT, it is sufficient to 
bill the device code HCPCS C1832 and only one procedure code (either 
CPT code 15110 or CPT 15115) to describe all three components of the 
service. However, with the creation of the eight new CPT codes, at 
least three CPT codes will need to be billed each time the RECELL 
System is used for a SCSA procedure: CPT code 15011 with or without CPT 
code 15012 for the skin harvesting, CPT code 15013 with or without CPT 
code 15014 for the SCSA preparation, and CPT code 15015 with or without 
CPT code 15016 or CPT code 15017 with or without CPT code 15018 for the 
SCSA application.
    For CY 2025, we proposed to assign the eight new CPT codes to 
various clinical APCs and status indicators provided in Table 102.
BILLING CODE 4120-01-P

[[Page 94113]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.126

BILLING CODE 4120-01-C
    Comment: We received two comments requesting that we finalize our 
proposal to assign 15011, 15015, and 15017 to

[[Page 94114]]

APC 5054 (Level 4 Skin Procedures) for CY 2025.
    Response: We thank the commenters for their support.
    Comment: We received two comments, including one comment from the 
manufacturer of the RECELL System, requesting that we reassign CPT code 
15013 from APC 5051 (Level 1 Skin Procedures) to APC 1575 (New 
Technology--Level 38 ($10,001-$15,000) with a payment rate of 
$12,500.50 for CY 2025. The commenters expressed concern that the 
proposed APC assignment for CPT code 15013 to APC 5051 does not 
accurately reflect the hospital-reported costs associated with the 
RECELL System. The commenters requested that we consider the hospital 
costs reported with device code C1832 during the TPT period when 
finalizing the APC assignment for CPT 15013. The comments estimated a 
combined total cost of $10,188.96 for CPT code 15013 by adding the 
purported mean cost for device code C1832 ($7,220) with supply and 
operating room time costs of approximately $2,900. Based on these 
estimates, the commenters believe assigning CPT code 15013 to APC 1575 
with a payment rate of $12,500.50 would sufficiently pay for the 
preparation step of the SCSA procedure.
    Response: We thank the commenters for their input. Under the OPPS, 
once pass-through status ends for a device, the cost of the device is 
packaged into its associated procedure. For the RECELL System, once TPT 
expires on December 31, 2024, the associated procedure will be CPT code 
15013. We agree with the commenters that we need to use the claims data 
available while the RECELL System is on TPT to determine the 
appropriate APC placement for CPT code 15013.
    However, given the restructuring of how SCSA procedures utilizing 
the RECELL System will be billed effective January 1, 2025, we also 
believe we need to consider the costs of the skin harvesting and 
application steps of the procedure, which are currently billed by only 
one procedure code (either CPT Code 15110 or CPT code 15115), paid at 
approximately $1,800, to determine the appropriate payment for the 
RECELL System and SCSA application step. In other words, we believe 
that the sum of the payment rates for the new codes describing the 
three steps of the SCSA procedure should approximate the cost of the 
RECELL System on TPT and CPT codes 15110 or 15115. Based on our review 
of the claims data for device code C1832 during the TPT period, as well 
as the payment rates for CPT codes 15110 and 15115, we believe 
assigning CPT code 15013 to APC 1567 (New Technology--Level 30 ($6001-
$6500)) with a $6,250.50 payment rate would be appropriate for CY 2025, 
considering that it will be billed with additional procedure codes that 
describe the other steps of the SCSA procedure. Rather than assigning 
CPT code 15013 to APC 5051, as proposed, which has a payment rate of 
approximately $200 for CY 2025, we believe assigning CPT code 15013 to 
APC 1567 with a payment rate of $6,250.50 will more appropriately pay 
for the preparation part of the service, which uses the device. When 
the full service is performed, meaning that the harvesting, 
preparation, and application steps are performed, the total cost of the 
service for CY 2025 will be approximately $10,000, an amount that we 
believe is appropriate based on the data we have collected while the 
device has had transitional pass-through status.
    In consideration of the public comments received, we are finalizing 
our proposal with modification. For CY 2025, we are finalizing the APC 
assignments for CPT codes 15011, 15015, and 15017 to APC 5054 (Level 4 
Skin Procedures) as proposed. However, we are not finalizing our 
proposal to assign CPT code 15013 to APC 5051 (Level 1 Skin Procedures) 
as proposed. For CY 2025, we are assigning CPT code 15013 to APC 1567 
((New Technology--Level 30 ($6001-$6500)).
    The final 2025 payment rates for the codes can be found in Addendum 
B to this final rule with comment period. In addition, we refer readers 
to Addendum D1 of this final rule with comment period for the status 
indicator meanings for all codes reported under the OPPS. Addenda B and 
D1 are available via the internet on the CMS website.
55. Surgical Pathology Examination, CPT Code 88309 (APC 5674)
    CPT code 88309 describes a level VI examination of a surgical 
pathology specimen performed by the physician, typically a pathologist. 
The examination includes accessioning the specimen into the lab, which 
involves formally receiving the specimen, examining gross and 
microscopic features of the specimen, and reporting findings.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to reassign CPT 
code 88309 from APC 5674 (Level 4 Pathology) to APC 5673 (Level 3 
Pathology) with a proposed payment rate of $356.00.
    Comment: Three commenters asked CMS to maintain the assignment of 
CPT code 88309 in APC 5674.
    One commenter recommended that CMS maintain the current assignment 
of CPT 88309 (Level VI--Surgical pathology, gross and microscopic 
examination) in APC 5674, (Level 4 Pathology), rather than assigning 
the code to APC 5673, (Level 3 Pathology), to promote resource and 
clinical cohesion.
    Two commenters stated that the proposed reassignment is based on 
claims data that do not reflect the actual costs of performing the 
test. They stated that the CY 2025 geometric mean cost for this code is 
over 25% lower than the geometric mean cost for the prior calendar 
years and that the complexity of specimens and technical work 
associated with these services requires the maintenance of the code in 
APC 5674. Therefore, to ensure resource cohesion within the clinical 
APCs, the commenters asked CMS to maintain the assignment of CPT code 
88309 to APC 5674 for CY 2025 and to not finalize an APC reassignment 
that would result in a greater than 56% reduction in the payment rate 
for this important service for Medicare beneficiaries.
    Response: We thank the commenters for their input. We acknowledge a 
significant drop in the geometric mean cost for CPT code 88309, which 
is almost 25% lower than the geometric mean cost in previous years.
    For this final rule with comment period, we once again reviewed the 
available CY 2023 claims data and observed a wide variation in claims 
used for ratesetting purposes for CY 2025. We note that the claims 
included in ratesetting for this code reflect a wide range of estimated 
costs and providers furnishing this service along with their associated 
clinical patterns. We believe these claims are an accurate reflection 
of those changing costs. However, we are sympathetic to commenters' 
concerns regarding the 25% reduction in the proposed payment rate for 
CPT code 88309 from CY 2024 to CY 2025. Therefore, we will use our 
equitable adjustment authority under section 1833(t)(2)(E) of the Act 
to continue to assign CPT code 88309 to APC 5674 for CY 2025.
    In summary, after consideration of the public comments that we 
received, we are finalizing our proposal with modification to assign 
CPT code 88309 to APC 5674. However, we will continue to monitor the 
claims data as they are updated and available.
    We refer readers to Addendum B to this final rule with comment 
period for the final CY 2025 OPPS payment rate for this code. Addendum 
B is available via the internet on the CMS website.

[[Page 94115]]

56. Therapeutic Ultrafiltration, CPT 0692T (APC 5242)
    In the CY 2025 OPPS/ASC proposed rule, we proposed to continue to 
assign CPT code 0692T (Therapeutic ultrafiltration), which became 
effective January 1, 2022, to APC 5241 (Level 1 Blood Product Exchange 
and Related Services) with a proposed payment rate of $431.37.
    Therapeutic ultrafiltration reported with CPT code 0692T, is an 
apheresis procedure for fluid-overloaded heart failure patients through 
which plasma water and sodium are removed from the blood using the 
Aquadex SmartFlow System.
    We received several comments requesting CMS reassign CPT code 0692T 
from APC 5241 (Level 1 Blood Product Exchange and Related Services) to 
APC 5242 (Level 2 Blood Product Exchange and Related Services).
    Comment: Several commenters claimed that the payment rate for APC 
5241 is inadequate for CPT code 0692T and that APC 5242 better aligns 
with the resource costs and clinical aspects of the service. According 
to the commenters, the resources required, and risks associated with 
ultrafiltration are the same as plasmapheresis, which is assigned to 
APC 5242. Ultrafiltration (e.g., apheresis) is the extracorporeal 
removal of isotonic plasma water (water and salt/electrolytes) and is 
very similar to plasmapheresis according to the commenters, which 
involves the extracorporeal removal, return, or exchange of blood 
plasma or components and is assigned to APC 5242. Commenters suggested 
that reassigning the ultrafiltration therapy code 0692T to APC 5242 
would align OPPS payment with the cost of providing the service.
    Response: We thank commenters for their input. We have limited 
claims data (9 total claims) for CPT code 0692T available for CY 2025 
ratesetting. However, based on the code's clinical similarity and 
expected resource cost similarity to CPT code 36514 (Therapeutic 
apheresis; for plasma pheresis), which we have assigned to APC 5242 
(Level 2 Blood Product Exchange and Related Services) for CY 2025, we 
believe that we should reassign CPT code 0692T to APC 5242.
    In summary, after consideration of the public comments that we 
received, we are finalizing our proposal with modification, and 
assigning CPT code 0692T to APC 5242 for CY 2025. The CY 2025 final 
payment rate for this code can be found in Addendum B of this final 
rule with comment period.
57. Thyroid Ablation, CPT Codes 60660 and 60661 (APC 5072)
    The AMA established CPT codes 60660 (Ablation of 1 or more thyroid 
nodule(s), one lobe or the isthmus, percutaneous, including imaging 
guidance, radiofrequency) and 60661 (Ablation of 1 or more thyroid 
nodule(s), additional lobe, percutaneous, with imaging guidance, 
radiofrequency (List separately in addition to code for primary 
service), effective January 1, 2025. These codes were previously 
described by the placeholder codes 6XX01 and 6XX02. In the CY 2025 
OPPS/ASC proposed rule, CMS crosswalked CPT code 60660 to CPT code 
0673T (Ablation, benign thyroid nodule(s), percutaneous, laser, 
including imaging guidance) and proposed to assign it to APC 5072 
(Level 2 Excision/Biopsy/Incision and Drainage) for CY 2025. CMS also 
proposed to assign CPT code 60661 to status indicator ``N'' (packaged), 
as it is an add-on code.
    Comment: We received two comments requesting reassignment for CPT 
codes 60660 and 60661. One comment requested we reassign CPT code 60660 
to APC 5073 (Level 3 Excision/Biopsy/Incision and Drainage), due to its 
clinical similarity and resource homogeneity with the other procedures 
in APC 5073. A second comment requested we reassign both 60660 and 
60661 to APC 5164 (Level 4 ENT Procedures), due to their similarity to 
CPT code 30140 (Submucous resection inferior turbinate, partial or 
complete, any method).
    Response: We thank the commenters for their suggestions. After 
further clinical review, we continue to believe that CPT code 0673T is 
the appropriate crosswalk for CPT code 60660 and that CPT code 30140 
would not be the correct clinically comparable code. CPT code 0673T has 
a geometric mean cost of around $1,578 and is assigned to APC 5072, 
which has a payment rate of around $1,620. We believe that 0673T is 
appropriately placed in APC 5072, and therefore, CPT code 60660 is 
appropriately assigned to APC 5072 and should not be reassigned to APC 
5073 at this time. Additionally, because CPT code 60661 is an add-on 
code, we believe that the current status indicator assignment of ``N'' 
is correct.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification to assign CPT code 60660 
to APC 5072 (Level 2 Excision/Biopsy/Incision and Drainage) and 60661 
to status indicator ``N'' for CY 2025. Table 103 shows the finalized 
status indicator and APC assignment for the procedure code. We refer 
readers to Addendum B of this final rule with comment period for the 
payment rates for all codes reportable under the OPPS. Addendum B is 
available via the internet on the CMS website.

[[Page 94116]]

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58. Thyroid Removal, CPT Code 60240 (APC 5361)
    In the CY 2025 OPPS/ASC proposed rule, CPT code 60240 
(Thyroidectomy, total or complete), which describes thyroid removal, 
was proposed to be assigned to APC 5361 (Level 1 Laparoscopy and 
Related Services) with a proposed geometric mean cost of $7,150.89 and 
proposed APC payment rate of $5,798.13.
    Comment: We received one comment requesting that we reassign CPT 
code 60240 to APC 5362 (Level 2 Laparoscopy and Related Services), 
which had a proposed payment rate of $10,378.45. The commenter argued 
that keeping CPT code 60240 in APC 5361 would be a 2 times rule 
violation because CPT code 60240 has a geometric mean cost that is 
greater than 2 times the geometric mean value of CPT code 
60281(Excision of thyroglossal duct cyst or sinus; recurrent), which 
had a proposed geometric mean cost of around $3,462 and is also in APC 
5361.
    Response: We thank the commenter for their input. Our review found 
that APC 5361 was not in violation of the 2 times rule. Because CPT 
code 60821 has only 2 claims for CY 2025, it does not meet the 
significance threshold for the 2 times rule evaluation. Additionally, 
the updated geometric mean cost for CPT code 60240 of $7,022.82 is 
closer to the payment rate of APC 5361 ($5,834.36) compared to APC 5362 
($10,411.39).
    After consideration of the public comment we received, we are 
finalizing our proposal without modification to assign CPT code 60240 
to 5361 (Level 1 Laparoscopy and Related Services) for CY 2025. Table 
104 shows the finalized status indicator and APC assignment for the 
procedure code. We refer readers to Addendum B of this final rule with 
comment period for the payment rates for all codes reportable under the 
OPPS. Addendum B is available via the internet on the CMS website.
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59. Trabecular Bypass Procedures, CPT Codes 66989, 66991, 0660T, 0661T, 
and 0671T (APCs 5492 and 5493)
    Trabecular bypass procedures are used for the treatment of glaucoma 
and may be performed along with cataract surgery or as a stand-alone 
procedure. Another glaucoma treatment involves the implantation of a 
device that releases a drug into the eye. For the CY 2025 OPPS final 
rule, we proposed to assign CPT code 66989 (Extracapsular cataract 
removal with insertion of intraocular lens prosthesis (1-stage 
procedure), manual or mechanical technique (e.g., irrigation and 
aspiration or phacoemulsification), complex, requiring devices or 
techniques not generally used in routine cataract surgery (e.g., iris 
expansion device, suture support for intraocular lens, or primary 
posterior capsulorrhexis) or performed on patients in the amblyogenic 
developmental stage; with insertion of intraocular (e.g., trabecular 
meshwork, supraciliary, suprachoroidal) anterior segment aqueous 
drainage device, without extraocular reservoir, internal approach, one 
or more) with a geometric mean cost around $5,440; CPT code 66991 
(Extracapsular cataract removal with insertion of intraocular lens 
prosthesis (1 stage procedure), manual or mechanical technique (e.g., 
irrigation and aspiration or phacoemulsification); with insertion of 
intraocular (e.g., trabecular meshwork, supraciliary, suprachoroidal) 
anterior segment aqueous drainage device, without extraocular 
reservoir, internal approach, one or more) with a geometric mean cost 
around $4,990; and CPT code 0671T (Insertion of anterior segment 
aqueous drainage device into the trabecular meshwork, without external

[[Page 94117]]

reservoir, and without concomitant cataract removal, one or more) with 
a geometric mean cost around $5,527 to APC 5493 (Level 3 Intraocular 
Procedures) with a payment rate around $5,160.
    Also, for the CY 2025 OPPS final rule, we proposed to assign CPT 
code 0660T (Implantation of anterior segment intraocular 
nonbiodegradable drug-eluting system, internal approach) with no claims 
data for CY 2025, and CPT code 0661T (Removal and reimplantation of 
anterior segment intraocular nonbiodegradable drug-eluting implant) 
with no claims data for CY 2025 to APC 5492 (Level 2 Intraocular 
Procedures) with a payment rate of around $4,023.
    Comment: Multiple commenters supported our proposal to assign CPT 
codes 66989, 66991, and 0671T to APC 5493 (Level 3 Intraocular 
Procedures) with a payment rate around $5,160. The commenters also 
supported our proposal to assign CPT codes 0660T and 0661T to APC 5492 
(Level 2 Intraocular Procedures) with a payment rate of around $4,023.
    Response: We appreciate the commenters' support for our proposals.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification for CPT codes 66989, 
66991, 0660T, 0661T, 0671T to assign these procedures to APC 5493 
(Level 3 Intraocular Procedures). We also are implementing our proposal 
without modification for CPT codes 0660T and 0661T to assign these 
procedures to APC 5492 (Level 2 Intraocular Procedures). Table 105 
shows the finalized status indicator and APC assignment for all of the 
procedure codes. We refer readers to Addendum B of this final rule for 
the payment rates for all codes reportable under the OPPS. Addendum B 
is available via the internet on the CMS website.

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[[Page 94119]]

60. Transcutaneous Magnetic Peripheral Nerve Stimulation CPT Codes 
0766T and 0767T (APC 5722)
    Transcutaneous Magnetic Peripheral Nerve Stimulation is intended to 
stimulate peripheral nerves for relief of chronic intractable pain, 
post[hyphen]traumatic pain, post[hyphen]surgical pain and/or for relief 
of chronic painful diabetic peripheral neuropathy in the lower 
extremities for patients 18 and older. CPT code 0766T (Transcutaneous 
magnetic stimulation by focused low-frequency electromagnetic pulse, 
peripheral nerve, with identification and marking of the treatment 
location, including noninvasive electroneurographic localization (nerve 
conduction localization), when performed; first nerve) became effective 
January 1, 2023. For CY 2024, CPT code 0766T has been assigned to APC 
5721 (Level 1 Diagnostic Tests and Related Services) with the status 
indicator ``Q1'' (STV-Packaged Codes). There are no claims available 
for CPT codes 0766T in CY 2023. For CY 2025, we proposed to continue 
assigning CPT codes 0766T to APC 5721.
    CPT code 0767T (Transcutaneous magnetic stimulation by focused low-
frequency electromagnetic pulse, peripheral nerve, with identification 
and marking of the treatment location, including noninvasive 
electroneurographic localization (nerve conduction localization), when 
performed; each additional nerve (list separately in addition to code 
for primary procedure)) became effective January 1, 2023. CPT code 
0767T is an add-on code and we proposed to assign status indicator 
``N'' (packaged) for this code.
    Comment: Commenters disagreed with the proposed assignment of APC 
5721 (Level 1 Diagnostic Tests and Related Services) and the status 
indicator ``Q1'' for CPT code 0766T, claiming that CPT code 0766T is 
not clinically similar nor uses comparable resources to other services 
in APC 5721. The commenters stated that the HOP Panel recommended that 
0766T be reassigned to APC 5431 (Level 1 Nerve Procedures) with a 
status indicator ``S'' (Significant Procedures, Not Discounted when 
Multiple. Paid under OPPS; separate APC payment). Additionally, 
commenters disagreed with the status indicator of ``N'' for CPT code 
0767T and requested the 0767T be reassigned status indicator ``S'' and 
assigned to APC 5431 (Level 1 Nerve Procedures).
    Response: We thank commenters for their input. We disagree that CPT 
code 0766T is comparable clinically and in resource costs to the 
services assigned to APC 5431. However, after further evaluation, we 
believe CPT code 0766T is more comparable clinically and from a 
resource cost perspective to CPT code 90867 (Therapeutic repetitive 
transcranial magnetic stimulation (tms) treatment; initial, including 
cortical mapping, motor threshold determination, delivery and 
management), which is assigned to APC 5722 (Level 2 Diagnostic Tests 
and Related Services), because these services share similar magnetic 
stimulation and nerve localization processes. Additionally, we believe 
that patients may receive this service as a primary standalone service. 
Therefore, for CY 2025, we are finalizing the reassignment of CPT code 
0766T to APC 5722 (Level 2 Diagnostic Tests and Related Services) and 
its status indicator to ``S'' (Significant Procedures, Not Discounted 
when Multiple. Paid under OPPS; separate APC payment).
    We note that CPT code 0767T is an add-on code. Add-on codes are 
always performed in addition to the primary service or procedure and 
must never be reported as a stand-alone code. As specified under 
regulation 42 CFR 419.2(b)(18), add-on codes are generally packaged 
under the OPPS, and payment for the codes are bundled with the primary 
codes. Consequently, CPT code 0767T is not paid separately under the 
OPPS, but instead, its payment is packaged into payment for the primary 
code.
    After consideration of the public comments we received, we are 
finalizing reassigned status indicator and APC assignments for CPT 
codes 0766T and finalizing as proposed the status indicator assignment 
for 0767T. Please refer to Table 106 below for the final OPPS APC and 
status indicator assignment for CPT codes 0766T and 0767T for CY 2025. 
We refer readers to Addendum B of this final rule with comment period 
for the payment rates for all codes reportable under the OPPS. Addendum 
B is available via the internet on the CMS website.

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61. Transurethral Ultrasound Ablation (TULSA) Procedure, HCPCS Code 
C9734 and CPT Code 55882 (APC 5377)
    The TULSA procedure is a minimally invasive procedure that, under 
MRI guidance, delivers precise doses of therapeutic ultrasound to treat 
prostate cancer. HCPCS code C9734 (Focused ultrasound ablation/
therapeutic intervention, other than uterine leiomyomata, with magnetic 
resonance (mr) guidance) became effective April 1, 2013.
    For CY 2025, the OPPS payment rates are proposed based on available 
CY 2023 claims data. For CY 2025, based on our analysis of claims data, 
we found a total of 89 single frequency claims and an estimated 
geometric mean cost of $10,056 for HCPCS code C9734. For CY 2025, we 
proposed to continue to assign HCPCS code C9734 to APC 5115 (Level 5 
Musculoskeletal Procedures) with a proposed payment rate of 
approximately $12,756.
    Comment: Commenters pointed out that the AMA CPT created a new 
code, CPT code 5X008, to describe the TULSA procedure represented by 
HCPCS code C9734. CPT code 5X008 (Ablation of prostate tissue, 
transurethral, using thermal ultrasound, including magnetic resonance 
imaging guidance for, and monitoring of, tissue ablation; with 
insertion of transurethral ultrasound transducer for delivery of 
thermal ultrasound, including suprapubic tube placement and placement 
of an endorectal cooling device, when performed) becomes effective 
January 1, 2025.
    Commenters also recommended that the TULSA procedure be reassigned 
to the Urology and Related Services APC series, which is more 
clinically consistent with other urology related procedures. 
Furthermore, commenters stated TULSA is more similar clinically and in 
terms of resources to the procedures in APC 5377 (Level 7 Urology and 
Related Services) than procedures in APC 5376 (Level 6 Urology and 
Related Services). Commenters referenced the use of a MRI technology, 
specialized staffing, and the longer procedural time that increases the 
resources needed to perform the TULSA procedure relative to other 
prostate ablation procedures in Level 6 Urology and Related Services 
(APC 5376). Commenters stated that HCPCS code C9734's geometric mean 
cost aligns more appropriately with APC 5377 (Level 7 Urology and 
Related Services) with a proposed APC geometric mean cost of $13,217.
    Response: We thank the commenters for pointing out that CPT code 
5X008 (55882) will become effective January 1, 2025. We note that we 
will replace HCPCS code C9734 with CPT code 5X008 (55882) effective 
January 1, 2025, as well as assign the underlying claims associated 
with C9734 to CPT code 5X008 (55882).
    We agree with the commenters that the TULSA procedure, described by 
HCPCS code C9734 (CPT code 55882) should be reassigned to the Urology 
and Related Services APC series to be consistent with other urological 
related procedures. We also believe that the TULSA procedure is 
clinically similar to CPT code 55880 (Ablation of malignant prostate 
tissue, transrectal, with high intensity-focused ultrasound (hifu), 
including ultrasound guidance) or CPT code 55873 (Cryosurgical ablation 
of the prostate (includes ultrasonic guidance and monitoring)) which 
are assigned to APC 5376. However, we acknowledge that the TULSA 
procedure requires greater resources from MRI equipment and MRI 
technologists, and requires a longer procedure time than CPT codes 
55880 and 55873. Therefore, for CY 2025, we are reassigning CPT code 
5X008 (55882) to APC 5377 (Level 7 Urology and Related Services). We 
note that we will continue to evaluate and monitor the cost of CPT code 
5X008 (55882) for future rulemaking.
    After consideration of the public comments we received, we are 
finalizing our policy to assign CPT code 5X008 (55882) to APC 5377 
(Level 7 Urology and Related Services). Please refer to Table 107 below 
for the final OPPS APC and status indicator assignment for CPT code 
5X008 (55882) for CY 2025. The final CY 2025 payment rates can be found 
in Addendum B to this final rule with comment period via the internet 
on the CMS website.

[[Page 94121]]

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62. Unfold AI Service, CPT Code 0898T (APC 5724)
    Unfold AI is an algorithm-based test that analyzes multiple 
clinical data inputs and multi-modal images to create a newly computed 
3D visualization of the precise location and dimensions of clinically 
significant prostate cancer. The generated output assists physicians in 
identifying the cancer margins for treatment. The Unfold AI service is 
represented by CPT code 0898T (Noninvasive prostate cancer estimation 
map, derived from augmentative analysis of image-guided fusion biopsy 
and pathology, including visualization of margin volume and location, 
with margin determination and physician interpretation and report) 
which became effective July 1, 2024. As this is a new code in 2024, we 
have no claims data for CPT code 0898T. For CY 2025, we proposed to 
assign CPT Code 0898T to APC 5724 (Level 4 Diagnostic Tests and Related 
Services).
    Comment: Commenters supported our proposal to assign CPT code 0898T 
to Level 4 Diagnostic Tests and Related Services (APC 5724).
    Response: We thank the commenters for their support on our proposal 
to assign CPT code 0898T to Level 4 Diagnostic Tests and Related 
Services (APC 5724).
    After consideration of the public comments we received, we are 
finalizing our proposal without modification for CPT code 0898T. Please 
refer to Table 108 below for the final OPPS APC and status indicator 
assignment for HCPCS code 0898T for CY 2025. The final CY 2025 payment 
rates can be found in Addendum B to this final rule with comment period 
via the internet on the CMS website.
[GRAPHIC] [TIFF OMITTED] TR27NO24.133

63. Ureteroscopy, HCPCS Code C9761 (APC 5376)
    The ureteroscopy procedure addresses kidney stones and may apply 
catheterization to vacuum aspirate the fragmented kidney stones. HCPCS 
code C9761 (Cystourethroscopy, with ureteroscopy and/or, with 
lithotripsy, and ureteral catheterization for steerable vacuum 
aspiration of the kidney, collecting system, ureter, bladder, and 
urethra if applicable (must use a steerable ureteral catheter) became 
effective October 1, 2020.
    For CY 2025, the OPPS payment rates are proposed based on available 
CY

[[Page 94122]]

2023 claims data. For the CY 2025 OPPS/ASC proposed rule, we found a 
total of 95 single frequency claims and a geometric mean cost of 
approximately $9,718 for HCPCS code C9761. For CY 2025, we proposed to 
continue to assign HCPCS code C9761 to APC 5376 (Level 6 Urology and 
Related Services) with a proposed payment rate of approximately $9,208.
    Comment: One commenter requested CMS provide coding guidance if 
HCPCS code C9761 should be reported when the ureteroscopy procedure 
utilizes the flexible ureteroscopy (fURS) with the flexible and 
navigable suction (FANS) sheath.
    Response: This comment is out of scope of this OPPS/ASC final rule 
with comment period. We note that if hospitals have questions about 
appropriate coding that they cannot resolve on their own, the 
appropriate first step would be to review the HCPCS codes or consult a 
Medicare Administrative Contractor (MAC).
64. V-LAP System Left Atrial Pressure Monitoring Procedure, CPT Code 
0933T (APC 5191)
    On January 1, 2025, CPT code 0933T (Transcatheter implantation of 
wireless left atrial pressure sensor for long-term left atrial pressure 
monitoring, including sensor calibration and deployment, right heart 
catheterization, transseptal puncture, imaging guidance, and 
radiological supervision and interpretation) will become effective to 
report the implantation and remote monitoring of the V-LAP System. The 
system is used to measure and monitor left atrial pressure in patients 
with advanced congestive heart failure (CHF).
    The V-LAP system was designated as a Category A IDE clinical study 
(NCT06147336) on January 30, 2024. Since devices in Category A IDE 
studies are not covered by Medicare during the study, the payment for 
CPT code 0933T while in the Category A IDE study will reflect only the 
cost of the service that is performed each time it is reported on a 
claim. For CY 2025, we proposed to assign CPT code 0933T to APC 5191 
(Level 1 Endovascular Procedures) and status indicator of ``J1'' 
(Hospital Part B Services Paid Through a Comprehensive APC) with a 
proposed payment of around $3,210.
    Comment: We received one comment from the manufacturer requesting 
that we reassign CPT code 0933T from APC 5191 (Level 1 Endovascular 
Procedures) to APC 1532 (New Technology--Level 32 ($7001-$7500)), as it 
more accurately reflects the costs of this procedure.
    Response: We appreciate the commenter's input. The commenter 
asserts that the current APC assignment of 5191 (Level 1 Endovascular 
Procedures) does not adequately reflect the complex nature and resource 
demands of the V-LAP procedure even though the procedure is described 
as a standard minimally invasive catheterization. We are unclear what 
procedural steps makes this procedure more complex than the other 
procedures assigned to APC 5191. Based on our understanding of the 
service and input from our medical advisors, we do not agree and 
believe that CPT code 93451 (Right heart catheterization including 
measurement(s) of oxygen saturation and cardiac output, when performed) 
is an appropriate crosswalk code while the V-LAPTM procedure 
is in a Category A IDE trial. Once the service receives appropriate FDA 
approval outside of the Category A IDE study (e.g., PMA approval or 
510(k)), we will work to assign CPT code 0933T to an APC that is more 
reflective of the cost of the service, beyond routine care items and 
services.
    We remind the readers that for Category A IDE studies, Medicare 
only provides payment for routine care items and services furnished in 
the FDA-approved Category A study. We refer readers to the Medicare 
Benefit Policy Manual, See 20.1--Medicare Requirements for Coverage of 
Items and Services in FDA-approved Category A and B IDE Studies.
    After consideration of the public comment we received, we are 
finalizing our proposal without modification to assign CPT code 0933T 
to APC 5191. We refer readers to Addendum B of this final rule with 
comment period for the payment rates for all codes reportable under the 
OPPS. Addendum B is available via the internet on the CMS website.
65. Vagal Nerve Neurostimulator System, CPT Codes 0908T Through 0912T
    The CPT Editorial Panel created 5 new Category III CPT codes, 
effective January 1, 2025, which describe the implantation, 
replacement, removal, interrogation, and programming of the integrated 
vagus nerve stimulation device used for the treatment of patients who 
have rheumatoid arthritis (RA) and are not responsive to 
pharmacological therapy. The patient is placed under general anesthesia 
(for about 60-90 minutes) while the neurosurgeon dissects the tissue on 
the left side of the neck to access the cervical vagus nerve within the 
carotid sheath. The rechargeable integrated neurostimulator is then 
placed directly on the cervical vagus nerve. The implant is charged 
weekly with an external charger. A rheumatologist is responsible for 
prescribing and making changes to the stimulation therapy via an app. 
See Table 109 for the CPT codes, their long descriptors, and the 
proposed payment assignments.

[[Page 94123]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.134

    For CY 2025, we proposed to assign 0908T and 0909T to APC 5462 
(Level 2 Neurostimulator and Related Procedures) and status indicator 
``J1'' (Hospital Part B Services Paid Through a Comprehensive APC; Paid 
under OPPS.) based on their similarity to CPT code 0587T (Percutaneous 
implantation or replacement of integrated single device 
neurostimulation system for bladder dysfunction including electrode 
array and receiver or pulse generator, including analysis, programming, 
and imaging guidance when performed, posterior tibial nerve) and 
because CPT 0587T also describes an integrated system.
    We proposed to assign 0910T to APC 5461 (Level 1 Neurostimulator 
and Related Procedures) and status indicator ``J1'' based on its 
similarity to CPT code 0588T (Revision or removal of percutaneously 
placed integrated single device neurostimulation system for bladder 
dysfunction including electrode array and receiver or pulse generator, 
including analysis, programming, and imaging guidance when performed, 
posterior tibial nerve) as both codes describe the removal of an 
integrated neurostimulation system.
    We also proposed to assign CPT codes 0911T to APC 5733 (Level 3 
Minor Procedures) and status indicator ``Q1'' (STV-Packaged Codes; Paid 
Under OPPS) using CPT code 95981(Electronic analysis of implanted 
neurostimulator pulse generator system (e.g., rate, pulse amplitude and 
duration, configuration of wave form, battery status, electrode 
selectability, output modulation, cycling, impedance and patient 
measurements) gastric neurostimulator pulse generator/transmitter; 
subsequent, without reprogramming) as a crosswalk code and 0912T to APC 
5742 (Level 2 Electronic Analysis of Devices) and status indicator of 
``S'' (Procedure or Service, Not Discounted When Multiple; Paid under 
OPPS; separate APC payment.) using CPT code 0589T (Electronic analysis 
with simple programming of implanted integrated neurostimulation system 
for bladder dysfunction (e.g., electrode array and receiver), including 
contact group(s), amplitude, pulse width, frequency (Hz), on/off 
cycling, burst, dose lockout, patient-selectable parameters, responsive 
neurostimulation, detection algorithms, closed-loop parameters, and 
passive parameters, when performed by physician or other qualified 
health care professional, posterior tibial nerve, 1-3 parameters) as a 
crosswalk code.
    Comment: We received several comments from stakeholders requesting 
that CPT codes XX32T (0908T) and XX33T (0909T) be reassigned from APC 
5462 (Level 2 Neurostimulator and Related Procedures) to APC 5465 
(Level 5 Neurostimulator and Related Procedures) because the proposed 
APC assignments do not reflect the costs of the device and procedure or 
consider the clinical intensity and risk of the procedure. Commenters 
provided CPT code 64568 (Open implantation of cranial nerve (e.g., 
vagus nerve) neurostimulator electrode array and pulse generator) as an 
appropriate comparator code, noting that the integrated devices do not 
require the creation of an additional subcutaneous pocket. While there 
are some differences in the two surgical procedures described by CPT 
codes XX32T (0908T) and XX33T (0909T) compared to CPT code 64568, the 
commenter asserted that

[[Page 94124]]

inserting the integrated system is a complex procedure to perform and 
is similar in cost, resources, and required skill.
    Another commenter requested that we reassign XX34T (0910T) from APC 
5461 (Level 1 Neurostimulator and Related Procedures) to APC 5463 
(Level 3 Neurostimulator and Related Procedures) stating that CPT code 
61888 (Revision or removal of cranial neurostimulator pulse generator 
or receiver) is an appropriate comparator code.
    Commenters noted that the vagal nerve neurostimulation system is a 
novel treatment for rheumatoid arthritis patients who have exhausted 
other pharmacological options to manage their disease. They stated that 
biological therapies are expensive and may cost over $50,000/per year, 
while this neurostimulation system is expected to have a shelf life of 
10 years. They asserted that APC reassignments of XX32T (0908T), XX33T 
(0909T), and XX34T (0910T) would support CMS' commitment to promoting 
new innovative treatment options and expanding access for beneficiaries 
with chronic conditions.
    In addition to the comments requesting APC reassignments, the 
manufacturer stated they were expecting FDA approval, specifically 
Premarket Approval (PMA), in the 2nd quarter of 2025 with an expected 
statement ``for the treatment of adult patients with moderately to 
severely active RA who have had an inadequate response, loss of 
response or intolerance to one (1) or more biological or targeted 
synthetic DMARDs (disease-modifying antirheumatic drugs)''. They 
acknowledged that, in the past, CMS has assigned non-FDA approved 
technologies a status indicator of ``E1'' and addressed the APC 
assignments once FDA approval is received. The manufacturer asserted 
the lack of payment assignments (APCs and status indicators) would 
significantly hinder commercialization of their neurostimulation 
system.
    Response: We thank the commenters for all their valuable input. 
Because this vagal nerve neurostimulation system has not yet received 
FDA approval, we believe that we should reassign CPT codes 0908T, 
0909T, 0910T, 0911T, and 0912T to status indicator ``E1'' to indicate 
that the code is not payable by Medicare when submitted on outpatient 
claims (any outpatient bill type). When we are notified by stakeholders 
that the FDA has approved this neurostimulation system, we will 
reassess the status indicator and APC assignments for these codes based 
on the comments we have received, in a future quarterly update and/or 
rulemaking cycle.
    In summary, after consideration of the public comments received, we 
are finalizing our proposal, with modification, to assign status 
indicator ``E1'' to CPT codes 0909T through 0912T. The final status 
indicator assignment for the codes is listed in Table 110. We refer 
readers to Addendum D1 of this final rule with comment period for the 
complete list of the OPPS payment status indicators and their 
definitions for CY 2025. Addendum D1 is available via the internet on 
the CMS website.
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[[Page 94125]]

66. VisONE[supreg] Synchronized Diaphragmatic StimulationTM 
(SDS[supreg]) System CPT Codes 0674T Through 0685T
    The VisONE[supreg] Synchronized Diaphragmatic 
StimulationTM (SDS[supreg]) System is a technology being 
studied to treat select patients with chronic heart failure by 
delivering electrical stimulation to the diaphragm to modulate 
intrathoracic pressure pulses on the cardiovascular system. The 
SDS[supreg] System is comprised of an implantable pulse generator 
(IPG), sensing and therapy lead electrodes, a laparoscopic implant tool 
to place the leads, and an external programmer and telemetry wand.
    There are 12 Category III CPT codes that may describe the various 
procedures related to the procedures involving the SDS[supreg] System: 
CPT codes 0674T-0685T. For CY 2025, as the SDS[supreg] System did not 
have FDA approval at the time of the proposed rule, we proposed to 
assign CPT codes 0674T-0685T to status indicator ``E1'' to indicate 
that the services are not paid by Medicare when submitted on outpatient 
claims (any outpatient bill type). Please refer to Table 111 for the 
full list of CPT codes and the proposed status indicators for CY 2025.
BILLING CODE 4120-01-P

[[Page 94126]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.136

BILLING CODE 4120-01-C
    Comment: One commenter, specifically, the manufacturer of the 
SDS[supreg] System, requested clinical APC assignments for 9 of the 12 
CPT codes

[[Page 94127]]

describing the various procedures involving the SDS[supreg] System. The 
commenter requested assignments to packaged status indicator ``N'' for 
the remaining three add-on CPT codes for which they did not request a 
clinical APC assignment.
    Specifically, the commenter requested that, for CY 2025, CMS 
assign:
     CPT code 0674T to APC 5465 (Level 5 Neurostimulator and 
Related Procedures) with SI ``J1'' based on a crosswalk to CPT code 
63685.
     CPT code 0675T to APC 5463 (Level 3 Neurostimulator and 
Related Procedures) with SI ``J1'' based on a crosswalk to CPT code 
43647.
     CPT codes 0677T and 0679T to APC 5362 (Level 2 Laparoscopy 
and Related Services) with SI ``J1'' based on a crosswalk to CPT code 
43648.
     CPT code 0680T to APC 5464 (Level 4 Neurostimulator and 
Related Procedures) with SI ``J1'' based on a crosswalk to CPT code 
64590.
     CPT code 0681T and 0682T to APC 5461 (Level 1 
Neurostimulator and Related Procedures) with SI ``J1'' based on a 
crosswalk to CPT code 64595.
     CPT code 0683T and 0685T to APC 5741 (Level 1 Electronic 
Analysis of Devices) with SI ``Q1'' based on crosswalks to CPT codes 
93281 and 93288, respectively.
     SI ``N'' to CPT codes 0676T, 0678T, and 0684T.
    The commenter also provided additional information regarding the 
FDA approval status of the SDS[supreg] System. Per the commenter, on 
July 26, 2024, the SDS[supreg] System received FDA approval for the 
Investigational Device Exemption (IDE) regarding the RECOVER-HF trial, 
which was anticipated to begin in late 2024. The request for Medicare 
coverage of the RECOVER-HF trial was pending when the comment was 
submitted. The commenter requested that CMS make the 12 codes payable 
effective January 1, 2025, in anticipation of Medicare's approval of 
their Category B IDE trial application.
    Response: We thank the commenter for their input and agree with the 
suggested CPT crosswalk codes provided by the commenter.
    We note that the RECOVER-HF trial was approved for Medicare 
coverage on September 23, 2024. Because the Category B IDE trial meets 
the CMS standards for coverage, and appears on the CMS approved IDE 
list on the CMS website, we are not finalizing our proposal to assign 
the 12 codes that describe the various procedures associated with the 
SDS[supreg] System to status indicator ``E1.'' In light of the recent 
Category B IDE study approval for the RECOVER-HF clinical trial, and 
based on our review of the comment received, more specifically the 
crosswalk codes recommended by the commenter, we are finalizing the 
following clinical APC and status indicator assignments:
BILLING CODE 4120-01-P

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[[Page 94129]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.138

BILLING CODE 4120-01-C
    The final CY 2025 payment rate for the codes can be found in 
Addendum B to this final rule with comment period. In addition, we 
refer readers to Addendum D1 to this final rule with comment period for 
the complete list of the OPPS payment status indicators and their 
definitions for CY 2025. Addendum D1 is available via the internet on 
the CMS website.
67. Xenograft Implantation Into the Articular Surface, CPT Code 0737T 
(APC 5115)
    For the July 1, 2022, update, the AMA CPT Editorial Panel 
established CPT code 0737T (Xenograft implantation into the articular 
surface) to describe xenograft implantation for use in cartilage and 
osteochondral defects in joints. Since July 1, 2022, CPT code 0737T has 
been assigned to status indicator ``E1'' (Not paid by Medicare when 
submitted on outpatient claims (any outpatient bill type)) to indicate 
that the code was not payable under the OPPS. In the OPPS Quarterly 
Change Request (Transmittal 12816, CR 13784) dated August 29, 2024, we 
noted that the device associated with this code (Agili-CTM) 
had become available, and therefore we reassigned CPT code 0737T to 
status indicator ``J1'' (Hospital Part B Services Paid Through a 
Comprehensive APC; Paid under OPPS) and APC 5115 (Level 5 
Musculoskeletal Procedures) effective July 1, 2024. For CY 2025, we 
proposed to continue to assign CPT code 0737T to APC 5115 with a 
proposed payment assignment of around $12,755.
    Comment: We received a couple of comments expressing support for 
assigning CPT code 0737T to APC 5115 and status indicator ``J1''. 
Commenters noted that the reimbursement was consistent with the costs 
associated with the procedure and would ensure equitable patient 
access, even allowing some beneficiaries to possibly avoid more costly 
knee replacement procedures. They requested that we maintain the APC 
and status indicator assignments for several years to gather claims 
data as they anticipate the patient volume will be limited due to the 
patient selection criteria.
    Response: We thank the commenters for their input. Under the OPPS, 
we review our claims data on an annual basis to determine payment rates 
and will continue to monitor the claims data and the appropriateness of 
the APC assignment for CPT code 0737T to APC 5115.
    In summary, we are finalizing our proposal, without modification, 
to assign CPT code 0737T to APC 5115 for CY 2025. The final CY 2025 
payment rate for the code can be found in Addendum B to this final rule 
with comment period. In addition, we refer readers to Addendum D1 of 
this final rule with comment period for the SI meanings for all codes 
reported under the OPPS. Addenda B and D1 are available via the 
internet on the CMS website.
68. OPPS Payment for Software as a Service
    New clinical software, which includes clinical decision support 
software, clinical risk modeling, and computer aided detection (CAD), 
is becoming increasingly available to providers. These technologies 
often perform data analysis of diagnostic images from patients. While 
many of these technologies are new, we note that clinical software, 
particularly CAD, has been used to aid or augment clinical decision 
making for decades. These technologies rely on complex algorithms or 
statistical predictive modeling to aid in the diagnosis or treatment of 
a patient's condition. We refer to these algorithm-driven services that 
assist practitioners in making clinical assessments, and that providers 
pay for either on a subscription or per-use basis, as Software as a 
Service (SaaS).
    We note the proliferation of SaaS procedures approved by the FDA 
and their subsequent assignment of CPT codes by the AMA has led the 
agency to seek a workable SaaS payment strategy. We are seeking a 
strategy that would provide equitable payment for these new 
technologies while also preserving the integrity of the OPPS payment 
bundles, an essential component of a prospective payment system. We are 
seeking a payment strategy that aligns with our agency's mission to 
improve quality, health, reduce cost, and strengthen the health care 
system. We note that the manufacturer-supplied cost data of

[[Page 94130]]

these SaaS services is often high and the true return in investment for 
these services is still unknown. Moreover, many SaaS services often do 
not share clinical and resource similarity to existing medical 
services. Thus, it generally has been challenging to compare a new SaaS 
service to existing medical services for the purpose of determining a 
fair payment rate for these new services.
    Although some have recently received separate payment for these 
SaaS procedures under the OPPS, we recognize that certain clinical 
decision support software, including machine learning or ``AI,'' has 
been available for many years. In the past ten years, clinical decision 
support software has been commonly used alongside electronic medical 
records by medical practitioners. Nonetheless, the number of FDA 
approved or cleared ``machine learning'' or ``AI'' clinical software 
programs has rapidly increased in the past few years. We note that the 
FDA has approved many SaaS procedures for similar functions: there are 
at least six software products that purport to detect findings in 
Computed Tomography (CT) studies of the chest.\29\ Additionally, we 
note some clinical software developers are now using alternative 
licensing that charges per use rather than using the traditional annual 
subscription or bulk use subscription. As a result of these variables 
and potentially others, there is significant price variation within the 
SaaS procedure space.
---------------------------------------------------------------------------

    \29\ https://www.fda.gov/medical-devices/software-medical-device-samd/artificial-intelligence-and-machine-learning-aiml-enabled-medical-devices
---------------------------------------------------------------------------

    We recognize that, as described in the CY 2023 OPPS/ASC final rule 
with comment period (87 FR 72027), SaaS procedures are a heterogenous 
group of services, which presents challenges when it comes to adopting 
payment policy for SaaS procedures as a whole. In the CY 2023 OPPS/ASC 
final rule, we solicited public comment on a payment approach that 
would broadly apply to SaaS procedures and have received some valuable 
feedback. Some of the feedback includes incorporating AI taxonomy 
across agencies and interested parties, or not to establish a single 
policy that would apply to all SaaS-type technology but instead 
separately evaluate each new technology to determine the appropriate 
HCPCS coding, including whether or not a potential CPT code can be used 
to support payment for the separate and distinct service under the 
OPPS.
    For CY 2025, we are continuing to work to formulate a workable SaaS 
payment policy that would enhance our ability to provide equitable 
payment for SaaS procedures while responsibly managing cost and 
protecting the Medicare trust fund. Specifically, we are working to 
address the following:
     Identifying a payment strategy that is applicable across 
the settings of care (physician offices, for example);
     Identifying the fair costs associated for SaaS services;
     Distinguishing services that should be paid separately 
versus services that should be packaged under a prospective payment 
system; and
     Identifying a payment strategy for SaaS services that are 
part of other medical devices versus those that are distinct services.
    We did not make any proposals on OPPS payment for SaaS for CY 2025 
but received a number of comments on the topic.
    Comment: Commenters suggested CMS formulate a SaaS payment policy 
that would incentivize adoption of new AI and ensure access and provide 
stability for its adoption of SaaS technologies. Commenters stated that 
CMS payment decisions have not uniformly and consistently ensured 
appropriate levels of payment. Some commenters recommended that we 
adopt the term ``Algorithm-based healthcare services'' (ABHS), which 
include SaaS procedures. ABHS includes these services regardless of 
whether they are delivered by a third party, or a health care 
professional using the AI software through the cloud, the web, a 
workstation, or embedded in imaging acquisition hardware. Commenters 
also recommended that ABHS codes be initially assigned to New 
Technology APCs for at least 5 years based on manufacture-supply cost 
data, until sufficient claims data are available. Some commenters also 
recommend that we codify the 2023 packaging exemption for SaaS add-on 
codes policy.
    Response: We appreciate the commenters' valuable input on a SaaS 
payment policy approach, and we will consider their input for any 
future SaaS payment policy. We note that the suggestion for any new 
SaaS services to remain in the initial New Technology APC assignment 
for at least 5 years is in contrast to our current Transitional Pass-
Through policy of three years for device or drugs. Moreover, we would 
need to examine the feasibility of payment determination based on 
manufacture-supplied cost data, which has historically not been 
comparable when the claims data become available.
    Comment: One commenter requested CMS clarify that SaaS codes 
created by the AMA CPT are to be vendor neutral, and that these codes 
do not represent any single vendor's services. The commenter stated the 
focus on a single commercial platform for a code is not accurate, 
confuses the applicability, and limits adoption of other tools for 
which the code was intended. The commenter recommended removing the 
current language that these codes are ``associated with'' a specific 
service, which may result in an increase in claims, therefore allowing 
for a more accurate understanding of actual costs associated with these 
services.
    Response: We thank the commenter for the valuable input. We 
recognize that the proliferation of SaaS procedures has created a need 
for the agency to continue to update our payment approach. We are 
continuing to work to improve SaaS payment policy in future rulemakings 
to enhance our ability to provide equitable payment for SaaS procedures 
while responsibly managing cost and protecting the Medicare trust fund.
69. APC and Status Indicator Review Process
    Each year, CMS receives a high volume of requests from stakeholders 
and other interested parties to make certain OPPS payment policy 
changes, including many requesting changes to the APC and status 
indicator assignments of new or revised codes. Current APC groupings, 
APC assignments, and status indicators are reflected in the various 
addenda to the proposed and final OPPS payment rules. In addition, 
comments within the scope of the proposed rule, are summarized and 
responded to in the annual OPPS final rule with comment period.
    Comment: We received one comment requesting that CMS outline a 
process that describes the criteria used to determine which stakeholder 
requests regarding APC assignments are included in the OPPS proposed 
rule. The commenter suggested that all APC assignment requests, 
including APC structure requests, be included in the OPPS proposed rule 
and that we should follow a process similar to the IPPS, which includes 
an annual deadline, and requests discussed in the following year's 
proposed rule.
    Response: We appreciate the feedback and will consider this comment 
for future rulemaking. As a reminder, codes are updated and changed 
throughout the year. CPT and Level II HCPCS code changes that affect 
the OPPS are published through the annual rulemaking cycle and through 
the OPPS quarterly update Change Requests (CRs). Generally, these code 
changes are effective January 1, April 1, July 1, or

[[Page 94131]]

October 1. CPT code changes are released by the AMA (via their website) 
while Level II HCPCS code changes are released to the public via the 
CMS HCPCS website. CMS recognizes the release of new CPT and Level II 
HCPCS codes outside of the formal rulemaking process via OPPS quarterly 
update CRs. Based on our review, we assign the new codes to interim 
status indicators (SIs) and APCs. These interim assignments are 
finalized in the OPPS/ASC final rules. This quarterly process offers 
hospitals access to codes that more accurately describe the items or 
services furnished and provides payment for these items or services in 
a timelier manner than if we waited for the annual rulemaking process. 
We solicit public comments on the new CPT and Level II HCPCS codes, 
status indicators, and APC assignments through our annual rulemaking 
process.
    Comment: We received one comment requesting information about our 
process for assigning status indicator ``E1'' to CPT or HCPCS codes 
that are not FDA approved. The commenter asserts that the delay in 
timing (from FDA approval to APC and SI assignment) affects beneficiary 
access to new technologies and services and impacts how other payers 
will pay for the services.
    Response: We appreciate the feedback. We believe for items and 
services that are not FDA approved, it is appropriate to assign the 
codes to status indicator ``E1'' to indicate that they are not payable 
by Medicare when submitted on outpatient claims (any outpatient bill 
type) because the services are either not covered by any Medicare 
outpatient benefit category, statutorily excluded by Medicare, or not 
reasonable and necessary. We rely on stakeholders to notify us upon FDA 
approval of their device and/or service and we work to ensure a timely 
transition and assign the applicable codes to APCs that reflect 
clinical and resource similarity to the new codes. We accept 
information regarding the device and/or service that the stakeholder 
can provide to us to assist us in our review. We remind readers that 
OPPS payment policies are updated quarterly through a sub-regulatory 
process.

IV. OPPS Payment for Devices

A. Pass-Through Payment for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
a. Background
    The intent of transitional device pass-through payment, as 
implemented at Sec.  419.66, is to facilitate access for beneficiaries 
to the advantages of new and truly innovative devices by allowing for 
adequate payment for these new devices while the necessary cost data is 
collected to incorporate the costs for these devices into the procedure 
APC rate (66 FR 55861). Under section 1833(t)(6)(B)(iii) of the Act, 
the period for which a device category eligible for transitional pass-
through payments under the OPPS can be in effect is at least 2 years 
but not more than 3 years. Prior to CY 2017, our regulation at Sec.  
419.66(g) provided that this pass-through payment eligibility period 
began on the date CMS established a particular transitional pass-
through category of devices, and we based the pass-through status 
expiration date for a device category on the date on which pass-through 
payment was effective for the category. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79654), in accordance with section 
1833(t)(6)(B)(iii)(II) of the Act, we amended Sec.  419.66(g) to 
provide that the pass-through eligibility period for a device category 
begins on the first date on which pass-through payment is made under 
the OPPS for any medical device described by such category.
    In addition, prior to CY 2017, our policy was to propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update. This means that device 
pass-through status would expire at the end of a calendar year when at 
least 2 years of pass-through payments had been made, regardless of the 
quarter in which the device was approved. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79655), we changed our policy to allow 
for quarterly expiration of pass-through payment status for devices, 
beginning with pass-through devices approved in CY 2017 and subsequent 
calendar years, to afford a pass-through payment period that is as 
close to a full 3 years as possible for all pass-through payment 
devices. We also have an established policy to package the costs of the 
devices that are no longer eligible for pass-through payments into the 
costs of the procedures with which the devices are reported in the 
claims data used to set the payment rates (67 FR 66763).
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79648 through 79661) for a full discussion of the current 
device pass-through payment policy.\30\
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    \30\ To apply for OPPS transitional device pass-through status, 
applicants complete an application that is subject to the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This 
information collection (CMS-10052) is currently approved under OMB 
control number 0938-0857 and has an expiration date of November 30, 
2025.
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    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized our policy to publicly post online OPPS device pass-through 
applications received on or after March 1, 2023, beginning with the 
issuance of the CY 2025 proposed rule and for each OPPS rulemaking 
thereafter. We refer readers to the CY 2023 OPPS/ASC final rule with 
comment period (87 FR 71934 through 71938) for a full discussion of the 
policy to publicly post OPPS device pass-through applications.
b. Expiration of Transitional Pass-Through Payments for Certain Devices
    As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires 
that, under the OPPS, a category of devices be eligible for 
transitional pass-through payments for at least 2 years, but not more 
than 3 years. Currently, there are 13 device categories eligible for 
pass-through payment. These devices are listed in Table 112 of this 
final rule where we detail the expiration dates of pass-through payment 
status for each of the 13 devices currently receiving device pass-
through payment.

[[Page 94132]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.139

[[Page 94133]]

    As discussed in section IV.A.2. New Device Pass-Through 
Applications for CY 2024 of the CY 2024 OPPS/ASC final rule with 
comment period, we approved HCPCS code C1601 (Endoscope, single-use 
(i.e. disposable), pulmonary, imaging/illumination device 
(insertable)), as a new device category for pass-through status under 
the OPPS, with an effective date of January 1, 2024. For the full 
discussion of the criteria used to evaluate device pass-through 
applications, refer to the CY 2024 OPPS/ASC final rule with comment 
period, which was published in the Federal Register on November 22, 
2023 (88 FR 81729 through 81743). We note that HCPCS code C1601 was 
established for a bronchoscope that can only be used for a single 
procedure and cannot be reprocessed. As such, HCPCS code C1601 only 
describes devices that cannot be reprocessed.
    In addition, as discussed in section IV.A.2 (New Device Pass-
Through Applications for CY 2023) of the CY 2023 OPPS/ASC final rule 
with comment period, we approved HCPCS code C1747 (Endoscope, single-
use (i.e. disposable), urinary tract, imaging/illumination device 
(insertable)), as a new device category for pass-through status under 
the OPPS, with an effective date of January 1, 2023. For the full 
discussion on the criteria used to evaluate device pass-through 
applications, refer to the CY 2023 OPPS/ASC final rule with comment 
period, which was published in the Federal Register on November 23, 
2022 (87 FR 71929 through 71934). We note that HCPCS code C1747 was 
established for a ureteroscope that can only be used for a single 
procedure and cannot be reprocessed. As such, HCPCS code C1747 only 
describes devices that cannot be reprocessed.
2. New Device Pass-Through Applications for CY 2025
a. Background
    Section 1833(t)(6) of the Act provides for pass-through payments 
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use 
categories in determining the eligibility of devices for pass-through 
payments. As part of implementing the statute through regulations, we 
have continued to believe that it is important for hospitals to receive 
pass-through payments for devices that offer substantial clinical 
improvement in the treatment of Medicare beneficiaries to facilitate 
access by beneficiaries to the advantages of the new technology. 
Conversely, we have noted that the need for additional payments for 
devices that offer little or no clinical improvement over previously 
existing devices is less apparent. In such cases, these devices can 
still be used by hospitals, and hospitals will be paid for them through 
appropriate APC payment. Moreover, a goal is to target pass-through 
payments for those devices where cost considerations are most likely to 
interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 
68629).
    As specified in regulations at Sec.  419.66(b)(1) through (3), to 
be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria:
     If required by FDA, the device must have received FDA 
approval or clearance and FDA marketing authorization (except for a 
device that has received an FDA investigational device exemption (IDE) 
and has been classified as a Category B device by FDA), or meet another 
appropriate FDA exemption; and the pass-through payment application 
must be submitted within 3 years from the date of the initial FDA 
marketing authorization, if required, unless there is a documented, 
verifiable delay in U.S. market availability after FDA marketing 
authorization is granted, in which case CMS will consider the pass-
through payment application if it is submitted within 3 years from the 
date of market availability;
     The device is determined to be reasonable and necessary 
for the diagnosis or treatment of an illness or injury or to improve 
the functioning of a malformed body part, as required by section 
1862(a)(1)(A) of the Act; and
     The device is an integral part of the service furnished, 
is used for one patient only, comes in contact with human tissue, and 
is surgically implanted or inserted (either permanently or 
temporarily), or applied in or on a wound or other skin lesion.
    In addition, according to Sec.  419.66(b)(4), a device is not 
eligible to be considered for device pass-through payment if it is any 
of the following: (1) equipment, an instrument, apparatus, implement, 
or item of this type for which depreciation and financing expenses are 
recovered as depreciation assets as defined in Chapter 1 of the 
Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Separately, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through payment 
devices should be established. The device to be included in the new 
category must--
     Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service 
as of December 31, 1996;
     Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) the estimated average reasonable cost of devices in 
the category exceeds 25 percent of the applicable APC payment amount 
for the service related to the category of devices; (2) the estimated 
average reasonable cost of the devices in the category exceeds the cost 
of the device-related portion of the APC payment amount for the related 
service by at least 25 percent; and (3) the difference between the 
estimated average reasonable cost of the devices in the category and 
the portion of the APC payment amount for the device exceeds 10 percent 
of the APC payment amount for the related service (with the exception 
of brachytherapy and temperature-monitored cryoablation, which are 
exempt from the cost requirements as specified at Sec.  419.66(c)(3) 
and (e)); and
     Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment, or, for devices for which pass-
through payment status will begin on or after January 1, 2020, as an 
alternative pathway to demonstrating substantial clinical improvement, 
a device is part of the FDA's Breakthrough Devices Program and has 
received marketing authorization for the indication covered by the 
Breakthrough Device designation.
    Beginning in CY 2016, we changed our device pass-through evaluation 
and determination process. Device pass-through applications are still 
submitted to CMS through the quarterly subregulatory process, but the 
applications are subject to notice and comment rulemaking in the next 
applicable OPPS annual rulemaking cycle. Under this process, all 
applications that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle, while submitters of applications that are not approved upon 
quarterly review will have the option of being

[[Page 94134]]

included in the next applicable OPPS annual rulemaking cycle or 
withdrawing their application from consideration. Under this notice-
and-comment process, applicants may submit new evidence, such as 
clinical trial results published in a peer-reviewed journal or other 
materials, for consideration during the public comment process for the 
proposed rule. This process allows those applications that we are able 
to determine meet all of the criteria for device pass-through payment 
under the quarterly review process to receive timely pass-through 
payment status, while still allowing for a transparent, public review 
process for all applications (80 FR 70417 through 70418).
    In the CY 2020 annual rulemaking process, we finalized an 
alternative pathway for devices that are granted a Breakthrough Device 
designation (84 FR 61295) and receive FDA marketing authorization for 
the indication covered by the Breakthrough Device designation. Under 
this alternative pathway, devices that are granted an FDA Breakthrough 
Device designation are not evaluated in terms of the current 
substantial clinical improvement criterion at Sec.  419.66(c)(2) for 
the purposes of determining device pass-through payment status, but do 
need to meet the other requirements for pass-through payment status in 
our regulation at Sec.  419.66. Devices that are part of the 
Breakthrough Devices Program, have received FDA marketing authorization 
for the indication covered by the Breakthrough Devices designation, and 
meet the other criteria in the regulation can be approved through the 
quarterly process and announced through that process (81 FR 79655). 
Proposals regarding these devices and whether pass-through payment 
status should continue to apply are included in the next applicable 
OPPS rulemaking cycle. This process promotes timely pass-through 
payment status for innovative devices, while also recognizing that such 
devices may not have a sufficient evidence base to demonstrate 
substantial clinical improvement at the time of FDA marketing 
authorization.
    More details on the requirements for device pass-through payment 
applications are included on the CMS website in the application form 
itself at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the 
``Downloads'' section. In addition, CMS is amenable to meeting with 
applicants or potential applicants to facilitate information sharing to 
support the evaluation of an OPPS device pass-through payment 
application or discuss general application criteria, including the 
substantial clinical improvement criterion.
b. Applications Received for Device Pass-Through Status for CY 2025
    We received 14 complete applications by the March 1, 2024, 
quarterly deadline, which was the last quarterly deadline for 
applications to be received in time to be included in this final rule. 
Of the complete applications, we received two applications in the 
second quarter of 2023, two application in the third quarter of 2023, 
three applications in the fourth quarter of 2023, and seven 
applications in the first quarter of 2024. Three of the applications 
were approved for device pass-through payment during the quarterly 
review process: The DETOURTM System, which was preliminarily 
approved upon quarterly review under the alternative pathway effective 
January 1, 2024, and the AVEIRTM DR Dual Chamber Leadless 
Pacemaker System and the EndoSound Vision SystemTM 
(EVSTM) which both were preliminarily approved upon 
quarterly review under the alternative pathway effective July 1, 2024. 
As previously stated, all applications that are preliminarily approved 
upon quarterly review will automatically be included in the next 
applicable OPPS annual rulemaking cycle. Therefore, the 
DETOURTM System, the AVEIRTM DR Dual Chamber 
Leadless Pacemaker System, and the EndoSound Vision SystemTM 
(EVSTM) are discussed in the following section IV.2.b.1.
    We note that the quarterly application process and requirements 
have not changed because of the addition of rulemaking review. Detailed 
instructions on submission of a quarterly device pass-through payment 
application are included on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf.
    Discussions of the applications we received by the March 1, 2024, 
deadline are included below. We did not include the description and 
discussion of new device category for transitional pass-through payment 
status applications which were included in the proposed rule that were 
withdrawn for consideration for the upcoming calendar year. We also do 
not summarize or respond to public comments received regarding these 
withdrawn or ineligible applications.
(1) Alternative Pathway Device Pass-Through Applications
    We received 10 device pass-through applications by the March 2024 
quarterly application deadline for devices that have received 
Breakthrough Device designation from FDA and FDA marketing 
authorization for the indication for which they have a Breakthrough 
Device designation, and therefore were eligible to apply under the 
alternative pathway.
(a) AGENTTM Paclitaxel-Coated Balloon Catheter
    Boston Scientific Corporation submitted an application for a new 
device category for transitional pass-through payment status for the 
AGENTTM Paclitaxel-Coated Balloon Catheter for CY 2025. Per 
the applicant, the AGENTTM Paclitaxel-Coated Balloon 
Catheter is a device/drug combination product consisting of a semi-
compliant intracoronary balloon catheter with a paclitaxel/acetyl 
tributyl citrate drug coating on the balloon component. The applicant 
asserted that the AGENTTM Paclitaxel-Coated Balloon Catheter 
delivers paclitaxel, an antiproliferative drug, directly to the 
arterial tissue which inhibits the proliferation of neointimal smooth 
muscle cells without introducing an additional stent layer, thereby 
reducing the rate of restenosis. According to the applicant, the 
AGENTTM Paclitaxel-Coated Balloon Catheter is intended for 
use in adult patients, after appropriate vessel preparation, undergoing 
percutaneous coronary intervention (PCI) in coronary arteries 2.0 mm to 
4.0 mm in diameter and lesions up to 26 mm in length for the purpose of 
improving myocardial perfusion when treating in-stent restenosis (ISR) 
and the management of atherosclerotic coronary artery disease.
    Please refer to the online application posting for the 
AGENTTM Paclitaxel-Coated Balloon Catheter, available at 
https://mearis.cms.gov/public/publications/device-ptp/DEP2402295H2TU, 
for additional detail describing this device and the disease treated by 
the device.
    Comment: Many commenters expressed their support for the approval 
of transitional pass-through payment for the AGENTTM 
Paclitaxel-Coated Balloon Catheter. The commenters, including the 
applicant, emphasized their positive views on the device's 
transformational nature as a treatment for ISR, the device's ability to 
demonstrate clinical improvement relative to other available 
treatments, and the device's safety profile. In addition, many 
commenters expressed their concerns that without

[[Page 94135]]

adequate reimbursement many medical facilities may not adopt widespread 
use of the AGENTTM Paclitaxel-Coated Balloon Catheter.
    Response: We appreciate the commenters' input and support for the 
AGENTTM Paclitaxel-Coated Balloon Catheter application for 
transitional pass-through payment. We have taken these comments into 
consideration in our final determination for pass-through status for 
the AGENTTM Paclitaxel-Coated Balloon Catheter.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the AGENTTM Paclitaxel-Coated Balloon 
Catheter received FDA Breakthrough Device designation effective January 
22, 2021, as a combination product indicated for percutaneous 
transluminal coronary angioplasty (PTCA) in coronary arteries 2.0 mm to 
4.0 mm in diameter to treat ISR, up to 26 mm in length, for the purpose 
of improving myocardial perfusion. FDA approved the premarket approval 
application (PMA) for the AGENTTM Paclitaxel-Coated Balloon 
Catheter on February 29, 2024, as indicated for use after appropriate 
vessel preparation in adult patients undergoing PCI in coronary 
arteries 2.0 mm to 4.0 mm in diameter and lesions up to 26 mm in length 
for the purpose of improving myocardial perfusion when treating ISR. We 
noted that while the indication for the FDA Breakthrough Device 
designation and the indication for the FDA premarket approval vary 
slightly, we stated that we believe that FDA premarket approval 
indication is the indication covered by the Breakthrough Device 
designation. We received the application for a new device category for 
transitional pass-through payment status for the AGENTTM 
Paclitaxel-Coated Balloon Catheter on February 29, 2024, which is 
within 3 years of the date of the initial FDA marketing authorization.
    We invited public comment on whether the AGENTTM 
Paclitaxel-Coated Balloon Catheter meets the newness criterion at Sec.  
419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant reiterated that the AGENTTM 
Paclitaxel-Coated Balloon Catheter received FDA premarket approval on 
February 29, 2024, for use after appropriate vessel preparation in 
adult patients undergoing PCI in coronary arteries 2.0 mm to 4.0 mm in 
diameter and lesions up to 26 mm in length for the purpose of improving 
myocardial perfusion when treating ISR. In addition, a few other 
commenters expressed their belief that the AGENTTM 
Paclitaxel-Coated Balloon Catheter meets the newness criterion at Sec.  
419.66(b)(1).
    Response: We appreciate the applicant's and commenters' input. The 
AGENTTM Paclitaxel-Coated Balloon Catheter received FDA 
Breakthrough Device designation effective January 22, 2021. We received 
the application for a new device category for transitional pass-through 
payment status for the AGENTTM Paclitaxel-Coated Balloon 
Catheter on February 29, 2024, which is within 3 years of February 29, 
2024, the date of FDA premarket approval application. Based on our 
review of the application, we have determined that the 
AGENTTM Paclitaxel-Coated Balloon Catheter meets the newness 
criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not explicitly indicate whether the 
AGENTTM Paclitaxel-Coated Balloon Catheter is integral to 
the service provided. The applicant stated that the AGENTTM 
Paclitaxel-Coated Balloon Catheter is used for one patient only, comes 
in contact with human tissue, and is surgically implanted or inserted 
as required by Sec.  419.66(b)(3).
    We invited public comment on whether the AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the eligibility criterion at Sec.  
419.66(b)(3).
    Comment: The applicant and another commenter asserted that the 
AGENTTM Paclitaxel-Coated Balloon Catheter meets all the 
requirements of Sec.  419.66(b)(3). The applicant submitted a comment 
clarifying that the AGENTTM Paclitaxel-Coated Balloon 
Catheter is integral to the service provided and meets the eligibility 
criterion at Sec.  419.66(b)(3) because the service cannot be furnished 
without the AGENTTM Paclitaxel-Coated Balloon Catheter. 
Specifically, the applicant commented that that the AGENTTM 
Paclitaxel-Coated Balloon Catheter is a device/drug combination product 
consisting of a semi-compliant intracoronary balloon catheter with a 
drug coating consisting of paclitaxel/acetyl tributyl citrate on the 
balloon component. In addition, the applicant provided that the 
AGENTTM Paclitaxel-Coated Balloon Catheter is inserted 
transiently in a coronary artery suffering from ISR and transfers a 
long-dwelling, therapeutic dose of paclitaxel to the vessel wall of the 
artery to prevent ISR reoccurrence. The applicant reiterated that the 
AGENTTM Paclitaxel-Coated Balloon Catheter is used for one 
patient only, comes in contact with human tissue, and is surgically 
implanted or inserted.
    Response: We appreciate the applicant's and commenter's 
clarification, and we agree that the AGENTTM Paclitaxel-
Coated Balloon Catheter is integral to the service furnished. We agree 
with the applicant and commenter that the AGENTTM 
Paclitaxel-Coated Balloon Catheter is used for one patient only, comes 
in contact with human tissue, and is surgically implanted or inserted, 
or applied in or on a wound or other skin lesion. After consideration 
of the public comments received and our review of the application, we 
have determined that the AGENTTM Paclitaxel-Coated Balloon 
Catheter meets the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether the 
AGENTTM Paclitaxel-Coated Balloon Catheter is equipment, an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered, or if the AGENT\TM\ 
Paclitaxel-Coated Balloon Catheter is a supply or material furnished 
incident to a service.
    We invited public comment on whether the AGENTTM 
Paclitaxel-Coated Balloon Catheter meets the exclusion criterion at 
Sec.  419.66(b)(4).
    Comment: The applicant and commenter submitted a comment clarifying 
that the AGENTTM Paclitaxel-Coated Balloon Catheter meets 
the eligibility criterion at Sec.  419.66(b)(4) because it is not 
equipment, an instrument, apparatus, implement or any type of item for 
which depreciation and financing expenses are recovered, and because it 
is the primary therapeutic intervention and is not a supply or material 
furnished incident to a service.
    Response: We appreciate the applicant's and commenter's 
clarification. We agree with the

[[Page 94136]]

applicant and commenter that the AGENTTM Paclitaxel-Coated 
Balloon Catheter is not equipment, an instrument, apparatus, implement, 
or item of this type for which depreciation and financing expenses are 
recovered as depreciation assets, or a material or supply furnished 
incident to a service. After consideration of the public comments 
received and our review of the application, we have determined that the 
AGENTTM Paclitaxel-Coated Balloon Catheter meets the 
eligibility criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
no previous or existing device categories for pass-through payment 
appropriately describe the AGENTTM Paclitaxel-Coated Balloon 
Catheter. Per the applicant, while device category C2623 (Catheter, 
transluminal angioplasty, drug-coated, non-laser) describes related or 
similar products to the AGENTTM Paclitaxel-Coated Balloon 
Catheter, the AGENTTM Paclitaxel-Coated Balloon Catheter is 
not appropriately described by C2623 because the devices in this 
category differ from the AGENTTM Paclitaxel-Coated Balloon 
Catheter in both size and indicated use, and therefore, the device is 
not appropriately described by C2623. The applicant further claimed 
that the devices described by C2623 are approved for use in the femoral 
or popliteal arteries in vessels with a diameter of at least 4.0 mm, 
whereas the AGENTTM Paclitaxel-Coated Balloon Catheter is 
indicated for use in coronary arteries that are between 2.0 mm to 4.0 
mm in diameter. In addition, the applicant also noted that the length 
of the lesions (up to 180 mm) treated with devices in this device 
category greatly exceeds the maximum lesion size of 26 mm for the 
AGENTTM Paclitaxel-Coated Balloon Catheter. Moreover, the 
applicant asserted that the devices described by C2623 are used to 
treat peripheral arterial disease and are contraindicated for use in 
coronary arteries. Per the applicant, the AGENTTM 
Paclitaxel-Coated Balloon Catheter is used in conjunction with 
transluminal PCIs which are described by different procedure codes than 
the percutaneous transluminal angioplasty services used for the devices 
in C2623. Lastly, the applicant stated that an analysis of claims found 
that the devices described by C2623 are typically reported with femoral 
or popliteal revascularization procedures (HCPCS codes from 37224 to 
37227).
    We noted that, based on the description the applicant provided, the 
AGENTTM Paclitaxel-Coated Balloon Catheter is a device/drug 
combination product consisting of a semi-compliant intracoronary 
balloon catheter with a paclitaxel/acetyl tributyl citrate drug coating 
on the balloon component and thus could be appropriately described by 
C2623. Specifically, we stated that we believe that C2623 may 
appropriately describe the AGENTTM Paclitaxel-Coated Balloon 
Catheter because it is a non-laser, drug-coated catheter used for 
transluminal angioplasty procedures. In this context, we noted that we 
believe the AGENTTM Paclitaxel-Coated Balloon Catheter may 
be similar to the devices described by C2623, and therefore, the 
AGENTTM Paclitaxel-Coated Balloon Catheter may also be 
appropriately described by C2623.
    In addition, while we acknowledged that when C2623 was established 
as a device category code effective April 1, 2015, the procedure codes 
with which C2623 could be reported (HCPCS code 37224 and HCPCS code 
37226) were limited to use in the femoral or popliteal arteries. 
However, based on the subsequent changes that were made to the 
procedure codes with which C2623 could be reported, we did not agree 
that C2623 is limited to use with femoral or popliteal 
revascularization procedures. First, we noted that effective August 25, 
2017, while C2623 was in device pass-through payment status, CMS added 
two procedure codes with which C2623 could be reported that were for 
procedures other than femoral popliteal revascularization procedures. 
Specifically, based on the FDA approval of a new indication for an 
existing device (a drug-coated balloon catheter for use with dialysis 
circuit procedures for the treatment of patients with dysfunctional 
arteriovenous fistulae),\31\ CMS added two procedure codes, HCPCS codes 
36902 and 36903 (transluminal balloon angioplasty procedures in 
peripheral dialysis segments),\32\ with which C2623 could be reported 
effective August 25, 2017. The devices used with these two added HCPCS 
codes, 36902 and 36903, which are also described by C2623, are drug-
coated balloon catheters used for dialysis circuit procedures in the 
upper extremities. We stated that we believe the inclusion of these 
additional reportable procedure codes illustrates that devices that may 
be described by C2623 were neither intended to be restricted to the 
treatment of vascular lesions of a specified dimension nor anatomically 
limited to femoral or popliteal revascularization procedures and is 
inconsistent with the applicant's assertion that the AGENTTM 
Paclitaxel-Coated Balloon Catheter is not appropriately described by 
C2623 because the category is only applicable for devices used in 
femoral or popliteal arteries with a diameter of at least 4.0 mm, and 
not smaller coronary arteries.
---------------------------------------------------------------------------

    \31\ Centers for Medicare & Medicaid Services (2017). Pub 100-04 
Medicare Claims Processing (Transmittal 3941) in CMS Manual System. 
Accessed at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2017downloads/r3941cp.pdf.
    \32\ HCPCS code 36902 (Introduction of needle(s) and/or 
catheter(s), dialysis circuit, with diagnostic angiography of the 
dialysis circuit, including all direct puncture(s) and catheter 
placement(s), injection(s) of contrast, all necessary imaging from 
the arterial anastomosis and adjacent artery through entire venous 
outflow including the inferior or superior vena cava, fluoroscopic 
guidance, radiological supervision and interpretation and image 
documentation and report; with transluminal balloon angioplasty, 
peripheral dialysis segment, including all imaging and radiological 
supervision and interpretation necessary to perform the angioplasty) 
and HCPCS code 36903 (Introduction of needle(s) and/or catheter(s), 
dialysis circuit, with diagnostic angiography of the dialysis 
circuit, including all direct puncture(s) and catheter placement(s), 
injection(s) of contrast, all necessary imaging from the arterial 
anastomosis and adjacent artery through entire venous outflow 
including the inferior or superior vena cava, fluoroscopic guidance, 
radiological supervision and interpretation and image documentation 
and report; with transcatheter placement of intravascular stent(s) 
peripheral dialysis segment, including all imaging and radiological 
supervision and interpretation necessary to perform the stenting, 
and all angioplasty within the peripheral dialysis segment).
---------------------------------------------------------------------------

    Further, beginning January 1, 2018, upon the expiration of device 
pass-through payment status for C2623, CMS packaged the payment for the 
costs of each of the devices described by C2623 into the payment for 
the costs related to the procedure with which each device is reported 
in the hospital claims data (FR 82 59321 through 59323). We further 
noted that upon becoming packaged for payment, C2623 effectively became 
reportable with other transluminal angioplasty procedure codes, 
including procedure codes for percutaneous coronary transluminal 
angioplasty services. Finally, we noted that while, per the applicant, 
the devices described by C2623 are typically reported with femoral or 
popliteal revascularization procedures, other procedure codes, 
including procedure codes for other percutaneous transluminal 
angioplasty services and

[[Page 94137]]

other related coronary procedure codes can and have been performed with 
devices described by C2623. As such, we stated that we believe the 
procedures with which the AGENTTM Paclitaxel-Coated Balloon 
Catheter is utilized could be reported with C2623.
    In this context, based on the description the applicant provided, 
we stated that we believe the AGENTTM Paclitaxel-Coated 
Balloon Catheter may be similar to the devices described by C2623, and 
therefore, the AGENTTM Paclitaxel-Coated Balloon Catheter 
may also be appropriately described by C2623.
    We invited public comment on whether the AGENT\TM\ Paclitaxel-
Coated Balloon Catheter meets the device category criterion at Sec.  
419.66(c)(1).
    Comment: In response to our concerns that the AGENTTM 
Paclitaxel-Coated Balloon Catheter may be appropriately described by 
C2623, the applicant and many commenters asserted that the 
AGENTTM Paclitaxel-Coated Balloon Catheter is not described 
by C2623 because the device is not used to perform transluminal 
angioplasties. Specifically, these commenters explained that the 
AGENTTM Paclitaxel-Coated Balloon Catheter is used to 
effectively deliver its drug to a lesion after the vessel wall has been 
prepared, typically through an angioplasty. They also asserted that 
C2623 is used to describe drug-coated balloons indicated for use in the 
peripheral vasculature which are capable of both angioplasty and drug-
delivery; however, according to the commenters, the AGENTTM 
Paclitaxel-Coated Balloon Catheter is used solely for drug-delivery and 
cannot be used for performing an angioplasty. In addition, the 
applicant commented that peripheral drug-coated balloon catheters, like 
those described by C2623, are primarily used for treating typically 
diffused atherosclerotic/restenotic lesions in the comparatively 
elastic femoral or popliteal arteries, whereas coronary drug-coated 
balloons are used for treatment of substantially smaller, stented (and 
therefore, relatively inelastic) coronary segments, with largely focal 
lesions. Similarly, many commenters underlined the differences between 
the AGENTTM Paclitaxel-Coated Balloon Catheter and 
peripheral drug-coated balloon catheters, including design, size, 
deployment location and time length, clinical indication, and 
procedural complexity.
    The applicant and a few commenters noted that CMS has historically 
included specific anatomy in several device categories, including those 
differentiating coronary and non-coronary devices. The applicant 
offered the following as examples of device categories that are 
specific to a particular type of intervention: C1759 (Catheter, 
intracardiac echocardiography), C1761 (Catheter, transluminal 
intravascular lithotripsy, coronary), and C1888 (Catheter, ablation, 
non-cardiac, endovascular). A few commenters highlighted device 
categories that are more granular in description than C2623, such as 
C1714 (Catheter, transluminal atherectomy, directional), C1724 
(Catheter, transluminal atherectomy, rotational), C1732 (Catheter, 
electrophysiology, diagnostic/ablation, 3D or vector mapping), and 
C1733 (Catheter, electrophysiology, diagnostic/ablation, other than 3D 
or vector mapping, other than cool-tip), and suggested that CMS 
similarly acknowledge the differences between the AGENTTM 
Paclitaxel-Coated Balloon Catheter and those devices in device category 
C2623.
    Response: We appreciate the applicant's and commenters' input. We 
note that while the FDA Breakthrough Device designation for the 
AGENTTM Paclitaxel-Coated Balloon Catheter stated a proposed 
indication for PTCA in coronary arteries 2.0 mm to 4.0 mm in diameter 
to treat ISR, up to 26 mm in length, for the purpose of improving 
myocardial perfusion, the FDA PMA for the AGENTTM 
Paclitaxel-Coated Balloon Catheter on February 29, 2024, stated the 
combination drug/device is indicated for use after appropriate vessel 
preparation in adult patients undergoing PCI in coronary arteries 2.0 
mm to 4.0 mm in diameter and lesions up to 26 mm in length for the 
purpose of improving myocardial perfusion when treating ISR, removing 
the PTCA indication. This appears to be consistent with the applicant's 
and commenters' assertions that the AGENTTM Paclitaxel-
Coated Balloon Catheter is not utilized in the treatment of PTCA. After 
consideration of the public comments received, we agree that the 
AGENTTM Paclitaxel-Coated Balloon Catheter is not indicated 
for use in transluminal angioplasty; rather, it is intended for 
improving myocardial perfusion when treating in-stent restenosis after 
appropriate vessel preparation. Further, we agree that C2623 describes 
drug-coated balloons which are capable of angioplasty, while the 
AGENTTM Paclitaxel-Coated Balloon Catheter appears to be 
used solely for drug-delivery and cannot be used for performing an 
angioplasty, including PCTAs. As such, we do not believe that the 
AGENTTM Paclitaxel-Coated Balloon Catheter is described by 
C2623.
    We acknowledge that CMS has included specific anatomic language in 
the descriptors of previous device category codes when such language 
was necessary based on the unique circumstances surrounding the 
establishment of a particular device category code. We note that CMS 
does not establish pass-through device categories for the purposes of 
describing specific devices, but rather, device categories which are 
intended to encompass all devices that can be appropriately described 
by a category. As such, all device categories, regardless of the 
language utilized in the descriptors, are established in such a way 
that no medical device is described by more than one category in 
accordance with section 1833(t)(6)(B)(ii)(II) of the Act.
    After consideration of the public comments received and our review 
of the application, we agree there is no existing category or category 
previously in effect that appropriately describes the 
AGENTTM Paclitaxel-Coated Balloon Catheter. Based on this 
information, we have determined that the AGENTTM Paclitaxel-
Coated Balloon Catheter meets the eligibility criterion at Sec.  
419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The AGENTTM Paclitaxel-
Coated Balloon Catheter has a Breakthrough Device designation and 
marketing authorization from FDA for the indication covered by the 
Breakthrough Device designation (as explained in the discussion of the 
newness criterion), and therefore, is not evaluated for substantial 
clinical improvement.
    We invited public comment on whether the AGENTTM 
Paclitaxel-Coated Balloon Catheter meets the device category criterion 
at Sec.  419.66(c)(2)(ii).
    Comment: The applicant and one commenter confirmed that the

[[Page 94138]]

AGENTTM Paclitaxel-Coated Balloon Catheter has received both 
Breakthrough Device designation and marketing authorization from FDA, 
meeting the device category criterion at Sec.  419.66(c)(2).
    Response: We appreciate the applicant's and commenter's input. The 
AGENTTM Paclitaxel-Coated Balloon Catheter has a 
Breakthrough Device designation effective January 22, 2021, and 
marketing authorization from FDA effective February 29, 2024, for the 
indication covered by the Breakthrough Device designation. Therefore, 
the AGENTTM Paclitaxel-Coated Balloon Catheter meets the 
criterion at 419.66(c)(2)(ii) and is not evaluated for substantial 
clinical improvement at Sec.  419.66(c)(2)(i). Based on our review of 
the application, we have determined that the AGENTTM 
Paclitaxel-Coated Balloon Catheter meets the device category criterion 
at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
AGENTTM Paclitaxel-Coated Balloon Catheter would be reported 
with the HCPCS codes as shown in Table 113.
[GRAPHIC] [TIFF OMITTED] TR27NO24.140

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant utilized the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5192, which had a CY 2024 payment rate of 
$5,445.84 at the time the application was received. HCPCS code 92920 in 
APC 5192 had a device offset amount of $1,662.61 at the time the 
application was received. According to the applicant, the cost of the 
AGENTTM Paclitaxel-Coated Balloon Catheter is $5,500.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $5,500.00 for the AGENTTM Paclitaxel-
Coated Balloon Catheter is 101.00 percent of the applicable APC payment 
amount for the service related to the category of devices of $5,445.84 
(($5,500.00/$5,445.84) x 100 = 101.00 percent). Therefore, we stated 
that we believe the AGENTTM Paclitaxel-Coated Balloon 
Catheter meets the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $5,500.00 for 
the AGENTTM Paclitaxel-Coated Balloon Catheter is 330.81 
percent of the cost of the device-related portion of the APC payment 
amount for the related service of $1,662.61 (($5,500.00/$1,662.61) x 
100 = 330.81 percent). Therefore, we stated that we believe the 
AGENTTM Paclitaxel-Coated Balloon Catheter meets the second 
cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $5,500.00 for the AGENTTM Paclitaxel-
Coated Balloon Catheter and the portion of the APC payment amount for 
the device of $1,662.61 is 70.46 percent of the APC payment amount for 
the related service of $5,445.84 ((($5,500.00 -

[[Page 94139]]

$1,662.61)/$ 5,445.84) x 100 = 70.46 percent). Therefore, we stated 
that we believe the AGENTTM Paclitaxel-Coated Balloon 
Catheter meets the third cost significance requirement.
    We invited public comment on whether the AGENTTM 
Paclitaxel-Coated Balloon Catheter meets the device pass-through 
payment criteria discussed in this section, including the cost 
criterion for device pass-through payment status.
    Comment: With respect to cost significance criteria, the applicant 
and a commenter reiterated that the AGENTTM Paclitaxel-
Coated Balloon Catheter meets all three of the cost significance 
criteria.
    Response: We appreciate the applicant's and commenter's input. 
After consideration of the public comments received and our findings 
from the first, second, and third cost significance tests, we agree 
that the AGENTTM Paclitaxel-Coated Balloon Catheter meets 
the cost significance criteria specified at Sec.  419.66(d).
    After consideration of the public comments received and our review 
of the device pass-through application, we have determined that the 
AGENTTM Paclitaxel-Coated Balloon Catheter meets the 
requirements for device pass-through status described at Sec.  419.66. 
We are finalizing approval for device pass-through payment status for 
the AGENTTM Paclitaxel-Coated Balloon Catheter effective 
January 1, 2025 under the alternative pathway for devices that have an 
FDA Breakthrough Device designation and have received FDA marketing 
authorization for the indication covered by the Breakthrough Device 
designation.
(b) AveirTM DR Dual Chamber Leadless Pacemaker System
    Abbott Laboratories submitted an application for a new device 
category for transitional pass-through payment status for the 
AveirTM DR Dual Chamber Leadless Pacemaker System 
(AveirTM DR System) for CY 2025. Per the applicant, the 
AveirTM DR System is comprised of two leadless pacemakers, 
one atrial and one ventricular with each containing a generator and 
electrodes, that provide dual-chamber pacing therapy after being placed 
within the heart's myocardium through a minimally invasive catheter-
based procedure. According to the applicant, the AveirTM DR 
System is without the need for traditional wire electrodes and can 
provide beat-to-beat communication and synchrony between the two 
pacemakers for the treatment of arrhythmia/bradycardia. Per the 
applicant, patients with indication for dual-chamber pacing would 
benefit from a dual-chamber leadless pacemaker system that provides 
atrial and ventricular bradycardia therapy, while eliminating the 
complications associated with conventional pacing systems.
    Please refer to the online application posting for the 
AveirTM DR System, available at https://mearis.cmsgov/public/publications/device-ptp/DEP230831B8DX0, for additional detail 
describing the device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the AveirTM DR System received FDA 
Breakthrough Device designation effective March 27, 2020, as a 
pacemaker implantation indicated in one or more of the following 
permanent conditions: syncope, presyncope, fatigue, disorientation due 
to arrhythmia/bradycardia, or any combination of these symptoms. FDA 
approved the premarket approval application (PMA) for the 
AveirTM DR System on June 29, 2023, for the indication 
covered by the Breakthrough Device designation. We received the 
application for a new device category for transitional pass-through 
payment status for the AveirTM DR System on March 23, 2023, 
which is within 3 years of the date of the initial FDA marketing 
authorization.
    We invited public comment on whether the AveirTM DR 
System meets the newness criterion at Sec.  419.66(b)(1).
    We did not receive public comments regarding whether the 
AveirTM DR System meets the newness criterion at Sec.  
419.66(b)(1). The AveirTM DR System received FDA 
Breakthrough Device designation effective March 27, 2020. We received 
the application for a new device category for transitional pass-through 
payment status for the AveirTM DR System on March 23, 2023, 
which is within 3 years of June 29, 2023, the date of FDA PMA. Based on 
our review of the application, we have determined that the 
AveirTM DR System meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. As noted in the proposed rule, the applicant did not indicate 
whether the AveirTM DR System is integral to the service 
furnished. The applicant also did not explicitly state that the 
AveirTM DR System is single-use; however, the applicant did 
state that one AveirTM DR System is required per patient per 
procedure. While the applicant did not explicitly state whether the 
AveirTM DR System comes in contact with human tissue or is 
surgically inserted or implanted, the applicant noted that the two 
AveirTM Delivery Catheters are inserted into the peripheral 
vasculature and the cardiovascular system to deliver and implant the 
AveirTM AR Atrial Leadless Pacemaker and the 
AveirTM VR Ventricular Leadless Pacemaker into the right 
atrium and right ventricle of the heart, respectively.
    We invited public comment on whether the AveirTM DR 
System meets the eligibility criterion at Sec.  419.66(b)(3).
    Comment: The applicant submitted a comment confirming that the 
AveirTM DR System is an integral part of the service 
provided, is used for one patient only, comes in contact with human 
tissue, and is surgically inserted or implanted using two delivery 
catheters that are inserted into the peripheral vasculature and 
cardiovascular system to deliver and implant the AveirTM AR 
Atrial Leadless Pacemaker and the AveirTM VR Ventricular 
Leadless Pacemaker into the right atrium and right ventricle of the 
heart, respectively. The applicant also stated that therefore, it 
believes the AveirTM DR System meets the eligibility 
criterion at Sec.  419.66(b)(3).
    Response: We appreciate the applicant's input. We agree with the 
applicant that the AveirTM DR System 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, or applied 
in or on a wound or other skin lesion. After consideration of the 
public comment received and our review of the application, we have 
determined that the AveirTM DR System meets the eligibility 
criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether the 
AveirTM DR System is equipment, an instrument, apparatus, 
implement, or item of this type for which depreciating and financing 
expenses are recovered,

[[Page 94140]]

or if the AveirTM DR System is a supply or material 
furnished incident to a service.
    We invited public comment on whether the AveirTM DR 
System meets the exclusion criterion at Sec.  419.66(b)(4).
    Comment: The applicant confirmed that the AveirTM DR 
System is not an instrument, apparatus, implement, or similar item for 
which depreciation and financing expenses are recovered. The applicant 
also stated that the AveirTM DR System is not a supply or 
material furnished incident to a service, and therefore, meets the 
eligibility criterion at Sec.  419.66(b)(4).
    Response: We appreciate the applicant's input. With respect to the 
eligibility criterion at Sec.  419.66(b)(4), we agree with the 
applicant that the AveirTM DR System is not equipment, an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered as depreciation 
assets, or a material or supply furnished incident to a service. After 
consideration of the public comment received and our review of the 
application, we have determined that the AveirTM DR System 
meets the eligibility criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
the AveirTM DR System is the only dual-chamber leadless 
pacemaker authorized by FDA and indicated for implantation in patients 
with one or more of the following permanent conditions: syncope, 
presyncope, fatigue, disorientation due to arrhythmia/bradycardia, or 
any combination of those conditions. Per the applicant, the 
AveirTM DR System is a modular dual-chamber leadless 
pacemaker system with bidirectional implant-to-implant communication 
that can accommodate all pacing indications. According to the 
applicant, no previous or existing device categories for pass-through 
payment appropriately describe the AveirTM DR System. The 
applicant stated that device categories C1785 (Pacemaker, dual-chamber, 
rate-responsive (implantable)) and C1889 (Insertable/implantable 
device, not otherwise classified) do not appropriately describe the 
AveirTM DR System because the AveirTM DR System 
received Breakthrough Device designation from FDA and has specific 
functionality and capabilities that are new to the market. The 
applicant also asserted that the AveirTM DR system is 
modular, such that a single device can be implanted in a heart chamber 
initially, and the second pacemaker added to the other heart chamber in 
the future should the clinical need arise; and therefore, it is not 
appropriately described by either C1785 or C1889.
    We did not identify an existing pass-through payment category that 
describes the AveirTM DR System. We invited public comment 
on whether the AveirTM DR System meets the device category 
criterion at Sec.  419.66(c)(1).
    Comment: The applicant agreed with CMS's assessment that there are 
no existing pass-through payment categories that describe the 
AveirTM DR System.
    Response: We appreciate the applicant's input. After consideration 
of the public comment received and our review of the application, we 
continue to believe that there is no existing category or category 
previously in effect that appropriately describes the 
AveirTM DR System. Therefore, we have determined that the 
AveirTM DR System meets the device category eligibility 
criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The AveirTM DR System has a 
Breakthrough Device designation and marketing authorization from FDA 
for the indication covered by the Breakthrough Device designation (as 
explained in more detail in the discussion of the newness criterion), 
and therefore, is not evaluated for substantial clinical improvement.
    We invited public comment on whether the AveirTM DR 
System meets the device category criterion at Sec.  419.66(c)(2)(ii).
    We did not receive public comment regarding whether the 
AveirTM DR System meets the device category criterion at 
Sec.  419.66(c)(2)(ii). However, the AveirTM DR System has a 
Breakthrough Device designation effective March 27, 2020, and a 
marketing authorization from FDA effective June 29, 2023, for the 
indication covered by the Breakthrough Device designation. Therefore, 
the AveirTM DR System meets the criterion at Sec.  
419.66(c)(2)(ii) and is not evaluated for substantial clinical 
improvement at Sec.  419.66(c)(2)(i). Based on our review of the 
application, we have determined that the AveirTM DR System 
meets the device category criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
AveirTM DR System would be reported with HCPCS codes as 
shown in Table 114.

[[Page 94141]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.141

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2023 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5224, which had a CY 2023 payment rate of 
$18,672.01 at the time the application was received. We used the CY 
2023 APC level device offset amount of $11,739.09 for APC 5224, as 
HCPCS codes 0795T and 0801T provided by the applicant were not included 
in Addendum P to the CY 2023 OPPS/ASC final rule with comment period 
and no CY 2023 HCPCS/CPT code level device offset amount was available 
at the time the application was received.\33\ According to the 
applicant, the cost of the AveirTM DR System is $24,000.00.
---------------------------------------------------------------------------

    \33\ We noted that the applicant originally utilized APC 5231 
(Level 1 ICD and Similar Procedures) for the three tests of the cost 
criteria in the application. However, the applicant provided 
supplemental information indicating that, HCPCS codes 0795T and 
0801T were assigned to APC 5224 (Level 4 Pacemaker and Similar 
Procedures) in the corrected Addendum B to the CY 2024 OPPS/ASC 
final rule with comment period and they believed that APC 5224 is 
currently the appropriate APC for the purposes of performing the 
cost significance calculations. We agreed with the applicant and 
selected APC 5224 for our calculation, which we believe is a more 
appropriate APC to use based on the assignment of HCPCS codes 0795T 
and 0801T to APC 5224 and the clinical similarity to other pacemaker 
insertion codes in APC 5224.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $24,000.00 for the AveirTM DR System is 
128.54 percent of the applicable APC payment amount for the service 
related to the category of devices of $18,672.01 (($24,000.00/
$18,672.01) x 100 = 128.54 percent). Therefore, we stated that we 
believe the AveirTM DR System meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $24,000.00 for 
the AveirTM DR System is 204.45 percent of the cost of the 
device-related portion of the APC payment amount for the related 
service of $11,739.09 (($24,000.00/$11,739.09) x 100 = 204.45 percent). 
Therefore, we stated that we believe the AveirTM DR System 
meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $24,000.00 for the AveirTM DR System and 
the portion of the APC payment amount for the device of $11,739.09 is 
65.66 percent of the APC payment amount for the related service of 
$18,672.01 ((($24,000.00-$11,739.09)/$ 18,672.01) x 100 = 65.66 
percent). Therefore, we stated that we believe the AveirTM 
DR System meets the third cost significance requirement.
    We invited public comment on whether the AveirTM DR 
System meets the device pass-through payment criteria discussed in this 
section, including the cost criterion for device pass-through payment 
status.
    Comment: With respect to cost significance criteria, the applicant 
reiterated that the AveirTM DR System meets all three of the 
cost significance criteria.
    Response: We appreciate the applicant's input. After consideration 
of the public comment we received and our findings from the first, 
second, and third cost significance tests, we agree that the 
AveirTM DR System meets the cost significance criteria 
specified at Sec.  419.66(d).

[[Page 94142]]

    Comment: The applicant submitted a comment requesting that CMS 
revise the proposed device offset for HCPCS code 0795T (Transcatheter 
insertion of permanent dual-chamber leadless pacemaker, including 
imaging guidance (e.g., fluoroscopy, venous ultrasound, right atrial 
angiography, right ventriculography, femoral venography) and device 
evaluation (e.g., interrogation or programming), when performed; 
complete system (i.e., right atrial and right ventricular pacemaker 
components)) used to report dual-chamber leadless pacemaker procedures.
    Response: We appreciate the applicant's input regarding the device 
offset amount associated with HCPCS code 0795T. We note that we have 
addressed this comment in Section IV.B of this final rule with comment 
period.
    As discussed, the AveirTM DR System pass-through 
application was preliminarily approved for transitional pass-through 
payment under the alternative pathway effective July 1, 2024. After 
consideration of the public comment we received and our review of the 
device pass-through application, we have determined that the 
AveirTM DR System meets the requirements for device pass-
through status described at Sec.  419.66 and we are finalizing approval 
for device pass-through payment status for the AveirTM DR 
System under the alternative pathway for devices that have an FDA 
Breakthrough Device designation and have received FDA marketing 
authorization for the indication covered by the Breakthrough Device 
designation.
(c) The DETOURTM System
    Endologix, LLC submitted an application for a new device category 
for transitional pass-through payment status for the 
DETOURTM System for CY 2025. According to the applicant, the 
DETOURTM System is an implantable component, used to create 
a femoropopliteal bypass routed through the femoral vein. The 
DETOURTM System is comprised of two main components: (1) the 
TORUSTM Stent Graft System, which is comprised of the 
TORUSTM Stent Graft and the TORUSTM Stent Graft 
Delivery System, and (2) the ENDOCROSSTM Device. Per the 
applicant, the DETOURTM System is used to treat patients 
with advanced peripheral vascular disease, specifically those with long 
complex femoropopliteal artery stenoses and occlusions resulting in 
lifestyle limiting claudication or severe lower limb threatening 
ischemia. According to the applicant, the DETOURTM System 
can restore arterial blood flow to the lower limb around the blocked 
femoral artery and allows for venous blood flow around the conduit for 
normal venous return, to reduce signs and symptoms of lower limb 
ischemia and prevent amputation.
    Please refer to the online application posting for the 
DETOURTM System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP23090164QL2, for additional detail 
describing the device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the DETOURTM System received FDA 
Breakthrough Device designation effective September 2, 2020, under the 
name the PQ Bypass System, as a device intended for percutaneous 
revascularization of symptomatic femoropopliteal lesions 200mm to 460mm 
with a chronic total occlusion 100mm to 425mm, and/or moderate-to-
severe calcification, and/or in-stent-restenosis in patients with 
severe peripheral arterial disease. FDA approved the premarket approval 
application (PMA) for the DETOURTM System on June 7, 2023, 
indicated for use for percutaneous revascularization in patients with 
symptomatic femoropopliteal lesions from 200 mm to 460 mm in length 
with chronic total occlusions (100 mm to 425 mm) or diffuse stenosis 
>70 percent who may be considered suboptimal candidates for surgical or 
alternative endovascular treatments. The DETOURTM System, or 
any of its components, is not for use in the coronary and cerebral 
vasculature. We noted that while the indication for the FDA 
Breakthrough Device designation and the indication for the FDA 
premarket approval vary slightly, we stated we believe that FDA 
premarket approval indication is the indication covered by the 
Breakthrough Device designation. We received the application for a new 
device category for transitional pass-through payment status for the 
DETOURTM System on September 1, 2023, which is within 3 
years of the date of the initial FDA marketing authorization.
    We invited public comment on whether the DETOURTM System 
meets the newness criterion at Sec.  419.66(b)(1).
    We did not receive public comments regarding whether the 
DETOURTM System meets the newness criterion at Sec.  
419.66(b)(1). The DETOURTM System received FDA Breakthrough 
Device designation effective September 2, 2020. We received the 
application for a new device category for transitional pass-through 
payment status for the DETOUR[Ocirc] System on September 1, 2023, which 
is within 3 years of June 7, 2023, the date of FDA PMA. Based on our 
review of the application, we have determined that the 
DETOURTM System meets the newness criterion at Sec.  
419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. Per the applicant, the DETOURTM System is integral 
to the service provided and is used for one patient only. While the 
applicant did not indicate whether the DETOURTM System comes 
in contact with human tissue, the applicant did specify that both 
components of the DETOURTM System, the TORUSTM 
Stent Graft System and the ENDOCROSSTM Device, are inserted 
or implanted during the percutaneous transmural femoropopliteal bypass 
procedure, as required by Sec.  419.66(b)(3).
    We invited public comments on whether the DETOURTM 
System meets the eligibility criterion at Sec.  419.66(b)(3).
    We did not receive public comments regarding whether the 
DETOURTM System meets the eligibility requirements of Sec.  
419.66(b)(3). As noted in the proposed rule, the applicant did not 
indicate that the DETOURTM System comes in contact with 
human tissue. However, because both components of the 
DETOURTM System, the TORUSTM Stent Graft System 
and the ENDOCROSSTM Device, are inserted or implanted during 
the percutaneous transmural femoralpopliteal bypass procedure, we 
believe that the DETOURTM System comes into contact with 
human tissue. After consideration of the information in the 
application, we have determined that the DETOURTM System 
meets the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant asserted that the DETOURTM 
System meets the device eligibility

[[Page 94143]]

requirements because it is not an instrument, apparatus, implement, or 
item of this type for which depreciation and financing expenses are 
recovered, and it is not a supply or material furnished incident to a 
service.
    We invited public comment on whether the DETOURTM System 
meets the exclusion criterion at Sec.  419.66(b)(4).
    We did not receive public comments regarding whether the 
DETOURTM System meets the eligibility requirements of Sec.  
419.66(b)(4). Based on our review of the application, we agree with the 
applicant that the DETOURTM System is not equipment, an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered as depreciation 
assets, or a material or supply furnished incident to a service. 
Therefore, we have determined that the DETOURTM System meets 
the eligibility criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant described 
that the DETOURTM System is a minimally invasive, single-use 
device with an implantable component, used to create a femoropopliteal 
bypass routed through the femoral vein. The applicant provided a list 
of existing and previous device categories for pass-through payment for 
other stents and explained why they do not believe any of the 
categories describe the DETOURTM System. In summary, the 
applicant asserted that the referenced device categories do not 
adequately describe the DETOURTM System because, in contrast 
to the DETOURTM System, the referenced device categories do 
not have: (1) a crossing device with long needle for transmural access, 
(2) a crossing device with high pressure needle delivery for heavily 
calcified and atherosclerotic arteries, (3) a high radial strength 
transmural stent graft capable of self-support and sustaining blood 
flow through conduit bridging artery to vein and back to artery, (4) a 
percutaneous stent graft delivery catheter, (5) a covered stent graft 
to allow for arterial blood flow within the conduit as venous blood 
flows around it in the vein, or (6) a permanent implant to maintain 
arterial and venous blood flow. The reasons the applicant asserted for 
why the DETOURTM System is not adequately described by each 
of the device categories are shown in Table 115.
[GRAPHIC] [TIFF OMITTED] TR27NO24.142

[[Page 94144]]

    We did not identify an existing pass-through payment category that 
describes the DETOURTM System.
    We invited public comment on whether the DETOURTM System 
meets the device category criterion at Sec.  419.66(c)(1).
    We did not receive any comments regarding whether the 
DETOURTM System meets the eligibility requirements at Sec.  
419.66(c)(1). Based on our review of the application, we continue to 
believe there is no existing category or category previously in effect 
that appropriately describes the DETOURTM System. Therefore, 
we have determined that the DETOURTM System meets the device 
category eligibility criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The DETOURTM System has a 
Breakthrough Device designation and marketing authorization from FDA 
for the indication covered by the Breakthrough Device designation (as 
explained in more detail in the discussion of the newness criterion), 
and therefore, is not evaluated for substantial clinical improvement.
    We invited public comment on whether the DETOURTM System 
meets the device category criterion at Sec.  419.66(c)(2).
    We did not receive public comment regarding whether the 
DETOURTM System meets the device category criterion at Sec.  
419.66(c)(2). However, the DETOURTM System has a 
Breakthrough Device designation effective September 2, 2020, and 
marketing authorization from FDA effective June 7, 2023, for the 
indication covered by the Breakthrough Device. Therefore, the 
DETOURTM System meets the criterion at Sec.  
419.66(c)(2)(ii) and is not evaluated for substantial clinical 
improvement at Sec.  419.66(c)(2)(i). Based on our review of the 
application, we have determined that the DETOURTM System 
meets the device category criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
DETOURTM System would be reported with the HCPCS code as 
shown in Table 116.
[GRAPHIC] [TIFF OMITTED] TR27NO24.143

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2023 
payment rates for the three tests of the cost criterion. For our 
calculations, like the applicant, we used APC 5193, which had a CY 2023 
payment rate of $10,615.31 at the time the application was received. 
HCPCS code 0505T in APC 5193 had a CY 2023 device offset amount of 
$5,229.10 at the time the application was received. According to the 
applicant, the cost of the DETOURTM System is $25,000.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $25,000.00 for the DETOURTM System is 
235.51 percent of the applicable APC payment amount for the service 
related to the category of devices of $10,615.31 (($25,000.00/
$10,615.31) x 100 = 235.51 percent). Therefore, we stated that we 
believe the DETOURTM System meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $25,000.00 for 
the DETOURTM System is 478.09 percent of the cost of the 
device-related portion of the APC payment amount for the related 
service of $5,229.10 (($25,000.00/$5,229.10) x 100 = 478.09 percent). 
Therefore, we stated that we believe the DETOURTM System 
meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related

[[Page 94145]]

service. The difference between the estimated average reasonable cost 
of $25,000.00 for the DETOURTM System and the portion of the 
APC payment amount for the device of $5,229.10 is 186.25 percent of the 
APC payment amount for the related service of $10,615.31 ((($25,000.00-
$5,229.10)/$10,615.31) x 100 = 186.25 percent). Therefore, we stated 
that we believe the DETOURTM System meets the third cost 
significance requirement.
    We invited public comment on whether the DETOURTM System 
meets the device pass-through payment criteria discussed in this 
section, including the cost criterion for device pass-through payment 
status.
    We did not receive any comments regarding whether the DETOUR[Ocirc] 
System meets the cost significance criteria as described at Sec.  
419.66(d). Based on our findings from the first, second, and third cost 
significance tests, we have determined that the DETOUR[Ocirc] System 
meets the cost significance criteria specified at Sec.  419,66(d).
    Comment: The applicant commented that the device offset amount 
assigned to HCPCS code 0505T should remain at $0.00 to align with the 
precedent set for similarly situated devices and ensure that hospitals 
continue to receive full and fair reimbursement for C1604.
    Response: We appreciate the applicant's input regarding the device 
offset amount associated with HCPCS code 0505T. We note that we have 
addressed this comment in section IV.B of this final rule with comment 
period.
    As discussed, the DETOURTM System pass-through 
application was preliminarily approved for transitional pass-through 
payment under the alternative pathway effective January 1, 2024. After 
our review of the device pass-through application, we have determined 
that the DETOUR[Ocirc] System meets the requirements for device pass-
through status described at Sec.  419.66 and we are finalizing approval 
for device pass-through payment status for the DETOUR[Ocirc] System 
under the alternative pathway for devices that have an FDA Breakthrough 
Device designation and have received FDA marketing authorization for 
the indication covered by the Breakthrough Device designation.
(d) EndoSound Vision SystemTM (EVSTM)
    EndoSound, Inc. submitted an application for a new device category 
for transitional pass-through payment status for the EVSTM 
for CY 2025. The applicant is only seeking a new device category for 
transitional pass-through payment status for the Ultrasound Disposable 
Kit--Diagnostic/Therapeutic (UDK-T) component (hereinafter referred to 
as ``UDK-T'') of the EVSTM. According to the applicant, the 
EVSTM is an ultrasound system designed to externally attach 
to an upper gastrointestinal (GI) endoscope (gastroscope/upper (EGD) 
endoscope). Per the applicant, the EVSTM is a device that, 
once attached to an EGD endoscope, temporarily converts the EGD 
endoscope to a fully capable endoscopic ultrasound (EUS) endoscope. The 
applicant asserted that the EVSTM can be coupled with an 
upper GI endoscope device to enable real-time ultrasound imaging, 
ultrasound guided needle aspiration, and other EUS guided procedures 
within the upper GI tract and surrounding organs. According to the 
applicant, the EVSTM consists of: (1) the EVS Scanner, a 
beamformer/scanner that performs ultrasound signal processing; (2) the 
Ultrasound Transducer Module (UTM), a reusable transducer assembly that 
converts the electrical signals from the scanner into ultrasound 
energy; (3) the Transducer Extension Cable (TEC), a cable/connector to 
interface the UTM to the EVS Scanner; and (4) the UDK-T, a disposable 
mounting kit with an operator control mechanism used to externally 
affix the EVSTM to a standard EGD endoscope and to provide 
needle and transducer angulation while maintaining the native 
gastroscope controls.
    Please refer to the online application posting for the 
EVSTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240228GJT0X, for additional detail 
describing this device and the disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the EVSTM, which includes the UDK-T, 
received FDA Breakthrough Device designation effective July 29, 2021, 
as a device intended to provide optical visualization of, ultrasonic 
visualization of, and therapeutic access to, the upper GI tract 
including but not restricted to the organs, tissues, and subsystems: 
esophagus, stomach, duodenum, and underlying areas. FDA granted the 
applicant 510(k) clearance for the EVSTM on December 27, 
2023, indicated for use such that when affixed to an endoscope, is 
intended to provide ultrasonic visualization of, and ultrasound guided 
therapeutic access to the upper GI tract including but not restricted 
to the organs, tissues, and subsystems: esophagus, stomach, duodenum, 
and underlying areas. The EVSTM, mounted on an endoscope, is 
introduced orally when indications consistent with the requirement for 
a GI procedure are met. The EVSTM is a prescription-only 
device to be used by a qualified physician. The clinical environments 
where the system can be used include clinics, hospitals, and ambulatory 
surgery centers. We noted that while the indication for the FDA 
Breakthrough Device designation and the indication for the FDA 510(k) 
clearance vary slightly, we stated we believe that the FDA 510(k) 
clearance indication is the one covered by the Breakthrough Device 
designation. We received the application for a new device category for 
transitional pass-through payment status for the EVSTM on 
February 28, 2024, which is within 3 years of the date of the initial 
FDA marketing authorization.
    We invited public comment on whether the EVSTM, 
inclusive of the UDK-T component, meets the newness criterion at Sec.  
419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant clarified that the EVSTM 
received FDA market authorization for 510(k) clearance. The applicant 
asserted that, according to FDA guidance,\34\ 510(k) clearance is 
permissible for pre-determined Breakthrough Device designation and 
stated there were no changes specific to device components, mechanism 
of use, or indications of use for either the Breakthrough Device 
designation or the 510(k) clearance. The applicant stated the 510(k) 
clearance occurred within 3 years of the submission of the pass-through 
application such that the EVSTM meets the newness criterion 
at 42 CFR 419.66(b)(1).
---------------------------------------------------------------------------

    \34\ See Breakthrough Devices Program, Guidance for Industry and 
Food and Drug Administration Staff Document issued on September 15, 
2023. https://www.fda.gov/media/162413/download.
---------------------------------------------------------------------------

    Response: We appreciate the commenter's input. The EVSTM 
received Breakthrough Device designation effective July 29, 2021. We 
received the application for a new device category for transitional 
pass-through payment status for the EVSTM on February 28, 
2024, which is within 3 years of December 27, 2023, the date of FDA 
510(k) clearance. Based on our review of the application, we have 
determined that the EVSTM meets the newness criterion at 
Sec.  419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in

[[Page 94146]]

contact with human tissue, and be surgically inserted or implanted, or 
applied in or on a wound or other skin lesion. The applicant did not 
indicate whether the UDK-T component of the EVSTM is 
integral to the service furnished; however, the applicant did indicate 
that the UDK-T is single-use, comes in contact with human tissue, and 
is inserted as part of an endoscopy procedure. We preliminarily 
approved the EVSTM HCPCS code C1606 (Adapter, single-use 
(i.e., disposable), for attaching ultrasound system to upper 
gastrointestinal endoscope) upon quarterly review under the alternative 
pathway with an effective date of July 1, 2024. We noted that C1606 was 
established for an adapter for attaching an ultrasound system to an 
upper GI endoscope that can only be used for a single procedure and 
cannot be reprocessed. As such, C1606 only describes devices that 
cannot be reprocessed.
    We invited public comment on whether the UDK-T component of the 
EVSTM meets the eligibility criterion at Sec.  419.66(b)(3).
    Comment: The applicant submitted a comment reiterating that the 
EVSTM is used for one patient, comes into contact with human 
tissue, and is surgically implanted or inserted. The applicant 
clarified that the C1606 device component (i.e., the UDK-T component) 
of the EVSTM meets the Sec.  419.66(b)(3) criteria and is 
integral to the function and operation of the EVSTM. The 
applicant further commented that C1606 was established for an adapter 
for attaching an ultrasound system to an upper GI endoscope that can 
only be used for a single procedure and cannot be reprocessed. The 
applicant asserted that the C1606 device component of the 
EVSTM meets the eligibility criterion at 42 CFR 
419.66(b)(3).
    Response: We appreciate the applicant's clarification. We agree 
with the applicant that the UDK-T component of the EVSTM is 
integral to the function and operation of the EVSTM and that 
the device is used for one patient only, comes into contact with human 
tissue, and is surgically implanted or inserted. After consideration of 
the applicant's comments and our review of the application we have 
determined that the UDK-T component of the EVSTM meets the 
eligibility requirement at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant claimed that the UDK-T meets the device 
eligibility requirements because it is not equipment or an item for 
which depreciation and financing expenses are recovered. In addition, 
the applicant asserted that the UDK-T is not a supply or material.
    We invited public comment on whether the UDK-T component of the 
EVSTM meets the exclusion criterion at Sec.  419.66(b)(4).
    Comment: The applicant submitted a comment reiterating that the 
UDK-T component of the EVSTM is not equipment or an item for 
which depreciation and financing expenses are recovered and is not a 
supply or material.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the UDK-T component of the EVSTM is not 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered as 
depreciation assets, or a material or supply furnished incident to a 
service. After consideration of the applicant comments we received and 
our review of the application, we have determined that the UDK-T 
component of the EVSTM meets the eligibility criterion at 
Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
the EVSTM is an ultrasound system designed to externally 
attach to an upper GI endoscope (gastroscope/upper (EGD) endoscope). 
According to the applicant, no previous or existing device categories 
for pass-through payment appropriately describe the UDK-T. Per the 
applicant, device category C1748 (Endoscope, single-use (i.e., 
disposable), Upper GI, imaging/illumination device (insertable)) does 
not appropriately describe the EVSTM, inclusive of the UDK-
T, because: (1) the EVSTM, inclusive of the UDK-T, enables 
an endoscope that a hospital has to have added functionalities such as 
the ability to perform an EUS procedure, but is not an endoscope like 
the devices in C1748; (2) the EVSTM, inclusive of the UDK-T, 
when used with an endoscope allows EUS procedures to be done without an 
elevator, unlike the other devices described in C1748; and (3) the 
EVSTM, inclusive of the UDK-T, and the devices described in 
C1748 are used in different procedures. The applicant explained that 
CMS indicated that C1748 should always be billed with a HCPCS code in 
the ranges of 43260-43265 and 43274-43278, but there is no overlap 
between those HCPCS codes billed with C1748 and the HCPCS codes the 
applicant stated that the EVSTM would be reported with as 
shown in Table 48 of the CY 2025 OPPS/ASC proposed rule.
    We did not identify an existing pass-through payment category that 
describes the UDK-T component of the EVSTM.
    We invited public comment on whether the UDK-T component of the 
EVSTM meets the device category criterion at Sec.  
419.66(c)(1).
    Comment: The applicant agreed with CMS' assessment that there are 
no existing pass-through payment categories that describe the UDK-T 
component of the EVSTM. The applicant further asserted that 
there is no other product similar in how the EVSTM 
assembles, operates, and functions and that, therefore, the device 
meets the criteria in 42 CFR 419.66(c)(1).
    Response: We appreciate the applicant's input. After consideration 
of the comment and our review of the application, we continue to 
believe that there is no existing category or category previously in 
effect that appropriately describes the UDK-T component of the 
EVSTM. Therefore, we have determined that the UDK-T 
component of the EVSTM meets the device category eligibility 
criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough

[[Page 94147]]

Device designation. The EVSTM, inclusive of the UDK-T, has a 
Breakthrough Device designation and marketing authorization from FDA 
for the indication covered by the Breakthrough Device designation (as 
explained in more detail in the discussion of the newness criterion) 
and therefore is not evaluated for substantial clinical improvement.
    We invited public comment on whether the EVSTM, 
inclusive of the UDK-T component, meets the device category criterion 
at Sec.  419.66(c)(2)(ii).
    Comment: The applicant reiterated that the EVSTM and its 
components were granted Breakthrough Device designation and received 
FDA marketing authorization for the indication covered by the 
Breakthrough Device designation, and therefore, meets the criteria at 
42 CFR 419.66(c)(2)(ii).
    Response: We appreciate the applicant's comment. The 
EVSTM and its components have a Breakthrough Device 
designation effective July 29, 2021, and marketing authorization from 
FDA effective December 27, 2023, for the indication covered by the 
Breakthrough designation. Therefore, the EVSTM meets the 
criterion at Sec.  419.66(c)(2)(ii) and is not evaluated for 
substantial clinical improvement at Sec.  419.66(c)(2)(i). Based on our 
review of the application and the applicant's comments, we have 
determined that the EVSTM meets the device category 
criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
EVSTM would be reported with HCPCS codes as shown in Table 
117.
[GRAPHIC] [TIFF OMITTED] TR27NO24.144

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations,

[[Page 94148]]

we used APC 5302, which had a CY 2024 payment rate of $1,812.99 at the 
time the application was received. HCPCS code 43232 in APC 5302 had a 
CY 2024 device offset amount of $14.50 at the time the application was 
received.\35\ According to the applicant, the cost of the disposable, 
single-use UDK-T component of the EVSTM is $500.00.
---------------------------------------------------------------------------

    \35\ We noted that the applicant selected the APC payment rate 
of $1,814.88 and the APC level device offset amount of $178.95 for 
APC 5302. However, the values selected are inconsistent with the APC 
payment rate and the APC level device offset amount found in CY 2024 
OPPS APC Offset File, which were corrected as described in the CY 
2024 OPPS/ASC final rule with comment period correction (89 FR 
9002). The HCPCS/CPT code level device offset amounts for the HCPCS/
CPT codes provided by the applicant are available in the corrected 
Addendum P to the CY 2024 OPPS/ASC final rule with comment period. 
For our calculation, we selected the APC payment rate of $1,812.99 
and the HCPCS/CPT code level device offset amount of $14.50 related 
to HCPCS 43232 in APC 5302 found in the corrected Addendum P, which 
are the accurate values for these codes. Based on our initial 
assessment in the proposed rule, using the APC payment rate of 
$1,812.99 and the device offset amount of $14.50 would result in the 
EVSTM meeting the cost significance requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $500.00 for the UDK-T is 27.59 percent of the 
applicable APC payment amount for the service related to the category 
of devices of $1,812.99 (($500.00/$1,812.99) x 100 = 27.59 percent). 
Therefore, we stated that we believe the UDK-T component of the 
EVSTM meets the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $500.00 for the 
UDK-T is 3,448.28 percent of the cost of the device-related portion of 
the APC payment amount for the related service of $14.50 (($500.00/
$14.50) x 100 = 3,448.28 percent). Therefore, we stated that we believe 
the UDK-T component of the EVSTM meets the second cost 
significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $500.00 for the UDK-T and the portion of the APC 
payment amount for the device of $14.50 is 26.78 percent of the APC 
payment amount for the related service of $1,812.99 ((($500.00 - 
$14.50)/$1,812.99) x 100 = 26.78 percent). Therefore, we stated that we 
believe the UDK-T component of the EVSTM meets the third 
cost significance requirement.
    We invited public comment on whether the UDK-T component of the 
EVSTM meets the device pass-through payment criteria 
discussed in this section, including the cost criterion for device 
pass-through payment status.
    Comment: With respect to the cost criterion, the applicant agreed 
that the UDK-T component of the EVSTM meets all three of the 
cost criterion outlined in 42 CFR 419.66(c)(3) and (d)(1) through (3).
    Response: We appreciate the applicant's input. After consideration 
of the comment we received and our findings from the first, second, and 
third cost significance tests, we agree that the UDK-T component of the 
EVSTM meets the cost significance criteria specified at 
Sec.  419.66(d).
    As discussed, the UDK-T component of the EVSTM pass-
through application was preliminarily approved for transitional pass-
through payment under the alternative pathway effective July 1, 2024. 
After considering the applicant comment received and our review of the 
device pass-through application, we have determined that the UDK-T 
component of EVSTM meets the requirements for device pass-
through status described at Sec.  419.66. We are finalizing approval 
for device pass-through payment status for the UDK-T component of the 
EVSTM under the alternative pathway for devices that have an 
FDA Breakthrough Device designation and have received FDA marketing 
authorization for the indication covered by the Breakthrough Device 
designation.
    Comment: The applicant commented that HCPCS codes 43240 and 43253 
should be added to the list of procedures that can be reported with 
C1606. The applicant stated that in Table 48 of the CY 2025 OPPS/ASC 
proposed rule, there are 6 primary HCPCS procedures codes reported with 
the nominated device, including HCPCS codes 43231, 43232, 43237, 43238, 
43242, and 43259. The applicant stated that in the July 2024 ASC code 
pairs file,\36\ dated June 14, 2024, 8 primary HCPCS procedures codes 
were listed with HCPCS code C1606, which included the HCPCS codes 
listed included those listed in proposed rule, with the addition of 
HCPCS codes 43240 and 43253. The applicant agreed with the preliminary 
approval of pass-through status for the nominated device and requested 
that it should be made clear that the 8 procedures codes on the July 
2024 ASC code pairs file for C1606 are the procedures that can be 
reported with C1606.
---------------------------------------------------------------------------

    \36\ July 2024 ASC code pairs file: https://www.cms.gov/license/ama?file=/files/zip/july-2024-asc-codepairs.zip.
---------------------------------------------------------------------------

    Response: We thank the applicant for the comment. We will evaluate 
this request and add HCPCS codes 43240 and 43253 to the list of 
procedures that can be reported with C1606 if appropriate.
(e) iFuse Bedrock GraniteTM Implant System
    SI-BONE submitted an application for a new device category for 
transitional pass-through payment status for the iFuse Bedrock 
GraniteTM Implant System for CY 2025. According to the 
applicant, the iFuse Bedrock GraniteTM Implant System 
consists of iFuse GraniteTM implants of various lengths and 
diameters and associated instruments sets. The titanium (Ti-6Al-4V ELI) 
iFuse GraniteTM implant consists of a porous fusion sleeve 
with threaded length attached to a solid post that has connection and 
implant placement features of a typical pedicle fixation screw. The 
iFuse GraniteTM implant is intended to provide sacropelvic 
fusion of the sacroiliac joint (when placed in the sacral-alar-iliac 
(SAI) trajectory) and fixation to the pelvis when used in conjunction 
with commercially available pedicle screw fixation systems as a 
foundational element for segmental spinal fusion only when performing 
both a lumbar and a sacroiliac joint (SIJ) fusion procedure in the same 
operative session. The applicant asserted that joint fusion occurs as a 
result of the device's porous surface and interstices and fixation 
occurs through the device's helical threaded design and traditional 
posterior fixation rod connection.
    Per the applicant, the device can be placed into the pelvis in two 
trajectories: the SAI trajectory (i.e., into the sacrum, across the SIJ 
and into the ilium), or directly into the ilium. The applicant 
explained that the iFuse GraniteTM implant is typically 
placed in the SAI trajectory, bilaterally, and

[[Page 94149]]

oftentimes stacked to achieve two points of fusion and fixation/
stabilization across each SIJ. According to the applicant, the iFuse 
GraniteTM implant may also be used in a single, but 
bilateral, configuration, where only two implants may be required when 
replacing traditional pedicle screws in either a SAI trajectory or 
iliac trajectory. The applicant asserted that the iFuse Bedrock 
GraniteTM Implant System is always used in addition to 
lumbar fusion instrumentation when used to perform lumbar and SIJ 
fusion at the same time.
    Please refer to the online application posting for the iFuse 
Bedrock GraniteTM Implant System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP240220LPFNM, for 
additional detail describing the device and the disease treated by the 
device.
    Comment: One commenter strongly encouraged CMS to consider the 
iFuse Bedrock GraniteTM Implant System as having met all 
requirements for transitional pass-through payment status for CY 2025 
and noting that that the device has Breakthrough Device designation for 
lumbar spinal deformity indications and was granted with New Technology 
Add-on Payment status effective in FY 2023 (87 FR 48780).
    Response: We appreciate the commenters' input and support for the 
iFuse Bedrock GraniteTM Implant System application for 
transitional pass-through payment. We have taken these comments into 
consideration in our final determination for pass-through status for 
the iFuse Bedrock GraniteTM Implant System.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the iFuse Bedrock GraniteTM Implant 
System received FDA Breakthrough Device designation effective November 
23, 2021, as a treatment of the acute and chronic instabilities or 
deformities of the thoracic, lumbar, and sacral spine, including: (1) 
degenerative disc disease (DDD), as defined by back pain of discogenic 
origin with degeneration of the disc confirmed by patient history and 
radiographic studies; (2) severe spondylolisthesis (Grades 3 and 4) of 
the L5-S1 vertebra; (3) skeletally mature patients receiving fusions by 
autogenous bone graft having implants attached to the lumbar and sacral 
spine (L3 to sacrum) with removal of the implants after the attainment 
of a solid fusion; (4) spondylolisthesis; (5) trauma (i.e., fracture or 
dislocation); (6) spinal stenosis; (7) deformities or curvatures (i.e., 
scoliosis, kyphosis, and/or lordosis); (8) spinal tumor; and (9) 
pseudarthrosis, and/or failed previous fusion. Subsequently, FDA also 
granted the applicant 510(k) clearance for the iFuse Bedrock 
GraniteTM Implant System on May 26, 2022, and December 22, 
2022, for the indication covered by the Breakthrough Device designation 
with one additional indication for use: SIJ dysfunction that is a 
direct result of SIJ disruption and degenerative sacroiliitis, 
including conditions whose symptoms began during pregnancy or in the 
peripartum period and have persisted postpartum for more than 6 months. 
We noted that the 510(k) clearance dated December 22, 2022, expanded 
the previously cleared indication of the iFuse Bedrock 
GraniteTM Implant System to include general compatibility 
with certain compatible pedicle screw systems, whereas the indications 
under the May 26, 2022, 510(k) clearance only addressed compatibility 
of the iFuse Bedrock GraniteTM Implant System with the 
SeaSpine Mariner Pedicle Screw System. Each 510(k) clearance, the May 
26, 2022, and the December 22, 2022, are covered by the November 23, 
2021, Breakthrough Device designation for the iFuse Bedrock 
GraniteTM Implant System. We received the application for a 
new device category for transitional pass-through payment status for 
the iFuse Bedrock GraniteTM Implant System on February 20, 
2024, which is within 3 years of the dates of the May 26, 2022, and 
December 22, 2022, FDA marketing authorizations for the iFuse Bedrock 
GraniteTM Implant System.
    We invited public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the newness criterion at 
Sec.  419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant reiterated that the iFuse Bedrock 
GraniteTM Implant System received FDA marketing 
authorization on May 26, 2022. The applicant requested that CMS begin 
the newness period for the iFuse Bedrock GraniteTM Implant 
System using the FDA Breakthrough Device designation of November 23, 
2021, and the earlier market availability date of May 26, 2022, for the 
510(k) marketing authorization.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the market availability date for the iFuse Bedrock 
GraniteTM Implant System should be May 26, 2022, rather than 
December 22, 2022, because that is when the device became commercially 
available. We received the application for a new device category for 
transitional pass-through payment status for the iFuse Bedrock 
GraniteTM Implant System on February 20, 2024, which is 
within 3 years of May 26, 2022, the date of 510(k) clearance. After 
consideration of the public comments received and our review of the 
application, we have determined that the iFuse Bedrock 
GraniteTM Implant System meets the newness criterion at 
Sec.  419.66(b)(1).
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the device must be an integral part of the service furnished, used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate if the iFuse Bedrock 
GraniteTM Implant System is integral to the service 
furnished. The applicant provided that the iFuse Bedrock 
GraniteTM Implant System is single-use, permanently 
implanted, and surgically inserted into the patient. However, we noted 
that we do not have sufficient information to determine if the 
associated instruments sets included in the iFuse Bedrock 
GraniteTM Implant System meet the eligibility criterion at 
Sec.  419.66(b)(3).
    We invited public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the eligibility criterion at 
Sec.  419.66(b)(3).
    Comment: The applicant submitted a comment clarifying that the 
iFuse Bedrock GraniteTM Implant System, including the 
associated instrument sets included in the iFuse Bedrock 
GraniteTM Implant System, meet the eligibility criterion at 
Sec.  419.66(b)(3). Specifically, the applicant stated that the iFuse 
Bedrock GraniteTM Implant System technology, including the 
associated instrument sets is integral to the service furnished, is 
single-use, permanently implanted, and surgically inserted into the 
patient, aligning fully with Sec.  419.66(b)(3).
    Response: We thank the applicant for the additional information. We 
agree with the applicant that the iFuse Bedrock GraniteTM 
Implant System, including the associated instrument sets, is an 
integral part of the service furnished, used for one patient only, 
comes in contact with human tissue, and is surgically implanted or 
inserted, or applied in or on a wound or other skin lesion. After 
consideration of the public comments received and our review of the 
application, we have determined that the iFuse Bedrock 
GraniteTM Implant System meets the criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through

[[Page 94150]]

payment if it is any of the following: (1) equipment, an instrument, 
apparatus, implement, or item of this type for which depreciation and 
financing expenses are recovered as depreciation assets as defined in 
Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-
1); or (2) a material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, or clip, other than a 
radiological site marker). The applicant did not indicate whether the 
iFuse Bedrock GraniteTM Implant System is equipment, an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered, or if the iFuse 
Bedrock GraniteTM Implant System is a supply or material 
furnished incident to a service.
    We invited public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the exclusion criterion at 
Sec.  419.66(b)(4).
    Comment: The applicant submitted a comment clarifying that the 
iFuse Bedrock GraniteTM Implant System is not a material or 
supply furnished incident to a service and meets the eligibility 
criterion at Sec.  419.66(b)(4) because neither the implant nor its 
associated instrument sets are a material or supply furnished incident 
to a service, and that the iFuse Bedrock GraniteTM Implant 
System operates like a vast majority of spine and orthopedic hardware 
typically used in surgery of this type. The applicant also confirmed 
that the iFuse Bedrock GraniteTM Implant System is not 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered as 
depreciation assets.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the iFuse Bedrock GraniteTM Implant System, 
including the associated instruments, is not equipment, an instrument, 
apparatus, implement, or item of this type for which depreciation and 
financing expenses are recovered as depreciation assets, or a material 
or supply such as a suture or clip furnished incident to a service. 
After consideration of the public comments received and our review of 
the application, we have determined that the iFuse Bedrock 
GraniteTM Implant System meets the eligibility criterion at 
Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
no previous or existing device categories for pass-through payment 
appropriately describe the iFuse Bedrock GraniteTM Implant 
System. Per the applicant, the device category C1821 (Interspinous 
process distraction device) does not appropriately describe the iFuse 
Bedrock Granite\TM\ Implant System because the iFuse Bedrock 
GraniteTM Implant System is used to fixate and fuse, while 
the devices described in C1821 are interspinous spacers which, after 
implantation, are opened or expanded to distract the neural foramina 
and decompress the nerves. The applicant asserted that device category 
C1713 (Anchor/screw for opposing bone-to-bone or soft tissue-to-bone 
(implantable)) also does not appropriately describe the iFuse Bedrock 
GraniteTM Implant System because the iFuse Bedrock 
GraniteTM Implant System allows for simultaneous fusion of 
the SIJ and fixation of the pelvis by connecting via the Tulip 
Connector to the base of the stabilizing rods within the lumbosacral 
spinal construct, while C1713 includes implantable pins and/or screws 
that are used to oppose soft tissue-to-bone, tendon-to-bone, or bone-
to-bone. Per the applicant, the device category C1889 (Implantable/
insertable device, not otherwise classified) also does not 
appropriately describe the iFuse Bedrock GraniteTM Implant 
System because it does not describe any specific device category, and 
therefore does not uniquely describe the device category proposed for 
the iFuse Bedrock GraniteTM Implant System.
    We noted that, according to the applicant, the iFuse Bedrock 
GraniteTM Implant System is intended to provide sacropelvic 
fusion of the sacroiliac joint (when placed in the SAI trajectory) and 
fixation to the pelvis when used in conjunction with commercially 
available pedicle screw fixation systems as a foundational element for 
segmental spinal fusion only when performing both a lumbar and SIJ 
fusion procedure in the same operative session. The applicant asserted 
that joint fusion occurs as a result of the device's porous surface and 
interstices and fixation occurs through the device's helical threaded 
design and traditional posterior fixation rod connection. We stated 
that we believe that the device category C1713 may appropriately 
describe the iFuse Bedrock GraniteTM Implant System and 
questioned whether a transfixing device utilizing the Tulip Connector 
is sufficiently distinguishable from traditional implantable pins or 
screws that it is meant to replace. In this context, based on the 
description the applicant provided, we stated that we believe the iFuse 
Bedrock GraniteTM Implant System may be similar to the 
devices described by C1713, and therefore, the iFuse Bedrock 
GraniteTM Implant System may also be appropriately described 
by C1713.
    In addition, we stated that we believe the device category C1889 
may appropriately describe the iFuse Bedrock GraniteTM 
Implant System because C1889 may be used to describe any implantable/
insertable device that is not otherwise described by a more specific 
device category and is, therefore, sufficiently broad to include 
implantable devices that allow for simultaneous fusion of the SIJ and 
fixation of the pelvis. We noted that in the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79562), CMS created C1889 with the 
specific intent to recognize devices furnished during a device 
intensive procedure that are not described by a specific Level II HCPCS 
Category C-code. In this context, we stated that we believe the iFuse 
Bedrock GraniteTM Implant System may be appropriately 
described by either C1713 or C1889.
    We invited public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the device category criterion 
at Sec.  419.66(c)(1).
    Comment: In response to our concerns that the iFuse Bedrock 
GraniteTM Implant System may be appropriately described by 
the device pass-through category C1713, the applicant and a few other 
commenters asserted that the iFuse Bedrock GraniteTM Implant 
System is not described by C1713. Specifically, the applicant relied 
upon the C1713 descriptor and supporting guidance: C1713: Anchor for 
opposing bone-to-bone or soft tissue-to-bone--Implantable pins and/or 
screws that are used to oppose soft tissue-to-bone, tendon-to-bone, or 
bone-to-bone. Screws oppose tissues via drilling as follows: soft 
tissue-to-bone, tendon-to-bone, or bone to-bone fixation. Pins are 
inserted or drilled into bone, principally with the intent to 
facilitate stabilization or oppose bone-to-bone. This may include 
orthopedic plates with accompanying washers and nuts. This category 
also applies to synthetic bone substitutes that may be used to fill 
bony void or gaps (i.e., bone substitute implanted into a bony defect 
created from trauma or surgery). The applicant and commenters clarified 
that, unlike

[[Page 94151]]

devices described by C1713, the iFuse Bedrock GraniteTM 
Implant System's intended use is not to anchor bone to bone, or soft 
tissue, tendons, or ligaments to bone, but to promote simultaneous 
pelvic stabilization and fusion across the SI joint space, via a unique 
and proprietary Tulip Connector that attaches to the spinal fusion 
construct. The applicant and another commenter further provided that 
the typical use scenarios for reporting C1713 include orthopedic 
procedures involving bone sutures, anchors, small plastic polyether 
ether ketone (PEEK) screws for bone-to-bone or bone-to-tendon/tissue 
connections, often in anatomic areas outside of the spine (including 
the extremities, shoulders, knees and small bones). Furthermore, the 
applicant and commenter noted that C1713 is used to report procedures 
that are mostly non-fusion applications with the intent to restore 
motion or function to anatomy(ies) and that C1713 can also include bone 
void filler or bone substitute materials (e.g., demineralized bone 
matrix, Subchondroplasty, etc.).
    The applicant and commenters specified that other implanted devices 
in this category restore motion while the iFuse Bedrock 
GraniteTM Implant System immobilizes; and that the iFuse 
Bedrock GraniteTM Implant System is intended to traverse an 
articulating joint space and fuse two bones via bridging the joint to 
immobilize it so bony fusion may occur.
    Response: We appreciate the applicant and commenters' 
clarifications and the additional information. We agree that the 
ability to simultaneously fuse the SIJ and fixate the pelvis to the 
spinal fusion construct distinguishes the iFuse Bedrock 
GraniteTM Implant System from other implant devices 
described by C1713 that anchor bone-to-bone, or soft tissue-to-bone, 
tendons-to-bone, or ligaments-to-bone. We also agree that the iFuse 
Bedrock GraniteTM Implant System is distinguishable from 
other implant devices described by C1713 because it secures bone to a 
metal rod via the Tulip Connector, and that typical C1713 implants do 
not include joint fusion technologies, and are not specific to anatomic 
areas, nor do they function similarly to the iFuse Bedrock 
GraniteTM.
    After consideration of the public comments we received and our 
review of the application, we agree that existing device category C1713 
does not appropriately describe the iFuse Bedrock GraniteTM.
    Comment: In response to our concerns that the iFuse Bedrock 
GraniteTM Implant System may be appropriately described by 
C1889, the applicant and a few commenters noted that C1889 is not, and 
has not been, a device pass-through category code, and that it is not 
included in the complete list of device pass-through category codes.
    Response: We appreciate the commenters' input. We agree that C1889 
is not a device pass-through category code, and therefore, agree that 
it is not relevant to our determination at Sec.  419.66(c)(1).
    After consideration of the public comments received and our review 
of the application, we agree there is no existing category or category 
previously in effect that appropriately describes the iFuse Bedrock 
GraniteTM Implant System. Based on this information, we have 
determined that the iFuse Bedrock GraniteTM Implant System 
meets the eligibility criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category at Sec.  
419.66(c)(2) provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The iFuse Bedrock GraniteTM 
Implant System has a Breakthrough Device designation and marketing 
authorization from FDA for the indication covered by the Breakthrough 
Device designation (as explained in the discussion of the newness 
criterion) and therefore is not evaluated for substantial clinical 
improvement.
    We invited public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the device category criterion 
at Sec.  419.66(c)(2)(ii).
    We did not receive any public comment regarding whether the iFuse 
Bedrock GraniteTM Implant System meets the device category 
criterion at Sec.  419.66(c)(2)(ii). The iFuse Bedrock 
GraniteTM Implant System has a Breakthrough Device 
designation effective November 23, 2021, and marketing authorization 
from FDA effective May 26, 2022, for the indication covered by the 
Breakthrough Device designation. Based on our review of the 
application, we have determined that the iFuse Bedrock 
GraniteTM Implant System meets the device category criterion 
at Sec.  419.66(c)(2)(ii) and is not evaluated for substantial clinical 
improvement at Sec.  419.636(c)(2)(i).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the iFuse Bedrock 
GraniteTM Implant System would be reported with HCPCS codes 
shown in Table 118.

[[Page 94152]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.145

    According to the applicant, the iFuse Bedrock GraniteTM 
Implant System is only used when both a SIJ fusion procedure and a 
lumbar fusion procedure are performed in the same operative session. 
The applicant stated that the iFuse Bedrock GraniteTM 
Implant System is not utilized when only a SIJ fusion procedure is 
performed (HCPCS code 27279) or when only a lumbar fusion procedure is 
performed (HCPCS code 22612, 22630, or 22633). Rather, per the 
applicant, the appropriate coding of the procedure where the iFuse 
Bedrock GraniteTM Implant System is used should include the 
HCPCS code for SIJ fusion (HCPCS code 27279) and a HCPCS code for 
lumbar fusion (HCPCS code 22612, 22630, or 22633). Per the applicant, 
the selection of the primary lumbar fusion HCPCS code (HCPCS code 
22612, 22630, or 22633) is dependent on the procedure performed.
    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant utilized the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5116, which had a CY 2024 payment rate of 
$17,756.28 at the time the application was received. The applicant 
stated the iFuse Bedrock GraniteTM Implant System device 
should be reported with the SIJ fusion procedure HCPCS code 27279 along 
with one of the three lumbar fusion procedures (HCPCS code 22612, 22630 
or 22633). While the applicant utilized HCPCS code 22612 for the device 
offset amount for test two of the cost criterion, we stated that we 
believe that HCPCS code 27279 is the appropriate HCPCS code for the 
offset and subsequent calculation. Specifically, we understood that 
code 27279 is always reported when the iFuse Bedrock 
GraniteTM Implant System is used along with only one of the 
three specified lumbar fusion codes and that the SIJ fusion procedure 
described by code 27279 is always performed when the iFuse Bedrock 
GraniteTM is used along with just one of three possible 
lumbar procedures, depending on the specific surgical approach used. 
Therefore, we stated that we believe that neither HCPCS codes 22612, 
22630, nor 22633 is appropriate to use for the cost criterion 
calculation. As such, we used HCPCS code 27279, the code that should 
always be reported with the iFuse Bedrock GraniteTM Implant 
System, for our calculations. HCPCS code 27279 in APC 5116 had a CY 
2024 device offset amount of $12,264.26 at the time the application was 
received. According to the applicant, the cost of the iFuse Bedrock 
GraniteTM Implant System is $11,689.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $11,689.00 for the iFuse Bedrock 
GraniteTM Implant System is 65.83 percent of the applicable 
APC payment amount for the service related to the category of devices 
of $17,756.28 (($11,689.00/$17,756.28) x 100 = 65.83 percent). 
Therefore, we stated that we believe the iFuse Bedrock 
GraniteTM Implant System meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $11,689.00 for 
the iFuse Bedrock GraniteTM Implant System is 95.31 percent 
of the cost of the device-related portion of the APC payment amount for 
the related service of $12,264.26 (($11,689.00/$12,264.26) x 100 = 
95.31 percent). Therefore, we stated that we believe the iFuse Bedrock 
GraniteTM Implant System does not meet the second cost 
significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $11,689.00 for the iFuse Bedrock 
GraniteTM Implant System and the portion of the APC payment 
amount for the device of $12,264.26 is negative 3.24 percent of the APC 
payment amount for the related service of $17,756.28 ((($11,689.00-
$12,264.26)/$17,756.28) x 100 =-3.24 percent). Therefore, we stated 
that we believe the iFuse Bedrock

[[Page 94153]]

GraniteTM Implant System does not meet the third cost 
significance requirement.
    We invited public comment on whether the iFuse Bedrock 
GraniteTM Implant System meets the device pass-through 
payment criteria discussed in this section, including the cost 
criterion for device pass-through payment status.
    Comment: In response to our proposal to utilize HCPCS code 27279 
for evaluation of cost criteria for the iFuse Bedrock 
GraniteTM Implant System, the applicant and another 
commenter asserted that the most appropriate HCPCS code to evaluate the 
criterion for the iFuse Bedrock GraniteTM Implant System is 
HCPCS code 22612. The applicant and another commenter provided several 
reasons: (1) The intended indication and use of the nominated device in 
the hospital outpatient and ASC setting will be in support of the 
lumbar spinal construct for lumbar fusion cases; (2) The typical 
patient for the nominated device has severe lumbar spinal pathology, 
such as scoliosis or kyphosis of the lumbar spine, as the primary 
diagnosis, whereas sacroiliac joint disease or dysfunction is not the 
primary diagnosis or procedure indication for these patients; and (3) 
As evidence of the consensus on this type of pelvic fixation to support 
lumbar patients, numerous commercial payers across the U.S. agree and 
have published medical coverage policies stating that SI joint fusion 
at the bottom of a long construct is covered for treatment of lumbar 
disease or dysfunction.\37\ The applicant claimed that in the 
outpatient setting, the iFuse Bedrock GraniteTM Implant 
System would always be used in conjunction with one of three spinal 
fusion procedures and would always be considered as a secondary 
procedure. The applicant stated that of the four relevant HCPCS codes 
in its application (HCPCS codes 22612, 22630, 22633, and 27279), the 
threshold for HCPCS code 22612 is the most appropriate for evaluating 
the cost criterion for the iFuse Bedrock GraniteTM Implant 
System. The applicant provided the following reasons: (1) HCPCS code 
22612 is the only lumbar spinal fusion procedure payable by Medicare in 
both hospital outpatient and ASC settings; (2) HCPCS code 22612 has a 
lower device offset, consistent with CMS' policies; and (3) HCPCS code 
22612 is the primary code in spinal fusion procedures in which the 
iFuse Bedrock GraniteTM will always be used as an adjunctive 
technology, when connected to compatible posterior spinal rods, to 
improve the potential outcome of the lumbar fusion case. Finally, the 
applicant argued that HCPCS code 22612 would also be appropriate from a 
primary assignment rank perspective, stating that since the nominated 
device will have multiple J1 HCPCS codes, it would be appropriate to 
determine which HCPCS code has the highest primary assignment ranking. 
The applicant referenced Addendum J of the CY 2024 final rule and the 
CY 2025 proposed rule stating that HCPCS code 22612 has a higher 
ranking for primary assignment purposes than HCPCS code 27279. The 
applicant claimed that it would be consistent with CMS' policy on 
assignment of primary procedures to select the cost threshold for HCPCS 
code 22612, as opposed to HCPCS code 27279, to assess the cost 
criterion for the iFuse Bedrock GraniteTM Implant System.
---------------------------------------------------------------------------

    \37\ Anthem CG-SURG-111: ``Open sacroiliac joint fusion 
procedures are considered medically necessar y. . . during 
multisegment spinal constructs (for example, correction of deformity 
in scoliosis or kyphosis surgery) extending to the ilium.'' Ref: 
https://www.anthem.com/dam/medpolicies/abcbs/active/guidelines/gl_pw_e001136.html (accessed August 24, 2024).
---------------------------------------------------------------------------

    Response: We thank the commenters for the additional information. 
Based on the updated information provided in the comments, we agree 
HCPCS code 22612 is an appropriate procedure code for the evaluation of 
the cost criterion for the iFuse Bedrock GraniteTM Implant 
System. As such, we have updated our calculations accordingly for the 
second and third cost significance requirements, at Sec.  419.66(d)(2) 
and (3), respectively as below.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The average reasonable cost of $11,689 for the iFuse 
Bedrock GraniteTM Implant System is 136.75 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $8,547.88 (($11,689.00/$8,547.88) x 100 = 136.75 
percent). Therefore, we agree that the iFuse Bedrock 
GraniteTM Implant System meets the second cost significant 
requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $11,689.00 for the iFuse Bedrock 
GraniteTM Implant System and the portion of the APC payment 
amount for the device of $8,547.88 is 17.70 percent of the APC payment 
amount for the related service of $17,756.28 ((($11,689.00-$8,547.88)/
$17,756.28) x 100 = 17.70 percent). Therefore, we agree that the iFuse 
Bedrock GraniteTM Implant System meets the third cost 
significance requirement.
    Comment: The applicant and another commenter stated that they 
believe it is appropriate for CMS to use the lowest APC payment rate 
applicable for use with the nominated device regarding the iFuse 
Bedrock GraniteTM Implant System, stating that this is 
consistent with increasing probability that the device will pass the 
cost significance test. The applicant and another commenter asserted 
that CMS should likewise use the offset amount that gives the nominated 
device the best opportunity to pass the test, arguing that HCPCS code 
22612 is the most appropriate code for assessing the cost threshold in 
this context.
    Response: We thank the commenters for their input. As we explained 
in the CY 2005 OPPS/ASC final rule with comment period (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion. We note that in both the original evaluation of 
cost in the proposed rule as well as in the re-evaluation in this final 
rule, we followed this procedure by selecting the lowest, and in this 
case only, APC payment rate applicable for APC 5116 of $17,756. While 
we note that since 2017, we calculate the device offset amount at the 
HCPCS/CPT[supreg] code level instead of the APC level (89 FR 79657), we 
disagree that we are bound by the same policy to select the HCPCS code 
with the lowest offset amount. We believe that doing so would 
potentially conflict with our stated policy of selecting the lowest APC 
payment rate, which is intended to increase the probability the device 
will pass the cost significance test. We do, however, agree to use 
HCPCS code 22612 and its device offset amount for the evaluation of the 
cost criterion for the iFuse Bedrock GraniteTM Implant 
System, based on the updated information we received in the comments.
    Comment: The applicant requested that the iFuse Bedrock 
GraniteTM Implant System be approved for the transitional 
pass-through status and the

[[Page 94154]]

device offset amount should be set to $0. The applicant asserted that 
the costs of the iFuse Bedrock GraniteTM Implant System are 
not included as part of the device-related portion of the APC 5116 
payment supporting hospitals performing a primary lumbar fusion 
procedure. The applicant stated that hospital outpatient departments 
and ASCs do not typically support combination lumbar fusion with SI 
joint fusion procedures performed in the same operative session, and 
claims data reveals an extremely low volume of these codes being 
reported together each year in the HOPD setting relative to other code 
pairings. In addition, the applicant stated that the iFuse Bedrock 
GraniteTM Implant System cannot be used as a stand-alone 
device; rather, it will only be used in conjunction with one of three 
lumbar spinal fusion procedures. The applicant referred to the CY 2024 
and CY 2025 Addendum J files and stated that all three HCPCS codes 
describing lumbar fusion which are eligible for payment in the hospital 
outpatient setting (HCPCS 22612, 22630, and 22633) are all ranked 
higher for primary assignment purposes than HCPCS code 27279. The 
applicant therefore argued that the device costs of the iFuse Bedrock 
GraniteTM Implant System have not been appropriately 
included in the device offset of any of the fusion procedures. The 
applicant further stated that, since the costs of the iFuse Bedrock 
GraniteTM Implant System are purely additive for hospitals 
currently performing lumbar spinal fusion procedures (HCPCS codes 
22612, 22630, or 22633) mapping to Comprehensive APC 5116, the 
applicant requested that CMS set the device offset to $0 when granting 
transitional pass-through status for the iFuse Bedrock 
GraniteTM Implant System for CY 2025.
    Response: After further review, we are persuaded by commenters that 
the iFuse Bedrock Granite\TM\ Implant System cannot be used as a stand-
alone device and that it is only used in conjunction with the existing 
device costs for the lumbar spinal fusion procedures. Therefore, we 
agree that the device is not included in the existing APC payment 
amount for these procedures and a device offset amount under 42 CFR 
419.66(h) would not be appropriate at this time. For CY 2025, for the 
procedures we described that are performed with this new transitional 
pass-through device category, we are accepting the commenter's 
recommendation to apply a $0 offset for the iFuse Bedrock Granite\TM\ 
Implant System. We refer the reader to Addendum B of this CY 2025 OPPS/
ASC final rule with comment period for APC payment rates.
    After consideration of the public comments we received and our 
findings from the first, second, and third cost significance tests, we 
agree that the iFuse Bedrock GraniteTM meets the cost 
significance criteria specified at Sec.  419.66(d).
    After consideration of the public comments we received and our 
review of the device pass-through application, we have determined that 
the iFuse Bedrock GraniteTM Implant System meets the 
criteria for device pass-through status described at Sec.  419.66. We 
are finalizing approval for device pass-through payment status for the 
iFuse Bedrock GraniteTM Implant System effective January 1, 
2025, under the alternative pathway for devices that have an FDA 
Breakthrough Device Designation and have received FDA marketing 
authorization for the indication covered by the Breakthrough Device 
designation.
(f) Paradise[supreg] Ultrasound Renal Denervation (RDN) System
    ReCor Medical, Inc. submitted an application for a new device 
category for transitional pass-through payment status for the 
Paradise[supreg] Ultrasound RDN System for CY 2025. Per the applicant, 
the Paradise[supreg] Ultrasound RDN System is a catheter-based system 
that delivers ultrasound energy in the location of sympathetic nerves 
surrounding the renal arteries. The applicant explained that the 
Paradise[supreg] Ultrasound RDN System is indicated to reduce blood 
pressure as an adjunctive treatment in patients with hypertension in 
whom lifestyle modifications and antihypertensive medications do not 
adequately control blood pressure. According to the applicant, the 
Paradise[supreg] Catheter, when used with the other Paradise[supreg] 
Ultrasound RDN System components, provides complete 360-degree energy 
delivery and targeted ablation depth with each energy emission with the 
goal of disrupting the nerves and consequently achieving a reduction in 
systemic arterial blood pressure. The applicant asserted that the 
Paradise[supreg] Catheter protects the artery walls using a cooling 
system during periods of ultrasound energy emission (also called 
sonications).
    Per the applicant's instructions for use, the Paradise[supreg] 
Ultrasound RDN System includes the following components: (1) 
Paradise[supreg] Generator, which circulates coolant fluid and 
electrical energy to the Paradise[supreg] Catheter via the 
Paradise[supreg] Cable and Paradise[supreg] Cartridge; (2) 
Paradise[supreg] Catheter, which connects with the Paradise[supreg] 
Generator and has a distal balloon (available in six different 
diameters that correspond to varying artery diameter ranges) that is 
pressurized using coolant fluid; (3) Paradise[supreg] Cartridge, which 
controls the fluid flow into and out of the Paradise[supreg] Catheter 
when used in conjunction with the Paradise[supreg] Generator; (4) 
Paradise[supreg] Connection Cable, which transfers electrical energy 
from the Paradise[supreg] Generator to the Paradise[supreg] Catheter; 
(5) Paradise[supreg] Remote, included with the Paradise[supreg] 
Generator for optional use; and (6) Paradise[supreg] Cart, an optional 
wheeled cart to which the Paradise[supreg] Generator can be mounted to 
stabilize the Paradise[supreg] Generator during a procedure and to 
transport the Paradise[supreg] Generator from one location to another. 
Per the applicant, additional items required for the procedure include: 
(1) a bag of coolant fluid for inflation and cooling of balloon; (2) a 
0.014 inch guidewire to track the Paradise[supreg] Catheter into 
position for delivery of ultrasound energy; (3) a push/pull style 
hemostasis valve; (4) a 6 French (Fr) or larger guide sheath; and (5) a 
7 Fr or larger guide catheter. According to the applicant, the 
Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable are single-patient, one-time use 
components of the system. According to the applicant, key steps for 
operating the Paradise[supreg] Ultrasound RDN System include: (1) 
gaining access to the femoral artery using standard interventional 
techniques and placing a 7 Fr (or larger) guide catheter; (2) advancing 
the 7 Fr guide catheter into the left or right renal artery under 
fluoroscopic guidance; (3) performing an angiogram to verify the 
patency of the left or right renal artery; (4) measuring the distal, 
mid, and proximal artery diameters and selecting the appropriate 
Paradise[supreg] Catheter balloon size; (5) preparing and attaching the 
Paradise[supreg] Cartridge, Paradise[supreg] Connection Cable, and 
sterile water supply, and connecting the Paradise[supreg] Cartridge 
extension tubing to the Paradise[supreg] Catheter; (6) preparing and 
flushing the Paradise[supreg] Catheter; removing access devices from 
the lumen of the guide catheter and inserting a 0.014 inch guidewire; 
(7) verifying the balloon on the Paradise[supreg] Catheter is deflated; 
(8) tracking the Paradise[supreg] Catheter over the guidewire and 
gently inserting the Paradise[supreg] Catheter into the push/pull style 
hemostasis valve and guide catheter; (9) advancing and positioning the 
Paradise[supreg] Catheter in desired locations within the renal 
arteries; (10) inflating the balloon via

[[Page 94155]]

the Paradise[supreg] Generator; (11) verifying the position of the 
balloon and catheter transducer via fluoroscopy and contrast injection; 
(12) performing denervation of the left and/or right renal artery by 
delivery of ultrasound energy; (13) verifying balloon deflation via 
fluoroscopy before moving to the next location; (14) withdrawing the 
Paradise[supreg] Catheter back into the guide catheter prior to moving 
the device into an alternate artery or accessory vessel, continuing to 
another position and exchanging the balloon catheter, as needed; (15) 
removing the Paradise[supreg] Catheter, ensuring that Paradise[supreg] 
Catheter balloon is in a deflated state prior to removal, by slowly 
withdrawing the Paradise[supreg] Catheter through the guide catheter, 
until completely withdrawn, and removing the guidewire and guide 
catheter; and (16) closing the wound per standard of practice.
    Please refer to the online application posting for the 
Paradise[supreg] RDN System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP231128137E1, for additional detail 
describing the device and the disease treated by the device.
    Comment: Many commenters expressed their support for the approval 
of the Paradise[supreg] Ultrasound RDN System for transitional pass-
through payment. In addition, many commenters shared their positive 
experiences with the Paradise[supreg] Ultrasound RDN System.
    Response: We appreciate the commenters' input and support for the 
Paradise[supreg] Ultrasound RDN System application for transitional 
pass-through payment. We have taken these comments into consideration 
in our final determination for pass-through status for the 
Paradise[supreg] Ultrasound RDN System.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the Paradise[supreg] Ultrasound RDN System received 
FDA Breakthrough Device designation effective December 4, 2020, as a 
device with the indicated use to reduce blood pressure in adult (>=22 
years of age) patients with uncontrolled hypertension, who may be 
inadequately responsive to, or who are intolerant to anti-hypertensive 
medications. FDA approved the premarket approval application (PMA) for 
the Paradise[supreg] Ultrasound RDN System on November 7, 2023, for the 
indicated use to reduce blood pressure as an adjunctive treatment in 
hypertension patients in whom lifestyle modifications and 
antihypertensive medications do not adequately control blood pressure. 
We noted that while the indication for the FDA Breakthrough Device 
designation and the indication for the FDA premarket approval vary 
slightly, we believed that FDA premarket approval indication is the one 
covered by the Breakthrough Device designation. We received the 
application for a new device category for transitional pass-through 
payment status for the Paradise[supreg] Ultrasound RDN System on 
November 28, 2023, which is within 3 years of the date of the initial 
FDA marketing authorization.
    We invited public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the newness criterion at Sec.  
419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant reiterated that the Paradise[supreg] 
Ultrasound RDN System received Breakthrough Device designation and 
later FDA approval on November 7, 2023, and CMS received the 
application for a new device category for transitional pass-through 
payment status on November 28, 2023, which is within 3 years of FDA 
approval. A few commenters stated the Paradise[supreg] Ultrasound RDN 
System meets the newness criterion, with one commenter specifically 
noting that the Paradise[supreg] Ultrasound RDN System meets the 
newness criterion based on its FDA Breakthrough Device designation.
    Response: We appreciate the commenters' input. We agree with the 
applicant and commenters that the Paradise[supreg] Ultrasound RDN 
System meets the device eligibility requirements of Sec.  419.66(b)(1); 
however, while we agree that the Paradise[supreg] Ultrasound RDN System 
meets the eligibility criterion specified at Sec.  419.66(b)(1), we 
note that a device's uniqueness or FDA designation does not alone 
qualify a device for transitional pass-through payment. Specifically, 
when we adopted the alternative pathway for device pass-through 
payments under the OPPS, we stated that applications for devices that 
have received FDA marketing authorization and are part of the FDA 
Breakthrough Devices Program would not be evaluated in terms of the 
current substantial clinical improvement criterion at Sec.  
419.66(c)(2) for purposes of determining device pass-through payment 
status, but would continue to need to meet the other requirements for 
pass-through payment status in our regulations at Sec.  419.66(c)(1) 
(84 FR 61295).
    The Paradise[supreg] Ultrasound RDN System received Breakthrough 
Device designation on December 4, 2020. We received the application for 
a new device category for transitional pass-through payment status for 
the Paradise[supreg] Ultrasound RDN System on November 28, 2023, which 
is within 3 years of November 7, 2023, the date of FDA PMA. Based on 
our review of the application, we have determined that the 
Paradise[supreg] Ultrasound RDN System meets the newness criterion at 
Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, be used for 
one patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not explicitly state whether the 
Paradise[supreg] Ultrasound RDN System is integral to the service 
furnished. With respect to whether the Paradise[supreg] Ultrasound RDN 
System is used for one patient only, the applicant asserted that the 
Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable are single-patient use. However, the 
Paradise[supreg] Generator, Paradise[supreg] Remote, and 
Paradise[supreg] Cart are reusable and are capital equipment. While the 
applicant did not explicitly state whether the Paradise[supreg] 
Ultrasound RDN System comes into contact with human tissue, the 
applicant provided that the Paradise[supreg] Catheter is placed within 
the renal artery. According to the applicant, the Paradise[supreg] 
Ultrasound RDN System is an implantable device. We noted that the 
Paradise[supreg] Generator, Paradise[supreg] Remote, and 
Paradise[supreg] Cart are reusable, do not come in contact with the 
patient's tissue, are not surgically implanted or inserted, or applied 
in or on a wound or other skin lesion, as required by Sec.  
419.66(b)(3).
    We invited public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the eligibility criterion at Sec.  
419.66(b)(3).
    Comment: The applicant submitted a comment clarifying that the 
Paradise[supreg] Ultrasound RDN System is an integral part of the 
service furnished and meets the eligibility criterion at Sec.  
419.66(b)(3) because the Paradise[supreg] Ultrasound RDN System 
performs the ablations via ultrasound which produce the therapeutic 
effect to reduce blood pressure. The applicant also clarified that the 
Paradise[supreg] Ultrasound RDN System comes into contact with human 
tissue and meets the eligibility criterion at Sec.  419.66(b)(3) 
because the Paradise[supreg] Ultrasound RDN System's ablation catheter 
comes in contact with human tissue and is surgically inserted into the 
body and removed at the end of the procedure. Finally, the applicant 
reiterated that the Paradise[supreg] Connector

[[Page 94156]]

Cable, Paradise[supreg] Cartridge, and Paradise[supreg] Catheter 
components of the Paradise[supreg] Ultrasound RDN System are single-use 
only and the Paradise[supreg] Catheter is surgically inserted into the 
body and removed at the end of the procedure.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the Paradise[supreg] Ultrasound RDN System is an 
integral part of the service furnished, and is surgically implanted or 
inserted, or applied in or on a wound or other skin lesion. In 
addition, we agree that the Paradise[supreg] Connector Cable, 
Paradise[supreg] Cartridge, and Paradise[supreg] Catheter components of 
the Paradise[supreg] Ultrasound RDN System are used for one patient 
only and come in contact with human tissue. We continue our discussion 
and final determination of the criterion at Sec.  419.66(b)(3) in our 
response below.
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). While the applicant did not explicitly state whether the 
Paradise[supreg] Ultrasound RDN System, or select components, is 
equipment, an instrument, apparatus, implement, or item for which 
depreciation and financing expenses are recovered, per the applicant, 
the Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable are single-use only. The applicant 
further explained that the Paradise[supreg] Generator, Paradise[supreg] 
Cart, and Paradise[supreg] Remote are capital equipment; as such, they 
are excluded from device pass-through payment eligibility under Sec.  
419.66(b)(4). The applicant did not explicitly state whether the 
Paradise[supreg] Ultrasound RDN System is a supply or material 
furnished incident to a service.
    The applicant requested pass-through payment for the 
Paradise[supreg] Ultrasound RDN System, but we questioned whether only 
the Paradise[supreg] Catheter component of the Paradise[supreg] 
Ultrasound RDN System, as opposed to the whole system, is eligible for 
pass-through payments under Sec.  419.66(b)(3) or at Sec.  
419.66(b)(4). We stated that we do not believe the Paradise[supreg] 
Generator, Paradise[supreg] Cable, Paradise[supreg] Cartridge, 
Paradise[supreg] Connection Cable, Paradise[supreg] Remote, or 
Paradise[supreg] Cart meet the eligibility requirements under Sec.  
419.66(b)(3) or at Sec.  419.66(b)(4), and, as such, are not eligible 
for pass-through payments.
    We invited public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the exclusion criterion at Sec.  
419.66(b)(4).
    Comment: The applicant submitted a comment clarifying that the 
Paradise[supreg] Cartridge and Paradise[supreg] Connector Cable meet 
the eligibility criterion at Sec.  419.66(b)(4) because they are 
critical parts of a single piece of equipment, they are not sold 
without the Paradise[supreg] Catheter, and because these two components 
are not separable from the Paradise[supreg] Catheter component. With 
regard to our question as to whether only the Paradise[supreg] Catheter 
component of the Paradise[supreg] Ultrasound RDN System is eligible for 
pass-through payments under Sec.  419.66(b)(3) or at Sec.  
419.66(b)(4), the applicant stated that the Paradise[supreg] Cartridge 
and Paradise[supreg] Connector Cable are eligible for pass-through 
payment because the procedure cannot be performed without all three 
components, i.e., the Paradise[supreg] Catheter, the Paradise[supreg] 
Cartridge, and the Paradise[supreg] Connector Cable. The applicant 
further stated that while the Paradise[supreg] Connector Cable and 
Paradise[supreg] Cartridge are not inserted into the body, the 
Paradise[supreg] Catheter that is inserted into the body will not 
function without them. Therefore, the applicant asserted that the 
Paradise[supreg] Connector Cable and Paradise[supreg] Cartridge should 
also be eligible for transitional pass-through status along with the 
Paradise[supreg] Catheter. The applicant also confirmed that the 
Paradise[supreg] Generator, Paradise[supreg] Remote, and 
Paradise[supreg] Cart components of the Paradise[supreg] Ultrasound RDN 
System are capital equipment and are not eligible for pass-through 
payment. With regard to our question about whether the Paradise[supreg] 
Ultrasound RDN System is a supply or material furnished incident to a 
service, the applicant submitted a comment clarifying that the 
Paradise[supreg] Ultrasound RDN System is not a supply or material 
furnished incident to a service because the purpose of the procedure is 
to use the Paradise[supreg] Ultrasound RDN System to treat the patient 
with renal denervation; therefore, it is integral and essential and it 
is not a supply that is used incident to or for the purpose of doing 
another procedure.
    Response: We thank the applicant for the clarification and agree 
with the applicant that the Paradise[supreg] Catheter, Paradise[supreg] 
Cartridge, and Paradise[supreg] Connection Cable components of the 
Paradise[supreg] Ultrasound RDN System meet the eligibility 
requirements under Sec.  419.66(b)(3) and (4) because the 
Paradise[supreg] Connector Cable and Paradise[supreg] Cartridge are 
required parts of a single piece of equipment, they are not sold 
without the Paradise[supreg] Catheter, they are single-use and they are 
not separable. We also agree with the applicant that the 
Paradise[supreg] Generator, Paradise[supreg] Remote, or 
Paradise[supreg] Cart are capital equipment and do not meet the 
eligibility requirements under Sec.  419.66(b)(3) or (4). Finally, we 
agree with the applicant that the Paradise[supreg] Ultrasound RDN 
System is not a material or supply furnished incident to a service. 
After consideration of the public comments we received and our review 
of the application, we have determined that the applicable components 
of the Paradise[supreg] Ultrasound RDN System meet the eligibility 
criteria at Sec.  419.66(b)(3) and (4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. Per the applicant, the 
Paradise[supreg] Ultrasound RDN System is a catheter-based system that 
delivers ultrasound energy in the location of sympathetic nerves 
surrounding the renal arteries. According to the applicant, no previous 
or existing device categories for pass-through payment have encompassed 
the Paradise[supreg] Ultrasound RDN System. Per the applicant, device 
categories C1753 (Catheter, intravascular ultrasound) and C1888 
(Catheter, ablation, noncardiac, endovascular (implantable)) do not 
appropriately describe the Paradise[supreg] Ultrasound RDN System. The 
applicant asserted that C1753 does not appropriately describe the 
Paradise[supreg] Ultrasound RDN System because the Paradise[supreg] 
Ultrasound RDN System is used to treat a disease and denervates renal 
nerves, whereas C1753 was created to describe ultrasound catheter 
devices that are not used to treat a disease and are used for imaging 
of the vessel. According to the applicant, C1888 does not appropriately 
describe the Paradise[supreg] Ultrasound RDN System because the 
Paradise[supreg] Ultrasound RDN System is intended to denervate renal 
nerves by using ultrasound energy that does not otherwise affect the 
blood vessel tissue, whereas C1888 was

[[Page 94157]]

created to describe devices that use radiofrequency or laser 
technologies to occlude or obliterate blood vessels.\38\
---------------------------------------------------------------------------

    \38\ The applicant referenced the Medicare Claims Processing 
Manual, Chapter 4 to support these assertions.
---------------------------------------------------------------------------

    We did not identify an existing pass-through payment category that 
describes the Paradise[supreg] Ultrasound RDN System. We invited public 
comment on whether the Paradise[supreg] Ultrasound RDN System meets the 
device category criterion at Sec.  419.66(c)(1).
    Comment: The applicant and a few other commenters agreed with CMS' 
assessment that there are no existing pass-through payment categories 
that describe the Paradise[supreg] Ultrasound RDN System.
    Response: We appreciate the commenters' input. After consideration 
of the public comments we received and our review of the application, 
we continue to believe that there is no existing category or category 
previously in effect that appropriately describes the Paradise[supreg] 
Ultrasound RDN System. Therefore, we have determined that the 
Paradise[supreg] Ultrasound RDN System meets the device category 
eligibility criterion at Sec.  419.66(c)(1).
    We noted that the applicant indicated the Paradise[supreg] 
Ultrasound RDN System is the only device authorized by FDA with an 
indication for renal denervation using ultrasound energy to achieve 
reductions in blood pressure. However, we noted that the Symplicity 
SpyralTM Catheter (Symplicity SpyralTM RDN 
System) device, for which we also received an application for 
transitional pass-through payments for CY 2025 as discussed in the 
proposed rule (89 FR 59312 through 59315) and this final rule with 
comment, is also authorized by FDA with an indication for renal 
denervation using a radiofrequency modality to achieve reductions in 
blood pressure. Accordingly, we noted that while the Paradise[supreg] 
Ultrasound RDN System device may have a different modality (i.e., 
ultrasound compared to radiofrequency) than that of the Symplicity 
SpyralTM Catheter device, the Paradise[supreg] Ultrasound 
RDN System device may have a similar mechanism of action to that of the 
Symplicity SpyralTM Catheter device. We questioned whether 
the device descriptions provided in the respective applications support 
establishing two modality specific pass-through payment device 
categories or a single device category that would encompass both RDN 
device modalities. We address this question in section (i) in detail 
immediately following the full discussion of all other applicable 
eligibility criteria for both the Paradise[supreg] Ultrasound RDN 
System and the Symplicity SpyralTM RDN System applications.
    For the summary of public comments received and our final decision 
on the question of whether the device descriptions provided in the 
respective applications support establishing two modality-specific 
pass-through payment device categories or a single device category that 
would encompass both RDN device modalities, please see section (i) 
immediately following the Symplicity SpyralTM RDN System 
application determination.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. As previously stated, the 
Paradise[supreg] Ultrasound RDN System has Breakthrough Device 
designation and marketing authorization from FDA for the indication 
covered by the Breakthrough Device designation (as explained in more 
detail in the discussion of the newness criterion) and therefore is not 
evaluated for substantial clinical improvement.
    We invited public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the device category criterion at Sec.  
419.66(c)(2)(ii).
    Comment: A few commenters stated that the Paradise[supreg] 
Ultrasound RDN System meets the eligibility criterion at Sec.  
419.66(c)(2)(ii), with one commenter asserting that the 
Paradise[supreg] Ultrasound RDN System meets the clinical improvement 
criterion based on its FDA Breakthrough Device designation.
    Response: We appreciate the commenter's input. We agree with the 
commenters that the Paradise[supreg] Ultrasound RDN System has a 
Breakthrough Device designation effective December 4, 2020, and 
marketing authorization from FDA effective November 7, 2023, for the 
indication covered by the Breakthrough Device designation and 
therefore, meets the criterion at Sec.  419.66(c)(2)(ii) and is not 
evaluated for substantial clinical improvement at Sec.  
419.66(c)(2)(i). Based on our review of the application and 
consideration of the public comments we received, we have determined 
that the Paradise[supreg] Ultrasound RDN System meets the device 
category criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
Paradise[supreg] Ultrasound RDN System would be reported with HCPCS 
codes shown in Table 119.

[[Page 94158]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.146

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2023 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5192, which had a CY 2023 payment rate of 
$5,215.40 at the time the application was received. We used the CY 2023 
APC level device offset amount of $1,491.08 for APC 5192, since HCPCS 
codes 0338T and 0339T were not included in Addendum P to the CY 2023 
OPPS/ASC final rule with comment period and no CY 2023 HCPCS/CPT code 
level device offset amount was available at the time the application 
was received.\39\ According to the applicant, the operating cost \40\ 
of the Paradise[supreg] Ultrasound RDN System is $23,000.00.
---------------------------------------------------------------------------

    \39\ The applicant stated as neither HCPCS code 0338T nor 0339T 
had a device offset amount listed in Addendum P to the CY 2023 OPPS/
ASC final rule with comment period, it selected a device offset 
amount of $0.00. However, for our calculation, we selected the CY 
2023 APC level device offset amount of $1,491.08 for APC 5192 found 
in CY 2023 NFRM OPPS APC Offset File, as no CY 2023 HCPCS/CPT code 
level device offset amount was available at the time the application 
was received. Based on our initial assessment for the proposed rule, 
using the device offset amount of $1,491.08 would result in the 
Paradise[supreg] Ultrasound RDN System meeting the cost significance 
requirement.
    \40\ According to the applicant, the current total cost of the 
Paradise[supreg] Ultrasound RDN System device is $23,235.00. For the 
cost criteria estimates, the applicant submitted an operating cost 
of $23,000.00 for the Paradise[supreg] Ultrasound RDN System device. 
Per the applicant, the individual component costs are as follows: 
Paradise[supreg] Remote (capital equipment) is $5.00; 
Paradise[supreg] Cart (capital equipment) is $5.00; Paradise[supreg] 
Generator (capital equipment) is $225.00; Paradise[supreg] RDN 
Catheter Kit (one time use) is $22,000.00; Paradise RDN Cable (one 
time use) is $250.00; and the Paradise[supreg] RDN Cartridge (one 
time use) is $750.00.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $23,000.00 for the Paradise[supreg] Ultrasound RDN 
System is 441.00 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,215.40 (($23,000.00/
$5,215.40) x 100 = 441.00 percent). Therefore, we stated that we 
believe the Paradise[supreg] Ultrasound RDN System meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $23,000.00 for 
the Paradise[supreg] Ultrasound RDN System is 1,542.51 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $1,491.08 (($23,000.00/$1,491.08) x 100 = 1,542.51 
percent). Therefore, we stated that we believe the Paradise[supreg] 
Ultrasound RDN System meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $23,000.00 for the Paradise[supreg] Ultrasound

[[Page 94159]]

RDN System and the portion of the APC payment amount for the device of 
$1,491.08 is 412.41 percent of the APC payment amount for the related 
service of $5,215.40 ((($23,000.00-$1,491.08)/$5,215.40) x 100 = 412.41 
percent). Therefore, we stated that we believe the Paradise[supreg] 
Ultrasound RDN System meets the third cost significance requirement.
    We invited public comment on whether the Paradise[supreg] 
Ultrasound RDN System meets the device pass-through payment criteria 
discussed in this section, including the cost criterion for device 
pass-through payment status.
    Comment: With respect to cost significance criteria, the applicant 
and a few other commenters reiterated that the Paradise[supreg] 
Ultrasound RDN System meets all three of the cost significance 
criteria. The applicant further clarified that the Paradise[supreg] 
Ultrasound RDN System meets the cost criteria regardless of whether the 
Paradise[supreg] Cartridge and Paradise[supreg] Connection Cable are 
deemed eligible for pass-through or excluded from the calculation. The 
applicant stated that the Paradise[supreg] Cartridge and 
Paradise[supreg] Connection Cable should be included when evaluating 
the cost criteria because they are both single-use items that are 
required for the Paradise[supreg] Ultrasound RDN System to function as 
intended and are essential to complete each patient treatment.
    Response: We appreciate the applicant's and commenters' input. We 
agree with the applicant that the Paradise[supreg] Catheter, 
Paradise[supreg] Cartridge, and Paradise[supreg] Connection Cable are 
single-use components that are required for the Paradise[supreg] 
Ultrasound RDN System to function as intended and are essential to 
complete each patient treatment and should be included when evaluating 
the cost criteria. After consideration of the public comments we 
received and our findings from the first, second, and third cost 
significance tests, we agree that the Paradise[supreg] Catheter, 
Paradise[supreg] Cartridge, and Paradise[supreg] Connection Cable 
components of the Paradise[supreg] Ultrasound RDN System meet the cost 
significance criteria specified at Sec.  419.66(d).
    After consideration of the public comments we received and our 
review of the device pass-through application, we have determined that 
the Paradise[supreg] Catheter, Paradise[supreg] Cartridge, and 
Paradise[supreg] Connection Cable components of the Paradise[supreg] 
Ultrasound RDN System meet the requirements for device pass-through 
status described at Sec.  419.66. Therefore, effective beginning 
January 1, 2025, we are finalizing approval for device pass-through 
payment status for the applicable components of the Paradise[supreg] 
Ultrasound RDN System under the alternative pathway for devices that 
have an FDA Breakthrough Device designation and have received FDA 
marketing authorization for the indication covered by the Breakthrough 
Device designation.
(g) Precision GI
    Limaca Medical submitted an application for a new device category 
for transitional pass-through payment status for Precision GI for CY 
2025. According to the applicant, Precision GI is a motorized, battery 
operated, single-use, fully disposable endoscopic ultrasound-guided 
(EUS) fine needle biopsy device used to obtain biopsies of tissue for 
definitive diagnosis of pancreatic cancer and other life-threatening 
gastrointestinal (GI) abnormalities. Per the applicant, Precision GI is 
untethered and battery operated with an internally powered and 
controlled motor, featuring a long flexible shaft transferring the 
proximal force of the motor through the inserted endoscope to the 
needle circumferential cutting tip. The device is controlled by a 
physician, who inserts the device into the patient's GI tract via the 
ultrasound endoscope. Upon reaching the designated biopsy site, the 
physician operates the device's motorized mechanism that automatically 
rotates the needle (which is included in the device's package) to cut 
and extract tissue. The biopsy site is accessed through the instrument 
channel of an ultrasound imaging endoscope that detects the device's 
echogenic needle tip.
    Please refer to the online application posting for Precision GI, 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP23113023REE, for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), Precision GI received FDA Breakthrough Device 
designation effective March 24, 2022, as a device used with an 
ultrasound endoscope for fine needle biopsy of submucosal lesions, 
mediastinal masses, lymph nodes, and intraperitoneal masses within or 
adjacent to the GI tract. FDA granted the applicant 510(k) clearance 
for Precision GI on August 28, 2023, for the indication covered by the 
Breakthrough Device designation. We received the application for a new 
device category for transitional pass-through payment status for 
Precision GI on November 30, 2023, which is within 3 years of the date 
of the initial FDA marketing authorization.
    We invited public comment on whether Precision GI meets the newness 
criterion at Sec.  419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant and one commenter agreed with CMS' 
assessment and the applicant noted that CMS raised no concerns about 
Precision-GI meeting the criterion at Sec.  419.66(b)(1).
    Response: We appreciate the applicant's and the commenter's input. 
We received the application for a new device category for transitional 
pass-through payment status for Precision GI on November 30, 2023, 
which is within 3 years of August 28, 2023, the date of FDA 510(k) 
clearance. Based on our review of the application and public comments 
received, we have determined that Precision GI meets the newness 
criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether Precision GI is an 
integral part of the service furnished. The applicant stated that the 
device is intended for single use. While the applicant did not 
explicitly state whether Precision GI comes in contact with human 
tissue and is surgically inserted or implanted, the applicant noted 
that Precision GI is used to sample targeted submucosal lesions, 
mediastinal masses, lymph nodes, and intraperitoneal masses within or 
adjacent to the GI tract and this is achieved by a physician who 
inserts Precision GI into the patient's GI tract using an ultrasound 
endoscope. However, we noted that, while the needle (which is a 
component of the device and is included in the device's package) does 
come into contact with human tissue and is surgically inserted, the 
motorized mechanism of the Precision GI device itself may not come in 
contact with human tissue and may not be surgically implanted or 
inserted (either permanently or temporarily), or applied in or on a 
wound or other skin lesion, as required at Sec.  419.66(b)(3).
    We invited public comment on whether Precision GI meets the 
eligibility criterion at Sec.  419.66(b)(3).
    Comment: In response to our concern about whether Precision GI is 
integral to the service furnished and meets the eligibility criterion 
at Sec.  419.66(b)(3), the

[[Page 94160]]

applicant clarified that Precision GI is an integral part of the 
service furnished because the Precision GI device is an endoscopic 
ultrasound-guided fine needle biopsy (EUS-FNB) medical device and is 
the essential device that physicians must use to enable the procedures 
for the services the applicant identified. The applicant clarified that 
physicians use Precision GI for procedures that are reported using the 
following HCPCS codes: 43238 (Esophagogastroduodenoscopy, flexible, 
transoral; with transendoscopic ultrasound-guided intramural or 
transmural fine needle aspiration/biopsy(s), (includes endoscopic 
ultrasound examination limited to the esophagus, stomach or duodenum, 
and adjacent structures), and 43242 (Esophagogastroduodenoscopy, 
flexible, transoral with transendoscopic ultrasound-guided intramural 
or transmural fine needle aspiration/biopsy(s), (includes endoscopic 
ultrasound examination limited to the esophagus stomach and either the 
duodenum or a surgically altered stomach where the jejunum is examined 
distal to the anastomosis)) and Precision GI is clearly integral to 
performing both of these services, given that these procedures are 
intended to extract suspected cancerous tissue and that Precision GI is 
the essential device used to obtain and remove the tissue. A commenter 
stated that based on the Precision GI application, they believe 
Precision GI would be integral to the procedures with which it is 
associated. The applicant reiterated that Precision GI is a single-use 
device and clarified that it is used for one patient only.
    Response: We appreciate the applicant's and the commenter's input. 
Based on the information provided in the comments we agree with the 
applicant and commenter that Precision GI is an essential device that 
physicians must use to enable the procedures for the services the 
applicant identified and, as such, Precision GI is an integral part of 
the service furnished. After consideration of the public comments 
received and our review of the application, we have determined that 
Precision GI is integral to the service furnished and is used for one 
patient only. We have taken this information into consideration in 
making our final determination of whether Precision GI meets the 
requirements of Sec.  419.66(b)(3).
    Comment: In response to our concerns about whether Precision GI 
comes in contact with human tissue and meets the eligibility criterion 
at Sec.  419.66(b)(3), the applicant and a commenter submitted comments 
clarifying that Precision GI comes in contact with human tissue when 
the device enters the patient and extracts suspected tumor tissue from 
the body. The applicant and commenter explained that after the 
Precision GI device is advanced through the mouth via the working 
channel of the upper GI endoscope to the section of the gastric wall 
located closest to the mass or tumor as identified by endoscopic 
ultrasound, the rotating needle component of Precision GI goes through 
the gastric wall to acquire tissue from the tumor. The applicant 
clarified that Precision GI operates as a single unit, which includes 
the needle and emphasized that Precision GI is not provided in separate 
components, does not require assembly, and does not require any 
additional supplies or materials to operate. As such, the applicant and 
the commenter asserted that Precision GI comes into contact with human 
tissue as required.
    In response to our concerns about whether Precision GI is 
surgically inserted or implanted the applicant and another commenter 
clarified that Precision GI is surgically inserted when Precision GI is 
inserted through a natural orifice (the mouth) to access the biopsy 
site, and therefore it meets the eligibility criterion at Sec.  
419.66(b)(3). Specifically, the applicant clarified that the surgical 
path to the tumor is created by the endoscope which is passed through 
the mouth (natural orifice) where Precision GI is then used to access 
the site and to extract tissue in or adjacent to the GI tract, meeting 
the requirements of Sec.  419.66(b)(3).
    Response: We appreciate the applicant's and the commenter's input. 
Based on the clarifying information provided in the comments, we agree 
with the applicant that Precision GI comes in contact with human tissue 
and is surgically implanted or inserted as required by Sec.  
419.66(b)(3). Specifically, we relied upon the clarification that 
Precision GI functions collectively as a single unit with no separate 
components and the device enters the patient via an endoscope to 
extract human tissue from the body, and as such, we believe that 
Precision GI comes into contact with human tissue. In addition, we 
agree with the applicant and commenter that Precision GI is surgically 
inserted when it is advanced through a natural orifice (i.e., the 
mouth) via an endoscope to create a surgical path to the tumor. After 
consideration of the public comments received and our review of the 
application, we have determined that Precision GI comes in contact with 
human tissue and is surgically inserted in accordance with the 
eligibility criterion at Sec.  419.66(b)(3).
    We agree with the applicant and commenter that Precision GI is an 
integral part of the service furnished, used for one patient only, 
comes in contact with human tissue, and is surgically implanted or 
inserted, or applied in or on a wound or other skin lesion. After 
consideration of the public comments received and our review of the 
application, we have determined that Precision GI meets the eligibility 
criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant indicated that Precision GI is not 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered as 
depreciation assets; the applicant noted that Precision GI is a 
motorized, single-use, fully disposable EUS fine needle biopsy device 
that functions with no related capital component. The applicant stated 
that Precision GI is not a material or supply furnished incident to a 
service. However, based on the applicant's description of Precision GI 
as a biopsy device, we questioned whether Precision GI may be 
considered a supply or material furnished incident to a service and 
excluded from device pass-through payment eligibility under Sec.  
419.66(b)(4).
    Specifically, in the CY 2001 OPPS interim final rule with comment 
period (65 FR 67804 through 67805), we explained how we interpreted 
Sec.  419.43(e)(4)(iv). We stated that we consider a device to be 
surgically implanted or inserted if it is introduced into the human 
body through a surgically created incision. We also stated that we do 
not consider an item used to cut or otherwise create a surgical opening 
to be a device that is surgically implanted or inserted. We consider 
items used to create incisions, such as scalpels, electrocautery units, 
biopsy apparatuses, or other commonly used operating room instruments, 
to be supplies or capital equipment not eligible for transitional pass-
through payments. We stated that we believe the function of these items 
is different and distinct from that of devices that are

[[Page 94161]]

used for surgical implantation or insertion. Finally, we stated that, 
generally, we would expect that surgical implantation or insertion of a 
device occurs after the surgeon uses certain primary tools, supplies, 
or instruments to create the surgical path or site for implanting the 
device. Further, in the CY 2006 OPPS final rule with comment period (70 
FR 68629 through 68630), we adopted as final our interpretation that 
the surgical insertion or implantation criterion can be met by devices 
that are surgically inserted or implanted via a natural or surgically 
created orifice, as well as those devices that are inserted or 
implanted via a surgically created incision. We reiterated that we 
maintain all of the other criteria in Sec.  419.66 of the regulations, 
namely, that we do not consider an item used to cut or otherwise create 
a surgical opening to be a device that is surgically implanted or 
inserted. We reiterated this interpretation in the CY 2024 OPPS final 
rule (88 FR 81543, 81743).
    We noted that Precision GI, is inserted into the patient's GI tract 
via the ultrasound endoscope to reach the designated biopsy site where 
the device's motorized mechanism is then used for cutting and 
extraction of tissue endoscopically from within or adjacent to the 
patient's GI tract. However, we questioned whether Precision GI, which 
is described as a biopsy device, may be considered a supply or material 
furnished incident to a service consistent with our previous 
interpretation of Sec.  419.43(e)(4)(iv) and therefore excluded from 
device pass-through payment eligibility under Sec.  419.66(b)(4).
    We welcomed additional evidence regarding whether Precision GI 
should be considered a material or supply incident to a service based 
on our previous interpretation of Sec.  419.43(e)(4)(iv) as it has been 
applied to biopsy devices and we invited public comments on whether 
Precision GI meets the exclusion criterion at Sec.  419.66(b)(4).
    Comment: The applicant submitted a comment stating that there is 
agreement that Precision GI is not equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets.
    Response: We appreciate the applicant's input. We agree with the 
applicant that Precision GI is not equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets. We have taken this 
information into consideration in making our final determination of 
whether Precision GI meets the requirements of Sec.  419.66(b)(4).
    Comment: The applicant submitted a comment clarifying that 
Precision GI is not a material or supply incident to a service and 
meets the eligibility criterion at Sec.  419.66(b)(4) because Precision 
GI does not create incisions and is not used to create a surgical 
opening, rather Precision GI is used to capture and extract a 
diagnostically relevant portion of the tumor. The applicant stated that 
Precision GI's cutting function does not make the device a commodity 
supply and that Precision GI should not be placed in the same category 
as simple cutting or basic commodity tools (e.g., such as scalpel, 
biopsy forceps, simple exchangeable needles, etc.).
    Additionally, the applicant stated that Precision GI is not a 
generic biopsy device as defined by CMS for pass-through devices, 
referencing section 60.4.3, Chapter 4 of the Medicare Claims Processing 
Manual. In support, the applicant compared Precision GI to devices 
described by C1782 (Morcellator), which like Precision GI are also used 
for tissue removal. The applicant explained that because C1782 devices 
are used for laparoscopic tissue removal, per the CMS guidance in the 
Medicare Claims Processing Manual, they are not considered generic 
biopsy devices.\41\ Thus, the applicant asserted its belief that, 
similar to C1782 devices, Precision GI is not a generic biopsy device 
because it is used for tissue removal. Furthermore, the applicant noted 
that C1782 would not appropriately describe Precision GI because C1782 
is specific to laparoscopic removal of tissue, whereas Precision GI is 
endoscopically inserted to remove tissue within or adjacent to the GI 
tract.
---------------------------------------------------------------------------

    \41\ According to the Medicare Claims Processing Manual 
(60.4.3), the device pass-through category C1782 (Morcellator) is 
specific to devices used for cutting, coring, and extracting tissue 
in laparoscopic procedures. These are distinct from biopsy devices 
because morcellators are used for the laparoscopic removal of 
tissue.
---------------------------------------------------------------------------

    The applicant asserted that CMS previously created a pass-through 
device category C1830 (Powered bone marrow biopsy needle), effective 
October 1, 2011, and that the device in this category functions 
similarly to Precision GI in complexity of operation and is not a 
biopsy needle as the applicant stated CMS defines this term. The 
applicant further commented that suggesting that Precision GI is a 
supply ignores the complexity of the device compared to commonly used 
endoscopic biopsy forceps and interchangeable commodity operating 
instruments.
    One commenter stated that, per the application, Precision GI is a 
single, disposable, mechanized unit that would be integral to the 
procedures with which it is associated and for this reason, it should 
not be categorized with scalpels, needles, and other commonly used 
operating room instruments as a supply furnished incident to a service 
and should not be excluded from device pass-through eligibility under 
Sec.  419.66(b)(4).
    The applicant asserted that the FDA Breakthrough Designation 
implicitly recognizes the innovative nature of Precision GI and that it 
would be unlikely to have received this designation if it were deemed a 
supply. The applicant also asserted that Precision GI obtains tumor 
tissue in a superior method compared to today's non-motorized EUS-FNB 
devices, providing consistently higher quality core tumor tissue for 
the anatomic pathologist to more confidently diagnose.
    Response: We appreciate the applicant's and commenter's input and 
the additional information. We agree with the applicant that Precision 
GI is not a supply or material furnished incident to a service because 
the device does not appear to be an item used to cut or otherwise 
create a surgical opening, rather it is inserted through a natural 
orifice (i.e., the mouth) via an endoscope to create a surgical path to 
reach the designated biopsy site where the device's motorized mechanism 
is used for cutting and extraction of tissue endoscopically from within 
or adjacent to the patient's GI tract.
    We also agree with the applicant that similar to devices described 
by C1782 and C1830, Precision GI appears to be distinct from biopsy 
devices as defined by section 60.4.3, Chapter 4 of the Medicare Claims 
Processing Manual.
    In response to the applicant's comment that FDA Breakthrough 
Designation implicitly recognizes the innovative nature of Precision GI 
and that it would be unlikely to have received this designation if it 
were deemed a supply, we note that a device's FDA designation does not 
alone qualify a device for transitional device pass-through payment; 
the criteria FDA utilizes to grant medical device approvals differ from 
the criteria CMS has established to evaluate device eligibility for 
OPPS device pass-through payments. As such, CMS must evaluate all 
information submitted for each device pass-through application for each 
applicable criterion as it applies to the nominated device. In response 
to the

[[Page 94162]]

applicant's comment that Precision GI obtains tumor tissue in a 
superior method compared to today's non-motorized EUS-FNB devices, 
providing consistently higher quality core tumor tissue for the 
anatomic pathologist to more confidently diagnose, we note that Sec.  
419.66(b)(4) does not require that a device is superior to other 
available devices.
    Based on the additional information provided in the comments, we 
agree with the applicant and commenter that Precision GI is not 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered as 
depreciation assets, or a material or supply furnished incident to a 
service. After consideration of the public comments received and our 
review of the application, we have determined that Precision GI meets 
the eligibility criterion at Sec.  419.66(b)(4).
    Comment: With respect to our concerns about the eligibility 
criterion at Sec.  419.66(b)(3), the applicant sought to distinguish 
Precision GI from the CytoCore device, which was denied pass-through 
status in CY 2024 (88 FR 81744). The applicant stated that Precision GI 
differs from CytoCore in two ways: unlike the CytoCore device, 
Precision GI does not have a separate needle component and Precision GI 
comes into contact with human tissue. Specifically, the applicant 
commented that the needle attached to the CytoCore is a separate 
needle, and not part of the CytoCore device and the needle is the only 
portion of the device that comes in contact with human tissue, whereas 
Precision GI's needle is an integral part of the Precision GI device 
that works in conjunction with Precision GI's long flexible shaft fully 
driven by its control system and motor, to transfer the proximal 
driving force of the motor to the highly specialized circumferential 
cutting and capturing tip to access the tumor tissue and perform the 
biopsy. The applicant further clarified that the Precision GI's needle 
is not only an integrated part of the device, but it is also a 
specifically and uniquely designed cannula with circumferential 
internal sharpening to enable superior tumor tissue capture when driven 
by Precision GI as a motor and microchip control program. The applicant 
stated that Precision GI enables the physician to accomplish motorized, 
automated, and synchronized axial advancement and rotational cutting 
and extraction of tissue at the target tissue site. Finally, the 
applicant noted that the needle used with Precision GI cannot be 
swapped out for other generic needles.
    Response: We appreciate the applicant's input and agree that 
because Precision GI does not have separate components, functions 
collectively as a single device, and is surgically inserted when it is 
advanced through a natural orifice (i.e., the mouth) via an endoscope, 
creating a surgical path to the tumor, the device comes into contact 
with human tissue and is surgically inserted as required by Sec.  
419.66(b)(3).
    Comment: With regard to our discussion about the eligibility 
criterion specified at Sec.  419.66(b)(4), a commenter stated that the 
Precision GI transitional pass-through payment application raises an 
important policy question about the definition of a biopsy apparatus. 
According to the commenter, items used to create incisions, such as 
biopsy apparatuses, or other commonly used operating room instruments, 
that CMS classified as supplies in in the CY 2006 OPPS final rule (70 
FR, 68629 through 68630) \42\ are substantially different from the 
targeted mechanical core biopsies of today. The commenter explained 
that technological advances in incision devices began in the late 2010s 
with various alterations to needle shapes and have continued to improve 
and progress to the current, mechanical, EUS-guided devices, which do 
not merely create incisions and should not be classified along with 
biopsy forceps or even aspiration needles. Therefore, the commenter 
requested that CMS consider the definition of a supply and consider re-
classification of mechanical tissue extraction apparatuses such as 
Precision GI into a new category of devices outside of the existing 
definition. The commenter stated their belief that this would enable 
CMS to determine the benefits and costs of single-use devices and 
future innovations in this space and determine their role in 
therapeutic decision-making and associated improvements in patient 
outcomes.
---------------------------------------------------------------------------

    \42\ Medicare Program; Changes to the Hospital Outpatient 
Prospective Payment System and Calendar Year 2006 Payment Rates, 70 
FR 68516 (November 10, 2005).
---------------------------------------------------------------------------

    Response: We thank the commenter for their feedback. We will 
continue to consider issues related to the definition of a biopsy 
apparatus as it relates to the criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
Precision GI is authorized by FDA with an indication to sample targeted 
submucosal lesions, mediastinal masses, lymph nodes, and 
intraperitoneal masses within or adjacent to the GI tract. Per the 
applicant, the device category C1830 (Powered bone marrow biopsy 
needle) does not appropriately describe Precision GI because Precision 
GI is not targeting bone marrow and instead is targeting 
sub[hyphen]mucosal and extramural GI lesions. According to the 
applicant, the device category C1782 (Morcellator) also does not 
appropriately describe Precision GI because that device category, per 
Medicare Claims Processing Manual, Ch. 4, section 60.4.3, is only for 
laparoscopic procedures. The applicant added that Precision GI cuts and 
extracts tissue endoscopically, not laparoscopically.
    We did not identify an existing pass-through payment category that 
describes Precision GI. We invited public comment on whether Precision 
GI meets the device category criterion at Sec.  419.66(c)(1).
    Comment: With respect to the device category criterion at Sec.  
419.66(c)(1), the applicant agreed with our assessment that there are 
no existing pass-through payment categories that describe Precision GI.
    Response: We appreciate the applicant's input. After consideration 
of the public comments received and our review of the application, we 
continue to believe there is no existing category or category 
previously in effect that appropriately describes Precision GI. 
Therefore, we have determined that Precision GI meets the device 
category eligibility criterion at Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. Precision GI has a Breakthrough Device 
designation and marketing authorization from FDA for

[[Page 94163]]

the indication covered by the Breakthrough Device designation (as 
explained in more detail in the discussion of the newness criterion) 
and therefore is not evaluated for substantial clinical improvement.
    We invited public comment on whether Precision GI meets the device 
category criterion at Sec.  419.66(c)(2)(ii).
    Comment: With respect to the device category criterion at Sec.  
410.66(c)(2)(ii), the applicant reiterated that Precision GI received 
FDA Breakthrough Device designation and marketing authorization for the 
same indication. The applicant agreed with CMS that Precision GI meets 
the device category criterion at Sec.  410.66(c)(2)(ii), and therefore, 
is not evaluated for substantial clinical improvement.
    Response: We appreciate the applicant's input. FDA granted 
Precision GI Breakthrough Device designation effective March 24, 2022, 
and a marketing authorization effective August 28, 2023, for the 
indication covered by the Breakthrough Device designation. Therefore, 
Precision GI meets the criterion at Sec.  419.66(c)(2)(ii) and is not 
evaluated for substantial clinical improvement at Sec.  
419.66(c)(2)(i). After consideration of public comments received and 
our review of the application, we have determined that Precision GI 
meets the device category criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that Precision GI would 
be reported with HCPCS codes as shown in Table 120.
[GRAPHIC] [TIFF OMITTED] TR27NO24.147

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant utilized the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5302, which had a CY 2024 payment rate of 
$1,812.99 at the time the application was received. HCPCS code 43242 in 
APC 5302 had a CY 2024 device offset amount of $23.75 at the time the 
application was received.\43\ According to the applicant, the cost of 
Precision GI is $1,400.00.
---------------------------------------------------------------------------

    \43\ We noted that the applicant selected the APC payment rate 
of $1,814.88 and the APC level device offset amount of $178.95 for 
APC 5302. However, the values selected are inconsistent with the APC 
payment rate and the APC level device offset amount found in CY 2024 
OPPS APC Offset File, which were corrected as described in the CY 
2024 OPPS/ASC final rule with comment period correction (89 FR 
9002). The HCPCS/CPT code level device offset amounts for the HCPCS/
CPT codes provided by the applicant are available in the corrected 
Addendum P to the CY 2024 OPPS/ASC final rule with comment period. 
For our calculation, we selected the APC payment rate of $1,812.99 
and the HCPCS/CPT code level device offset amount of $23.75 related 
to HCPCS 43242 in APC 5302 found in the corrected Addendum P, which 
are the accurate values for these codes. Based on our initial 
assessment for the proposed rule, using the APC payment rate of 
$1,812.99 and the device offset amount of $23.75 would result in 
Precision GI meeting the cost significance requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $1,400.00 for Precision GI is 77.22 percent of the 
applicable APC payment amount for the service related to the category 
of devices of $1,812.99 (($1,400.00/$1,812.99) x 100 = 77.22 percent). 
Therefore, we stated that we believe Precision GI meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount. The estimated average reasonable cost of $1,400.00 
for Precision GI is 5894.74 percent of the cost of the device-related 
portion of the APC payment amount for the related service of $23.75 
(($1,400.00/$23.75) x 100 = 5894.74 percent). Therefore, we stated that 
we believe Precision GI meets the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of

[[Page 94164]]

$1,400.00 for Precision GI and the portion of the APC payment amount 
for the device of $23.75 is 75.91 percent of the APC payment amount for 
the related service of $1,812.99 ((($1,400-$23.75)/$1,812.99) x 100 = 
75.91 percent). Therefore, we stated that we believe Precision GI meets 
the third cost significance requirement.
    We invited public comment on whether Precision GI meets the device 
pass-through payment criteria discussed in this section, including the 
cost criterion for device pass-through payment status.
    Comment: With respect to cost significance criteria, the applicant 
stated that they agree with CMS that Precision GI satisfies the cost 
criteria.
    Response: We appreciate the applicant's input. After consideration 
of the public comment received and our findings from the first, second, 
and third cost significance tests, we have determined that Precision GI 
meets the cost significance criteria specified at Sec.  419.66(d).
    After consideration of the public comments received, and our review 
of the device pass-through application, we have determined that 
Precision GI meets the requirements for device pass-through status 
described at Sec.  419.66, and we are finalizing approval for device 
pass-through payment status for Precision GI effective January 1, 2025, 
under the alternative pathway for devices that have an FDA Breakthrough 
Device designation and have received FDA marketing authorization for 
the indication covered by the Breakthrough Device designation.
(h) Symplicity SpyralTM Renal Denervation (RDN) System
    Medtronic submitted an application for a new device category for 
transitional pass-through payment status for the Symplicity 
SpyralTM RDN System for CY 2025. The applicant is seeking a 
new device category for transitional pass-through payment status only 
for the Symplicity SpyralTM Multi-Electrode RDN Catheter 
(hereinafter Symplicity SpyralTM Catheter) component of the 
Symplicity SpyralTM RDN System. According to the applicant, 
the Symplicity SpyralTM RDN System consists of the 
Symplicity SpyralTM Catheter and the Symplicity 
G3TM generator; however, the applicant requested device 
pass-through status for the catheter component of the system only. The 
applicant further explained that the Symplicity SpyralTM RDN 
System is indicated to reduce blood pressure as an adjunctive treatment 
in hypertension patients in whom lifestyle modifications and 
antihypertensive medications do not adequately control blood pressure. 
Per the applicant, the Symplicity SpyralTM Catheter, when 
used with the Symplicity G3TM generator, delivers 
radiofrequency (RF) energy through the wall of the renal artery to 
disrupt the surrounding renal nerves with the aim of modulating or 
suppressing sympathetic nerve hyperactivity. According to the 
applicant, the Symplicity SpyralTM Catheter is a single-use 
catheter used to deliver multiple ablations in both kidneys, in the 
renal main, accessory, and branch arteries, based on a patient's artery 
anatomy and size.
    Per the applicant, the Symplicity SpyralTM Catheter is 
designed to be used with the Symplicity G3TM generator and 
includes the following components: (1) four gold radiopaque electrodes 
at the spiral (helical) distal end that are deployed into a spiral 
(helical) shape by partially retracting the guidewire proximal to the 
spiral section of the catheter; (2) self-expanding electrode array 
assembly which radially spaces the four gold electrodes for quadratic 
ablation; (3) rapid exchange port; (4) straightening tool intended to 
facilitate safe insertion of the guidewire into the catheter; (5) cable 
connector attached to the catheter handle that connects the catheter to 
the generator; (6) catheter handle; and (7) femoral marker. Per the 
applicant, additional components of the Symplicity SpyralTM 
RDN System include the: (1) Symplicity G3TM generator, which 
is only compatible with the Symplicity SpyralTM Catheter, 
which includes a remote control, power cable, and output for the 
Symplicity SpyralTM Catheter; (2) Symplicity G3TM 
generator cart, an optional mobile cart; and (3) foot switch, an 
optional component. Per the applicant, additional items required for 
the procedure include: (1) a 0.36 mm (0.014 in) guidewire, preferably 
without hydrophilic coating; (2) a dispersive electrode; (3) a sterile 
bag to cover the remote control if used in the sterile field; (4) a 6 
French (Fr) guide-catheter; (5) an introducer sheath; (6) a stopcock 
sidearm; (7) a Tuohy-Borst adapter; and (8) other standard items used 
to aid percutaneous transluminal catheterization in renal arteries.
    According to information submitted by the applicant, key steps for 
operating the Symplicity SpyralTM Catheter include: (1) 
connecting the Symplicity SpyralTM Catheter to the 
Symplicity G3TM generator; (2) inserting the Symplicity 
SpyralTM Catheter through a small femoral incision and 
guiding it to the renal artery via the abdominal aorta; (3) advancing 
the Symplicity SpyralTM Catheter until the distal electrode 
is located in the desired position within the renal artery; (4) 
retracting the guidewire, allowing the self-expanding catheter to 
expand and fit the renal arterial vessel walls; (5) delivering the 
treatment of RF energy to ablate the renal nerves through the 
activation of the catheter electrodes, which is controlled using the 
generator; (6) if treating another vessel, repositioning the guide 
catheter within the next vessel and repeating the procedure for 
positioning the catheter and delivering treatments; (7) upon completion 
of all treatments, straightening the distal end by advancing the 
guidewire and withdrawing both the guidewire and the straightened 
catheter from the guide catheter; (8) retracting the guide catheter 
from the sheath and removing the introducer sheath from the artery; (9) 
using standard of care procedures to achieve hemostasis at the puncture 
site; and (10) disposing of the devices.
    Please refer to the online application posting for the Symplicity 
SpyralTM RDN System, available at https://mearis.cms.gov/public/publications/device-ptp/DEP231130WPU4J, for additional detail 
describing the device and the disease treated by the device.
    Comment: Many commenters expressed their support for the approval 
of the Symplicity SpyralTM RDN System for transitional pass-
through payment.
    Response: We appreciate the commenters' input and support for the 
Symplicity SpyralTM RDN System application for transitional 
pass-through payment. We have taken these comments into consideration 
in our final determination for pass-through status for the Symplicity 
SpyralTM RDN System.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), the Symplicity SpyralTM RDN System 
received FDA Breakthrough Device designation effective March 27, 2020, 
as a device with the following indicated use: the Symplicity 
SpyralTM multi-electrode renal denervation catheter and the 
Symplicity G3TM RF Generator are indicated for the reduction 
of blood pressure in patients with uncontrolled hypertension despite 
the use of anti-hypertensive medications or in patients who may have 
documented intolerance to anti-hypertensive medications. FDA approved 
the premarket approval application (PMA) for the Symplicity 
SpyralTM RDN System on November 17, 2023, for the indicated 
use to reduce blood pressure as an adjunctive treatment in patients 
with hypertension

[[Page 94165]]

in whom lifestyle modifications and antihypertensive medications do not 
adequately control blood pressure. We received the application for a 
new device category for transitional pass-through payment status for 
the Symplicity SpyralTM Catheter on November 30, 2023, which 
is within 3 years of the date of the initial FDA marketing 
authorization.
    We invited public comment on whether the Symplicity 
SpyralTM Catheter meets the newness criterion at Sec.  
419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant reiterated that the Symplicity 
SpyralTM Catheter received FDA marketing authorization on 
November 17, 2023, and the Symplicity SpyralTM RDN System 
was granted Breakthrough Device designation effective March 27, 2020. A 
few other commenters also stated that they believed the Symplicity 
SpyralTM RDN System meets the newness criterion.
    Response: We appreciate the applicant's and commenters' input. The 
Symplicity SpyralTM RDN System received FDA Breakthrough 
Device designation on March 27, 2020. We received the application for a 
new device category for transitional pass-through payment status for 
the Symplicity SpyralTM Catheter on November 30, 2023, which 
is within 3 years of November 17, 2023, the date of FDA PMA. After 
consideration of the public comments received and our review of the 
application, we have determined that the Symplicity SpyralTM 
Catheter meets the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the Symplicity 
SpyralTM Catheter is integral to the service furnished. Per 
the applicant, the Symplicity SpyralTM Catheter is intended 
for single-patient use only. While the applicant did not explicitly 
state whether the Symplicity SpyralTM Catheter comes into 
contact with human tissue, the applicant asserted that the 
SymplicityTM Catheter ablates renal nerve tissue by 
positioning the catheter within the renal artery, which expands and 
fits the renal arterial vessel walls. While the applicant did not 
explicitly state if the Symplicity SpyralTM Catheter is 
surgically inserted or implanted, per the device description, the 
Symplicity SpyralTM Catheter is inserted through a small 
femoral incision, after which it is inserted into the renal arterial 
vessel.
    We invited public comment on whether the Symplicity 
SpyralTM Catheter meets the eligibility criterion at Sec.  
419.66(b)(3).
    Comment: The applicant submitted a comment stating that the 
Symplicity SpyralTM catheter meets all eligibility criteria 
as laid out at Sec.  419.66(b)(3). The applicant clarified that the 
Symplicity SpyralTM Catheter is required to ablate the renal 
sympathetic nerves in this procedure, is integral to the service 
furnished, and meets the eligibility criterion at Sec.  419.66(b)(3). 
The applicant further clarified that the Symplicity SpyralTM 
Catheter comes into contact with human tissue because it is inserted 
through the skin and into the arterial system, and is then introduced 
into the renal artery.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the Symplicity SpyralTM Catheter is an 
integral part of the service furnished, used for one patient only, 
comes in contact with human tissue, and is surgically implanted or 
inserted, or applied in or on a wound or other skin lesion because the 
Symplicity SpyralTM Catheter is a single-use catheter and is 
inserted through a small femoral incision, after which it is inserted 
into the renal arterial vessel. After consideration of the public 
comments we received and our review of the application, we have 
determined that the Symplicity SpyralTM Catheter meets the 
eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not state whether the Symplicity 
SpyralTM Catheter is equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered, or whether the Symplicity SpyralTM 
Catheter is a supply or material furnished incident to a service.
    We invited public comment on whether the Symplicity 
SpyralTM Catheter meets the exclusion criterion at Sec.  
419.66(b)(4).
    Comment: The applicant submitted a comment confirming that the 
Symplicity SpyralTM Catheter meets the eligibility criterion 
at Sec.  419.66(b)(4) because it is not equipment, an instrument, 
apparatus, implement, or item for which depreciation and financing 
expenses are recovered as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual. The applicant clarified that the Symplicity 
SpyralTM Catheter is not a supply or material furnished 
incident to a service. The applicant commented that the Symplicity 
SpyralTM Catheter is used with the Symplicity 
G3TM generator, which may be considered depreciating 
equipment as defined at Sec.  419.66(b)(4); however, the applicant 
noted that it is only seeking pass-through status for the single-use 
Symplicity SpyralTM Catheter.
    Response: We thank the applicant for the clarification and agree 
with the applicant that the Symplicity SpyralTM Catheter is 
not equipment, an instrument, apparatus, implement, or item of this 
type for which depreciation and financing expenses are recovered as 
depreciation assets, or a material or supply furnished incident to a 
service. After consideration of the public comments we received and our 
review of the application, we have determined that the Symplicity 
SpyralTM Catheter meets the eligibility criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. According to the applicant, 
the Symplicity SpyralTM Catheter is a single-use catheter 
used to deliver multiple ablations in both kidneys, in the renal main, 
accessory, and branch arteries, based on a patient's artery anatomy and 
size. According to the applicant, no previous or existing device 
categories for pass-through payment appropriately describe the 
Symplicity SpyralTM Catheter. The applicant asserted that 
two categories, C1886 (Catheter, extravascular tissue ablation, any 
modality (insertable)) and C1888 (Catheter, ablation, noncardiac, 
endovascular (implantable)), do not appropriately describe the 
Symplicity SpyralTM Catheter. Per the applicant, C1886 does 
not appropriately describe the Symplicity SpyralTM Catheter 
because the Symplicity SpyralTM

[[Page 94166]]

Catheter ablates renal nerve tissue via an endovascular approach by 
positioning the catheter within the renal artery and C1886 was created 
to describe devices that ablate extravascular tissue (via an 
extravascular approach).\44\ According to the applicant, C1888 does not 
appropriately describe the Symplicity SpyralTM Catheter 
because the Symplicity SpyralTM Catheter does not ablate or 
otherwise affect the blood vessel tissue and C1888 was created to 
describe devices designed to occlude or obliterate blood vessels.\45\
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    \44\ The applicant referenced CY 2013 OPPS FR (77 FR 68352) and 
Transmittal 2386, Change Request 7672 (Jan 13, 2012) to support 
these assertions.
    \45\ The applicant referenced the Medicare Claims Processing 
Manual, Chapter 4, section 60.4.3 to support these assertions.
---------------------------------------------------------------------------

    We did not identify an existing pass-through payment category that 
describes the Symplicity SpyralTM Catheter. We invited 
public comment on whether the Symplicity SpyralTM Catheter 
meets the device category criterion at Sec.  419.66(c)(1).
    Comment: The applicant and a few other commenters agreed with CMS' 
assessment that there are no existing pass-through payment categories 
that describe the Symplicity SpyralTM Catheter.
    Response: We appreciate the commenters' input. After consideration 
of the public comments we received and our review of the application, 
we continue to believe that there is no existing category or category 
previously in effect that appropriately describes the Symplicity 
SpyralTM Catheter. Therefore, we have determined that the 
Symplicity SpyralTM Catheter meets the device category 
eligibility criterion at Sec.  419.66(c)(1).
    We noted that the applicant indicated the Symplicity 
SpyralTM Catheter is not the only device authorized by FDA 
with an indication for renal denervation to achieve reductions in blood 
pressure. Paradise[supreg] Ultrasound RDN System, for which we also 
received an application for transitional pass-through payments for CY 
2025 as discussed in more detail in the proposed rule (89 FR 59304 
through 59307) and this final rule with comment, is also authorized by 
FDA with an indication for renal denervation using ultrasound energy to 
achieve reductions in blood pressure. Per the applicant, the 
Paradise[supreg] Ultrasound RDN System would also be described by the 
applicant's proposed pass-through payment category: Ablation catheter, 
renal nerve, via endovascular approach, any modality. Accordingly, we 
noted that while the Symplicity SpyralTM Catheter device may 
have a different modality (i.e., radiofrequency compared to 
ultrasound), the Symplicity SpyralTM Catheter device may 
have a similar mechanism of action to that of the Paradise[supreg] 
Ultrasound RDN System device. We questioned whether the device 
descriptions provided in the respective applications support 
establishing two modality specific pass-through payment device 
categories or a single device category that would encompass both RDN 
device modalities. We address this question in section (i) in detail 
immediately following the full discussion of all other applicable 
eligibility criteria for the Symplicity SpyralTM RDN System 
application.
    For the summary of public comments received and our final decision 
on the question of whether the device descriptions provided in the 
respective applications support establishing two modality-specific 
pass-through payment device categories or a single device category that 
would encompass both RDN device modalities, please see section (i) 
immediately following the Symplicity SpyralTM RDN System 
application determination.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. As previously stated, the Symplicity 
SpyralTM Catheter has Breakthrough Device designation and 
marketing authorization from FDA for the indication covered by the 
Breakthrough Device designation (as explained in more detail in the 
discussion of the newness criterion) and therefore is not evaluated for 
substantial clinical improvement.
    We invited public comment on whether the Symplicity 
SpyralTM Catheter meets the device category criterion at 
Sec.  419.66(c)(2)(ii).
    Comment: The applicant submitted a comment confirming that the 
Symplicity SpyralTM Catheter meets the eligibility criterion 
at Sec.  419.66(c)(2)(ii) because as an FDA Breakthrough Device, it 
meets the device category criterion as described at Sec.  
419.66(c)(2)(ii). A few commenters also stated that the Symplicity 
SpyralTM Catheter meets the eligibility criterion at Sec.  
419.66(c)(2)(ii).
    Response: We appreciate the applicant's and commenters' input. The 
Symplicity SpyralTM RDN System has a Breakthrough Device 
designation, as stated by the applicant, effective March 27, 2020, and 
marketing authorization from FDA effective November 17, 2023, for the 
indication covered by the Breakthrough Device designation and 
therefore, meets the criterion at Sec.  419.66(c)(2)(ii) and is not 
evaluated for substantial clinical improvement at Sec.  
419.66(c)(2)(i). Based on our review of the application and 
consideration of the public comments we received, we have determined 
that the Symplicity SpyralTM Catheter meets the eligibility 
criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the Symplicity 
SpyralTM Catheter would be reported with HCPCS codes shown 
in Table 121.

[[Page 94167]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.148

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5192, which had a CY 2024 payment rate of 
$5,445.84 at the time the application was received. HCPCS code 0339T in 
APC 5192 had a CY 2024 device offset amount of $3,362.26 at the time 
the application was received.\46\ According to the applicant, the cost 
of the Symplicity SpyralTM Catheter is $16,000.00.
---------------------------------------------------------------------------

    \46\ We noted that the applicant selected the APC payment rate 
of $5,451.51 and the HCPCS/CPT code level device offset amount of 
$3,365.76 for HCPCS 0339T in APC 5192. However, the values selected 
are inconsistent with the APC payment rate and the device offset 
amount found in the corrected Addendum P to the CY 2024 OPPS/ASC 
final rule with comment period. For our calculation, we selected the 
APC payment rate of $5,445.84 and the HCPCS/CPT code level device 
offset amount of $3,362.26 for HCPCS 0339T in APC 5192 found in the 
corrected Addendum P, which are the accurate values for these codes. 
Based on our initial assessment for the proposed rule, using the APC 
payment rate of $5,445.84 and the HCPCS/CPT code level device offset 
amount of $3,362.26 would result in the Symplicity 
SpyralTM Catheter meeting the cost significance 
requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $16,000.00 for the Symplicity SpyralTM 
Catheter is 293.80 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,445.84 (($16,000.00/
$5,445.84) x 100 = 293.80 percent). Therefore, we stated that we 
believe the Symplicity SpyralTM Catheter meets the first 
cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $16,000.00 for 
the Symplicity SpyralTM Catheter is 475.87 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $3,362.26 (($16,000.00/$3,362.26) x 100 = 475.87 
percent). Therefore, we stated that we believe the Symplicity 
SpyralTM Catheter meets the second cost significance 
requirement.
    The third cost significance requirement at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $16,000.00 for the Symplicity SpyralTM 
Catheter and the portion of the APC payment amount for the device of 
$3,362.26 is 232.06 percent of the APC payment amount for the related 
service of $5,445.84 ((($16,000.00-$3,362.26)/$5,445.84) x 100 = 232.06 
percent). Therefore, we stated that we believe the Symplicity 
SpyralTM Catheter meets the third cost significance 
requirement.
    We invited public comment on whether the Symplicity 
SpyralTM Catheter meets the device pass-through payment 
criteria discussed in this section, including the cost criterion for 
device pass-through payment status.
    Comment: With respect to cost significance criteria, the applicant 
and a few other commenters reiterated that the Symplicity 
SpyralTM Catheter meets all three of the cost significance 
criteria.
    Response: We appreciate the applicant's and commenters' input. 
After consideration of the public comments we received and our findings 
from the first, second, and third cost significance tests, we agree 
that the Symplicity SpyralTM Catheter meets the cost 
significance criteria specified at Sec.  419.66(d).
    After consideration of the public comments we received and our 
review of the device pass-through application, we have determined that 
the Symplicity

[[Page 94168]]

SpyralTM Catheter meets the requirements for device pass-
through status described at Sec.  419.66. Therefore, effective 
beginning January 1, 2025, we are finalizing approval for device pass-
through payment status for the Symplicity SpyralTM Catheter 
under the alternative pathway for devices that have an FDA Breakthrough 
Device designation and have received FDA marketing authorization for 
the indication covered by the Breakthrough Device designation.
    (i) Paradise[supreg] Ultrasound RDN System and the Symplicity 
SpyralTM RDN System Device Category Code Establishment
    As previously discussed, we received two applications for 
transitional device pass-through status for RDN devices: the 
Paradise[supreg] Ultrasound RDN System and the Symplicity 
SpyralTM RDN System (Symplicity SpyralTM 
Catheter). Per the applicants, both are RDN devices that use an 
endovascular approach to enter the renal arteries and ablate renal 
sympathetic nerves to achieve reductions in blood pressure. We 
questioned whether the information provided for each nominated device 
supported establishing two modality-specific device pass-through 
payment device categories or establishing a single device category that 
would encompass both RDN devices.
    We noted that the Paradise[supreg] Ultrasound RDN System and the 
Symplicity SpyralTM RDN System are both authorized by FDA 
for the indicated use to reduce blood pressure as an adjunctive 
treatment in patients with hypertension in whom lifestyle modifications 
and antihypertensive medications do not adequately control blood 
pressure. In addition, based on the information provided in the 
respective applications, we stated that it appears that both devices 
use the same procedure (renal sympathetic denervation, also called 
renal sympathetic nerve ablation) with the same underlying mechanism of 
action (thermal ablation), treat the same disease (hypertension) in the 
same patient population (patients in whom lifestyle modifications and 
antihypertensive medications do not adequately control blood pressure), 
and aim to achieve the same therapeutic outcome (to reduce blood 
pressure). We noted that in addition to having the same indicated use, 
per the applicants, both devices may be used with the same HCPCS 
procedure codes: 0338T \47\ or 0339T.\48\
---------------------------------------------------------------------------

    \47\ HCPCS procedure code 0338T (Transcatheter renal sympathetic 
denervation, percutaneous approach including arterial puncture, 
selective catheter placement(s) renal artery(ies), fluoroscopy, 
contrast injection(s), intraprocedural roadmapping and radiological 
supervision and interpretation, including pressure gradient 
measurements, flush aortogram and diagnostic renal angiography when 
performed; unilateral).
    \48\ HCPCS procedure code 0339T (Transcatheter renal sympathetic 
denervation, percutaneous approach including arterial puncture, 
selective catheter placement(s) renal artery(ies), fluoroscopy, 
contrast injection(s), intraprocedural roadmapping and radiological 
supervision and interpretation, including pressure gradient 
measurements, flush aortogram and diagnostic renal angiography when 
performed; bilateral).
---------------------------------------------------------------------------

    We noted several differences in procedural technique with use of 
the Paradise[supreg] Ultrasound RDN System device compared to the 
Symplicity SpyralTM RDN System device. Per the applicants, 
the Paradise[supreg] Ultrasound RDN System delivers ablation while 
positioned in the main renal arteries only, whereas the Symplicity 
SpyralTM RDN System may deliver ablation while positioned in 
the main renal, accessory, and branch arteries and therefore may 
require advancing the catheter beyond the main renal arteries. 
According to the applicants, the Paradise[supreg] Ultrasound RDN System 
procedural technique requires the measurement of the main renal artery 
diameter to select an appropriate size cooling balloon catheter, 
whereas the Symplicity SpyralTM RDN System does not require 
a cooling balloon catheter nor this measurement. Similarly, per the 
applicants, the Paradise[supreg] Catheter's cooling balloon catheter 
requires additional procedural techniques to ensure the balloon is 
appropriately inflated and deflated during the procedure, but the 
Symplicity SpyralTM Catheter does not require this.
    The two applicants proposed different device category descriptions. 
Based on the information submitted, we acknowledged that the device 
category proposed by the applicant for the Paradise[supreg] Ultrasound 
RDN System would not appropriately describe the Symplicity 
SpyralTM RDN System, but that the device category proposed 
by the applicant for the Symplicity SpyralTM RDN System 
would appropriately describe the Paradise[supreg] Ultrasound RDN 
System. Specifically, the applicant for the Paradise[supreg] Ultrasound 
RDN System proposed the following device category: Catheter, 
intravascular renal denervation, ultrasound, with balloon cooling,\49\ 
while the applicant for the Symplicity SpyralTM RDN System 
proposed the following device category: Ablation catheter, renal nerve, 
via endovascular approach, any modality. The device category descriptor 
the applicant proposed for the Paradise[supreg] Ultrasound RDN System 
specifies the device's treatment or procedure (catheter renal 
denervation), the ablation modality (i.e., ultrasound), and an 
attribute of the catheter (i.e., the cooling balloon). We noted that 
while the device category descriptor the applicant proposed for the 
Symplicity SpyralTM RDN System device also specifies the 
device's treatment or procedure (catheter ablation of the renal 
nerves), it does not specify an ablation modality or any additional 
attributes of the catheter; rather, the proposed device category for 
the Symplicity SpyralTM RDN System more broadly describes 
any ablation modality (e.g., radiofrequency or ultrasound).
---------------------------------------------------------------------------

    \49\ The Paradise[supreg] Ultrasound RDN System device category 
does not explicitly describe using an endovascular approach; 
however, it does describe renal nerve ablation via a catheter. We 
stated that we believe the device category describes the 
intravascular sonication (ultrasound treatment) delivered by the 
catheter. We noted that the proposed device description does not 
preclude an endovascular approach, and that, per the applicant, the 
Paradise[supreg] Ultrasound RDN system is a catheter-based 
endovascular based system.
---------------------------------------------------------------------------

    The applicant for the Symplicity SpyralTM RDN System 
asserted that the use of a common thermal mechanism of action in both 
systems supported the establishment of a single device category 
irrespective of modality. However, we noted the applicant of the 
Paradise[supreg] Ultrasound RDN System stated a separate device 
category associated with ultrasound denervation is supported by 
possible differences in clinical efficacy between RDN devices using 
ultrasound and those using radiofrequency ablation. However, we noted 
that we did not evaluate the validity or generalizability of these 
claims, nor was it clear if the two different ablation modalities 
(i.e., ultrasound and radiofrequency) would render different clinical 
results in larger studies or in the long term.50 51 We 
further noted that we discussed these claims solely for the purpose of

[[Page 94169]]

determining whether the information provided supports establishing two 
modality-specific pass-through payment device categories or 
establishing a single device category that may encompass both RDN 
devices.
---------------------------------------------------------------------------

    \50\ Fengler, K., Rommel, K.-P., Kriese, W., Blazek, S., Besler, 
C., von Roeder, M., Desch, S., Thiele, H., & Lurz, P. (2023, 
February 13). Research Correspondence: 6- and 12-Month Follow-Up 
From a Randomized Clinical Trial of Ultrasound vs Radiofrequency 
Renal Denervation (RADIOSOUND-HTN). JACC: Cardiovascular 
Interventions, 16(3),: 367-369. https://doi.org/10.1016/j.jcin.2022.10.058
    \51\ Fengler, K., Rommel, K.-P., Blazek, S., Besler, C., 
Hartung, P., von Roeder, M., Petzold, M., Winkler, S., 
H[ouml]llriegel, R., Desch, S., Thiele, H., & Lurz, P. (2019). A 
Three-Arm Randomized Trial of Different Renal Denervation Devices 
and Techniques in Patients With Resistant Hypertension (RADIOSOUND-
HTN). Circulation: 139(5), 590-600. https://doi.org/10.1161/CIRCULATIONAHA.118.037654.
---------------------------------------------------------------------------

    In seeking comment, we noted that in accordance with section 
1833(t)(6)(B)(ii)(II) of the Act, new categories must be established in 
such a way that no medical device is described by more than one 
category. We further noted that CMS does not establish pass-through 
device categories for the purposes of describing specific devices, but 
rather, device categories which are intended to encompass all devices 
that can be appropriately described by a category. However, there are 
instances where CMS has defined specific ablation modalities (e.g., 
high intensity ultrasound, microwave, and cryoablation) in HCPCS codes 
for use with the OPPS. In addition, we noted the existence of several 
modality-specific tissue ablation procedure codes in the Current 
Procedural Terminology (CPT[supreg]) 2024. However, there are examples 
where CMS has established device categories with additional granularity 
to differentiate similar devices with special characteristics (e.g., 
implantable neurostimulators). Further, there are examples where CMS 
has created HCPCS codes specifying the modality of ablation (e.g., 
ultrasound, microwave). Finally, we noted that the intent of 
transitional device pass-through payment, as implemented at Sec.  
419.66, is to facilitate access for beneficiaries to the advantages of 
new and truly innovative devices by allowing for adequate payment for 
these new devices while the necessary cost data is collected to 
incorporate the costs for these devices into the procedure APC rate (66 
FR 55861). We questioned whether two modality-specific device category 
codes may facilitate the collection of more accurate data for 
incorporating the costs of these two devices into the procedure APC 
rate as well as foster the tracking of efficacy data for these two 
ablation modalities.
    As such, we invited public comment on whether the device 
descriptions provided in the Paradise[supreg] Ultrasound RDN System and 
the Symplicity SpyralTM RDN System applications support 
establishing two modality-specific pass-through payment device 
categories or a single device category that would encompass both RDN 
device modalities.
    Comment: Commenters, including the Paradise[supreg] Ultrasound RDN 
System applicant, overwhelmingly supported establishing two pass-
through payment device categories. However, some commenters suggested 
that the device category codes be specific to the physical device 
characteristics while other commenters suggested the device category 
codes be specific to modality. Specifically, the applicant for the 
Paradise[supreg] Ultrasound RDN System and many other commenters stated 
that two device categories are more appropriate for many reasons such 
as documented procedural differences between the two treatment 
modalities, differences in the prices between the two technologies, 
CMS's previous creation of separate and distinct device categories for 
similar technologies, CMS's recent creation of different ICD-10-PCS 
codes for radiofrequency and ultrasound renal denervation modalities in 
the FY 2025 IPPS final rule, and to facilitate the tracking of each 
device's efficacy data.
    We received a few comments, including from the Symplicity 
SpyralTM RDN System applicant, who suggested that CMS 
establish a single device category that would encompass both RDN device 
modalities. The Symplicity SpyralTM RDN System applicant and 
a few other commenters supported the establishment of an energy 
modality-agnostic RDN device pass-through payment device category for 
several reasons. Specifically, the Symplicity SpyralTM RDN 
System applicant emphasized the similarities between the two devices 
and procedures, opinions from the physician community, existing policy 
and coding standards, and potential future consequences of this 
determination. The Symplicity SpyralTM RDN System applicant 
also disagreed with many of the reasons for separate pass-through 
payment device categories provided by the Paradise[supreg] Ultrasound 
RDN System applicant that were outlined in the proposed rule.
    Response: We appreciate the feedback provided by the applicants and 
the commenters on this topic. We have taken the points raised into 
consideration in our final decision.
    Comment: Commenters, including the Paradise[supreg] Ultrasound RDN 
System applicant noted many procedural differences between the two 
treatment modalities. For example, the radiofrequency system (i.e., 
Symplicity SpyralTM RDN System) requires ablation of the 
main renal artery and branches of the main renal artery, whereas the 
Paradise[supreg] Ultrasound RDN System normally requires ablation of 
only the main renal artery, leading to significantly fewer ablations 
52 53 and the Paradise[supreg] Ultrasound RDN System 
requires the estimation of the size of the patient's renal artery to 
ensure the correct balloon size is utilized, which may require 
additional equipment or procedural steps at the discretion of the 
operator compared to the Symplicity SpyralTM RDN System 
procedure, where this is not required. In addition, the applicant and 
many commenters noted that the Symplicity SpyralTM RDN 
System procedure takes longer than the overall procedure for the 
Paradise[supreg] Ultrasound RDN System, and the Paradise[supreg] 
Ultrasound RDN System applicant specified this difference in procedure 
time as approximately 30 percent.54 55 56 57 58 Many other 
commenters also indicated additional potential procedural differences 
between the two devices, including variation in the number of catheters 
used, pre- and post-procedure scheduling and workflow protocols, 
complexity of the procedure, depth of ablation, specialized training 
requirements, patient selection and management issues, and recovery 
time.
---------------------------------------------------------------------------

    \52\ Fengler, et al. (2019). A Three-Arm Randomized Trial of 
Different Renal Denervation Devices and Techniques in Patients With 
Resistant Hypertension (RADIOSOUND-HTN). Circulation, 139(5), 590-
600. https://doi.org/10.1161/CIRCULATIONAHA.118.037654.
    \53\ Fengler, et al. (2023). Research Correspondence: 6- and 12-
Month Follow-Up From a Randomized Clinical Trial of Ultrasound vs 
Radiofrequency Renal Denervation (RADIOSOUND-HTN). JACC: 
Cardiovascular Interventions, 16(3): 367--369. https://doi.org/10.1016/j.jcin.2022.10.058.
    \54\ Fengler, et al. (2019).
    \55\ Fengler, et al. (2023).
    \56\ Symplicity Spyral renal denervation system Instructions for 
Use. Medtronic.
    \57\ Azizi, M., Schmieder, R.E., Mahfoud, F., Weber, M.A., 
Daemen, J., Davies, J., Basile, J., Kirtane, A.J., Wang, Y., Lobo, 
M.D., Saxena, M., Feyz, L., Rader, F., Lurz, P., Sayer, J., Sapoval, 
M., Levy, T., Sanghvi, K., Abraham, J., Sharp, A.S.P., Fisher, 
N.D.L., Bloch, M.., Reeve-Stoffer, H., Coleman, L., Mullin, C., & 
Mauri, Laura on behalf of the RADIANCE-HTM Investigators (2018). 
Endovascular ultrasound renal denervation to treat hypertension 
(RADIANCE-HTN SOLO): a multicentre, international, single-blind, 
randomised, sham-controlled trial. Lancet, 391(10137), P2335-P2345. 
https://doi.org/10.1016/S0140-6736(18)31082-1.
    \58\ Azizi, M., Sanghvi, K., Saxena, M., Gosse, P., Reilly, 
J.P., Levy, T., Rump, L.C., Persu, A., Basile, J., Bloch, M.J., 
Daemen, J., Lobo, M.D., Mahfoud, F., Schmieder, R.E., Sharp, A.S.P., 
Weber, M.A., Sapoval, M., Fong, P., Pathak, A., Lantelme, P., Hsi, 
D., Bangalore, S., Witkowski, A., Weil, J., Kably, B., Barman, N.C., 
Reeve-Stoffer, H., Coleman, L., McClure, C.K., Kirtane, A.J. on 
behalf of the RADIANCE-HTN Investigators (2021). Ultrasound renal 
denervation for hypertension resistant to a triple medication pill 
(RADIANCEHTN TRIO): a randomised, multicentre, single-blind, sham-
controlled trial. Lancet, 397(10293), P2476-P2486. https://doi.org/10.1016/S0140-6736(21)00788-1.
---------------------------------------------------------------------------

    With respect to procedural and device similarities, the Symplicity 
SpyralTM RDN System applicant and another commenter 
reiterated that both devices share the same intended use, for the same 
patient population, with identical

[[Page 94170]]

or nearly identical FDA-approved indications, and are deployed 
similarly, on the same anatomy. The Symplicity SpyralTM RDN 
System applicant further stated that the two devices have the same 
mechanism of action (thermal ablation of renal sympathetic nerves using 
heat energy), a similar form factor and product composition (single use 
endovascular catheters, connected to a generator, and delivered over a 
wire to the renal arteries, with distal ends containing heat energy 
emitting implements which ablate nerve tissue), and that the RDN 
procedure performed with either technology is fundamentally the same. 
The Symplicity SpyralTM RDN System applicant also asserted 
that even though there may be small differences in the placement of 
each device along the renal arterial vasculature, they believe these 
small differences can be expected for devices that are inherently 
similar but not identical in form factor, size, and deliverability. The 
Symplicity SpyralTM RDN System applicant asserted that the 
RDN procedure performed by both devices is also fundamentally the same, 
as both include catheter-based femoral access and closure, 
intraprocedural imaging, physician wire skills and expertise, and the 
ablation targeting of the sympathetic renal nerves to achieve the 
identical therapeutic goal of reducing blood pressure.
    The Symplicity SpyralTM RDN System applicant reiterated 
that the Paradise[supreg] Catheter's cooling balloon requires specific 
procedural techniques to ensure the balloon is appropriately inflated 
and deflated during the procedure, noting that the Symplicity 
SpyralTM Catheter does not have this requirement. The 
applicant stated that the Symplicity SpyralTM Catheter does 
not require a cooling balloon as the non-occlusive spiral design of the 
radiofrequency catheter allows for continued collateral blood flow to 
cool the artery wall during ablation. Further, while use of the 
Paradise[supreg] Catheter's cooling balloon does require some different 
considerations when compared to the Symplicity SpyralTM 
Catheter, particularly related to vessel size, the cooling balloon 
itself is not providing the therapeutic effect (i.e. ablation of the 
nerves); rather, the balloon is preventing vessel damage from heat 
energy. The applicant stated this distinction makes it similar to many 
medical devices which provide the same treatment but require slightly 
different considerations based on manufacturer-specific equipment 
differences, and while the energy modality has driven some differences 
in the Symplicity SpyralTM Catheter and the Paradise[supreg] 
Catheter designs, the overall procedure is substantially similar 
between the two technologies.
    With respect to the differences in procedural technique described 
in the proposed rule that the Paradise[supreg] Ultrasound RDN System 
only ablates in the main renal arteries, while the Symplicity 
SpyralTM RDN System typically involves ablation in the main 
renal arteries, accessories, and branches, the applicant stated that 
according to the Paradise[supreg] Ultrasound RDN System instructions 
for use (IFU),\59\ the Paradise[supreg] Ultrasound RDN System is 
recommended for treatment of branches and accessory arteries, provided 
they are of appropriate size to accommodate the balloon and meet 
specific spacing requirements. The Symplicity SpyralTM RDN 
System applicant explained that the Symplicity SpyralTM RDN 
System IFU \60\ do not specify or require that distal branches be 
treated (only a size range for vessel diameters is specified). 
Furthermore, per the applicant, a thorough treatment strategy typically 
including distal branches is recommended for the Symplicity 
SpyralTM RDN System. The applicant noted that this 
recommendation is based on available knowledge of renal sympathetic 
nerve anatomy, to increase the likelihood of thorough and complete 
denervation up to the size limitations of the device, given that the 
current procedure and technology do not yet have an intraprocedural way 
to validate successful denervation. Additionally, the Symplicity 
SpyralTM RDN System applicant noted that several studies, 
including a sub-analysis of the Paradise[supreg] Ultrasound RDN System 
applicant's RADIANCE-HTN SOLO \61\ study, point to the importance of 
thorough ablation, including appropriate branch and accessory renal 
arteries, to achieving optimal nerve ablation and blood pressure 
reduction with RDN.62 63 Further, the Symplicity 
SpyralTM RDN System applicant stated that proceduralists 
with both devices seek to denervate to the greatest extent possible up 
to the limitations of the RDN technology used, and there are many 
considerations in how proceduralists may determine where to denervate, 
and with how many energy emissions, based on clinical experience and 
patient anatomical considerations.
---------------------------------------------------------------------------

    \59\ ReCor Paradise Ultrasound RDN Instructions for Use. https://mearis.cms.gov/public/publications/device-ptp/DEP231128137E1 
(accessed July 26, 2024).
    \60\ Symplicity Spyral Indications for Use. Available at: 
https://www.accessdata.fda.gov/cdrh_docs/pdf22/P220026D.pdf. 
Accessed Sept 2024.
    \61\ Saxena, M., Schmieder, R.E., Kirtane, A.J., Mahfoud, F., 
Daemen, J., Basile, J., Lurz, P., Gosse, P., Sanghvi, K., Fisher, 
N.D.L., Rump, L.C., Pathak, A., Blakenstjn, P.J., Mathur, A., Wang, 
Y., Weber, M.A., Sharp, A.S.P., Bloch, M.J., Barman, N.C., Claude, 
L., Song, Y., Aziz, M. & Lobo, M.D. (2022). Predictors of blood 
pressure response to ultrasound renal denervation in the RADIANCE-
HTN SOLO study. Journal of Human Hypertension, 36(7), 629-639. 
https://doi.org/10.1038/s41371-021-00547-y.
    \62\ Sato, Y., Kawakami, R., Jinnouchi, H., Sakamoto, A., 
Cornelissen, A., Mori, M., Kawai, K., Guo, L., Coleman, L., Nash, 
S., Claude, L., Barman, N.C., Romero, M., Kolodgie, F.D., Virmani, 
R., & Finn, A.V. (2001). Comprehensive Assessment of Human Accessory 
Renal Artery Periarterial Renal Sympathetic Nerve Distribution. 
JACC: Cardiovascular Interventions, 14(3), 304-15. https://doi.org/10.1016/j.jcin.2020.09.043.
    \63\ Struthoff, H., Lauder, L, Hohl, M., Hermens, A., Rami 
Tzafriri, A., Edelman, E.R., Kunz, M., B[ouml]hm, M., Tschernig, T., 
& Mahfoud, F. (2023). Histological examination of renal nerve 
distribution, density, and function in humans. EuroIntervention, 
19(7), 612-620. https://doi.org/10.4244/eij-d-23-00264.
---------------------------------------------------------------------------

    The Symplicity SpyralTM RDN System applicant disagreed 
with some assertions provided in the Paradise application and discussed 
in some of the comments supporting the creation of two device category 
codes. Primarily, the applicant asserted that the differences in 
intraprocedural metrics cited in the proposed rule noted are not 
accurate comparisons. For example, the Symplicity SpyralTM 
RDN System applicant stated that the average procedure times from 
respective pooled analyses suggest that the total procedure time is 85 
minutes for the Symplicity SpyralTM RDN System \64\ and 78 
minutes for the Paradise[supreg] Ultrasound RDN but the total procedure 
times attributed to using either device are variable across studies, 
and, due to differing trial procedural requirements and physician 
experience, it is difficult to compare procedure times across studies. 
In addition, the applicant further stated other intraprocedural 
metrics, such as total ablation time and ablation time per cycle, are 
not necessarily reflective of additional resources involved in the 
procedures. The Symplicity SpyralTM RDN System applicant 
noted that in the proposed rule CMS stated that the Symplicity 
SpyralTM Catheter required more ablations per patient at 
46.9, compared to 5.4 ablations for the Paradise[supreg] Ultrasound RDN 
System. However, the applicant stated that as a quadripolar device, 
each of the Symplicity SpyralTM Catheter's four electrodes 
may be activated independently for focal treatments, causing the 
difference in the number of ablations. The applicant clarified that the 
SPYRAL HTN-OFF MED

[[Page 94171]]

randomized controlled trial \65\ counted ablations from each of the 
four electrodes of the Symplicity SpyralTM Catheter as a 
separate ablation, although most ablation cycles would have counted the 
four ablations simultaneously as a single ablation. The applicant 
indicated that given this design difference, it is misleading to draw 
comparisons between those two data points for each system. The 
applicant also clarified that regarding ablation depth, cadaveric 
studies found that >90 percent of the renal nerves lie within 6.39 mm 
of the arterial lumen.\66\ While the applicant stated that it cannot 
independently confirm the 1-6 mm ablation depth cited for the 
Paradise[supreg] Ultrasound RDN System, a histological study of 
radiofrequency RDN in porcine models using the Symplicity 
SpyralTM RDN System found a comparable mean lesion depth of 
6.26 mm (+/- 1.62) in the main renal segment.\67\ The Symplicity 
SpyralTM RDN System applicant also stated that regardless of 
modality, ablation depth is not uniform and occurs asymmetrically as a 
result of heating different tissue types surrounding the renal artery 
(given the presence of other organs surrounding the renal artery, and 
anatomical variability between patients, this heat energy is variably 
dissipated). Therefore, the applicant asserted that ablation depth, by 
itself, is an incomplete two-dimensional measure of a three-dimensional 
phenomenon.
---------------------------------------------------------------------------

    \64\ Podium presentation. Mahfoud. Pooled, 12-month Blood 
Pressure Reductions Using the Symplicity Spyral Radiofrequency Renal 
Denervation Catheter. Transvascular Cardiotherapuetics Conference. 
October 2023.
    \65\ B[ouml]hm, M., Kario, K., Kandzari, D.E., Mahfoud, F., 
Weber, M.A., Schmieder, R.E., Tsioufis, K., Pocock, S., 
Konstantinidis, D., Choi, J.W., East, C., Lee, D.P., Ma, A., Ewen, 
S., Cohen, D.L., Wilensky, R., Devireddy, C.M., Lea, J., Schmid, A., 
Weil, J., Agdirlioglu, T., Reedus, D., Jefferson, B.K., Reyes, D., 
D'Souza, R., Sharp, A.S.P., Sharif, F., Fahy, M., DeBruin, V., 
Cohen, S.A., Brar, S., & Townsend, R.R. on behalf of the SPYRAL HTN-
OFF MED Pivotal Investigators (2020). Efficacy of catheter-based 
renal denervation in the absence of antihypertensive medications 
(SPYRAL HTN-OFF MED Pivotal): a multicentre, randomised, sham-
controlled trial. Lancet, 395(10234), 1444-1451. https://doi.org/
10.1016/s0140-6736(20)30554-7.
    \66\ Sakakura, K., Ladich, E., Cheng, Q., Otsuka, F., Yahagi, 
K., Fowler, D.R., Kolodgie, F.D., Virmani, R., & Joner, M. (2014). 
Anatomic assessment of sympathetic peri-arterial renal nerves in 
man. Journal of American College of Cardiology, 64(7), 635-43. 
https://doi.org/10.1016/j.jacc.2014.03.059.
    \67\ Wolf, M., Hubbard, B., Sakaoka, A., Rousselle, S., Tellez, 
A., Jiang, X., Kario, K., Hohl, M., B[ouml]hm, M., & Mahfoud, F. 
(2018). Procedural and anatomical predictors of renal denervation 
efficacy using two radiofrequency renal denervation catheters in a 
porcine model. Journal of Hypertension, 36(12), 2453-2459. https://doi.org/10.1097/hjh.0000000000001840.
---------------------------------------------------------------------------

    Response: We thank the commenters and the applicants for the 
information. We agree with commenters that the Paradise[supreg] 
Ultrasound RDN System and the Symplicity SpyralTM RDN System 
have the same underlying thermal mechanism of action, have the same 
intended use for the same patient population, and have identical FDA-
approved primary indications. However, we continue to believe that, 
while there are similarities, the devices are not identical and warrant 
separate device categories. We note that commenters, including the 
applicants, addressed potential clinical impacts, efficacy, and 
outcomes in the comments. While we have included some of those details 
in our discussion for the purposes of illustrating the procedural 
comparison of the two devices and determining whether the information 
provided supports establishing two modality-specific pass-through 
payment device categories or establishing a single device category that 
may encompass both RDN devices, we note that we did not evaluate the 
validity or generalizability of these claims, nor was it is clear if 
the two different ablation modalities (i.e., ultrasound and 
radiofrequency) would render different clinical results in larger 
studies or in the long term. In regard to comments on the differences 
in clinical trial data between the Paradise[supreg] Ultrasound RDN 
System and the Symplicity SpyralTM RDN System, we are not 
evaluating any evidence submitted in relation to the devices' clinical 
outcomes or the comparison of clinical outcomes to other similar 
devices because both devices meet the requirements at Sec.  
419.66(c)(2)(ii) and are not required to prove substantial clinical 
improvement for pass-through payment, as discussed in this final rule.
    With regard to the procedural differences we noted in the proposed 
rule, we agree with commenters that there are some procedural 
differences between the two RDN technologies and that the long-term 
impact of these differences on patient outcomes is unknown. We 
appreciate that differences between the two treatment modalities may 
result in different resource requirements such as operating room time, 
more anesthetic, and more contrast medium. We also agree with the many 
commenters who stated the Paradise[supreg] Ultrasound RDN System may 
require additional equipment or procedural steps to determine the 
estimation of the size of the patient's renal artery to ensure the 
correct balloon size is utilized.
    With regards to comments stating the cooling balloon itself is not 
providing the therapeutic effect (i.e. ablation of the nerves); rather, 
the balloon is preventing vessel damage from heat energy, we appreciate 
that the cooling balloon does not constitute a difference in mechanism 
of action. However, we believe the different considerations of 
resources due to the differences of the cooling balloon may be 
considered a significant difference in modalities that could reasonably 
suggest a need for separate device codes.
    Comment: The Paradise[supreg] Ultrasound RDN System applicant and 
many commenters stated that the difference in price between the two 
technologies also warrants two device categories. The Paradise[supreg] 
Ultrasound RDN System applicant and many other commenters stated that 
while the transitional pass-through payment calculation is based on 
hospital charges, having only one device category could lead to 
undercharging for one technology and overcharging for the other. The 
Paradise[supreg] Ultrasound RDN System applicant and many other 
commenters further stated that having two distinct device categories 
would allow hospitals to set charges that accurately reflect the cost 
of each procedure, thereby enabling CMS to more accurately calculate 
the costs of each procedure. The applicant and a few commenters further 
stated two distinct device categories would provide additional 
flexibility for CMS to more fully evaluate both modalities over the 
pass-through period to determine the most appropriate APC assignment 
when transitional pass-through payment expires.
    The Symplicity SpyralTM RDN System applicant commented 
that it appreciates CMS' intent to facilitate access for beneficiaries 
to innovative technologies by allowing for adequate payment while cost 
data is collected for APC assignments, and that the payment calculation 
methodology for transitional device pass-through provides for adequate 
payments based on charges on individual hospital claims adjusted to 
costs during the 3-year eligibility period, regardless of device 
category assignment. The applicant further commented that when the 
pass-through period expires and CMS packages the procedures into an 
APC, payment will be calculated at the level of the CPT code, which 
both RDN technologies share. The applicant claimed that the RDN device 
costs for both technologies will be packaged into the payment for the 
same CPT code, whether these costs are similar or not. The Symplicity 
SpyralTM RDN System applicant therefore questioned the 
utility of using separate device categories for cost tracking. The 
Symplicity SpyralTM RDN System applicant also opined that 
tracking efficacy data for the two devices is beyond the fundamental 
purpose of establishing device categories and should not be a primary 
consideration. The applicant stated that both manufacturers are engaged 
in post-

[[Page 94172]]

market research to continue building the body of evidence for RDN 
specific to each technology, and the research will continue independent 
of the establishment of pass-through device categories. The applicant 
urged CMS to prioritize and maintain an OPPS policy-based rationale in 
establishing new device categories, with focus on the payment-driven 
mechanisms and purposes of the device category codes.
    Response: In response to comments on the difference in price 
between the two technologies and whether that difference warrants two 
device categories, we note that while price difference considerations 
are generally outside the scope of the traditional pass-through payment 
program, we agree with commenters that two distinct device categories 
will provide an easier mechanism for hospitals to set charges that 
reflect the price differences between the two device categories which 
will enable CMS to more accurately calculate the costs of each 
procedure for future rulemaking.
    Comment: The Paradise[supreg] Ultrasound RDN System applicant and 
many commenters asserted that CMS has previously created separate and 
distinct device categories for similar technologies. The applicant 
suggested the most notable of these are the neurostimulators, where CMS 
created categories to differentiate rechargeable, non-rechargeable, 
high-frequency, and closed feedback loop neurostimulators for the 
treatment of chronic pain.\68\ The Paradise[supreg] Ultrasound RDN 
System applicant stated that other neurostimulator categories have also 
been created for phrenic nerve stimulation, paired stimulation, and 
carotid sinus baroreceptor stimulation. Further, the applicant stated 
that there are also currently five device categories \69\ that are all 
electrophysiology catheters. The applicant stated that they believe 
that these device categories appropriately capture the characteristics 
among these groups of technologies to allow for the most accurate 
reporting of device costs. The Paradise[supreg] Ultrasound RDN System 
applicant opined that the situation with respect to the 
Paradise[supreg] Ultrasound RDN System and the SymplicityTM 
Spryal RDN System is similar to the examples presented, and therefore, 
it is appropriate to have two device categories to differentiate 
tracking of ultrasound and radiofrequency renal denervation. Several 
other commenters also referenced device categories that were 
differentiated due to their unique characteristics, including examples 
related to cardiology, neurostimulators, catheters, and ablation 
modalities (i.e., high-intensity ultrasound, microwave, and 
cryoablation), to support their position that the Paradise[supreg] 
Ultrasound RDN System and the SymplicityTM Spryal RDN System 
should be classified within two different pass-through payment device 
categories.
---------------------------------------------------------------------------

    \68\ HCPCS codes C1826 (Generator, neurostimulator 
(implantable), includes closed feedback loop leads and all 
implantable components, with rechargeable battery and charging 
system), C1827 (Generator, neurostimulator (implantable), non-
rechargeable, with implantable stimulation lead and external paired 
stimulation controller), C1821 (Interspinous process distraction 
device (implantable)), C1822 (Generator, neurostimulator 
(implantable), high frequency, with rechargeable battery and 
charging system), C1823 (Generator, neurostimulator (implantable), 
non-rechargeable, with transvenous sensing and stimulation leads), 
C1767 (Generator, neurostimulator (implantable), non-rechargeable), 
C1820 (Generator, neurostimulator (implantable), with rechargeable 
battery and charging system), and C1825 (Generator, neurostimulator 
(implantable), non-rechargeable with carotid sinus baroreceptor 
stimulation lead(s).
    \69\ HCPCS codes C1730 (Catheter, electrophysiology, diagnostic, 
other than 3D mapping (19 or fewer electrodes)), C1731 Catheter, 
electrophysiology, diagnostic, other than 3D mapping (20 or more 
electrodes)), C1732 (Catheter, electrophysiology, diagnostic/
ablation, 3D or vector mapping), C1733 (Catheter, electrophysiology, 
diagnostic/ablation, other than 3D or vector mapping, other than 
cool-tip), and C2630 (Catheter, electrophysiology, diagnostic/
ablation, other than 3D or vector mapping, cool-tip).
---------------------------------------------------------------------------

    Further, the Paradise[supreg] Ultrasound RDN System applicant and 
many commenters noted that CMS recently created different ICD-10-PCS 
codes that differentiate between radiofrequency and ultrasound renal 
denervation modalities for the new technology add-on payments confirmed 
in the IPPS final rule for FY 2025. The applicant and several 
commenters opined that it is important to be consistent across 
inpatient and outpatient settings as the same rationale for separation 
and independent tracking of costs applies in both instances. A few 
commenters stated that the use of separate ICD-10-PCS codes for the two 
devices reflect their unique contributions to the treatment of 
hypertension.
    The applicant for the Symplicity SpyralTM RDN System 
argued that pass-through device categories are not established for the 
purpose of describing specific devices; rather, device categories are 
intended to encompass all devices that can be appropriately described 
by a category (89 FR 59316). The applicant acknowledged that, as stated 
in the proposed rule, CMS has established energy-specific device 
categories in the past; however, the applicant asserted that the 
establishment of device categories requires a nuanced approach, 
balancing appropriate granularity without becoming manufacturer- or 
device-specific. The applicant asserted that CMS must assess each 
situation on a case-by-case basis, in the context of the procedure and 
device in question, the existing code set, and established policy. The 
applicant asserted its belief that a single device category for the two 
RDN technologies is consistent with the considerations put forth by CMS 
in the proposed rule and consistent with past precedent, whereas the 
creation of two categories may conflict with these policy standards. 
Another commenter stated a preference for a simple single code to be 
used on claims when performing RDN, regardless of which device is 
chosen.
    With regard to broader device category definitions, the Symplicity 
SpyralTM RDN System applicant asserted that RDN ablation 
catheters in the future may come with several combinations of 
modalities and cooling mechanisms, noting that there are other RDN 
devices currently in development, such as a radiofrequency RDN catheter 
with balloon cooling under study by Metavention, with an approved 
Investigational Device Exemption (IDE) in the United States. The 
applicant stated the belief that other manufacturers may eventually 
gain FDA authorization with various device structures and features 
employing either ultrasound or radiofrequency RDN, and thus believed 
that the specific category description proposed by the Paradise[supreg] 
Ultrasound RDN System applicant would establish a framework in which 
different iterations of RDN technology could be considered new by 
virtue of their brand-specific characteristics. The Symplicity 
SpyralTM RDN System applicant asserted that, in contrast, a 
broader device category definition for RDN technologies currently 
eligible for pass-through would provide flexibility for future RDN 
devices to be evaluated on their own merits and that, if those devices 
meet the newness and other criteria for pass-through payment status, a 
broad category code for RDN can be easily adapted to reflect the 
distinguishing characteristic that merits such recognition.
    The Symplicity SpyralTM RDN System applicant noted that 
the RDN procedure used with either device is currently reported using 
the same energy modality-agnostic Category III CPT[supreg] codes. This 
applicant further opined that the broader physician community views RDN 
as fundamentally a single procedure with multiple technologies

[[Page 94173]]

available in the same class.70 71 72 73 Specifically, the 
applicant commented that in a Society for Cardiovascular Angiography & 
Interventions (SCAI) expert consensus statement published in August 
2023, the operator training and experience recommended for the RDN 
procedure is the same, regardless of which technology is used, with the 
only device-specific training noted in the statement being operator 
familiarity with the functionality of each technology's generator and 
knowledge regarding balloon sizing with ultrasound RDN,\74\ while the 
European Society of Cardiology/European Society of Hypertension (ESC/
ESH) Guidelines refer only to RDN as a class and do not distinguish 
between radiofrequency and ultrasound technologies.75 76 A 
commenter stated that from a physician work perspective, the two 
systems are similar in time and technique. The applicant further 
asserted that this issue was addressed at the September 2023 American 
Medical Association CPT[supreg] Editorial Panel meeting, where a 
request for a CPT[supreg] code for an energy modality-specific 
ultrasound RDN procedure was ultimately rejected by the Panel.
---------------------------------------------------------------------------

    \70\ Mancia, G., Kreutz, R., Brunstr[ouml]m, M., Burnier, M., 
Grassi, G., Januszewicz, A., Muiesan, M.L., Tsioufis, K., Agabiti-
Rosei, E., Algharably, E.A.E., Azizi, M., Benetos, A., Borghi, C., 
Hitij, J.B., Cifkova, R., Coca, A., Cornelissen, V., Cruickshank, 
J.K., Cunha, P.G., Danser, A.H.J., Pinho, R.M., Delles, C., 
Dominiczak, A.F., Dorobantu, M., Doumas, M., Fern[aacute]ndez-
Alfonso, M.S., Halimi, J.M., J[aacute]rai, Z., Jelakovi[cacute], B., 
Jordan, J., Kuznetsova, T., Laurent, S., Lovic, D., Lurbe, E., 
Mahfoud, F., Manolis, A., Miglinas, M., Narkiewicz, K., Niiranen, 
T., Palatini, P., Parati, G., Pathak, A., Persu, A., Polonia, J., 
Redon, J., Sarafidis, P., Schmieder, R., Spronck, B., Stabouli, S., 
Stergiou, G., Taddei, S., Thomopoulos, C., Tomaszewski, M., Van de 
Borne, P., Wanner, C., Weber, T., Williams, B., Zhang, Z.Y., & 
Kjeldsen, SE (2023). 2023 ESH Guidelines for the management of 
arterial hypertension: The Task Force for the management of arterial 
hypertension of the European Society of Hypertension. Journal of 
Hypertension, 41(12), 1874-2071. https://doi.org/10.1097/HJH.0000000000003480.
    \71\ Barbato, E., Azizi, M., Schmieder, R.E., Lauder, L., 
B[ouml]hm, M., Brouwers, S., Bruno, R.M., Dudek, D., Kahan, T., 
Kandzari, D.E., L[uuml]scher, T.F., Parati, G., Pathak, A., 
Ribichini, F.L., Schlaich, M.P., Sharp, A.S.P., Sudano, I., Volpe, 
M., Tsioufis, C., Wijns, W., & Mahfoud, F. (2023). Renal denervation 
in the management of hypertension in adults. A clinical consensus 
statement of the ESC Council on Hypertension and the European 
Association of Percutaneous Cardiovascular Interventions (EAPCI). 
European Heart Journal, 44(15), 1313-1330. https://doi.org/10.1093/eurheartj/ehad054.
    \72\ Swaminathan, R.V., East, C.A., Feldman, D.N., Fisher, N.D., 
Garasic, J.M., Giri, J.S., Kandzari, D.E., Kirtane, A.J., Klein, A., 
Kobayashi, T., Koenig, G., Li, J., Secemsky, E., Townsend, R.R., & 
Aronow, H.D. (2023). SCAI Position Statement on Renal Denervation 
for Hypertension: Patient Selection, Operator Competence, Training 
and Techniques, and Organizational Recommendations. Journal of the 
Society for Cardiovascular Angiography & Interventions, 2(6), 
101121. https://doi.org/10.1016/j.jscai.2023.101121.
    \73\ Kandzari DE, Townsend RR, Bakris G, Basile, J., Bloch, 
M.J., Cohen, D.L., East, C., Ferdinand, K.C., Fisher, N., Kirtane, 
A., Lee, D.P., Puckrein, G., Rader, F., Vassalotti, J.A., Weber, 
M.A., Willis, K., & Secemsky, E. (2021). Renal denervation in 
hypertension patients: Proceedings from an expert consensus 
roundtable cosponsored by SCAI and NKF. Catheterization & 
Cardiovascular Interventions, 98(3), 416-426. https://doi.org/10.1002/ccd.29884.
    \74\ Swaminathan, R.V., East, C.A., Feldman, D.N., Fisher, N.D., 
Garasic, J.M., Giri, J.S., Kandzari, D.E., Kirtane, A.J., Klein, A., 
Kobayashi, T., Koenig, G., Li, J., Secemsky, E., Townsend, R.R., & 
Aronow, H.D. (2023). SCAI Position Statement on Renal Denervation 
for Hypertension: Patient Selection, Operator Competence, Training 
and Techniques, and Organizational Recommendations. Journal of the 
Society for Cardiovascular Angiography & Interventions, 2(6), 
101121. https://doi.org/10.1016/j.jscai.2023.101121.
    \75\ Mancia, G., Kreutz, R., Brunstr[ouml]m, M., Burnier, M., 
Grassi, G., Januszewicz, A., Muiesan, M.L., Tsioufis, K., Agabiti-
Rosei, E., Algharably, E.A.E., Azizi, M., Benetos, A., Borghi, C., 
Hitij, J.B., Cifkova, R., Coca, A., Cornelissen, V., Cruickshank, 
J.K., Cunha, P.G., Danser, A.H.J., Pinho, R.M., Delles, C., 
Dominiczak, A.F., Dorobantu, M., Doumas, M., Fern[aacute]ndez-
Alfonso, M.S., Halimi, J.M., J[aacute]rai, Z., Jelakovi[cacute], B., 
Jordan, J., Kuznetsova, T., Laurent, S., Lovic, D., Lurbe, E., 
Mahfoud, F., Manolis, A., Miglinas, M., Narkiewicz, K., Niiranen, 
T., Palatini, P., Parati, G., Pathak, A., Persu, A., Polonia, J., 
Redon, J., Sarafidis, P., Schmieder, R., Spronck, B., Stabouli, S., 
Stergiou, G., Taddei, S., Thomopoulos, C., Tomaszewski, M., Van de 
Borne, P., Wanner, C., Weber, T., Williams, B., Zhang, Z.Y., & 
Kjeldsen, SE (2023). 2023 ESH Guidelines for the management of 
arterial hypertension: The Task Force for the management of arterial 
hypertension of the European Society of Hypertension. Journal of 
Hypertension, 41(12), 1874-2071. https://doi.org/10.1097/HJH.0000000000003480.
    \76\ Barbato, E., Azizi, M., Schmieder, R.E., Lauder, L., 
B[ouml]hm, M., Brouwers, S., Bruno, R.M., Dudek, D., Kahan, T., 
Kandzari, D.E., L[uuml]scher, T.F., Parati, G., Pathak, A., 
Ribichini, F.L., Schlaich, M.P., Sharp, A.S.P., Sudano, I., Volpe, 
M., Tsioufis, C., Wijns, W., & Mahfoud, F. (2023). Renal denervation 
in the management of hypertension in adults. A clinical consensus 
statement of the ESC Council on Hypertension and the European 
Association of Percutaneous Cardiovascular Interventions (EAPCI). 
European Heart Journal, 44(15), 1313-1330. https://doi.org/10.1093/eurheartj/ehad054.
---------------------------------------------------------------------------

    Response: As commenters stated, we have established precedent for 
creating both broad and distinct device categories for similar 
technologies. In fact, there have been many scenarios is which we have 
established distinct device categories to differentiate between various 
neurostimulators, electrophysiology catheters, and ablation modalities 
to ensure that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect due as required by Sec.  419.66(c)(1). We 
agree with the SymplicityTM Spryal RDN System applicant that 
the establishment of device categories requires a nuanced approach, and 
that CMS must assess each situation on a case-by-case basis in 
accordance with established policy. We believe that we have followed 
not only our established policy, but our precedent in our evaluation of 
the device category code determination for the two nominated RDN 
devices. We agree with commenters that this situation with respect to 
the Paradise[supreg] Ultrasound RDN System and the 
SymplicityTM Spryal RDN System is similar to the examples 
presented.
    The SymplicityTM Spryal RDN System applicant noted that 
manufacturers may gain FDA authorization for other RDN devices with 
various device characteristics employing either ultrasound or 
radiofrequency RDN and establishing device category codes that are 
device characteristic specific, like the code descriptor proposed by 
the Paradise[supreg] Ultrasound RDN System applicant. This, according 
to the SymplicityTM Spryal RDN System applicant, would 
establish a framework in which different iterations of RDN technology 
could be considered new by virtue of their brand-specific 
characteristics. We acknowledge that concern and agree that the device 
category codes established for the nominated devices should not 
typically be differentiated by the specific device characteristics, 
rather, consistent with the options in the proposed rule, we believe 
that in this instance the device pass-through payment device categories 
should be modality-specific.
    With respect to a comment on the September 2023 AMA CPT[supreg] 
Editorial Panel meeting, where the SymplicityTM Spryal RDN 
System applicant stated that a request for a CPT[supreg] code specific 
to an energy modality ultrasound RDN procedure was ultimately rejected, 
as of the date this final rule with comment period is issued, we are 
not aware of any decision made by the AMA CPT[supreg] Editorial Panel 
regarding this issue.
    Comment: The Paradise[supreg] Ultrasound RDN System applicant and 
many commenters also stated creating two categories may facilitate 
tracking modality-specific efficacy data and shared their belief that 
having the ability to identify and track which RDN device modality 
Medicare patients receive via claims data may be beneficial for CMS in 
the future.
    The Symplicity SpyralTM RDN System applicant stated that 
tracking efficacy data for the two devices is beyond the fundamental 
purpose of establishing device categories and should not be a primary 
consideration.
    Response: In response to comments on tracking of long-term efficacy 
data for the nominated devices, while we note that collecting long-term 
efficacy data is always a priority of CMS and other interested parties, 
we agree with the Symplicity SpyralTM RDN System applicant 
that we do not believe the tracking of long-term efficacy is a 
fundamental purpose of establishing

[[Page 94174]]

device category codes, as such, we did not consider this topic in our 
final decision.
    We thank the commenters for their feedback and took into account 
all of the points raised in our final decision.
    Comment: The applicant for the Symplicity SpyralTM RDN 
System, Medtronic, submitted another application for its device, 
PulseSelectTM, for transitional pass-through payment during 
CY 2025. The proposed rule stated that PulseSelectTM is used 
to achieve catheter ablation to treat atrial fibrillation, and thus, 
could be appropriately described by C1733. The Symplicity 
SpyralTM RDN System applicant stated that the 
PulseSelectTM application involved the interpretation of an 
existing device category description, but the applicant stated CMS's 
conclusion for that application is consistent with the logic for 
establishing a single device category to describe the two RDN devices. 
Following the publication of the proposed rule, the applicant withdrew 
its application for transitional pass-through payment for 
PulseSelectTM.
    Response: With respect to the application for the 
PulseSelectTM included in the CY 2025 notice of proposed 
rulemaking, we note that we invited comment on whether the 
PulseSelectTM PFA System was described by C1733 (89 FR 59310 
through 59311). We noted that based on the description the applicant 
provided, the PulseSelectTM PFA System is used to achieve 
catheter ablation to treat atrial fibrillation, and thus could be 
appropriately described by C1733. However, because the application was 
withdrawn prior to making a final determination on the device category 
criterion at Sec.  419.66(c)(1), we are unable to address whether we 
would have ultimately determined that the PulseSelectTM PFA 
System was described by C1733.
    We thank both applicants and the many commenters for their input. 
We note that we received overwhelming support in favor of establishing 
two device category codes to reflect the nominated devices. After 
review of the applications and the comments we received, we agree with 
majority of the commenters that we should establish two pass-through 
payment device categories. We believe that there are procedural 
differences and potential resource requirement differences between the 
two treatment modalities that warrant separate device categories. In 
addition, we believe that the circumstances presented by the nominated 
devices are sufficiently similar to the previous scenarios in which we 
established device category codes to differentiate similar devices with 
different modalities. However, we disagree with the suggestion that the 
device category codes should be specific to the physical device 
characteristics rather than modality-specific device categories. As 
such, consistent with our proposal and our final determination to 
approve both the Paradise[supreg] Ultrasound RDN System and the 
Symplicity SpyralTM RDN System for device pass-through 
payment status effective January 1, 2025, we are finalizing our 
decision to create two modality-specific pass-through payment device 
categories for RDN devices: radiofrequency and ultrasound.
(2) Traditional Device Pass-Through Applications
(a) Ambu[supreg] aScopeTM Gastro
    Ambu Inc. submitted an application for a new device category for 
transitional pass- through payment status for the Ambu[supreg] 
aScopeTM Gastro for CY 2025. Per the applicant, the 
Ambu[supreg] aScopeTM Gastro is a sterile, single-use, 
flexible gastroscope intended to be used for: (1) endoscopic access to 
and examination of the upper gastrointestinal (GI) anatomy; and (2) 
upper GI endoscopy or esophagogastroduodenoscopy (EGD) to diagnose and 
treat problems in the upper GI tract, including dysphagia, 
gastroesophageal reflux disease, narrowing or blockages, esophageal 
varices, inflammation, ulcers, tumors, hiatal hernia, Celiac disease, 
Crohn's disease, and infections of the upper GI tract in adult 
patients.
    According to the applicant, the Ambu[supreg] aScopeTM 
Gastro works with the Ambu[supreg] aBoxTM 2, a compatible, 
reusable displaying unit. The Ambu[supreg] aScopeTM Gastro 
endoscope is inserted into the upper GI anatomy airway through the 
mouth, while the Ambu[supreg] aBoxTM 2 is a non-sterile 
digital monitor intended to display live imaging data from Ambu 
visualization devices. The applicant is only seeking a new device 
category for transitional pass-through payment status for the 
Ambu[supreg] aScopeTM Gastro.
    Please refer to the online application posting for the Ambu[supreg] 
aScopeTM Gastro, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2305305795M, for additional detail 
describing this device and the disease treated by the device.
    Comment: A few commenters expressed general support for the 
application for transitional pass-through payments for the Ambu[supreg] 
aScopeTM Gastro.
    Response: We appreciate the commenters' input and recognize the 
commenters' support for the approval of the Ambu[supreg] 
aScopeTM Gastro for transitional pass-through payment.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on February 3, 2022, the applicant received 510(k) 
clearance from FDA for the Ambu[supreg] aScopeTM Gastro, 
Ambu[supreg] aBoxTM 2, as a sterile, single-use, flexible 
gastroscope intended to be used for endoscopic access to and 
examination of the upper GI anatomy. The Ambu[supreg] 
aScopeTM Gastro is intended to provide visualization via a 
compatible Ambu displaying unit and to be used with endotherapy 
accessories and other ancillary equipment. We received the application 
for a new device category for transitional pass-through payment status 
for the Ambu[supreg] aScopeTM Gastro on May 30, 2023, which 
is within 3 years of the date of the initial FDA marketing 
authorization.
    We invited public comment on whether the Ambu[supreg] 
aScopeTM Gastro meets the newness criterion at Sec.  
419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant reiterated that the Ambu[supreg] 
aScopeTM Gastro meets the newness requirement for 
transitional pass-through payment.
    Response: We appreciate the applicant's input. We received the 
application for a new device category for transitional pass-through 
payment status for the Ambu[supreg] aScopeTM Gastro on May 
30, 2023, which is within 3 years of February 3, 2022, the date of FDA 
510(k) approval to market for the Ambu[supreg] aScopeTM 
Gastro. As such we have concluded that the Ambu[supreg] 
aScopeTM Gastro meets the newness criterion.
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether the Ambu[supreg] 
aScopeTM Gastro is integral to the service furnished. The 
applicant stated that the device was single-use and is intended to be 
used with one patient only. We noted that the Ambu[supreg] 
aScopeTM Gastro, based on the device description provided by 
the applicant and the evidence provided in support of the substantial 
clinical improvement as discussed in detail in the Sec.  419.66(c)(2) 
analysis in this

[[Page 94175]]

application summary write-up, explicitly provides that the nominated 
device is intended to be used on one patient, for a single procedure 
and then disposed of. As such, we noted that our evaluation and final 
decision as it relates to this potential category of devices 
(gastroscopes) would be based on the understanding that devices 
included in this device category (gastroscopes) can only be used for a 
single procedure, on a single patient, and cannot be reprocessed. While 
the applicant did not explicitly state whether the device comes in 
contact with human tissue or is surgically inserted, per the device 
description, the Ambu[supreg] aScopeTM Gastro is a flexible 
gastroscope intended to be used for endoscopic access to and 
examination of the upper GI anatomy.
    We invited public comment on whether the Ambu[supreg] 
aScopeTM Gastro meets the eligibility criterion at Sec.  
419.66(b)(3).
    Comment: With respect to the eligibility criterion at Sec.  
419.66(b)(3), the applicant submitted a comment confirming that the 
Ambu[supreg] aScopeTM Gastro is used for one patient only, 
does come in contact with human tissue, and is surgically inserted 
during applicable procedures, and that the Ambu[supreg] 
aScopeTM Gastro is a device that is an integral part of the 
service furnished.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the Ambu[supreg] aScopeTM Gastro is an 
integral part of the service furnished, used for one patient only, 
comes in contact with human tissue, and is surgically inserted. After 
consideration of the public comment received and based on our review of 
the application, we have determined that the Ambu[supreg] 
aScopeTM Gastro meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant indicated that the Ambu[supreg] 
aScopeTM Gastro is single-use equipment, not intended for 
use in multiple patients, for which depreciation and financing expenses 
are not recovered. The applicant explained that the Ambu[supreg] 
aScopeTM Gastro is purely an operating cost and is not 
subject to capitalization or a depreciation schedule.
    We noted that the applicant stated in the application that the 
Ambu[supreg] aScopeTM Gastro is a supply furnished incident 
to a service rendered, as described, the Ambu[supreg] 
aScopeTM Gastro would be considered a supply or material 
furnished incident to a service and excluded from device pass-through 
payment eligibility under Sec.  419.66(b)(4).
    We invited public comment on whether the Ambu[supreg] 
aScopeTM Gastro meets the exclusion criterion at Sec.  
419.66(b)(4).
    Comment: The applicant submitted a comment clarifying that the 
Ambu[supreg] aScopeTM Gastro is not a material or supply 
furnished incident to the service and meets the eligibility criterion 
at Sec.  419.66(b)(4) because it must be purchased for each patient and 
is a device that is integral to the procedure. The applicant reiterated 
that as a single-use scope, it is not subject to capital equipment 
depreciation schedules.
    Response: We appreciate the applicant's input. We agree with the 
applicant that the Ambu[supreg] aScopeTM Gastro is not a 
material or supply furnished incident to the service because it is 
single-use equipment, not intended for use in multiple patients, for 
which depreciation and financing expenses are not recovered. In 
addition, we agree that the Ambu[supreg] aScopeTM Gastro is 
not a material or supply furnished incident to the service. After 
consideration of the public comment received and our review of the 
application, we have determined that the Ambu[supreg] 
aScopeTM Gastro meets the eligibility criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determine that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. Per the applicant, the 
Ambu[supreg] aScopeTM Gastro is a sterile, single-use, 
flexible, imaging/illumination gastroscope device that uses an 
integrated camera module and built-in dual light-emitting diode (LED) 
illumination to provide access to, illumination, and imaging of the 
upper GI anatomy for diagnostic and therapeutic purposes for a GI 
patient. According to the applicant, no previous or existing device 
categories for pass-through payment appropriately describe the 
Ambu[supreg] aScopeTM Gastro. Per the applicant, the two 
device categories, C1747 (Endoscope, single-use (i.e., disposable), 
urinary tract, imaging/illumination device (insertable)) and C1748 
(Endoscope, single-use (i.e., disposable), upper gastrointestinal tract 
(GI), imaging/illumination device, (insertable)), do not appropriately 
describe the Ambu[supreg] aScopeTM Gastro. Specifically, the 
applicant asserted that the urinary tract scopes described in C1747 are 
not indicated for use in the GI system and therefore, do not 
appropriately describe Ambu[supreg] aScopeTM Gastro. The 
applicant further asserted that while C1748 describes a single-use 
endoscopic device, C1748 is only appropriate for single-use 
duodenoscopes and endoscopic retrograde cholangiopancreatography (ERCP) 
services. While the long descriptor of C1748 describes disposable 
endoscopes with imaging and illumination capabilities intended for use 
in the upper GI and the applicant describes the Ambu[supreg] 
aScopeTM Gastro as a single-use, gastroscope with 
illumination and imaging intended for use in the upper GI anatomy, we 
noted that C1748 only describes single-use duodenoscopes and ERCP 
services. As such, the Ambu[supreg] aScopeTM Gastro is not 
described by C1748.
    We did not identify an existing pass-through payment category that 
describes the Ambu[supreg] aScopeTM Gastro. We invited 
public comment on whether the Ambu[supreg] aScopeTM Gastro 
meets the device category criterion at Sec.  419.66(c)(1).
    Comment: The applicant and a commenter agreed with CMS' assessment 
that there are no existing pass-through payment categories that 
describe the Ambu[supreg] aScopeTM Gastro. The applicant 
submitted a comment with supporting documents reiterating that C1747 
for single-use ureteroscopes and C1748 for single-use duodenoscopes do 
not describe the Ambu[supreg] aScopeTM Gastro because the 
Ambu[supreg] aScopeTM Gastro is a gastroscope and not a 
duodenoscope.\77\ The applicant also submitted a July 2020 CMS Medicare 
Learning Network memorandum (MM11842) as a supporting document to 
confirm that C1748 is specific to ERCP procedures, which does not apply 
to the Ambu[supreg]

[[Page 94176]]

aScopeTM Gastro.\78\ The other commenter indicated that 
endoscopic procedure codes, including those for EGD, were mostly 
created prior to the invention of single-use endoscopes. The commenter 
provided a detailed list of procedure codes for different types of 
endoscopes, including duodenoscopes and gastroscopes, to illustrate the 
differences in their applications. The commenter recommended the 
establishment of a new category to allow reporting specifically for 
gastroscopes, as their indications for use differ from other types of 
endoscopes like duodenoscopes.
---------------------------------------------------------------------------

    \77\ Please see the public posting at [https://www.regulations.gov/document/CMS-2024-0199-0002/comment for a 
complete list of evidence and background documents submitted by the 
applicant during the public comment process. Please note, that as in 
the proposed rule, we do not summarize background documents, which 
are documents that do not support the applicant's assertions.
    \78\ Centers for Medicare & Medicaid Services (2020). MLN 
Matters: July 2020 Update of the Ambulatory Surgical Center (ASC) 
Payment System (HHS-0938-2020-F-6667). U.S. Department of Health and 
Human Services. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/MM11842.pdf.
---------------------------------------------------------------------------

    However, a few other commenters stated that they believed that the 
existing code C1748 appropriately describes the Ambu[supreg] 
aScopeTM Gastro technology. One of the commenters stated 
that this code was established to cover all single-use scopes for upper 
GI procedures, regardless of the camera orientation (forward-facing or 
side-facing). Another commenter noted that C1748 was established in 
2020, following an application from Boston Scientific for its 
EXALTTM Model D Single-Use Duodenoscope.\79\ The commenter 
noted that while the EXALTTM Model D Single-Use Duodenoscope 
is used primarily in ERCP, CMS updated C1748 by assigning additional 
transnasal procedure codes to C1748 to include devices like the EvoEndo 
Model LE Single-Use Gastroscope.\80\ The commenter stated that the 
description of C1748 reflects the use of an upper GI imaging/
illumination device and is not specific only to duodenoscopes.
---------------------------------------------------------------------------

    \79\ Centers for Medicare & Medicaid Services (2020). MLN 
Matters: July 2020 Update of the Ambulatory Surgical Center (ASC) 
Payment System (HHS-0938-2020-F-6667). U.S. Department of Health and 
Human Services. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/MM11842.pdf.
    \80\ Centers for Medicare & Medicaid Services (2020). MLN 
Matters: July 2020 Update of the Ambulatory Surgical Center (ASC) 
Payment System (HHS-0938-2020-F-6667). U.S. Department of Health and 
Human Services. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/MM11842.pdf.
---------------------------------------------------------------------------

    Response: We appreciate the applicant's and commenters' input. We 
agree with the applicant that C1747 does not describe the Ambu[supreg] 
aScopeTM Gastro because C1747 is intended to describe 
devices used in a different anatomical area (the urethra) of the 
patient. With regard to C1748, we continue to believe that C1748 does 
not describe the Ambu[supreg] aScopeTM Gastro because C1748 
describes devices intended to perform ERCP services and limited 
transnasal endoscopy services. Unlike the devices described by C1748, 
according to the description provided by the applicant, the 
Ambu[supreg] aScopeTM Gastro is intended to be used for 
transoral endoscopy and is not indicated for transnasal endoscopy or 
ERCP services. Specifically, while we agree that C1748 describes upper 
GI imaging/illumination devices, which could describe the Ambu[supreg] 
aScopeTM Gastro, C1748 does not include the types of 
procedures that the Ambu[supreg] aScopeTM Gastro can 
perform, such as those described by HCPCS code 43205 (Esophagoscopy, 
flexible, transoral; with bandligation of esophageal varices). We 
acknowledge that a list of procedure codes associated with HCPCS code 
C1748 were updated in 2022 to include transnasal services and were 
assigned to APC 5301 (Level 1 Upper GI Procedures) and APC 5302 (Level 
2 Upper GI Procedures), however, we do not believe that the addition of 
those codes to the codes for which C1748 can be reported describe the 
Ambu[supreg] aScopeTM Gastro because, as previously 
indicated, it is our understanding that the Ambu[supreg] 
aScopeTM Gastro is intended for transoral services only.\81\ 
We note that the EvoEndo [supreg] Model LE Single-use Gastroscope is 
indicated for use both as a transoral and transnasal gastroscope, while 
the Ambu[supreg] aScopeTM Gastro is only indicated for 
transoral use. While we believe the devices are comparable for the 
transoral functions of the devices for the purposes of evaluating 
substantial clinical improvement as discussed below, we do not believe 
that adding a subset of applicable procedure codes to C1748 expanded 
the device category code in such a way that it describes the 
Ambu[supreg] aScopeTM Gastro. After consideration of the 
public comments received and our review of the application, we agree 
that there is no previous or existing pass-through payment category 
that appropriately describes the Ambu[supreg] aScopeTM 
Gastro because no current category appropriately describes a single-
use, transoral gastroscope with illumination and imaging intended for 
use in the upper GI anatomy. Therefore, we have determined that the 
Ambu[supreg] aScopeTM Gastro meets the device eligibility 
criterion at Sec.  419.66(c)(1).
---------------------------------------------------------------------------

    \81\ Centers for Medicare & Medicaid Services (2020). MLN 
Matters: July 2020 Update of the Ambulatory Surgical Center (ASC) 
Payment System (HHS-0938-2020-F-6667). U.S. Department of Health and 
Human Services. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/MM11842.pdf.
---------------------------------------------------------------------------

    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The applicant claimed that the 
Ambu[supreg] aScopeTM Gastro represents a substantial 
clinical improvement over existing technologies in the diagnosis and 
management of endoscopic procedures and examination within the upper GI 
anatomy. The applicant outlined the following areas in which it claimed 
the Ambu[supreg] aScopeTM Gastro would provide a substantial 
clinical improvement: (1) elimination of the risk of cross-
contamination between patients and scopes, (2) elimination of the risk 
of cross-contamination for reusable gastroscopes, (3) elimination of 
the risk of resistant infections that originate from reusable 
gastroscopes, (4) avoidance of scope damage and debris after 
reprocessing, (5) avoidance of damaged and contaminated scopes from 
being used on patients, (6) elimination of the risk of patient-to-
patient infections associated with contaminated scopes, and (7) 
avoidance of infection and death associated with reusable gastroscope 
contamination.
    The applicant provided seven background articles about reusable GI 
endoscopes to support its claims. Table 122 summarizes the applicant's 
assertions regarding the substantial clinical improvement criterion. 
Please see the online posting for the Ambu[supreg] aScopeTM 
Gastro for the applicant's complete statements regarding the 
substantial clinical improvement criterion and the supporting evidence 
provided.
BILLING CODE 4120-01-P

[[Page 94177]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.149

[[Page 94178]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.150

BILLING CODE 4120-01-C
    After review of the information provided by the applicant, we 
stated we had the following concerns regarding whether the Ambu[supreg] 
aScopeTM Gastro meets the substantial clinical improvement 
criterion.
    First, we noted that the applicant identified 11 other devices that 
it believed are most like the Ambu[supreg] aScopeTM Gastro: 
(1) Olympus GIF-HQ 190; (2) Olympus GIF-1TH190; (3) Olympus GIF-H190; 
(4) Olympus GIF-CP190N; (5) Fujifilm EG-760R; (6) Fujifilm EG-760CT; 
(7) Fujifilm EG-760Z; (8) Fujifilm EG-740N; (9) Pentax HD Video 
Gastroscope EG34 i10; (10) Pentax MagniView EG 2990Zi; and (11) Pentax 
G EYE. According to the applicant, these devices are used during the 
same specific procedure(s) and/or services with which the nominated 
device is used. The applicant stated that the nominated device's 
single-use feature is unique among the comparators because its single-
use feature eliminates gastroscope reprocessing. The applicant also 
indicated that there are no HCPCS Level I and/or Level II code(s) used 
to identify these existing devices. While the evidence provided 
demonstrated that the Ambu[supreg] aScopeTM Gastro may be 
different than the other 11 closely related devices, it does not 
provide any comparative data that demonstrates that the Ambu[supreg] 
aScopeTM Gastro offers a substantial clinical improvement 
when compared to the other 11 devices.
    Second, we noted that the nominated device was determined to be 
substantially equivalent to a predicate device: OLYMPUS EVIS EXERA II 
Gastrointestinal Videoscope GIF H180 (K100584). The FDA 510(k) summary 
indicated that both devices share the same technological 
characteristics such as insertion portion length, working channel 
diameter, direction of view and bending angles. We noted that the 
510(k) summary indicated that, unlike the predicate device, the 
Ambu[supreg] aScopeTM Gastro is a sterile, single-use device 
and not intended to be reprocessed. Again, while this demonstrated that 
the Ambu[supreg] aScopeTM Gastro may be different than the 
predicate device, it is unclear whether this difference demonstrates 
substantial clinical improvement. No comparative data demonstrating 
that the Ambu[supreg] aScopeTM Gastro provides a substantial 
clinical improvement when compared to the Olympus EVIS EXERA II 
Gastrointestinal Videoscope GIF-H180 was provided. We stated we would 
be interested in additional information to demonstrate whether the 
nominated device demonstrates a substantial clinical benefit in 
comparison to other existing devices.
    Further, the applicant indicated that while other single-use 
endoscopes are available, there are no known competitive devices on the 
market that are single-use, transoral, and marketed in the U.S. The 
applicant compared the Ambu[supreg] aScopeTM Gastro to the 
following two existing devices: (1) EndoFresh Single-Use Gastroscope; 
and (2) EvoEndo Model LE Single-Use Gastroscope. Specifically, the 
applicant noted that although EndoFresh Single-Use Gastroscope is FDA-
cleared and a similar device that could also become eligible for 
transitional pass-through payment under the proposed additional 
category, it has no commercial activity in the U.S. According to the 
applicant, while EvoEndo[supreg] Model LE Single-Use Gastroscope is 
used during the same specific procedure(s) and/or services as the 
Ambu[supreg] aScopeTM Gastro, the Ambu[supreg] 
aScopeTM Gastro is different

[[Page 94179]]

from EvoEndo[supreg] Model LE Single-Use Gastroscope because the 
Ambu[supreg] aScopeTM Gastro is a transoral scope, not 
transnasal. The applicant also indicated that there are no HCPCS Level 
I and/or Level II code(s) used to identify EvoEndo Model LE Single-Use 
Gastroscope. However, we noted that EvoEndo[supreg] Model LE Single-Use 
Gastroscope is both transoral and transnasal, which is indicated on the 
EvoEndo, Inc.'s website and on its FDA 510(k) clearance letter. We also 
noted that the applicant did not compare the Ambu[supreg] 
aScopeTM Gastro to another single-use, FDA-cleared endoscope 
available on the market--EXALTTM Model D, Single-Use 
Duodenoscope--which we stated that we believe may be similar. We stated 
we were interested in additional information to demonstrate whether the 
nominated device demonstrates a substantial clinical improvement in 
comparison to similar single-use competitive devices such as the 
EvoEndo[supreg] Model LE Single-Use Gastroscope and the 
EXALTTM Model D, Single-Use Duodenoscope. In addition, we 
noted that the applicant's self-sponsored studies, which are background 
articles by Muscarella, L. F. (2022),\82\ Muscarella, L.F. (2023),\83\ 
and Ofstead, et. al. (2022),\84\ lack direct comparison of the 
nominated device to other devices, and do not directly show any 
clinical improvement that results from the use of the nominated device 
compared to the use of other devices. In order to demonstrate 
substantial clinical improvement over currently available treatments, 
we consider supporting evidence, preferably published peer-reviewed 
clinical trials, that shows improved clinical outcomes, such as 
reduction in mortality, complications, subsequent interventions, future 
hospitalizations, recovery time, pain, or a more rapid beneficial 
resolution of the disease process compared to the standard of care. 
Additional supporting evidence, preferably published peer-reviewed 
clinical trials, that shows these improved clinical outcomes would help 
inform our assessment of whether the Ambu[supreg] aScopeTM 
Gastro demonstrates substantial clinical improvement over existing 
technologies.
---------------------------------------------------------------------------

    \82\ Muscarella, L.F. (2022). Contamination of Flexible 
Endoscopes and Associated Infections: A Comprehensive Review and 
Analysis of FDA Adverse Event Reports. LFM Healthcare Solutions, 
LLC. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
    \83\ Muscarella, L.F. (2023). Gastroscopes Have Been Linked to A 
Cluster of Resistant E. coli Infections--Is the Risk Sufficiently 
Recognized? LFM Healthcare Solutions, LLC. https://lfm-hcs.com/2023/01/gastroscopes-have-been-linked-to-a-cluster-of-resistant-e-coli-infections-is-the-risk-sufficiently-recognized/.
    \84\ Ofstead, C.L., Smart, A.G., Hopkins, K.M., & Wetzler, H.P. 
(2023). The utility of lighted magnification and borescopes for 
visual inspection of flexible endoscopes. American Journal of 
Infection Control, 51(1), 2-10. https://doi.org/10.1016/j.ajic.2022.08.026.
---------------------------------------------------------------------------

    Moreover, while the details provided in the application and all the 
articles submitted as evidence of substantial clinical improvement 
discuss potential adverse events from reusable gastroscope procedures, 
they do not appear to directly show any clinical improvement that 
results from the use of the Ambu[supreg] aScopeTM Gastro. 
Rather, the applicant provided evidence which seems to rely on indirect 
inferences from other sources of data. Specifically, the applicant 
included an FDA Manufacturer and User Facility Device Experience 
(MAUDE) report \85\ which provides the details of multiple adverse 
event reports associated with the contamination or suspected 
contamination of reusable gastroscopes but does not directly show any 
clinical improvement that results from the use of the Ambu[supreg] 
aScopeTM Gastro.
---------------------------------------------------------------------------

    \85\ MAUDE Adverse Event Report: AIZU OLYMPUS CO., LTD. EVIS 
EXERA III GASTROINTESTINAL VIDEOSCOPE (fda.gov).
---------------------------------------------------------------------------

    While the applicant claimed that the Ambu[supreg] 
aScopeTM Gastro eliminates cross-contamination associated 
with reusable gastroscopes and eliminates the risk of infections that 
originate from reusable gastroscopes, we stated that we do not believe 
that we have sufficient information on the prevalence of infection to 
evaluate the applicant's substantial clinical improvement claims for 
the Ambu[supreg] aScopeTM Gastro. We noted the analyses on 
adverse event reports and the FDA MAUDE report appear to apply to 
flexible, reprocessed gastroscope or endoscopes, broadly, but not to 
disposable, single-use devices comparable to the nominated 
device.86 87 88 Therefore, we questioned the direct 
relevance of these background articles to the nominated device and the 
applicant's substantial clinical improvement claims. Further, we noted 
that many of the applicant's substantial clinical improvement claims 
rely on an assumption that inadequate reprocessing of reusable 
endoscopes is positively correlated with heightened risk of infection. 
We noted that the applicant's self-sponsored analyses of FDA adverse 
event reports and studies and the FDA MAUDE report do not provide 
evidence on the prevalence of infection, establish a clear relationship 
between infection risk and reprocessing procedures, or substantiate 
that single-use disposable scopes, or the nominated device 
specifically, would be a substantial clinical improvement over 
currently available devices.89 90 91 92 We stated that we 
would be interested in more information on the prevalence of infection 
due to incomplete/inadequate processing for gastroscopes in the U.S. 
and whether single-use gastroscopes reduce the infection rate in 
patients to identify the extent of the problem with existing 
technologies.
---------------------------------------------------------------------------

    \86\ Muscarella, L.F. (2022). Contamination of Flexible 
Endoscopes and Associated Infections: A Comprehensive Review and 
Analysis of FDA Adverse Event Reports. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
    \87\ Muscarella, L.F. (2023). Gastroscopes Have Been Linked to A 
Cluster of Resistant E. coli Infections--Is the Risk Sufficiently 
Recognized? https://lfm-hcs.com/2023/01/gastroscopes-have-been-linked-to-a-cluster-of-resistant-e-coli-infections-is-the-risk-sufficiently-recognized/.
    \88\ MAUDE Adverse Event Report: AIZU OLYMPUS CO., LTD. EVIS 
EXERA III GASTROINTESTINAL VIDEOSCOPE (fda.gov).
    \89\ Muscarella, L.F. (2022). Contamination of Flexible 
Endoscopes and Associated Infections: A Comprehensive Review and 
Analysis of FDA Adverse Event Reports. https://lfm-hcs.com/2022/01/contamination-of-flexible-endoscopes-and-associated-infections/.
    \90\ Muscarella, L.F. (2023). Gastroscopes Have Been Linked to A 
Cluster of Resistant E. coli Infections--Is the Risk Sufficiently 
Recognized? https://lfm-hcs.com/2023/01/gastroscopes-have-been-linked-to-a-cluster-of-resistant-e-coli-infections-is-the-risk-sufficiently-recognized/.
    \91\ Ofstead, C.L., Smart, A.G., Hopkins, K.M., & Wetzler, H.P. 
(2023). The utility of lighted magnification and borescopes for 
visual inspection of flexible endoscopes. American Journal of 
Infection Control, 51(1), 2-10.
    \92\ MAUDE Adverse Event Report: AIZU OLYMPUS CO., LTD. EVIS 
EXERA III GASTROINTESTINAL VIDEOSCOPE (fda.gov).
---------------------------------------------------------------------------

    We invited public comment on whether the Ambu[supreg] 
aScopeTM Gastro meets the device category criterion at Sec.  
419.66(c)(2).
    Comment: In response to our concerns that the Ambu[supreg] 
aScopeTM Gastro lacked comparative data demonstrating 
substantial clinical improvement compared to other available 
treatments, the applicant submitted a comment along with a multitude of 
articles and background documents.\93\ The applicant submitted these 
documents as evidence to support the claim that the Ambu[supreg] 
aScopeTM Gastro is as a single-use device which offers 
substantial clinical improvements compared to reusable gastroscopes by 
eliminating infection risks and ensuring consistent functionality, 
which they assert are significant issues with reusable gastroscopes. 
The applicant stated that the Ambu[supreg] aScopeTM Gastro 
reduces infection risks and ensures consistent functionality. To 
support this claim, the applicant cited over 10,000

[[Page 94180]]

Manufacturer and User Facility Device Experience (MAUDE) adverse event 
database reports for reusable scopes since May 2023 that include 1,500 
related to contamination issues. The applicant noted that none of the 
MAUDE reports include adverse event reports for the Ambu[supreg] 
aScopeTM Gastro. In addition, the applicant referenced 
studies showing problems with reusable scopes, such as inadequate 
cleaning and performance degradation.94 95 96 97 98 The 
applicant claimed that single-use scopes could be used in various 
settings without reprocessing delays, potentially expanding access to 
care. Although no specific studies on the Ambu[supreg] 
aScopeTM Gastro's impact on patient throughput exist, the 
applicant cited research on other single-use scopes indicating 
increased efficiency and reduced wait times, suggesting similar 
benefits.99 100 101 In response to our concern about the 
lack of information identifying the extent of the problem with existing 
technologies, including the prevalence of infection due to incomplete 
and/or inadequate processing for gastroscopes in the U.S., and whether 
single-use gastroscopes reduce the infection rate in patients, the 
applicant stated that contamination issues are primarily relevant to 
reusable gastroscopes due to their complex reprocessing requirements, 
which are prone to human error and design flaws. The applicant 
referenced the studies and MAUDE reports again, reiterating that they 
show significant contamination rates and adverse events for reusable 
gastroscopes.102 103 The applicant indicated that one study 
found a 19.98 percent contamination rate in reprocessed endoscopes. The 
applicant argued that single-use devices, like the Ambu[supreg] 
aScopeTM Gastro, eliminate cross-contamination risks, and 
noted there have been no MAUDE reports including the Ambu[supreg] 
aScopeTM Gastro.\104\ The applicant anticipated that FDA 
might recommend single-use gastroscopes, citing severe infections 
linked to reusable ones, including deaths from Escherichia coli (E. 
coli) and Carbapenem-resistant Enterobacteriaceae (CRE). The applicant 
emphasized that single-use gastroscopes would particularly benefit 
immunosuppressed patients by eliminating these risks.
---------------------------------------------------------------------------

    \93\ Please see the public posting at https://www.regulations.gov/document/CMS-2024-0199-0002/comment for a 
complete list of background documents submitted [by the applicant] 
during the public comment process.
    \94\ Haislip, I., Hoffman, D., Dehlholm-Lambertsen, E., & Cool, 
C. (20223) Single-Use Vs Reusable Endoscope Reprocessing: A Staff 
Survey on Safety and Effectiveness. Value in Health, 26(12): S434. 
https://doi.org/10.1016/j.jval.2023.09.227.
    \95\ Hoffman, D. & Cool, C. (2024). Gastrointestinal Endoscopy 
Volume, Efficiency, And Safety Issues: A Case Report. Ambu USA. 
https://www.ambuusa.com/Files/Files/Downloads/Ambu%20USA/Gastrointestinal-endoscopy-volume_-efficiency_-and-safety-issues-a-case-report-poster.pdf.
    \96\ Wallace, M.M., Keck, T., Dixon, H., & Yassin, M. (2025). 
Borescope examination and microbial culture results of endoscopes in 
a tertiary care hospital led to changes in storage protocols to 
improve patient safety. American Journal of Infection Control, 
51(4): 361-366. https://doi.org/10.1016/j.ajic.2022.09.009.
    \97\ Ofstead, C.L., Smart, A.G., Hopkins, K.M., & Wetzler, H.P. 
(2022). The utility of lighted magnification and borescopes for 
visual inspection of flexible endoscopes. American Journal of 
Infection Control, (22)00660-5. https://doi.org/10.1016/j.ajic.2022.08.026.
    \98\ Billy, H. & Pradhan, S. (2024). Superior Backward 
Articulation in Disposable Gastroscopes versus Reusable 
Gastroscopes. Surgery for Obesity and Related Diseases, 20(6): S136. 
https://doi.org/10.1016/j.soard.2024.04.426.
    \99\ Johnson, B.A., Raman, J.D., Best, S.L., & Lotan, Y. (2023). 
Prospective Randomized Trial of Single-Use vs Reusable Cystoscope 
for Ureteral Stent Removal. Journal of Endourology, 37(10): 1139-
1144. https://doi.org/10.1089/end.2023.0134.
    \100\ G[ouml]ger, Y.E., [Ouml]zkent, M.S., 
K[inodot]l[inodot]n[ccedil] M.T., Ta[scedil]kapu, H.H., G[ouml]ger, 
E., Ayd[inodot]n, A., S[ouml]nmez, M.G., & Karalezli, G. (2021). 
Efficiency of retrograde intrarenal surgery in lower pole stones: 
disposable flexible ureterorenoscope or reusable flexible 
ureterorenoscope? World Journal of Urology, 39(9): 3643-3650. 
https://doi.org/10.1007/s00345-021-03656-y.
    \101\ Bowen, A.J., Macielak, R.J., Fussell, W., Yeakel, S., 
McMillan, R., Goates, A, Awadallah, A., & Ekbom, DC (2024). Single-
use versus reusable rhinolaryngoscopes for inpatient 
otorhinolaryngology consults: Resident and patient experience. 
Laryngoscope: Investigative Otolaryngology, 9(1): e1203. https://doi.org/10.1002/lio2.1203.
    \102\ Wallace, M.M., Keck, T., Dixon, H., & Yassin, M. (2025). 
Borescope examination and microbial culture results of endoscopes in 
a tertiary care hospital led to changes in storage protocols to 
improve patient safety. American Journal of Infection Control, 
51(4): 361-366. https://doi.org/10.1016/j.ajic.2022.09.009.
    \103\ Goyal, H., Larsen, S., Perisetti, A., Larsen, N.B., 
Ockert, L.K., Adamsen, S., Tharian, B., & Thosani, N. (2002). 
Gastrointestinal endoscope contamination rates--elevators are not 
only to blame: a systematic review and meta-analysis. Endoscopy: 
International Open, 10(06): E840-E853. https://doi.org/10.1055/a-1795-8883.
    \104\ Goyal, H., Larsen, S., Perisetti, A., Larsen, N.B., 
Ockert, L.K., Adamsen, S., Tharian, B., & Thosani, N. (2002). 
Gastrointestinal endoscope contamination rates--elevators are not 
only to blame: a systematic review and meta-analysis. Endoscopy: 
International Open, 10(06): E840-E853. https://doi.org/10.1055/a-1795-8883.
---------------------------------------------------------------------------

    In response to our concern about the lack of comparative data 
demonstrating that the Ambu[supreg] aScopeTM Gastro provides 
substantial clinical improvement over the OLYMPUS EVIS EXERA II 
Gastrointestinal Videoscope GIF H180, the applicant submitted a study 
by Billy, et al. (2024), conducted at a Community Memorial Health 
Systems-Ventura, CA's endoscopic GI lab, that examined the difference 
in the degrees of retroflexion articulation achieved between an 
inventory of reusable diagnostic gastroscopes (RUDG: OLYMPUS GIF-HQ190 
& H190) compared to that of two, single-use diagnostic gastroscopes 
(SUDG: Ambu[supreg] aScopeTM Gastro).\105\ Per the 
applicant, the study demonstrated that the Ambu[supreg] 
aScopeTM Gastro has superior retroflexion compared to the 
OLYMPUS GIF-HQ190. The applicant believed that this is significant 
because articulation is crucial for the procedures these devices 
perform and reduced effectiveness in RUDGs can hinder optimal patient 
care.
---------------------------------------------------------------------------

    \105\ Billy, H. & Pradhan, S. (2024). Superior Backward 
Articulation in Disposable Gastroscopes versus Reusable 
Gastroscopes. Surgery for Obesity and Related Diseases, 2 0(6): 
S136. https://doi.org/10.1016/j.soard.2024.04.426.
---------------------------------------------------------------------------

    However, one commenter stated that the applicant has not 
demonstrated substantial clinical improvement over existing 
technologies. The commenter stated that FDA clearance for the 
Ambu[supreg] aScopeTM Gastro is based on equivalence to the 
earlier generation Olympus EVIS Exera II model 180 series. The 
commenter believed that the applicant has not provided comparative 
clinical documentation to support its claim.
    In response to our concern about the lack of information 
demonstrating substantial clinical improvement with the use of the 
Ambu[supreg] aScopeTM Gastro device compared to similar 
single-use competitive devices, such as the EXALTTM Model D, 
Single-Use Duodenoscope and the EvoEndo Model LE Single-Use 
Gastroscope, the applicant submitted a comment asserting that there are 
key differences between the Ambu[supreg] aScopeTM Gastro and 
the EXALTTM Model D Single-Use Duodenoscope and the EvoEndo 
Model LE Single-Use Gastroscope. The applicant stated that the 
Ambu[supreg] aScopeTM Gastro cannot be compared to the 
EXALTTM Model D because it is not indicated for ERCP 
procedures. The applicant noted that, compared to the EvoEndo Model LE 
Single-Use Gastroscope, the Ambu[supreg] aScopeTM Gastro has 
a larger working channel (2.8 mm vs. 2.0 mm), allowing for more 
endoscopic accessories and broader capabilities. The applicant also 
claimed that while the EvoEndo[supreg] Model LE Single-Use Gastroscope 
can perform some of the same procedures, it is limited compared to the 
Ambu[supreg] aScopeTM Gastro, which can perform 30 HCPCS 
procedures versus 10 for the EvoEndo[supreg] Model LE Single-Use 
Gastroscope.
    A commenter agreed with CMS, noting that the EvoEndo[supreg] Model 
LE Single-Use Gastroscope is for both transoral and transnasal use, as 
stated on EvoEndo[supreg] Model LE Single-Use Gastroscope website and 
its FDA 510(k) clearance summary. The commenter highlighted 
similarities in FDA clearances between the Ambu[supreg]

[[Page 94181]]

aScopeTM Gastro and the EvoEndo[supreg] Model LE Single-Use 
Gastroscope and noted that the applicant has not shown substantial 
clinical improvement of the nominated device over this existing device.
    To bolster its claims that single-use gastroscopes have improved 
outcomes compared to reusable gastroscopes, the applicant submitted 
background articles and other documents about the potential adverse 
events from reusable gastroscope procedures as well as from other 
reusable types of endoscopes for different anatomy (e.g., 
bronchoscopy). Many commenters noted numerous challenges and risks 
associated with the reprocessing of reusable endoscopes, emphasizing 
the need for single-use alternatives like the Ambu[supreg] 
aScopeTM Gastro to improve patient safety. A few commenters 
pointed out that delays in reprocessing due to staffing shortages, 
union-related issues, and the need to transport scopes across hospitals 
are common. Several commenters stated that the cleaning process for 
endoscopes involves many complex steps, making the cleaning process 
prone to human error and creating difficulty in training staff 
effectively. One commenter stated that despite proper education, human 
error remains a significant barrier to successful reprocessing with 
observations of missed steps and shortcuts due to assumptions or 
mimicking others. A few commenters further explained that inadequate 
training and preparation, especially during after-hours procedures, 
contribute to poor cleaning practices and increased infection risks. 
Several commenters further noted that continuous cleaning without 
breaks due to staff shortages and high demand increases the likelihood 
of errors.
    Many commenters identified specific reprocessing gaps, including 
blood dripping from reprocessed scopes, improper handling of 
Creutzfeldt-Jakob Disease (CJD) cases, non-compliance with cleaning 
guidelines, and failed competencies among reprocessing technicians. One 
commenter indicated that problems with automatic preprocessors, 
inconsistent reprocessing locations, and confusion over Automated 
Endoscope Reprocessors (AERs) filters add to the complexity and risk. 
One commenter stated that there is a positive correlation between 
inadequate reprocessing and increased infection risk. Specifically, the 
commenter asserted that single-use gastroscopes eliminate this risk, 
providing a higher standard of care. The commenter cited several FDA 
reports and peer-reviewed studies asserting that they link reusable 
gastroscopes to infections and outbreaks, thereby supporting the need 
for single-use alternatives. The commenter acknowledged that linking or 
associating a reusable gastroscope with an infection or outbreak does 
not confirm the gastroscope transmitted or otherwise caused the 
infection, as one or more other factors could be, in part or solely, 
responsible. The commenter suggested more data would be required to 
conclude more definitively that the endoscope caused an infection. The 
commenter also acknowledged that FDA's MAUDE database has limitations 
and that its housed adverse event reports may be incomplete, 
inaccurate, untimely, unverified, or biased.
    The applicant and several commenters advocated for the adoption of 
disposable gastroscopes, such as the Ambu[supreg] aScopeTM 
Gastro in healthcare settings, emphasizing their benefits in terms of 
efficiency, patient safety, and cost-effectiveness. Several commenters 
stated that single-use gastroscopes are always ready for use, 
eliminating delays caused by the need to reprocess reusable scopes 
because they can be set up quickly, facilitating continuous care, 
especially in critical situations. Multiple commenters stated that 
single-use gastroscopes eliminate the risk of cross-infection 
associated with reusable scopes, which can remain contaminated even 
after reprocessing. One commenter indicated that sterile single-use 
devices lower the infection risk for patients with compromised immune 
systems. Another commenter provided a scenario in which single-use 
gastroscopes are crucial for patients with diseases like CJD, where 
reusable scopes might need to be destroyed. Several commenters pointed 
out that single-use gastroscopes remove the financial and logistical 
burdens associated with reprocessing, sampling, culturing, and 
infection surveillance. One commenter considered the single-use 
gastroscopes serve as a bridge when reusable scopes are out for repair, 
ensuring uninterrupted patient care. Several commenters stated that the 
single-use scopes provide consistent performance as they are used only 
once, avoiding issues related to scope degradation. One commenter 
believed that single-use scopes can incorporate rapid design 
improvements, enhancing their clinical capabilities.
    Response: We appreciate the applicant's and commenters' input and 
insights on efficiency, patient safety, and cost-effectiveness. 
However, we wish to reiterate the statement we made in CY 2024 (88 FR 
81736) where we encouraged applicants to submit all relevant supporting 
evidence with their device pass-through application to allow us to 
adequately evaluate and include the data in the notice of proposed 
rulemaking. Further, we note that the information submitted by the 
applicant in support of its CY 2025 application during the comment 
period did not appear to provide information that demonstrates that the 
use of the Ambu[supreg] aScopeTM Gastro improves clinical 
outcomes when compared to the use of similar reusable or single-use 
gastroscope devices. In order to evaluate substantial clinical 
improvement over currently available treatments to meet the 
transitional pass-through payment criterion at Sec.  419.66(c)(2), we 
consider supporting evidence, preferably published peer-reviewed 
clinical trials, that demonstrates improved clinical outcomes, such as 
reduction in mortality, complications, subsequent interventions, future 
hospitalizations, recovery time, pain, or a more rapid beneficial 
resolution of the disease process comparing the nominated device to the 
standard of care.
    Based on the information provided and our review, we note that the 
Ambu[supreg] aScopeTM Gastro and the EvoEndo Model LE Single 
Use Gastroscope do perform at least 10 of the same procedures. We 
remain concerned with the lack of evidence comparing these devices' 
respective clinical outcomes. We further note that the applicant 
referenced the study by Billy, et al (2024), which compared the 
nominated device against OLYMPUS EVIS EXERA III GIF-HQ190, not the 
predicate device, OLYMPUS EVIS EXERA II Gastrointestinal Videoscope GIF 
H180 for retroflexion articulation (not clinical outcome). We also note 
that the Billy, et al. (2024) article is not a peer-reviewed 
publication and does not provide evidence of the Ambu[supreg] 
aScopeTM Gastro's clinical improvement compared to other 
single-use gastroscopes. In addition to this study, the applicant 
submitted numerous background articles; however, these articles did not 
include evidence that demonstrated or supported the Ambu[supreg] 
aScopeTM Gastro's substantial clinical improvement compared 
to other single-use gastroscopes. We also have concerns regarding the 
submitted articles' relevance and appropriateness. For example, we have 
concerns about the validity of the findings in the Haislip, et al. 
(2023) poster submitted as evidence by the applicant because it lacks a 
full description of the methods, and it is unknown where it was 
presented and the extent to which it was peer reviewed for the validity 
of its findings. In the Tomlinson publication, which primarily

[[Page 94182]]

discusses the complexity of Instructions For Use (IFUs) for noncritical 
devices but not semi-critical devices like endoscopes that require 
high-level disinfection, we note that the problematic IFUs mentioned 
pertain to physical therapy and ophthalmology, not endoscopy.\106\ As 
such, we question the relevancy of the submitted materials and do not 
believe that the information provided supported the applicants claims 
of substantial clinical improvement.
---------------------------------------------------------------------------

    \106\ Tomlinson L, Halipern N, Alexander M, Townsend S, 
Zabriskie K, Luper L. Modernizing Medical Device Instructions for 
Use (IFUs): Infection Preventionists Speak Up for Patient Safety. 
APIC_Modernizing-Medical-Device-IFUs_5_16_24.pdf (sdapic.org).
---------------------------------------------------------------------------

    Based on our review of the extensive MAUDE reports provided by one 
of the commenters, we found that the vast majority did not conclusively 
link reusable gastroscopes to infections and those with proven or 
highly likely cross-contamination were few in number. We also note that 
the references provided by the commenter were about bronchoscopes and 
duodenoscopes, which are different anatomical areas that may be more 
vulnerable to infection.
    Comment: The applicant and a commenter urged CMS to follow 
precedents set with Uretero1, aScope5 Broncho HD, and other single-use 
endoscopes and to approve the Ambu[supreg] aScopeTM Gastro 
for transitional pass-through payment status. The applicant argued that 
the existing evidence is consistent with the level of evidence provided 
for previously approved single-use endoscopes like Uretero1 and aScope 
5 Broncho HD.
    Response: We appreciate the applicant's and commenter's input. We 
evaluate documentation submitted for each application as it applies to 
that specific device. Due to inherent differences in the devices 
themselves and/or the supporting documentation submitted, we may have 
different concerns. In addition, we are not precluded from evaluating 
and expressing concerns regarding documentation submitted with an 
application because we have evaluated the document as part of a 
previous application. We approved the Uretero1 and the aScope5 Broncho 
HD applications for device pass-through status because the applicants 
submitted documentation of studies that directly demonstrated the 
nominated device's improved clinical outcomes compared to other 
devices. We do not believe that the applicant has submitted 
documentation that demonstrates a substantial clinical improvement with 
use of the Ambu[supreg] aScopeTM Gastro compared to the use 
of other comparable devices.
    Comment: In regard to our concern about using other sources of data 
and relying on indirect inferences as evidence, the applicant commented 
that we should call our attention to the volumes of literature 
concerning reprocessing issues. The applicant shared MAUDE reports to 
show that reusable devices have had outbreaks, while disposable 
gastroscopes, like the Ambu[supreg] aScopeTM Gastro, have 
not. The applicant also noted a pattern of FDA advisories and 
subsequent CMS approvals for single-use endoscopes (single-use aScope 5 
Broncho HD) suggesting that single-use gastroscopes offer substantial 
clinical improvements. Additionally, the applicant argued that single-
use gastroscopes enhance availability and access to care, especially 
during equipment failures or staffing shortages.
    In response to our concern about lack of studies that directly 
compare the Ambu[supreg] aScopeTM Gastro device to other 
single-use devices, the applicant argued that due to the nature and 
relative newness of single-use endoscopes, extensive data is not yet 
available on the Ambu[supreg] aScopeTM Gastro device 
specifically. The applicant emphasized reprocessing issues, submitting 
reports documenting challenges and risks, including bacterial 
transmission, even with meticulous adherence to instructions. The 
applicant further argued that conducting a full-scale randomized trial 
comparing single-use and reusable gastroscopes would be time-
prohibitive. The applicant again cited the study by Billy, et al (2024) 
showing superior retroflexion of single-use devices over reusable ones. 
The applicant emphasized the sterile nature of the Ambu[supreg] 
aScopeTM Gastro, eliminating infection risks associated with 
reprocessing reusable devices. The applicant reiterated that single-use 
endoscopes save time, improve morale, and reduce reprocessing risks, 
leading to increased patient throughput and reduced wait times, 
demonstrating clinical improvements over reusable options.
    Response: We thank the applicant for its input. However, we 
continue to have concerns about the studies and evidence submitted, as 
most of these are background articles that do not directly assess, 
evaluate, or review the Ambu[supreg] aScopeTM Gastro. When 
there are currently available treatment options for a patient 
population (as is the case for the Ambu[supreg] aScopeTM 
Gastro), substantial clinical improvement is demonstrated when the 
candidate device demonstrates significantly improved clinical outcomes 
compared to the currently available treatments.\107\ In this context, 
the submitted evidence in support of the Ambu[supreg] 
aScopeTM Gastro's substantial clinical improvement must 
demonstrate that Ambu[supreg] aScopeTM Gastro results in 
substantial clinical improvement when compared to available reusable 
and single-use devices for the treatment of the patient population. 
Inferences that the device may improve clinical outcomes because it may 
obviate complications associated with other available treatments are 
insufficient to demonstrate substantial clinical improvement. 
Therefore, the inferences derived from submitted evidence, including 
analysis of adverse event reports and MAUDE reports, do not establish 
substantial clinical improvement. Specifically, we are concerned that 
the details provided in the application and the documents submitted as 
evidence of substantial clinical improvement are background documents 
that discuss potential adverse events from reusable gastroscope 
procedures and rely on indirect inferences from other sources of data. 
In addition, while we acknowledge that we have considered FDA 
advisories in the evaluation and subsequent CMS approval for single-use 
endoscopes in the past, we note that the applicant did not submit an 
FDA safety communication for reusable gastroscope, rather the applicant 
speculated that FDA will issue a safety communication similar to the 
safety communications they issued on bronchoscopes, ureteroscope, and 
duodenoscopes. We are not aware of an FDA safety communication for 
gastroscope at this time. We do not believe that the documents provided 
by the applicant and commenters demonstrate any clinical improvements 
that result from the use of the Ambu[supreg] aScopeTM Gastro 
when compared to available reusable or single-use devices that are 
similar to the Ambu[supreg] aScopeTM Gastro. As such, we 
continue to have the concerns articulated in the CY 2025 OPPS/ASC 
proposed rule and discussed above.
---------------------------------------------------------------------------

    \107\ Device Pass-through Requirements: https://mearis.cms.gov/public/resources.
---------------------------------------------------------------------------

    We appreciate the commenters' input but remain concerned that there 
has not been an adequate comparison of clinical outcomes between the 
Ambu[supreg] aScopeTM Gastro and other available reuseable 
and/or single-use devices used for similar indications. Because of the 
reasons discussed above, we do not believe that the Ambu[supreg] 
aScopeTM

[[Page 94183]]

Gastro represents a substantial clinical improvement relative to 
existing therapies currently available. Therefore, we have determined 
that the Ambu[supreg] aScopeTM Gastro does not meet the 
substantial clinical improvement criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the Ambu[supreg] 
aScopeTM Gastro would be reported with HCPCS codes shown in 
Table 123.

[[Page 94184]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.151

[[Page 94185]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.152

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2023 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5301, which had a CY 2023 payment rate of 
$825.51 at the time the application was received. HCPCS code 43239 in 
APC 5301 had a CY 2023 device offset amount of $2.64 at the time the 
application was received.\108\ According to the applicant, the cost of 
the Ambu[supreg] aScopeTM Gastro is $799.00.
---------------------------------------------------------------------------

    \108\ We noted that the applicant selected a device offset 
amount of $21.55 for APC 5301 without selecting a specific HCPCS/CPT 
code. However, for the HCPCS/CPT codes provided by the applicant, we 
noted the HCPCS/CPT code level device offset amounts are available 
in Addendum P to the CY 2023 OPPS/ASC final rule with comment 
period. For our calculation, we selected the HCPCS/CPT code level 
device offset amount of $2.64 related to HCPCS 43239 in APC 5301 
found in Addendum P to the CY 2023 OPPS/ASC final rule with comment 
period. Based on our initial assessment for the proposed rule, using 
the device offset amount of $2.64 would result in Ambu[supreg] 
aScopeTM Gastro meeting the cost significance 
requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The average 
reasonable cost of $799.00 for the Ambu[supreg] aScopeTM 
Gastro is 96.79 percent of the applicable APC payment amount for the 
service related to the category of devices of $825.51 (($799.00/
$825.51) x 100 = 96.79 percent). Therefore, we stated that we believe 
the Ambu[supreg] aScopeTM Gastro meets the first cost 
significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $799.00 for the 
Ambu[supreg] aScopeTM Gastro is 30,265.15 percent of the 
cost of the device-related portion of the APC payment amount for the 
related service of $2.64 (($799.00/$2.64) x 100 = 30,265.15 percent). 
Therefore, we stated that we believe the Ambu[supreg] 
aScopeTM Gastro meets the second cost significance 
requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $799.00 for the Ambu[supreg] aScopeTM 
Gastro and the portion of the APC payment amount for the device of 
$2.64 is 96.47 percent of the APC payment amount for the related 
service of $825.51 ((($799.00-$2.64)/$825.51) x 100 = 96.47 percent). 
Therefore, we stated that we believe the Ambu[supreg] 
aScopeTM Gastro meets the third cost significance 
requirement.
    We invited public comment on whether the Ambu[supreg] 
aScopeTM Gastro meets the device pass-through payment 
criteria discussed in this section, including the cost criterion for 
device pass-through payment status.
    Comment: With respect to cost significance criteria, the applicant 
reiterated that the Ambu[supreg] aScopeTM Gastro meets all 
three of the cost significance criteria.
    Response: We appreciate the applicant's input. After consideration 
of

[[Page 94186]]

the public comment received and our findings from the first, second, 
and third cost significance tests, we agree that the Ambu[supreg] 
aScopeTM Gastro meets the cost significance criteria 
specified at Sec.  419.66(d).
    After consideration of the public comments received and our review 
of the device pass-through application, we are not approving the 
Ambu[supreg] aScopeTM Gastro for transitional pass-through 
payment status in CY 2024 because the product does not meet the 
substantial clinical improvement criterion at Sec.  419.66(c)(2).
(b) OMEZA Wound Care Matrix (OCMTM)
    OMEZA LLC submitted an application for a new device category for 
transitional pass-through payment status for OCMTM for CY 
2025. According to the applicant, OCMTM is an amorphous, 
solid, malleable sheet comprised of hydrolyzed fish peptides infused 
with cod liver oil which acts as an anhydrous skin protectant. Per the 
applicant, OCMTM is indicated for the management of wounds. 
The applicant asserted that, when applied to a clean wound surface, 
OCMTM is naturally incorporated into the wound over time. 
Per the applicant, OCMTM's cold water fish peptides provide 
building blocks for tissue regeneration and cell signaling molecules 
stimulate tissue growth. Additionally, OCMTM's matrix-like 
device also contains active pharmaceutical ingredient(s) (API) and 
nutrients that continuously reduce biofilm impact, reduce inflammation, 
increase tissue proliferation, and support remodeling of tissue.
    Please refer to the online application posting for the 
OCMTM, available at https://mearis.cms.gov/public/publications/device-ptp/DEP2403016HWP6, for additional detail 
describing the device and the disease treated by the device.
    Comment: Several commenters with experience treating patients with 
OCMTM stated their belief that it meets all the criteria 
outlined in the rule and should be granted pass-through status so that 
patients with stalled or non-healing wounds can be treated before the 
wound increases in size or becomes infected.
    Response: As stated previously, to be eligible for transitional 
pass-through payment under the OPPS, a device must meet the criteria at 
Sec.  419.66(b)(1) through (4). With respect to the newness criterion 
at Sec.  419.66(b)(1), on September 1, 2021, the applicant received 
510(k) clearance from FDA for OCMTM as a device to be used 
for the management of wounds including: (1) partial and full-thickness 
wounds, (2) pressure ulcers, (3) venous ulcers, (4) diabetic ulcers, 
(5) chronic vascular ulcers, (6) tunneled/undermined wounds, (7) 
surgical wounds (donor sites/grafts, post-Moh's surgery, post-laser 
surgery, podiatric, wound dehiscence), (8) trauma wounds (abrasions, 
lacerations, superficial partial thickness burns, skin tears), and (9) 
draining wounds. We received the application for a new device category 
for transitional pass-through payment status for OCMTM on 
March 1, 2024, which is within 3 years of the date of the initial FDA 
marketing authorization.
    We invited public comment on whether OCMTM meets the 
newness criterion at Sec.  419.66(b)(1).
    Comment: The applicant thanked CMS for agreeing that 
OCMTM meets the newness criteria.
    Response: We appreciate the applicant's comment. We received the 
application for a new device category for transitional pass-through 
payment status for OCMTM on March 1, 2024, which is within 3 
years of September 1, 2021, the date of FDA 510(k) clearance. Based on 
our review of the application, we have determined that OCMTM 
meets the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not indicate whether OCMTM is 
integral to the service furnished. In the CY 2014 final rule with 
comment period (78 FR 75005), we stated that we have interpreted the 
term ``integral'' to mean that the device is necessary to furnish or 
deliver the primary procedure with which it is used. For example, a 
pacemaker is integral to the procedure of implantation of a pacemaker. 
We noted that OCMTM does not appear to be necessary to 
furnish or deliver the primary procedure with which it is used, 
specifically debridement. Rather, we noted the use of OCMTM 
following the debridement procedure, including the duration of 
treatment and the reapplication frequency, seems to be based entirely 
on provider discretion. As such, we stated that we do not believe that 
OCMTM is integral to the service furnished as required by 
Sec.  419.66(b)(3). The applicant stated that OCMTM is 
classified for one-time use and is designed for intimate contact with 
both regular and irregular wound beds, and as such, it is applied in or 
on a wound.
    We invited public comment on whether OCMTM meets the 
eligibility criterion at Sec.  419.66(b)(3).
    Comment: In response to our concern that OCMTM may not 
meet the eligibility criteria under Sec.  419.66(b)(3), the applicant 
asserted that OCMTM is integral to services furnished in the 
outpatient setting for non-healing wounds. Specifically, the applicant 
stated that OCMTM is integral to both the active wound care 
management furnished for HCPCS codes 97597, 97598, 97602, and 97605-
97608, and surgical debridement services furnished under HCPCS codes 
11000-11012 and 11042-11047. The applicant added that for hard-to-heal, 
non-healing wounds that fail to respond to four weeks of standard wound 
care (including debridement), adjunctive application of advanced wound 
therapies, like OCMTM, is the next recommended wound 
management step. The applicant stated that OCMTM is 
indicated for application following initial standard of care failure 
and may replace the need for negative-pressure wound therapy, placental 
membranes, bioengineered skin substitutes, several acellular matrices, 
autologous fibrin, and leukocyte platelet patches, which are all 
typically used in the hospital outpatient setting. The applicant 
further explained that OCMTM is not a skin protectant, but 
instead, a bioactive matrix that conforms to the wounds allowing for 
more complete coverage of the wound in a safe and effective manner; 
thus, it supplements the missing necessary components for the natural 
healing to occur. The applicant asserted that OCMTM performs 
a similar function to certain collagen-based implantable devices used 
in internal surgeries to promote healing by improving the structural 
integrity of joints, soft tissues, and nerves. Per the applicant, 
debridement alone is insufficient for managing refractory wounds, 
necessitating adjunctive advanced wound therapies, such as 
OCMTM. The applicant, therefore, stated that classification 
of OCMTM as specifically an incident to supply is 
inconsistent with its necessitated clinical use. Several non-applicant 
commenters agreed with the applicant that OCMTM does not 
always require debridement, and therefore, the device is integral to 
the service performed.
    As support for the integral function of OCMTM, the 
applicant quoted the CY 2014 OPPS/ASC final rule \109\ (78 FR

[[Page 94187]]

75005) statement that skin substitutes are integral to, dependent on, 
and supportive to the surgical procedures in which they are used. 
Specifically, the applicant asserted that while OCMTM is not 
a skin substitute, it has a distinct composition and mechanism, as well 
as a higher degree of regulatory oversight, exemplified by its FDA 
510(k) clearance for wound management. The applicant stated that, like 
skin substitutes, OCMTM meets the integral to service 
criterion for wound management, as outlined in the CY 2014 OPPS final 
rule, given that OCMTM not only matches but also exceeds the 
clinical utility of skin substitutes as an advanced wound therapy. The 
applicant concluded by asserting that OCMTM's indicated use, 
per its FDA 510(k) clearance, supports the device's classification as 
integral to the services furnished.
---------------------------------------------------------------------------

    \109\ Medicare and Medicaid Programs: Hospital Outpatient 
Prospective Payment and Ambulatory Surgical Center Payment Systems 
and Quality Reporting Programs; Hospital Value-Based Purchasing 
Program; Organ Procurement Organizations; Quality Improvement 
Organizations; Electronic Health Records (EHR) Incentive Program; 
Provider Reimbursement Determinations and Appeals (CMS-1601-FC), 78 
FR 74826 (Dec. 10, 2013) (amending 42 CFR parts 405, 410, 412, 419, 
475, 476, 486, and 495).
---------------------------------------------------------------------------

    Response: We appreciate the applicant's input. Based on the 
additional information provided in the comments, we agree that 
OCMTM is integral to advanced wound therapy because it is 
used for active wound care management after the patient has received 
standard of care services with or without debridement including in the 
management of refractory wounds. Specifically, we agree that 
OCMTM is integral to active wound care management furnished 
for HCPCS codes 97597, 97598, 97602, and 97605-97608 and surgical 
debridement services furnished under HCPCS codes 11000-11012 and 11042-
11047. Additionally, we agree with the applicant that OCMTM 
is used for one patient only, comes in contact with human tissue, and 
is applied in or on a wound. After consideration of the public comments 
received and our review of the application, we have determined that 
OCMTM meets the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criteria at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether OCMTM 
is equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered, or if 
OCMTM is a supply or material furnished incident to a 
service. However, in the CY 2014 final rule, we described skin 
substitutes as a type of supply used in a surgical procedure (78 FR 
74929 through 74930). As explained in the CY 2014 final rule, supplies 
are a large category of items that typically are either for single-
patient use or have a shorter life span in use than equipment. Supplies 
can be anything that is not equipment and include not only minor, 
inexpensive, or commodity-type items but also include a wide range of 
products used in the hospital outpatient setting, including certain 
implantable medical devices, which we have considered supplies since 
the inception of the OPPS (78 FR 74929 through 74930). We clarified 
that we believe skin substitutes are supplies used in a surgical 
procedure because, as a part of a surgical repair procedure, they 
reinforce and aid the healing of tissue like implantable biologicals, 
but with skin substitutes, the tissue is skin instead of internal 
connective tissues (78 FR 74931). As such, we questioned whether 
OCMTM would be considered a supply, and as such it would be 
excluded from device pass-through payments under Sec.  419.66(b)(4).
    We invited public comment on whether OCMTM meets the 
exclusion criterion at Sec.  419.66(b)(4).
    Comment: In response to our concern that OCMTM would be 
excluded under Sec.  419.66(b)(4), the applicant asserted that 
OCMTM is not an item for which depreciation and financing 
expenses are recovered and that, like an implantable biologic or 
medical device, is used as an integral and necessary supply in a 
surgical procedure. The applicant stated that OCMTM does not 
fit the classification of an incident to supply, defined as a material 
or supply furnished incident to a service because it aids in the 
management of wounds by supplementing the missing necessary components 
for the natural function of healing to occur; and is necessary to the 
wound care procedure itself when debridement alone is insufficient. The 
applicant asserted that classification of OCMTM as an 
incident to supply is not consistent with its necessitated clinical 
use. The applicant asserted that given that OCMTM exceeds 
the clinical utility of skin substitutes as an advanced wound therapy 
and that skin substitutes as outlined in the CY 2014 OPPS final rule 
meet the integral to service criteria for wound management, the 
applicant believes that OCMTM does not meet the 
disqualifying criteria of being an incidental supply under Sec.  
419.66(b)(4).
    Response: We appreciate the clarification from the applicant. Based 
on the additional information provided in the comments, we agree with 
the applicant that OCMTM is not equipment, an instrument, 
apparatus, implement, or item of this type for which depreciation and 
financing expenses are recovered as depreciation assets, or are a 
material or supply furnished incident to a service. Specifically, we 
believe that OCMTM is necessary to the wound care procedure 
itself when debridement alone is insufficient and is, therefore, not a 
material or supply furnished incident to a service. We note that while 
the applicant did not furnish further detail to explain why 
OCMTM is not a depreciable asset, we believe that the 
applicant provided enough additional information about OCMTM 
to conclude that it is like other cellular and tissue-based products 
for wound management, and therefore, OCMTM is not an asset 
subject to depreciation or used in a normal or standby capacity by the 
provider per the Medicare Reimbursement Manual (CMS Pub. 15-1). After 
consideration of the public comment received and our review of the 
application, we have determined that OCMTM meets the 
eligibility criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
OCMTM is indicated for the comprehensive treatment of 
advanced wounds and provides continuous delivery of pharmaceutical 
grade products through an amorphous, anhydrous solid, which reduces 
biofilm while simultaneously promoting tissue proliferation and 
remodeling. According to the applicant, no previous or existing device 
categories for pass-through payment appropriately describe 
OCMTM.
    We did not identify an existing pass-through payment category that 
describes OCMTM. We invited public comment on whether 
OCMTM meets the device category criterion at Sec.  
419.66(c)(1).
    We did not receive any comments regarding whether OCMTM 
meets the eligibility requirements at Sec.  419.66(c)(1). Based on our 
review of the application, we continue to believe there is no

[[Page 94188]]

existing category or category previously in effect that appropriately 
describes OCMTM. Therefore, we have determined that 
OCMTM meets the device category eligibility criterion at 
Sec.  419.66(c)(1).
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The applicant claimed that 
OCMTM represents a substantial clinical improvement over 
existing technologies in the treatment of hard to heal or chronic 
wounds which require advanced wound care procedures such as venous leg 
ulcers, diabetic foot ulcers, pressure ulcers, and wound dehiscence 
where proper wound preparation, product application, and proper 
secondary dressings are a requirement. Specifically, the applicant 
claimed that OCMTM demonstrates: (1) superior clinical 
outcomes and healing for Diabetic Foot Ulcers (DFU) compared to 
standard of care; (2) faster healing rates than standard of care for 
Venous Leg Ulcers (VLUs); (3) superior clinical outcomes for patients 
who could not qualify for clinical trials due to comorbidities; (4) 
improved results when compared to results with standard of care for 
patients who failed prior treatment; (5) in vitro/in vivo antimicrobial 
properties and patient safety; and (6) improved patient safety.
    The applicant provided the following clinical trial data and case 
studies to support these claims: (1) two randomized controlled trials 
(a single-site trial of patients with DFUs to evaluate percent area 
reduction, and a randomized, multicenter, open label study for a 
patient group with VLUs); (2) two real-world trials comprised of two 
separate case studies of patients receiving follow-up care at two 
different wound treatment centers; (3) one in vitro study; (4) one in 
vivo porcine study; and (5) one consumer research study assessing the 
safety of OCMTM using the skin prick method. Table 124 
summarizes the applicant's assertions regarding the substantial 
clinical improvement criterion. We noted that there are multiple 
variations in poster presentations for the same study; these posters 
are identified by study number and presentation number in parentheses. 
Please see the online posting for OCMTM for the applicant's 
complete statements regarding the substantial clinical improvement 
criterion and the supporting evidence provided.
BILLING CODE 4120-01-P

[[Page 94189]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.153

[[Page 94190]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.154

[[Page 94191]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.155

BILLING CODE 4120-01-C
    After review of the information provided by the applicant, we 
stated we had the following concerns regarding whether the applicant 
presents clinical data to suggest that OCMTM provides a 
substantial clinical improvement over other similar skin protectant and 
wound healing products to meet the criterion at Sec.  419.66(c)(2)(i). 
Based on the evidence submitted in the application, we noted the 
following concerns: (1) lack of direct comparison between the nominated 
device and the predicate or reference devices for skin substitutes, 
particularly with respect to treatment of deep or persistent chronic 
wounds in people with DFU and VLU; (2) reliance on non-peer-reviewed 
studies, such as unpublished abstracts or conference posters, the 
results of which are only presented in a final data table; and (3) 
reliance on studies which were sponsored by the device manufacturer 
rather than independent research. We noted that the unpublished 
abstract for OCMTM lacked a detailed discussion of study 
limitations, patient population, and assurances that studies have been 
thoroughly peer-reviewed and free from implicit bias. Furthermore, the 
abstract does not state if or how standard of care treatment was 
administered within the same time period to control groups, and 
therefore, we stated we were unsure if there was a direct comparison 
between OCMTM and its predicate or reference

[[Page 94192]]

devices. Furthermore, we noted that the two randomized controlled 
trials 110 111 and two real world studies 112 113 
submitted by the applicant to support its claims had relatively small 
sample sizes, some investigating only two patients total, which 
potentially limits the statistical significance of the results.
---------------------------------------------------------------------------

    \110\ Bell, D.P., et al. (2023). A Clinical Study Using 
Combination Therapy with Standard of Care for the Treatment of 
Diabetic Foot Ulcers: Interim Analysis. (poster presented at the 
20th Annual Desert Foot Conference, December 6-9, 2023, Phoenix, AZ, 
USA).
    \111\ Randomized Controlled Trial in Venous Leg Ulcers 
(NCT05291169) (no author or publication date given).
    \112\ Black, G., Bakewell, S., & Bell, D. (2023). A Novel 
Combination Therapy Technology: Case Studies of Complete Closure of 
a Diabetic Foot Ulcer and a Charcot Foot Ulcer. (poster presented at 
the 2023 Diabetic Foot Conference, September 28-30, 2023, Anaheim, 
CA).
    \113\ Barrett, C.L., Bakewell, S.J., & Bell, D. (2023). A Novel 
Combination Therapy Technology: Case Studies of Complete Closure of 
Diabetic Foot Ulcers. Presented at the 2023 Diabetic Foot 
Conference, September 28-30, 2023, Anaheim, CA.
---------------------------------------------------------------------------

    We noted that the applicant did not provide a comparison of 
OCMTM to other devices it identified are closely related or 
similar to OCMTM. Specifically, in the FDA authorization 
letter dated September 1, 2021, FDA identified one predicate device, 
SweetBio Apis (K182725), and three reference devices, 
INTEGRATM Flowable Wound Matrix (K072113), Kerecis MariGen 
Wound Dressing (K132343), and Southwest Technologies Stimulen Collagen 
(K030774) to which OCMTM may be compared. We noted that we 
did not approve transitional device pass-through payment for Kerecis 
MariGen Wound Dressing (K132343) for CY 2018 after determining that the 
clinical data provided by the applicant did not support the claim that 
Kerecis Omega3 Wound Dressing provides a substantial clinical 
improvement over other similar skin substitute products (82 FR 59330 
through 59332). The FDA authorization letter noted that 
OCMTM and the predicate device SweetBio Apis have similar 
indications and the same intended use, namely, to manage wounds by 
providing an animal-derived collagen product that is biodegradable and 
incorporates into the surrounding tissue during the body's natural 
wound healing processes. Both products supplement the collagen 
constituent with additional biocompatible materials to achieve a final 
product that covers and protects the wound, assists in managing wound 
exudate, and maintains a moist wound environment. Further, the 
substantial equivalence table included in the FDA authorization letter 
indicated that OCMTM raised no new questions of safety or 
effectiveness when compared to the predicate and reference devices.
    In the first claim, the applicant asserted OCMTM has 
superior clinical outcomes and healing for DFU compared to the standard 
of care. Based on the evidence submitted by the applicant, we noted the 
following concerns: (1) lack of a direct comparison to the predicate or 
reference devices in the two randomized controlled trials and the two 
real world clinical studies; (2) reliance on unpublished studies; (3) 
reliance on manufacturer sponsored studies; and (4) small sample sizes. 
First, Simman, et al. (2023) describes the results of a single-site 
trial in patients with DFUs to evaluate percent area reduction in wound 
healing. The stated goal of this study was to demonstrate that a 
combination therapy, using OCMTM plus standard of care 
treatment, moves chronic DFUs from a stalled state to a healing state 
in a 4-week period. The study enrolled 25 patients, five of whom did 
not complete the study, and one of whom died during the study from 
comorbidities related to their underlying condition. Study group DFUs 
were managed with combination therapy from 4-12 weeks, and control 
group DFUs (comprised of six total study participants) were managed 
with standard of care treatment involving cleaning and debridement 
only.
    Interim analyses presented as a poster (Bell, et al., 2023) as 
evidence to support the first claim was limited to 12 total study 
participants. The interim analysis concluded that healing rates showed 
an average of 63 percent area reduction for the remaining participants 
at 4 weeks following standard of care treatment, and an average of 91 
percent area reduction at 12 weeks following the treatment in patients 
with DFUs managed with the combination therapy. The interim analysis 
study further showed that one patient with a 12-week percent area 
reduction of 73 percent continued to improve through week 14 while 
three patients' wounds had not healed at the time of analysis for those 
receiving combination therapy.
    In the final results presented in Simman, et al. (2023), the 
average 4-week percent area reduction was 60 percent, with three 
patients experiencing 100 percent closure with combination therapy. At 
12 weeks, the median wound size was 0.0 cm\2\ (range, 0-2.59), and the 
average percent area reduction was 93 percent, with five additional 
patients experiencing 100 percent closure with combination therapy. The 
average 4- and 12-week percent area reductions with standard of care 
alone were 42 percent and 45 percent, respectively. According to the 
final analysis study abstract, every wound treated with 
OCMTM combination therapy was reduced by more than 70 
percent in 12 weeks; and all wounds previously failed treatments.
    We noted that the Simman, et al. (2023) study abstract and the 
interim analysis do not provide any direct comparison to standard of 
care treatment with another collagen-based wound matrix or device that 
is otherwise similar to the indications for use of OCMTM in 
nonhealing wounds. In addition, we noted that it is unclear if any of 
the control group patients received collagen-based treatments including 
the predicate or reference devices to draw comparisons to collagen-
based skin products that perform similarly to OCMTM. While 
we recognized, given the number of skin substitute products on the U.S. 
market, it is not possible to compare OCMTM to each product, 
we stated that we believe studies comparing the product against other 
powder, liquid, or gel skin substitute products could provide more 
evidence demonstrating the clinical superiority of OCMTM. In 
addition to the lack of comparison to other collagen-based wound matrix 
devices, we noted that the standard of care treatment in this study was 
limited to cleaning and debridement, which, based on the applicant's 
description for methods for administering OCMTM, is a step 
prior to administering OCMTM.
    In reference to the applicant's statements that debridement 
combined with application of OCMTM is more effective in the 
removal of biofilm compared to the standard of care of debridement 
alone, we noted that neither the abstract nor the interim analysis for 
this study analyzed results on removal or prevention of biofilm in 
isolation from the overall metric on wound percent area reduction. We 
noted that FDA recommends sharp debridement alone as an effective 
method to remove the biofilm and necrotic tissue in a chronic wound 
(Bettle, et al., 2023). We questioned whether the results describing 
the average percent area reduction in wounds transitioning from a 
nonhealing state to a healing state are sufficient to show substantial 
clinical improvement in removal or prevention of biofilm. We further 
questioned whether the results in percent area reduction can be 
attributed to debridement combined with application of OCMTM 
as opposed to debridement alone because it is unclear if debridement 
was performed on all participants in the retrospective control group.

[[Page 94193]]

    Furthermore, we noted that only the effects of historic standard of 
care treatments administered prior to the start of the study to 
patients in the control group were included for analysis. While one of 
the selection criteria for study participants was having failed prior 
treatment, neither the abstract nor interim analysis discussed how 
other variables, such as age and comorbidities, may have contributed to 
treatment failure, or which specific treatments failed in each of the 
six control group participants. We noted that not all patients in the 
control group received, or were eligible to receive, the same standard 
of care treatments prior to the study and did not receive any skin 
substitute or wound dressing treatments during the study as a 
comparison to the test group patients that were treated with 
OCMTM. Due to the stated limitations in the study as 
previously described, we stated that we do not believe that the 
applicant has demonstrated that OCMTM offers a substantial 
clinical improvement over existing treatments.
    Finally, we noted that the sample size of 19 individuals (six of 
whom were assigned to the control group) in the Simman, et al. (2023) 
study limits the generalizability of the findings. Therefore, we 
questioned whether OCMTM has superior clinical outcomes and 
healing for DFUs compared to the standard of care or the predicate or 
reference devices. Additionally, we noted that the Simman, et al. 
(2023) study abstract and interim analysis were sponsored by the 
manufacturer and have not been published, and therefore are not based 
on independent and peer-reviewed findings.
    In addition to the Simman, et al. (2023) study (including the 
abstract and interim results), in support of its first claim, the 
applicant submitted two posters presenting results from limited case 
studies investigating two patients who received treatment using 
OCMTM combination therapy at the point of care. The first 
poster (Black, et al., 2023) discussed the treatment of two patients 
seeking treatment for DFUs at a wound care clinic: (1) a 75-year-old 
female patient who developed a DFU on her right third toe whose DFU 
wound progressed from nonhealing to healing after one application of 
the combination OCMTM therapy; and (2) a 65-year-old female 
patient with a history of diabetes and a blister of 3-month duration 
that progressed from nonhealing (after treatment with collagen powder, 
a gauze covering, an absorbent dressing, and a protective bandage) to 
completely closed after nine applications of the combination 
OCMTM therapy over 63 days. The study authors concluded that 
these case studies demonstrated: (1) rapid and durable healing of 
chronic/nonhealing wounds in two patients with diabetes who received 
the combination therapy for their chronic wounds; (2) significantly 
faster closure of a DFU within 1 week using OCMTM 
combination therapy than the average healing rate of 84 days for a 1-3 
cm\2\ plantar ulcer managed using standard care practices; and (3) that 
early treatment of chronic/nonhealing wounds with OCMTM 
combination therapy improves outcomes and can lead to complete closure.
    Similarly, the second poster (Barrett, et al., 2023) presented 
results from a case study of two patients who received follow-up care 
at an outpatient wound center: (1) a 58-year-old male patient with a 
distal plantar lateral ulceration with infection, which required 
hospitalization; and (2) a 56-year-old male patient with leg trauma 
that had obliterated the patient's anterior tibial and peroneal 
arteries, leaving him with single vessel runoff to the left foot via 
the posterior tibial artery. In the first patient, after 5 weeks of 
initial negative pressure wound therapy following surgery, the 
percentage area reduction of the wound was 19 percent. In comparison, 
after three weekly follow-up applications of OCMTM 
combination therapy, the patient's percentage area reduction was 95 
percent. In the second patient, the amputation site was noted as 
completely necrotic, and therefore not a candidate for standard of care 
negative pressure wound therapy due to poor skin condition, ischemia, 
and hyperalgesia. It was noted that after three applications of 
OCMTM combination therapy, there was a significant 
improvement in the wound depth and tissue color, with visible 
epithelialization at the wound edges despite the patient's obvious 
ischemia. It was noted that the wound size improved and completely 
healed between the fourth and fifth application of OCMTM 
combination therapy and after the seventh application of 
OCMTM combination therapy. The researchers concluded that 
the case studies demonstrate complete and rapid healing of refractory 
DFUs in two patients with diabetes who had previously undergone lower 
extremity amputations and that early use of OCMTM 
combination therapy has the potential to reduce the rate of amputations 
and improve patients' quality of life.
    We noted that both case studies (Barrett, et al., 2023, and Black, 
et al., 2023) were sponsored by the manufacturer and only had two study 
participants treated with OCMTM combination therapy, which 
limits the generalizability of the findings. Although the studies 
suggest that the two participants treated with OCMTM 
combination therapy showed transition to a healing state subsequent to 
the application of OCMTM, the results varied widely in terms 
of number of applications needed to achieve positive results and 
treatment duration. Further, we noted that these case studies provide 
no direct comparison to the standard of care treatment or the predicate 
or reference devices. We noted that eligibility for standard of care 
treatments also varied across patients and resulted in varying degrees 
of percent area reduction or wound closure from prior treatments before 
application of OCMTM combination therapy. While in one 
patient, the study showed an improved clinical outcome in percentage 
area reduction (19 percent to 95 percent) with treatment utilizing 
OCMTM combination therapy, we noted that the treatment 
including OCMTM was not only completed subsequent to 
standard of care treatment with a collagen wound protectant, but also 
delivered to the same individual rather than as a comparison to 
standard of care treatments in a control group.
    We questioned whether the submitted evidence adequately supports 
the claim that OCMTM has superior clinical outcomes and 
healing for DFU compared to the standard of care. We stated our 
interest in additional information to demonstrate whether the nominated 
device demonstrates a substantial clinical improvement in comparison to 
similar collagen-based matrix devices.
    In the second claim, the applicant asserted that OCMTM 
provides faster healing rates than standard of care for VLUs. However, 
based on the evidence submitted, we noted the following concerns: (1) 
reliance on unpublished studies; and (2) a lack of any documentation 
indicating the study authors, study description, methods, limitations, 
information on standard of care treatment for the comparison of control 
groups, analysis, or discussion. The only data provided were in the 
form of two tables. One table \114\ provided demographic information 
for the study participants, such as race, age, gender, presence of 
VLUs, comorbidities, wound area, and wound age; however, there is no 
indication of how many initial study participants were included in the 
final results or how many were assigned to either the treatment or 
control group receiving the standard of

[[Page 94194]]

care. The other table \115\ presented one row of data from the final 
results of a randomized controlled trial on VLUs showing an average 
percent area reduction of 66 percent at 12 weeks in OCMTM 
treatment group (there was no comparison to the standard of care 
treatment group) and an average percent area reduction of 34 percent at 
four weeks in the OCMTM treatment group compared to an 
average percent area reduction of 31 percent at four weeks in the 
standard of care group. Due to the lack of a study report, we stated 
that we have insufficient information to adequately assess this study 
or make a determination as to whether the study supports the claim that 
OCMTM provides faster healing rates than standard of care 
for VLU.
---------------------------------------------------------------------------

    \114\ Demographics for RCT in VLU (no author or publication date 
given).
    \115\ Randomized Controlled Trial in Venous Leg Ulcers 
(NCT05291169) (no author or publication date given).
---------------------------------------------------------------------------

    In order to demonstrate substantial clinical improvement over 
currently available treatments, we noted that we consider supporting 
evidence, preferably published peer-reviewed clinical trials, that 
shows improved clinical outcomes, such as reduction in mortality, 
complications, subsequent interventions, future hospitalizations, 
recovery time, pain, or a more rapid beneficial resolution of the 
disease process compared to the standard of care. We noted that 
additional supporting evidence, preferably published peer-reviewed 
clinical trials, that shows these improved clinical outcomes would help 
inform our assessment of whether OCMTM demonstrates 
substantial clinical improvement over existing technologies.
    In the third claim, the applicant asserted that OCMTM 
provides superior clinical outcomes for patients who could not qualify 
for clinical trials due to comorbidities, and in the fourth claim, the 
applicant stated that OCMTM improved results when compared 
to results with standard of care for patients who failed prior 
treatment. The applicant used the same pair of documents as supporting 
evidence for both the third and fourth claims: (1) a case study by 16 
independent investigators (Bettle, et al., 2023), and (2) a final 
summary table \116\ of the results of that case study. In the case 
study by the 16 independent investigators, OCMTM combination 
therapy was administered to 65 patients with wound ages ranging from 12 
weeks to 15 years who failed prior treatment, including six patients 
with prior failed cellular tissue product therapies. Patients were not 
otherwise subjected to inclusion or exclusion criteria. According to 
the applicant, the findings by the 16 independent investigators showed 
77 percent of wounds were closed by 12 weeks and the average area 
reduction was 90 percent. Wounds treated included DFUs, VLUs, pressure 
injuries, arterial, pyoderma, hematomas, surgical, and trauma. We noted 
that the study lacked direct comparison to a standard of care 
treatment. Rather, the study compared patient data to standardized data 
on wound closure and mean time to total wound closure by wound type 
based on standardized data from the U.S. Wound Registry.
---------------------------------------------------------------------------

    \116\ OCM treating Multiple Etiologies Final Trial Data (no 
author or publication date given).
---------------------------------------------------------------------------

    We questioned whether the submitted evidence adequately supports 
the claims that OCMTM provides superior clinical outcomes 
for patients who could not qualify for clinical trials, due to 
comorbidities, or that OCMTM improved results when compared 
to results with standard of care for patients who failed prior 
treatment. We welcomed further investigation with comparators to help 
determine whether the device demonstrates substantial clinical 
improvement over currently available treatments in the clinical setting 
where it is most likely to be used.
    In its fifth claim, the applicant asserted that in vitro (Davis, et 
al., 2023) and in vivo (Davis, Jozic, et al., 2023) study results 
demonstrate antimicrobial properties and patient safety. The applicant 
further asserted that OCMTM addresses an unmet medical need, 
stating that no other product demonstrates antimicrobial properties and 
leads to complete wound healing. In the in vivo study (Davis, Jozic, et 
al., 2023), researchers made 31 deep reticular wounds across the 
paravertebral and thoracic areas on each of specific pathogen-free 
pigs. Pathogenic strains of Methicillin-Resistant Staphylococcus Aureus 
(USA300) or Pseudomonas Aeruginosa (ATCC 27312), prepared as 106 CFU/ml 
inoculum suspensions, were used to inoculate all wounds within 20 
minutes after wounding followed by application of polyurethane 
dressings (Tegaderm, 3M, USA) for 72 hours before being treated. 
Subsequent treatment consisted of OCMTM alone in one test 
group, OCMTM plus a skin protectant in another test group, 
Aquacel Ag Advantage in the positive control group, or the wounds were 
left untreated in the negative control group. We noted that the only in 
vivo study (Davis, Jozic, et al., 2023) with direct comparison to a 
skin protectant was conducted on non-human subjects (pigs). We 
questioned whether these data can be extrapolated to demonstrate 
significant clinical improvement in humans. In addition, according to 
the applicant, the in vitro study (Davis, et al., 2023) showed 
OCMTM significantly inhibiting Methicillin-resistant 
Staphylococcus aureus and Pseudomonas aeruginosa compared to negative 
controls. We noted that the in vitro study (Davis, Jozic, et al., 2023) 
lacked a direct comparison to performance of other similar skin 
protectant products or wound therapies besides infection control 
methods such as silver sulfadiazine or Mupirocin antibiotic. We further 
noted that both the in vitro and in vivo studies were submitted as 
poster presentations and that the studies had not been published and 
peer-reviewed in full.
    We questioned whether the submitted evidence adequately supports 
the claims that OCMTM demonstrates antimicrobial properties 
and patient safety. We noted that additional supporting evidence, 
preferably published peer-reviewed clinical trials, that demonstrates 
improved clinical outcomes, such as reduction in mortality, 
complications, subsequent interventions, future hospitalizations, 
recovery time, pain, or a more rapid beneficial resolution of the 
disease process, would help inform our assessment of whether 
OCMTM demonstrates substantial clinical improvement over the 
standard of care and existing technologies.
    For its sixth claim, the applicant asserted that study results 
demonstrated patient safety of OCMTM. In support of this 
claim, the applicant provided one consumer research study (Princeton 
Consumer Research Corp., 2019) \117\ of 25 subjects showing no 
immediate allergic reaction to OCMTM. We noted that, similar 
to our previously stated concerns, the study did not include a direct 
comparison to predicate or reference devices despite claiming an 
improvement over standard of care treatment. We noted that the 
submitted evidence does not adequately support the claims that 
OCMTM demonstrates substantial clinical improvement in 
product safety in comparison to similar products.
---------------------------------------------------------------------------

    \117\ Princeton Consumer Research Corp. (2019). Final Report. A 
safety study to assess the allergy potential of OMEZA collagen 
matrix in human subjects using the skin prick method.
---------------------------------------------------------------------------

    Finally, we noted that OCMTM may not demonstrate that it 
substantially improves the diagnosis or treatment of an illness when 
compared to the benefits of other available treatments. 
OCMTM was determined to be substantially equivalent to a 
legally marketed device, the SweetBio Apis, which received 510(k) 
clearance on

[[Page 94195]]

April 29, 2019. The FDA 510(k) summary for OCMTM indicated 
that both devices share similar technological characteristics. Per FDA, 
the main differences between OCMTM and the predicate are the 
specific collagen source (OCMTM uses whitefish skin-derived 
collagen, while the SweetBio Apis uses porcine skin-derived collagen) 
and the specific identity of the supplemental components, which serve 
the same fundamental purpose in enabling each wound dressing to achieve 
the shared intended use.\118\
---------------------------------------------------------------------------

    \118\ The SweetBio Apis is FDA cleared and marketed under 510(k) 
since 2019 (FDA 510(k)) letter: https://www.accessdata.fda.gov/cdrh_docs/pdf21/K211972.pdf.
---------------------------------------------------------------------------

    We invited public comment on whether OCMTM meets the 
substantial clinical improvement criterion at Sec.  419.66(c)(2)(i).
    Comment: With respect to our concern about the lack of independent 
peer-reviewed or published clinical evidence, the applicant commented 
that they recognize the importance of peer-reviewed research. Further, 
the applicant noted that while at the time of the initial application, 
none of the studies had been submitted for peer-review or published in 
indexed journals, the clinical evidence previously referenced has now 
been published, is in press for an indexed journal, or has been 
submitted for review at an indexed journal and is publicly available on 
a preprint server. The applicant submitted these as part of its 
comment.119 120 121 The applicant also acknowledged that it 
sponsored the provided studies but asserted that, due to the newness of 
the product, cost, and unclear coverage status, the lack of 
investigator-sponsored trials is not unexpected.
---------------------------------------------------------------------------

    \119\ Bettle III, G., Bell, D.P., & Bakewell, S.J. (2024). A 
Novel Comprehensive Therapeutic Approach to the Challenges of 
Chronic Wounds: A Brief Review and Clinical Experience Report. 
Advances in Therapy, 41: 492-508. https://doi.org/10.1007/s12325-023-02742-4.
    \120\ Simman, R., Bakewell, S.J., Bell, D., Shuman, S., & 
Cheney, M. (2024). A novel approach for the treatment of diabetic 
foot ulcers using a multimodal wound matrix: a clinical study. 
Journal of Wound Care. https://doi.org/10.12968/jowc.2024.0085.
    \121\ Cole, W. (2024). Treatment of bacterially contaminated 
lower extremity ulcers with a fatty acid-containing wound matrix: a 
case series. Journal of Wound Care, 33(8):554-559. https://doi.org/10.12968/jowc.2024.0101.
---------------------------------------------------------------------------

    Response: We thank the applicant for their response to our concerns 
regarding the lack of independent and peer-reviewed studies. After 
consideration of the applicant's comments, we believe the applicant has 
addressed our concern about the lack of peer-reviewed and published 
studies by submitting two studies (Bettle III, et al., 2024, and 
Simman, et al., 2024) that appear to support the applicant's claims of 
substantial clinical improvement that have been accepted for 
publication in peer-reviewed medical journals.
    Comment: In response to our concerns that the applicant did not 
provide a comparison of OCMTM to similar wound closure 
products, the applicant reiterated that OCMTM catalyzes 
wound closure in patients with nonhealing wounds treated with other 
advanced wound therapies. The applicant also asserted that 
OCMTM offers a more rapid beneficial resolution over the 
best available therapies, including the predicate and reference 
devices. Specifically, the applicant asserted that in comparison to the 
protective dressing application, OCMTM application in 
conjunction with debridement qualifies as an active wound procedure 
within the scope of active wound care management services. The 
applicant also noted that OCMTM application following 
initial standard of care failure may replace the need for negative-
pressure wound therapy, placental membranes, bioengineered skin 
substitutes, several acellular matrices, autologous fibrin, and 
leukocyte platelet patches, all of which are currently used in the 
hospital outpatient setting.
    The applicant clarified that it has not advocated for 
OCMTM to be used in routine management of wounds as it 
believes the current standard of care, which includes four weeks of 
routine therapy, should be utilized prior to the application of 
OCMTM. Specifically, the applicant asserted that once wounds 
become refractory, then OCMTM can be applied to re-initiate 
the healing process, as demonstrated in the submitted studies.
    The applicant further stated that FDA has specifically acknowledged 
the lack of innovative products aimed at the treatment of non-healing 
chronic wounds. The applicant noted that patients with significant 
medical comorbidities presenting with non-healing wounds of any size 
have not been enrolled in advanced wound therapy randomized controlled 
trials, even though these patients represent a high-risk group that 
most clinicians believe need active treatment beyond the routine 
standard of care to prevent infection, amputation, and even death. The 
applicant asserted that OCMTM addresses an unmet need for 
patients with multiple comorbidities who have refractory wounds of at 
least four weeks duration, including at least two weeks of care by a 
wound specialist, who would have likely been excluded from the few 
randomized control trials in this field.
    Response: We thank the applicant for its input and clarification. 
While we appreciate that FDA has specifically acknowledged the lack of 
innovative products aimed at the treatment of non-healing chronic 
wounds, we remain concerned with the lack of clinical studies and 
comparative studies demonstrating whether the use of OCMTM, 
when applied following initial standard of care failure as an active 
wound procedure, results in substantial clinical improvement over other 
available active wound care management services. With respect to 
replacing the need for negative pressure wound therapy, placental 
membranes, bioengineered skin substitutes, several acellular matrices, 
autologous fibrin and leukocyte platelet patches, we address specific 
substantial clinical improvement claims and responses to our concerns 
below.
    Comment: Several commenters stated that they believed for wound 
infections that could progress to sepsis or necessitate an amputation, 
OCMTM could prevent patient complications, including 
disability secondary to the complications of a non-healing wound, or 
death. The commenters stated that for chronic non-healing and hard-to-
heal wounds OCMTM offers several advantages including that 
its effects can be seen quickly, even though other products used prior 
to OCMTM failed, and its amorphous property enables optimal 
use of the product, even in wounds with non-perfect, irregular wound 
beds. The commenters stated that this amorphous structure allows the 
product to fill unique areas within wounds, such as tunneling and 
undermining, that would otherwise be unmanageable using a standard 
advanced wound graft product.
    Response: We thank the commenters for their input. We maintain our 
concerns that the submitted evidence does not adequately support the 
applicant's claims that OCMTM demonstrates substantial 
clinical improvement compared to other available treatments. We 
appreciate that commenters provided information about the unique uses 
for OCMTM's amorphous structure; however, we note that the 
commenters did not supply additional data in support of these claims. 
Furthermore, we note that the applicant did not make any specific 
claims about the consequential benefits directly attributable to any 
specific or isolated mechanism of OCMTM.
    Comment: With respect to our concerns about the lack of direct 
comparison to the predicate or reference devices in the studies used to 
support its first three claims, the applicant noted

[[Page 94196]]

that while OCMTM and the predicate device SweetBio Apis have 
similar indications and the same intended use, they differ in the 
chemical and physical properties of the derived collagen product as 
well as the additional biocompatible materials that supplement the 
product. The applicant also asserted that SweetBio Apis does not have 
any published data on its effectiveness in healing wounds in a similar 
population, as in OCMTM's most recently completed study. The 
applicant stated that SweetBio Apis's study of real-world evidence 
featured a small sample size (n = 12) with likely singular etiology 
(implied to be DFU given diabetic population) and limited transparency 
into the selection of study participants. The applicant asserted that, 
in comparison, OCMTM has been investigated in a patient 
group that is significantly larger, has more variability in ulcer 
etiology, and has more comorbidities, which is representative of the 
overall patient population for whom OCMTM is indicated. 
Additionally, the applicant highlighted that SweetBio Apis has 
published only one randomized controlled trial involving participants 
with Mohs Surgical Defects, which demonstrated no significant 
difference in re-epithelization.
    The applicant asserted that, as such, a direct comparison of 
OCMTM's and SweetBio Apis's published evidence indicates 
that OCMTM has more substantially proven capability to 
deliver clinical improvement for these hard-to-treat wounds. In 
addition, the applicant stated that while OCMTM and SweetBio 
Apis have similar indications and the same intended use, their derived 
collagen products differ in the chemical and physical properties. The 
applicant further stated that OCMTM differs from SweetBio 
Apis in terms of additional biocompatible materials that supplement the 
product. The applicant asserted that this supplement material (i.e., 
the additional biocompatible materials) raises no new questions of 
safety or effectiveness when OCMTM is compared to the 
predicate and reference devices but does confer additional benefits to 
OCMTM. The applicant asserted that OCMTM's 
additional benefits warrant the product's consideration for 
transitional device pass-through payment. The applicant stated they are 
planning to work with the HCPCS workgroup to define a more accurate 
description of OCMTM since it is unlike other collagen 
products on the market.
    The applicant also clarified that their most recent clinical 
studies demonstrate the multi-faceted impact of OCMTM's 
multiple components on wound healing. Specifically, the applicant 
asserted that other collagen wound matrix devices' similar compositions 
confer some, but not all, of the wound healing properties 
characteristic of OCMTM. The applicant further asserted that 
a head-to-head comparison of OCMTM to any of these other 
products would only represent the marginal benefits of 
OCMTM's supplemental biomaterials. In addition, the 
applicant stated that their clinical study relies on the metric of 
wound percent area reduction in hard-to-heal wounds in order to 
demonstrate OCMTM's total clinical benefit, rather than the 
consequential benefits directly attributable to any specific mechanism 
in isolation. The applicant asserted it has not made individual claims 
about OCMTM's clinical superiority over similar wound 
healing products in regards to any specific mechanisms that contribute 
to the totality of OCMTM's clinical benefits conferred to 
patients with hard-to-heal wounds as it has not performed such 
independent or multi-factorial statistical analyses.
    Response: We thank the applicant for the additional information. 
After reviewing the provided information, we note that the applicant's 
points regarding the differences between OCMTM and SweetBio 
Apis are comparisons of volume of data, study design, and test results 
between studies that each evaluate OCMTM and SweetBio Apis 
separately and without a direct comparison. Therefore, we remain 
concerned about the lack of direct comparison of OCMTM to 
other similar devices, particularly those that are animal-derived 
collagen-based products in test arms or cohorts within the same study. 
We note that we were not able to verify the applicant's claims that 
there is more scientific data supporting the clinical effectiveness of 
OCMTM while there is none supporting the clinical 
effectiveness of SweetBio Apis, especially since there appears to be a 
high volume of data showing clinical effectiveness of SweetBio Apis 
available on the manufacturer's website.\122\ We also note that even if 
the applicant could demonstrate that there is comparatively more data 
on effectiveness in wound healing from treatment with OCMTM 
than for SweetBio Apis, clinical effectiveness is not an equivalent 
standard to substantial clinical improvement over existing 
technologies. With respect to the applicant's argument that SweetBio 
Apis may not be a suitable comparator because OCMTM's 
derived collagen products differ in chemical and physical properties as 
well as the additional biocompatible materials that supplement the 
products, as we noted previously, the FDA made no distinction between 
porcine or fish-derived collagen in wound dressings,\123\ or the 
chemical and physical properties of any additives used to anchor this 
collagen to the wound.\124\ We do not believe that the applicant has 
demonstrated that the physical and chemical properties result in 
substantial clinical improvement because of the lack of direct 
comparison of OCMTM to these similar products.
---------------------------------------------------------------------------

    \122\ Sweetbio[supreg]. Citations. https://www.sweetbio.com/apis.
    \123\ Note that while CMS refers to these materials as ``skin 
substitutes'' in its 2024 guidance Billing and Coding: Skin 
Substitutes Grafts/Cellular Tissue-Based Products for the Treatment 
of Diabetic Foot Ulcers and Venous Leg Ulcers, https://www.cms.gov/medicare-coverage-database/view/article.aspx?articleid=59625, the 
FDA collectively refers to this class of products as Dressings, 
Wound/Dressings, Wound, Collagen. see e.g. FDA (2022). Traditional 
510(k), Kerecis, pg. 6. https://www.accessdata.fda.gov/cdrh_docs/pdf21/K213231.pdf.
    \124\ The SweetBio Apis is FDA cleared and marketed under 510(k) 
since 2019 (FDA 510(k)) letter: https://www.accessdata.fda.gov/cdrh_docs/pdf21/K211972.pdf. Note that the FDA collectively refers 
to this class of products as Dressings, Wound or Dressings, Wound, 
Collagen. See e.g. FDA (2022). Traditional 510(k), Kerecis, pg. 6. 
https://www.accessdata.fda.gov/cdrh_docs/pdf21/K213231.pdf.
---------------------------------------------------------------------------

    In response to the applicant's assertion that a head-to-head 
comparison of OCMTM to any other products would only 
represent the marginal benefits of OCMTM's supplemental 
biomaterials, we believe that this suggests that other products would 
perform similarly to OCMTM in the metric of percent area 
reduction across different test arms in patients with the same or 
similar hard-to-heal wounds. While we appreciate the need to study 
OCMTM's effect on the total clinical benefits in hard-to-
heal wounds in isolation, we continue to believe evaluation of the 
applicant's first three claims of substantial clinical improvement 
(i.e., OCMTM's superior outcomes and faster healing rates in 
comparison to the standard of care) requires a direct comparison of 
OCMTM's clinical outcomes to those similar products. For the 
reasons discussed, we do not believe that OCMTM represents a 
substantial clinical improvement relative to similar currently 
available therapies.
    Comment: In regard to the applicant's claim that OCMTM 
provides a treatment option for a patient population unresponsive to, 
or ineligible for currently available treatments, the applicant 
submitted additional information to clarify that OCMTM not

[[Page 94197]]

only matches but exceeds the clinical utility of skin substitutes as 
advanced wound therapy for patients with hard-to-heal wounds. 
Specifically, the applicant asserted that OCMTM's 
superiority over other forms of wound management is evident in its 
ability to reduce wound size in patients with non-healing wounds that 
were failed by alternative wound products, such as gentian violet/
methylene blue foam, manuka honey, cellular tissue products (CTPs), 
Negative Pressure Wound Therapy (NPWT), and dressings consisting of 
alginate, collagen, or silver. The applicant stated that the study 
protocol in Dhillon, et al. (2024) \125\ ensured that patients had 
wounds that had not responded to therapy for at least eight weeks and 
had undergone high-quality wound care for a minimum of two weeks that 
included the use of advanced therapies, such as the predicate and 
reference devices. Furthermore, the applicant asserted that the 
OCMTM clinical trial design was intentional in evaluating 
the device's clinical utility in a patient population that was not 
served by other alternative wound products.
---------------------------------------------------------------------------

    \125\ Dhillon, Y., Mulder, G., Patel, K., Moya, L., Boghossian, 
G., Swain, D., McLafferty, R., Perez, K., Nguyen, J., Wilkinson, N., 
Arragon, J., Contreras, L., Geiger, D., Cummings, R., LaVigne, B., 
Bell, D., Bakewell, S. (2024). An open-label, interventional, 
prospective, real-world evidence study to evaluate a multimodal 
wound matrix in patients with refractory wounds. Advances in Wound 
Care, Ed (pre-print).
---------------------------------------------------------------------------

    Response: We appreciate the applicant's clarification. We agree 
with the applicant that the Dhillon, et al. (2024) study demonstrated 
OCMTM's effectiveness in treating a group of 53 patients who 
did not improve after receiving alternative wound products prior to the 
study. However, we note that, of the 111 patients that entered the 
study's screening phase, only 53 patients and 54 wounds (which included 
18 DFUs, 19 VLUs, two pressure injuries, one surgical, one lower 
extremity wound, and 12 unclassified etiology) received treatment and 
were eligible for the data set. We also note that the study's final 
analysis excluded the 58 patients who responded to the standard of care 
(i.e., cleaning and debridement) with wound reduction of more than 30 
percent. We are concerned that Dhillon, et al. (2024) fails to provide 
details about the specific previous wound management treatments that 
the study participants received to demonstrate that it exceeds the 
clinical utility of skin substitutes as advanced wound therapy for 
hard-to-heal wounds as the applicant claims above. Absent this data, we 
are unable to verify that OCMTM treats a patient population 
unresponsive to currently available multimodal wound management 
treatments.
    Comment: In response to our concerns that the studies provided on 
OCMTM's antimicrobial properties do not demonstrate results 
in live human subjects, the applicant commented that OCMTM 
can play a preventative role in wound management through the inherent 
antimicrobial properties of its anhydrous matrix. The applicant 
asserted that a small-scale clinical study signaled OCMTM's 
antimicrobial capacity and that its antimicrobial properties could 
enable preventative care of hard-to-heal wounds. Specifically, the 
applicant stated that OCMTM's non-antibiotic composition may 
reduce the probability of bacterial colonization progressing to wound 
infection, which could result in antibiotic resistance or even sepsis 
and limb amputation. In addition, the applicant asserted that 
OCMTM has clinical utility as a non-antibiotic 
decolonization agent in clinically uninfected wounds for which 
antibiotic prophylaxis is deemed inappropriate, per International 
Working Group on the Diabetic Foot/Infectious Diseases Society of 
America (IWGDF/IDSA) Guidelines. The applicant also commented that it 
is committed to working with FDA to evaluate the extent to which the 
OCMTM's antimicrobial properties confer substantial clinical 
benefit over the standard of care treatment.
    Furthermore, the applicant suggested that transitional device pass-
through payments would enable it to continue developing evidence that 
OCMTM's decolonization function provides substantial 
clinical benefit over the standard of care. The applicant compared 
OCMTM's decolonization function to topical prophylactic 
decolonization methods, for which clinical significance has 
historically been difficult to substantiate. The applicant asserted 
that this mechanism of infection prevention and control has been widely 
practiced for decades in accordance with CDC guidance, as exemplified 
by chlorhexidine bathing and administration of intranasal mupirocin or 
Iodophor. Similarly, several non-applicant commenters stated that 
OCMTM has some unique and validated anti-microbial 
properties that can potentially reduce the risk of infection, as many 
hard-to-heal wounds are colonized by bacteria but not yet infected. 
These commenters also asserted that this may lead to a further 
reduction in antibiotic prescriptions during treatment of hard-to-heal 
wounds.
    Response: We thank the applicant and commenters for their input. 
After consideration of the comments received, we remain concerned that 
the applicant has not provided sufficient clinical evidence to 
demonstrate OCMTM's antimicrobial properties in human 
subjects. The provided case study of OCMTM's decolonization 
effects includes only three patients with hard-to-heal wound etiologies 
and compares OCMTM to non-treatment of periwound skin, 
rather than wound beds of similar etiology treated with the standard of 
care.\126\ Therefore, we do not believe this demonstrates that 
OCMTM application to the wound bed results in fewer 
bacterial infections.
---------------------------------------------------------------------------

    \126\ Cole, W. (2024). Treatment of bacterially contaminated 
lower extremity ulcers with a fatty acid-containing wound matrix: a 
case series. Journal of Wound Care, 33(8):554-559. https://doi.org/10.12968/jowc.2024.0101.
---------------------------------------------------------------------------

    Concerning the applicant and other commenters' statements about the 
claim about antimicrobial properties, we note that these claims appear 
to be conditional. While the applicant compared OCMTM's 
decolonization function to topical prophylactic decolonization methods, 
its claims that OCMTM has the potential to reduce the 
probability of bacterial colonization, play a preventative role in 
wound management, and reduce the risk of infection are not proven. In 
addition, we note that the applicant did not provide the referenced 
joint CDC/FDA workshop materials describing this study's methods, so we 
are unable to verify whether topical prophylactic decolonization 
methods are analogous to OCMTM. Therefore, we remain 
concerned about the lack of evidence demonstrating that 
OCMTM antimicrobial properties improve outcomes by reducing 
the risk of infection.
    In regard to the applicant's plan to pursue further studies to 
demonstrate substantial clinical improvement in this area, we are 
unable to consider future evidence for OCMTM's current 
transitional pass-through payment application.
    Comment: In response to our concerns that the submitted evidence 
does not adequately support the applicant's claim that OCMTM 
demonstrates substantial clinical improvement in product safety in 
comparison to similar products, the applicant stated that FDA's 
clearance of OCMTM through the 510(k) application process 
involves a comprehensive review of the device's safety and performance 
data. Specifically, the applicant asserted that

[[Page 94198]]

OCMTM is among the minority of advanced wound therapies that 
have passed rigorous FDA review of safety and effectiveness. In 
addition, the applicant stated that Bettle, et. al. (2024) demonstrates 
that OCMTM has no potential allergenicity, no potential 
sensitization, and resulted in no known product-related adverse events. 
The applicant asserted that this was further corroborated by 
OCMTM's most recent, real-world evidence dataset presented 
in Dhillon, et. al. (2024), which showed that treatment with 
OCMTM resulted in only eight potential product-related 
adverse events and no serious adverse events.
    Response: We appreciate the applicant's input. However, we maintain 
our concern that the submitted evidence does not demonstrate 
OCMTM's substantial clinical improvement in product safety 
in comparison to similar products. We acknowledge that FDA's 510(k) 
clearance process includes a comprehensive review to evaluate the 
safety and effectiveness of a new product, however, demonstrating 
substantial clinical improvement for device pass-through payment is 
different from FDA's 510(k) process. While the applicant has shown that 
OCMTM is safe, we continue to believe that the applicant has 
not shown that OCMTM demonstrates substantial clinical 
improvement in product safety in comparison to currently available 
therapies. For the reasons discussed, we do not believe that 
OCMTM represents a substantial clinical improvement relative 
to existing therapies currently available as discussed in the summary 
above. Therefore, we have determined that OCMTM does not 
meet the substantial clinical improvement criterion at Sec.  
419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that OCMTM 
would be reported with HCPCS codes as shown in Table 125.
[GRAPHIC] [TIFF OMITTED] TR27NO24.156

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant utilized the CY 2024 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5052, which had a CY 2024 payment rate of 
$379.92 at the time the application was received. HCPCS code 11042 in 
APC 5052 had a device offset amount of $0.04 at the time the 
application was received. According to the applicant, the cost of 
OCMTM is $1,320.00.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25

[[Page 94199]]

percent of the applicable APC payment amount for the service related to 
the category of devices. The average reasonable cost of $1,320.00 of 
OCMTM is 347.44 percent of the applicable APC payment amount 
for the service related to the category of devices of $379.92 
(($1,320.00/$379.92) x 100 = 347.44 percent). Therefore, we stated that 
we believe OCMTM meets the first cost significance 
requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $1,320.00 for 
OCMTM is 3,300,000.00 percent of the cost of the device-
related portion of the APC payment amount for the related service of 
$0.04 (($1,320.00/$0.04) x 100 = 3,300,000.00 percent). Therefore, we 
stated that we believe OCMTM meets the second cost 
significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $1,320.00 for OCMTM and the portion of 
the APC payment amount for the device of $0.04 is 347.43 percent of the 
APC payment amount for the related service of $379.92 ((($1,320.00-
$0.04)/$379.92) x 100 = 347.43 percent). Therefore, we stated that we 
believe OCMTM meets the third cost significance requirement.
    We invited public comment on whether OCMTM meets the 
device pass-through payment criteria discussed in this section, 
including the cost criterion for device pass-through payment status.
    Comment: Several non-applicant commenters asserted that 
OCMTM warrants transitional pass-through payments because 
the current construction of the APC bundle includes the services for 
hard-to-heal wounds but its associated payment rate (i.e., the 
reimbursement amount for the services assigned to the APC) is not 
sufficient to cover the cost of more advanced treatments, such as the 
OCMTM, which are needed to manage complex wounds. The 
commenters stated that they strongly support the use of 
OCMTM in the outpatient hospital setting; however, they 
asserted that the costs are too high given the current APC assignment 
and its payment rate. The commenters stated that without access to OCM 
in the hospital outpatient setting patients may be treated in other 
settings, which can be costlier since these other settings bill 
separately for advanced wound therapy. The commenters stated that 
OCMTM represents a clinically effective solution for hard-
to-heal wounds that, at present, cannot be used in the outpatient 
hospital setting given that the cost of using OCMTM is not 
adequately reflected in the payment rate for the APC to which the 
product is assigned under the OPPS.
    Response: We thank the commenters for their additional input. We 
acknowledge the commenters' concerns about the cost of OCMTM 
as a treatment option in the hospital outpatient department; however, 
we note that in order to be eligible for device pass-through, a device 
must meet all requirements for pass-through payment status in our 
regulation at Sec.  419.66, in addition to determining that the cost of 
the device is not insignificant, as described in Sec.  419.66(d).
    Comment: The applicant thanked CMS for agreeing that it met the 
cost criterion.
    Response: We appreciate the applicant's comment. After 
consideration of the public comment received and our findings from the 
first, second, and third cost significance tests, we agree that 
OCMTM meets the cost significance criteria specified at 
Sec.  419.66(d).
    After consideration of the public comments received and our review 
of the device pass-through application, we are not approving 
OCMTM for transitional pass-through payment status in CY 
2025 because the product does not meet the substantial clinical 
improvement criterion at Sec.  419.66(c)(2).
(c) OPN NC
    SIS Medical AG submitted an application for a new device category 
for transitional pass-through payment status for OPN NC for CY 2025. 
Per the applicant, OPN NC percutaneous transluminal coronary 
angioplasty (PTCA) dilatation catheter is a sterile, single-use, rapid 
exchange catheter with a distal non-compliant double layer balloon 
attached to a flexible distal polymer shaft. The applicant explained 
that OPN NC is intended for balloon dilatation of the stenotic portion 
of a coronary artery or bypass graft stenosis for the purpose of 
improving myocardial perfusion. Per the applicant, the balloon 
dilatation catheter is also indicated for post deployment expansion of 
balloon expandable coronary stents. The applicant asserted that the 
device is inserted to position a balloon in a calcified coronary lesion 
where super-high pressure is used with the intention of achieving 
acceptable expansion of the lesion. Per the applicant, radiopaque 
balloon marker bands enable accurate positioning of the device, and 
shaft markers for brachial and femoral techniques are also in place. 
According to the applicant, OPN NC is intended for all patient 
populations.
    Please refer to the online application posting for OPN NC, 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP231214L8XQC, for additional detail describing the device and the 
disease treated by the device.
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on March 14, 2022, the applicant received 510(k) 
clearance from FDA for OPN NC as a device intended for balloon 
dilatation of the stenotic portion of a coronary artery or bypass graft 
stenosis for the purpose of improving myocardial perfusion. The balloon 
dilatation catheter is also indicated for post deployment expansion of 
balloon expandable coronary stents. We received the application for a 
new device category for transitional pass-through payment status for 
OPN NC on December 14, 2023, which is within 3 years of the date of the 
initial FDA marketing authorization.
    We invited public comment on whether OPN NC meets the newness 
criterion at Sec.  419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), one commenter stated that they believe OPN NC meets the 
newness criterion at Sec.  419.66(b)(1) because unlike prior balloons 
including noncompliant balloons, it is specially designed to achieve 
35-55 atmospheres (atm) of pressure, which is far beyond the 20 atm of 
conventional balloons. The commenter further noted that this can be 
particularly and uniquely useful for under-expanded stents from 
fibrotic or calcified vessels, which even new technologies such as 
lithotripsy and older technologies such as laser are unable to expand.
    Response: We appreciate the commenter's input; however, the comment 
relates to an assessment of whether the technology meets the 
substantial clinical improvement criterion rather than the newness 
criterion. As such, we have addressed

[[Page 94200]]

this comment in the substantial clinical improvement criterion 
discussion below.
    We received the application for a new device category for 
transitional pass-through payment status for OPN NC on December 14, 
2023, which is within 3 years of March 14, 2022, the date of FDA 510(k) 
clearance. Based on our review of the application, we have determined 
that OPN NC meets the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, comes in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. Per the applicant, OPN NC is integral to the service provided 
and is used for one patient only. While the applicant did not 
explicitly state whether the device is surgically inserted or comes in 
contact with human tissue, per the device description, OPN NC is 
inserted into the patient for balloon dilation of the stenotic portion 
of a coronary artery or bypass graft stenosis for the purpose of 
improving myocardial perfusion.
    We invited public comment on whether OPN NC meets the eligibility 
criterion at Sec.  419.66(b)(3).
    Comment: One commenter submitted a comment stating that they 
believe that OPN NC meets the Sec.  419.66(b)(3) criterion because it 
is integral to the service provided and used for one patient only, that 
is, it is disposable.
    Response: We appreciate the commenter's input. With respect to the 
eligibility criterion at Sec.  419.66(b)(3), as noted in the proposed 
rule, the applicant did not indicate that OPN NC is surgically inserted 
or comes in contact with human tissue; however, because the device is 
inserted into the patient for balloon dilation of the stenotic portion 
of a coronary artery or bypass graft stenosis for the purpose of 
improving myocardial perfusion, we believe that OPN NC is surgically 
inserted and comes in contact with human tissue. In addition, we agree 
with the applicant that OPN NC is an integral part of the service 
furnished and used for one patient only. After consideration of the 
public comment we received and our review of the application, we have 
determined that OPN NC meets the eligibility criterion at Sec.  
419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not address whether OPN NC is 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered, or if OPN 
NC is a supply or material furnished incident to a service.
    We invited public comments on whether OPN NC meets the exclusion 
criterion at Sec.  419.66(b)(4).
    Comment: With regards to criterion Sec.  419.66(b)(4), one 
commenter stated that OPN NC is not equipment.
    Response: We appreciate the commenter's input. With respect to the 
eligibility criterion at Sec.  419.66(b)(4), as noted in the proposed 
rule, the applicant did not indicate that OPN NC is not equipment, an 
instrument, apparatus, implement, or item of this type for which 
depreciation and financing expenses are recovered, or if OPN NC is a 
supply or material furnished incident to a service; however, because 
the device is inserted into a calcified coronary lesion where super-
high pressure is used for the purpose of improving myocardial 
perfusion, we believe that OPN NC is not a supply or material furnished 
incident to a service. In addition, OPN NC is a single-use PTCA 
dilatation catheter with a distal non-compliant double layer balloon 
attached to a flexible distal polymer shaft, and therefore does not 
appear to be equipment, an instrument, apparatus, implement, or item of 
this type for which depreciation and financing expenses are recovered 
as depreciation assets. After consideration of the public comment we 
received and our review of the application, we have determined that OPN 
NC meets the eligibility criterion at Sec.  419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant described OPN 
NC as a PTCA dilatation catheter with a distal non-compliant double 
layer balloon attached to a flexible distal polymer shaft. According to 
the applicant, no previous or existing device categories for pass-
through payment appropriately describe OPN NC. Per the applicant, the 
device category, C1725 (Catheter, transluminal angioplasty, non-laser 
(may include guidance, infusion/perfusion capability)) does not 
appropriately describe OPN NC, because OPN NC is a super high pressure, 
non-compliant double (twin) layer balloon. Based on the description the 
applicant provided, OPN NC is a transluminal vascular dilatation 
catheter with a balloon intended for dilatation of the stenotic portion 
of a coronary artery or bypass graft stenosis for the purpose of 
improving myocardial perfusion, which is consistent with the devices 
described by C1725. In this context, we stated that we believe OPN NC 
may be similar to the devices described by C1725, and therefore, OPN NC 
may also be appropriately described by C1725.
    We invited public comment on whether OPN NC meets the device 
category criterion at Sec.  419.66(c)(1).
    Comment: In response to our concerns that OPN NC may be 
appropriately described by C1725, one commenter commented that OPN NC 
is similar in purpose and function to other devices under C1725; 
however, the double-layer construction is unique in the coronary space, 
and enables the high-pressure inflation needed for angioplasty of 
resistant lesions. The commenter further commented that while this is 
similar in mechanism to conventional angioplasty balloons (dilatation 
through pressure, rather than through intravascular lithotripsy (IVL)), 
it creates a unique functionality of using pressure to dilate lesions 
and stents that would otherwise be resistant to dilatation. Another 
commenter stated that it thinks OPN NC should be reimbursed and 
assigned the same codes as coronary IVL (C1761) as it is used for 
similar patients/treatments.
    Response: We appreciate the commenters' input. We do not agree that 
OPN NC is described by the C1761 (Catheter, transluminal intravascular 
lithotripsy, coronary) device category as suggested. We note that C1761 
is used to describe coronary IVL devices that are used to perform IVL, 
a methodology that delivers sonic pressure waves to break calcium 
deposits in a coronary vessel, which is inconsistent with the function 
and purpose of OPN NC. As such, we do not believe that C1761 describes 
OPN NC. However, we continue to believe OPN NC is similar to the 
devices described by C1725. Specifically, C1725 (Catheter, transluminal 
angioplasty, non-laser (may include guidance, infusion/

[[Page 94201]]

perfusion capability)) is used to describe devices that rely on 
inflation of a balloon to directly apply pressure to plaque in a vessel 
during an angioplasty procedure. The applicant stated that OPN NC is a 
transluminal vascular dilatation catheter with a balloon intended for 
dilatation of the stenotic portion of a coronary artery or bypass graft 
stenosis for the purpose of improving myocardial perfusion, which is 
consistent with the devices described by C1725. While we recognize that 
OPN NC may vary in construction from other devices described by C1725, 
we nevertheless continue to believe that OPN NC is appropriately 
described by C1725. Therefore, we have determined that OPN NC does not 
meet the device category eligibility criterion at Sec.  419.66(c)(1) 
because it is appropriately described by an existing category or a 
category previously in effect.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the 
device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. According to the applicant, OPN NC 
represents a substantial clinical improvement over existing 
technologies in the management of patients with highly calcified 
coronary lesions by providing optimal lumen expansion and demonstrating 
better outcomes in lesion treatment compared to other devices.
    The applicant provided the following evidence to support its claim: 
three peer-reviewed studies; a PowerPoint presenting an indirect 
comparison of OPN NC versus another device, Shockwave Intravascular 
Lithotripsy (IVL) System with Shockwave C2 Coronary Intravascular 
Lithotripsy (IVL) Catheter (Shockwave),\127\ that uses IVL to treat 
calcium lesions; a spreadsheet summarizing the data presented in the 
PowerPoint document comparing OPN NC and Shockwave; and a background 
article providing an expert consensus statement from the Society for 
Cardiovascular Angiography & Interventions on management of in-stent 
restenosis and stent thrombosis.\128\ Table 126 summarizes the 
applicant's assertion regarding the substantial clinical improvement 
criterion. Please see the online posting for OPN NC for the applicant's 
complete statements regarding the substantial clinical improvement 
criterion and the supporting evidence provided.
---------------------------------------------------------------------------

    \127\ CMS approved an application for the Shockwave IVL System 
with Shockwave C2 Coronary IVL Catheter as a new device category for 
transitional pass-through payment status and established HCPCS code 
C1761 as a new device category effective July 1, 2021. We refer 
readers to the CY 2022 OPPS/ASC final rule with comment period (86 
FR 63577 through 63583) for a full discussion the Shockwave IVL 
System with Shockwave C2 Coronary IVL Catheter application and 
decision.
    \128\ Background articles are not included in the following 
table but can be accessed via the online posting for the technology.
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BILLING CODE 4120-01-P

[[Page 94202]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.157

[[Page 94203]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.158

BILLING CODE 4120-01-C
    After review of the information provided by the applicant, we 
stated that we have the following concerns regarding whether OPN NC 
meets the substantial clinical improvement criterion. The applicant 
presented the published results of one study of 50 patients undergoing 
optical coherence tomography (OCT)-guided percutaneous coronary 
interventions, including OPN NC, to treat calcified lesions (Natalia 
Pinilla-Echeverri, et al., 2023). The retrospective study aimed to gain 
a better understanding of OPN NC calcium modification mechanisms, such 
as creating deep and wide calcium fractures during percutaneous 
coronary interventions with the intended clinical outcome of improving 
myocardial perfusion. Per the applicant, the study showed a primary 
efficacy endpoint of >= 80 percent expansion of the mean reference 
lumen area achieved in 80 percent of the patients treated. The 
applicant also presented a retrospective study evaluating 326 highly 
resistant coronary lesions that had failed to achieve adequate post-
dilatation luminal gain with conventional NC-balloons (Secco, et al., 
2019). Per the study authors, an OPN NC balloon was inflated to achieve 
a uniform balloon expansion after the failed attempts with conventional 
NC-balloons. According to the authors, 413 OPN NC balloons were used 
(1.26 per lesion), and angiographic success was achieved in 318 lesions 
(97.5 percent), procedural success was achieved in 315 lesions (96.6 
percent), and technical success was achieved in 288 patients (90.5 
percent). The study authors also reported that the OPN NC balloon alone 
was able to achieve adequate expansion in 288 cases (90.5 percent), 
while in 30 patients, rotational atherectomy was needed and performed 
because of the impossibility to cross the lesion with a proper sized 
OPN NC balloon. The applicant presented a third study focused on 
patients needing treatment of in-stent restenosis (ISR) (Seiler, et 
at., 2023). According to the authors, 208 ISR lesions were treated in 
188 patients. The study authors concluded that the use of OPN NC for 
treatment of ISR lesions was safe (primary endpoint of the study) and 
may lead to a low rate of target lesion/vessel failure (TLF/TVF) during 
long-term follow-up. We noted that these studies were not randomized 
clinical trials with a comparator to demonstrate clinical improvement. 
Instead, the applicant presented results from registries using non-
randomized, retrospective study designs without a control group, which 
we stated that we believe may reduce the strength of the evidence 
presented to support the claim. The authors noted in all three studies 
that randomized trials may be needed to compare OPN NC to other similar 
devices.
    Further, we also noted that in one of the studies (Natalia Pinilla-
Echeverri, et al., 2023), the study authors indicated that use of other 
calcium lesion modification devices prior to applying OPN NC to the 
patients in that study is a potential confounder that could result in 
overestimation of OPN NC's effectiveness. The study authors stated that 
this was controlled by having an exclusive OCT pullback pre-OPN NC but 
indicated that calcium plaque modification caused by other devices may 
not be evident on OCT. The study authors further noted that since other 
devices were used before OPN NC, they could not comment on calcium 
modification from OPN NC use upfront or an OPN NC-only strategy. We 
welcomed any additional evidence supporting the claim that that OPN NC 
provides optimal lumen expansion and the impact of using other calcium 
lesion modification devices prior to applying OPN NC to a patient.
    With regard to safety, in the Natalia Pinilla-Echeverri, et al. 
(2023) study, one patient was found to have had a flow limiting 
dissection requiring stent deployment; however, no coronary 
perforations or no-reflow were reported. In the Secco, et al. (2019) 
study, three patients (0.9 percent) were reported to have experienced 
coronary rupture after balloon inflation and were successfully treated 
with stent implantation. In the Seiler, et al. (2023) study, coronary 
perforation was reported to have occurred twice (0.96 percent) with 
both successfully treated by balloon inflation and implantation of a 
covered stent; a total of nine (4.3 percent) locally limited, but flow 
limiting dissections were reported to have occurred and were 
successfully treated with implantation of a drug-eluting stent; 4 (1.9 
percent) cases of flow deterioration due to embolization of thrombotic 
material (no-reflow) were found; and one patient (0.5 percent) was 
reported to have suffered from immediate vessel closure after stent 
implantation. The application did not address whether the use of the 
device is safe beyond the data on safety endpoints presented in the 
studies provided. We welcomed additional studies or evidence discussing 
the risk of adverse events with the use of these types of non-compliant 
balloons.
    Finally, we expressed concern that the evidence may not demonstrate 
that

[[Page 94204]]

OPN NC substantially improves the treatment of an illness when compared 
to the benefits of other available treatments. The applicant asserted 
in a supporting document included in the application, that OPN NC is 
not the only FDA-authorized device with an indication for balloon 
dilatation of the stenotic portion of a coronary artery or bypass graft 
stenosis for the purpose of improving myocardial perfusion and also an 
indication for post deployment expansion of balloon expandable coronary 
stents. OPN NC was determined to be substantially equivalent to a 
legally marketed device, the NC Euphora Rapid Exchange Balloon 
Dilatation Catheter (Medtronic Inc; K141090), which received 510(k) 
clearance on August 15, 2014. The FDA 510(k) summary for OPN NC 
indicated that the devices share similar technological characteristics. 
In fact, the FDA 510(k) summary indicated that OPN NC differs only in 
the rated burst pressure of the balloon. We noted that the applicant 
did not compare the nominated device with the NC Euphora Rapid Exchange 
Balloon Dilatation Catheter, which we believe may be similar. While the 
applicant asserted that OPN NC is the only super-high pressure, non-
compliant twin layer balloon dilatation catheter available in the U.S. 
and the only device on the market of this nature and capability, we 
stated we would be interested in additional information to demonstrate 
whether the nominated device demonstrates a substantial clinical 
benefit in comparison to other similar NC balloon devices.
    We invited public comment on whether OPN NC meets the substantial 
clinical improvement criterion at Sec.  419.66(c)(2).
    Comment: We received multiple comments supporting the approval of 
OPN NC based on personal experience with the product and opinions on 
the clinical benefit of utilizing OPN NC. The commenters described 
their experiences using OPN NC and asserted that it works where other 
interventional strategies, such as traditional non-compliant balloons, 
atherectomy or intravascular lithotripsy have failed. The commenters 
added that they believe OPN NC is unique in allowing full expansion of 
extremely resistant lesions, particularly in the treatment of previous 
stents with restenosis due to under-expansion of underlying calcium and 
where the presence of the stent limits the use of technology such as 
atherectomy to modify the calcium. In addition, the commenters stated 
that in some cases OPN NC may be used as a stand-alone treatment, 
particularly in cases involving previously under-expanded stents. 
Further, the commenters asserted that they believe OPN NC is unique in 
achieving these results because it is a super high-pressure 
noncompliant balloon consisting of a double balloon layer and 
therefore, the rated burst pressure is substantially higher than that 
of a traditional non-compliant balloon. One commenter stated that the 
rated burst pressure for OPN NC is 35 atms of pressure, which is 
significantly higher than traditional non-compliant angioplasty 
balloons that have rated burst pressures of 20-24 atms of pressure. One 
commenter stated that OPN NC is specially designed to achieve 35-55 
atms of pressure.\129\ While this commenter addressed this device 
feature in reference to the Sec.  419.66(b)(1) in their comment, we 
believe the comment was intended to address to address the substantial 
clinical improvement criterion, and therefore is included in the 
substantial clinical improvement discussion.
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    \129\ The applicant indicated 35 atms of pressure as the rated 
burst pressure in the information included in the application.
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    One commenter acknowledged that while the OPN NC device has not 
been tested in randomized trials, the commenter believes the device has 
demonstrated utility in cases of prior device failure, i.e., where 
conventional balloons have failed to dilate a lesion and effectively 
demonstrates its use case in selected circumstances. The commenter 
further commented that, as a result, they believe that the OPN NC 
balloon is substantially different from the predicate NC Euphora Rapid 
Exchange Balloon Dilatation Catheter.
    Response: While we appreciate the commenters input regarding their 
experiences with OPN NC, we did not receive any additional data to 
address our concerns related to the applicant's claims of substantial 
clinical improvement. As such, we maintain our concerns listed in the 
CY 2025 OPPS/ASC proposed rule regarding the lack of randomized trials 
data, the lack of information about comparators, potential confounders 
not being accounted for, potential risk of adverse events, limited data 
supporting substantial improvement in the treatment of an illness, and 
insufficient evidence comparing OPN NC to its predicate. Several 
commenters asserted that OPN NC as an intervention yields results where 
other interventions failed. These commenters stated that OPN NC is 
unique in allowing full expansion of extremely resistant lesions. 
Commenters further stated that OPN NC is unique in treatment compared 
to previous stents with restenosis due to under-expansion of underlying 
calcium where the presence of the stent limits the use of technology 
such as atherectomy to modify the calcium. We note that we did not 
receive comments from the applicant. While we appreciate the 
information provided by the commenters, we note that no additional 
evidence was submitted to support the applicant's claims and we 
continue to have the same concerns discussed in the proposed rule.
    After consideration of the public comments we received and our 
review of the application, we do not believe that OPN NC represents a 
substantial clinical improvement relative to existing therapies 
currently available and have determined that OPN NC does not meet the 
device eligibility criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that OPN NC would be 
reported with HCPCS codes shown in Table 127.

[[Page 94205]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.159

    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant did not provide 
details regarding the payment rates it applied for the three tests of 
the cost criterion. For our calculations, we used APC 5192, which had a 
CY 2023 payment rate of $5,215.40 at the time the application was 
received. HCPCS code 92920 in APC 5192 had a CY 2023 device offset 
amount of $1609.99 at the time the application was received.
    We noted that the applicant provided two cost amounts for OPN NC: 
(1) a price list showing the cost of OPN NC as $2,200.00; and (2) a 
product list that lists the cost of OPN NC as $1,200.00. We further 
noted that the cost included on the product list provided by the 
applicant for OPN NC ($1,200.00) does not pass any of the three tests 
of the cost criterion, but the cost included on the price list for OPN 
NC ($2,200.00) passes all three tests of the cost criterion.
    When performed with the price list cost for OPN NC of $2,200.00, we 
noted the following calculation outcomes: Sec.  419.66(d)(1), the first 
cost significance requirement, provides that the estimated average 
reasonable cost of devices in the category must exceed 25 percent of 
the applicable APC payment amount for the service related to the 
category of devices. The average reasonable cost of $2,200.00 for OPN 
NC is 42.18 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,215.40 (($2,200.00/
$5,215.40) x 100 = 42.18 percent). Therefore, when utilizing the price 
list cost of $2,200.00 provided, we stated that we believe OPN NC meets 
the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $2,200.00 for 
OPN NC is 136.65 percent of the cost of the device-related portion of 
the APC payment amount for the related service of $1,609.99 ($2,200.00/
$1,609.99) x 100 = 136.65 percent). Therefore, when utilizing the price 
list cost of $2,200.00 provided, we stated that we believe OPN NC meets 
the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $2,200.00 for OPN NC and the portion of the APC 
payment amount for the device of $1,609.99 is 11.31 percent of the APC 
payment amount for the related service of $5,215.40 ((($2,200.00-
$1,609.99)/$5,215.40) x 100 = 11.31 percent). Therefore, when utilizing 
the price list cost of $2,200.00 provided, we stated that we believe 
OPN NC meets the third cost significance requirement.
    When performed with the product list cost for OPN NC of $1,200.00, 
we noted the following calculation outcomes: Sec.  419.66(d)(1), the 
first cost significance requirement, provides that the estimated 
average reasonable cost of devices in the category must exceed 25 
percent of the applicable APC payment amount for the service related to 
the category of devices. The average reasonable cost of $1,200.00 for 
OPN NC is 23.01 percent of the applicable APC payment amount for the 
service related to the category of devices of $5,215.40 (($1,200.00/
$5,215.40) x 100 = 23.01 percent). Therefore, when utilizing the 
product list cost of $1,200.00 provided, we stated that we believe OPN 
NC does not meet the first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $1,200.00 for 
OPN NC is 74.53 percent of the cost of the device-related portion of 
the APC payment amount for the related service of $1,609.99 ($1,200.00/
$1,609.99) x 100 = 74.53 percent). Therefore, when utilizing the 
product list cost of $1,200.00 provided, we stated that we believe OPN 
NC does not meet the second cost significance requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $1,200.00 for OPN NC and the portion of the APC 
payment amount for the device of $1,609.99 is negative 7.86 percent of 
the APC payment amount for the related service of $5,215.40 
((($1,200.00-$1,609.99)/$5,215) x 100 =

[[Page 94206]]

-7.86 percent). Therefore, when utilizing the product list cost of 
$1,200.00 provided, we stated that we believe OPN NC does not meet the 
third cost significance requirement.
    Based on the conflicting amounts provided for the reasonable cost 
of OPN NC, we questioned whether OPN NC meets the cost significance 
criterion. We welcomed additional information regarding this 
inconsistency on the estimated average reasonable cost of OPN NC.
    We invited public comment on whether the OPN NC meets the device 
pass-through payment criteria discussed in this section, including the 
cost criterion for device pass-through payment status.
    We did not receive any comments regarding whether OPN NC meets the 
cost significance criteria as described at Sec.  419.66(d). As noted in 
the proposed rule, the applicant provided two different amounts for the 
reasonable cost of OPN NC. For this final rule with comment period, we 
will use the submitted device cost of $2,200 stated in the price list 
in the proposed rule to perform our cost calculations. As such, based 
on our findings from the first, second, and third cost significance 
tests, we believe OPN NC meets the eligibility criterion at Sec.  
419.66(d).
    After consideration of the public comments we received and our 
review of the device pass-through application, we are not approving OPN 
NC for transitional pass-through payment status in CY 2025 because the 
product does not meet eligibility criteria at Sec.  419.66(c)(1) and 
(2).
(d) OSCAR[supreg] Peripheral Multifunctional Catheter
    Biotronik, Inc. submitted an application for a new device category 
for transitional pass-through payment status for OSCAR[supreg] 
Peripheral Multifunctional Catheter (OSCAR[supreg]) for CY 2025. 
According to the applicant, OSCAR[supreg] is a tool used to simplify 
the treatment of peripheral artery disease (PAD), a disease process 
characterized by the narrowing of arteries that supply blood to the 
limbs, usually the legs. In severe cases, PAD can cause tissue death 
and gangrene, leading to amputation. Per the applicant, OSCAR[supreg] 
can simplify the process of peripheral interventions, reduce the time 
required to perform the procedure and the need for repeat procedures, 
reduce the risk of complications associated with changing out multiple 
medical devices, minimize radiation exposure, and enhance patient 
comfort.
    Please refer to the online application posting for OSCAR[supreg], 
available at https://mearis.cms.gov/public/publications/device-ptp/DEP230601F6NM2, for additional detail describing the device and the 
disease treated by the device.
    Comment: A few commenters stated that OSCAR[supreg] meets the 
criteria for transitional pass-through payment. Commenters stated that 
they believe OSCAR[supreg] is highly effective and safe in crossing 
multiple occluded vessels of different morphologies above and below the 
knee, and is a necessary tool to treat patient with critical limb 
ischemia and calcific blockages of the arteries in the legs. One 
commenter asserted that OSCAR[supreg] will save money for hospitals 
because the device will result in less equipment use, faster procedure 
times, and higher rates of success and case completion.
    Response: We appreciate the commenters' input and support for the 
OSCAR[supreg] application for transitional pass-through payment. We 
have taken these comments into consideration in our final determination 
regarding pass-through status for OSCAR[supreg].
    As stated previously, to be eligible for transitional pass-through 
payment under the OPPS, a device must meet the criteria at Sec.  
419.66(b)(1) through (4). With respect to the newness criterion at 
Sec.  419.66(b)(1), on July 5, 2022, the applicant received 510(k) 
clearance from FDA for OSCAR[supreg] as a device to be used for 
percutaneous transluminal interventions in the peripheral vasculature 
to provide support during access into, and to dilate stenoses in, 
femoral, popliteal and infrapopliteal arteries. The product is also 
intended for injecting radiopaque contrast media for angiography. We 
received the application for a new device category for transitional 
pass-through payment status for OSCAR[supreg] on June 1, 2023, which is 
within 3 years of the date of the initial FDA marketing authorization.
    We invited public comment on whether OSCAR[supreg] meets the 
newness criterion at Sec.  419.66(b)(1).
    Comment: With respect to the newness criterion at Sec.  
419.66(b)(1), the applicant reiterated that the pass-through payment 
application for OSCAR[supreg] is within the timeframe of 3 years post-
FDA approval; therefore, the newness criterion at Sec.  419.66(b)(1) is 
met.
    Response: We appreciate the applicant's input. We received the 
application for a new device category for transitional pass-through 
payment status for OSCAR[supreg] on June 1, 2023, which is within 3 
years of July 5, 2022, the date of FDA 510(k) clearance. Based on our 
review of the application, we have determined that OSCAR[supreg] meets 
the newness criterion at Sec.  419.66(b)(1).
    With respect to the eligibility criteria at Sec.  419.66(b)(3), the 
device must be an integral part of the service furnished, used for one 
patient only, come in contact with human tissue, and be surgically 
inserted or implanted, or applied in or on a wound or other skin 
lesion. The applicant did not explicitly state whether OSCAR[supreg] is 
integral to the service provided. While the applicant did not 
explicitly state whether the device is used for one patient only or 
whether it comes in contact with human tissue, per the device 
description, OSCAR[supreg] is surgically inserted into the lower 
extremity peripheral vascular system and is single-use.
    We invited public comments on whether OSCAR[supreg] meets the 
eligibility criterion at Sec.  419.66(b)(3).
    Comment: The applicant submitted a comment confirming that the 
OSCAR[supreg] meets the eligibility criterion at Sec.  419.66(b)(3) 
because it is an integral part of the service furnished, is used for 
one patient only, comes into contact with human tissue, and is 
surgically inserted or implanted.
    Response: We appreciate the applicant's input. We agree with the 
applicant that OSCAR[supreg] is an integral part of the service 
furnished, used for one patient only, comes in contact with human 
tissue, and is surgically implanted or inserted, or applied in or on a 
wound or other skin lesion. After consideration of the public comments 
received and our review of the application, we have determined that 
OSCAR[supreg] meets the eligibility criterion at Sec.  419.66(b)(3).
    With respect to the exclusion criterion at Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker). The applicant did not indicate whether OSCAR[supreg] is 
equipment, an instrument, apparatus, implement, or item of this type 
for which depreciation and financing expenses are recovered, or if 
OSCAR[supreg] is a supply or material furnished incident to a service.
    We invited public comment on whether OSCAR[supreg] meets the 
exclusion criterion at Sec.  419.66(b)(4).

[[Page 94207]]

    Comment: The applicant submitted a comment confirming that 
OSCAR[supreg] meets the eligibility criterion at Sec.  419.66(b)(4) 
because it is not equipment, an instrument, apparatus, implement, or 
item for which depreciation and financing expenses are recovered. The 
applicant also clarified that OSCAR[supreg] is not a supply or material 
furnished incident to a service.
    Response: We appreciate the applicant's input. We agree with the 
applicant that OSCAR[supreg] is not equipment, an instrument, 
apparatus, implement, or item of this type for which depreciation and 
financing expenses are recovered as depreciation assets, or a material 
or supply furnished incident to a service. After consideration of the 
public comments received and our review of the application, we have 
determined that OSCAR[supreg] meets the eligibility criterion at Sec.  
419.66(b)(4).
    In addition to the criteria at Sec.  419.66(b)(1) through (4), the 
criteria for establishing new device categories are specified at Sec.  
419.66(c). The first criterion, at Sec.  419.66(c)(1), provides that 
CMS determines that a device to be included in the category is not 
appropriately described by any of the existing categories or by any 
category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. The applicant asserted that 
OSCAR[supreg] is a combination device authorized by FDA with an 
indication to diagnose and treat peripheral vascular lesions, identify 
obstructions, and cross the areas of obstruction and restore blood flow 
using a single system. According to the applicant, no previous or 
existing device categories for pass-through payment appropriately 
describe OSCAR[supreg]. Per the applicant, OSCAR[supreg] has the 
functionality of multiple devices currently used during lower extremity 
peripheral vasculature interventions. The applicant provided multiple 
HCPCS codes that could describe some of the components of 
OSCAR[supreg]; however, only one of the codes provided, C1725 
(Catheter, transluminal angioplasty, non-laser (may include guidance, 
infusion/perfusion capability)), is a pass-through device category 
HCPCS code, and, therefore, C1725 is the only device category we 
evaluated for this criterion. Per the applicant, the device category 
C1725 does not appropriately describe OSCAR[supreg] because 
OSCAR[supreg] can cover the functionality of support catheters, several 
sizes of angioplasty balloons, chronic total occlusion crossing 
devices, reentry catheters, resistant lesion preparation devices, and 
dissection-reducing devices. According to the applicant, current pass-
through coding does not adequately capture OSCAR[supreg]'s full 
functionality and the added clinical and economic value derived from 
its simplification of peripheral vascular interventions.
    We noted, based on the description the applicant provided, that 
when the OSCAR[supreg] support catheter and OSCAR[supreg] dilator are 
combined with the OSCAR[supreg] PTA balloon, the device is used to 
complete a transluminal angioplasty, which is consistent with the 
devices described by C1725. In this context, we stated that we believe 
OSCAR[supreg] may be similar to the devices described by C1725 and, 
therefore, may be appropriately described by C1725.
    We invited public comment on whether OSCAR[supreg] meets the device 
category criterion at Sec.  419.66(c)(1).
    Comment: In response to our concerns that OSCAR[supreg] may be 
appropriately described by C1725, the applicant commented that while 
some functionality of OSCAR[supreg] is captured in C1725, 
OSCAR[supreg]'s functionality of crossing and lesion treatment is not 
described by C1725. According to the applicant, C1725 does not 
adequately capture OSCAR[supreg]'s multi-functionality because while 
C1725 describes non-laser catheters used for transluminal angioplasty, 
which may include guidance, infusion, or perfusion capability, 
OSCAR[supreg] facilitates the steps of percutaneous transluminal 
angioplasty (PTA) procedures through lesion access, lesion crossing, 
and lesions of different length treatment, achieved using only a single 
device for the entire procedure. The applicant reiterated that 
OSCAR[supreg] consists of a support catheter, dilator, and PTA, 
providing the possibility for several different configurations during 
peripheral vasculature intervention. Further, the applicant noted that 
with this versatility, OSCAR[supreg] also provides features that are 
not available with other devices, such as user-adjustable guidewire 
support for accessing and crossing lesions and a length-adjustable 
balloon for lesion-specific angioplasty.
    Response: We appreciate the applicant's input. After consideration 
of the public comments received and our review of the application, we 
continue to believe that C1725 appropriately describes OSCAR[supreg] 
because, as described by the applicant, when the OSCAR[supreg] support 
catheter and OSCAR[supreg] dilator are combined with the OSCAR[supreg] 
PTA balloon, the device is used to complete a transluminal angioplasty, 
which is consistent with the function of devices that may appropriately 
be described by C1725. The applicant asserted that OSCAR[supreg] 
provides features that are not available with other devices, such as a 
user-adjustable guidewire for accessing and crossing lesions and a 
length-adjustable balloon for lesion-specific angioplasty. However, 
based on the information provided, it remains unclear whether some of 
these additional items are simply supplies incidental to the service. 
If these additional items are supplies incidental to a service, the 
inclusion of these supplies along with a device to streamline a service 
does not materially differentiate the device from similar devices. 
Therefore, the multi-functionality differences of OSCAR[supreg] 
described by the applicant would not distinguish it from other devices 
described by the pass-through device category C1725.
    After consideration of the public comments received and our review 
of the application, we continue to believe that C1725 appropriately 
describes OSCAR[supreg]. Therefore, we have determined that 
OSCAR[supreg] does not meet the device category eligibility criterion 
at Sec.  419.66(c)(1) because it is appropriately described by an 
existing category or a category previously in effect.
    Comment: The applicant asserted that device category C1725 does not 
appropriately describe OSCAR[supreg] because the functionality of 
OSCAR[supreg] allows the operator to perform several procedural steps 
with only one device, which improves procedural efficiency, reduces 
radiation exposure for patient and operator, and reduces the number of 
devices used to complete the procedure. The applicant also stated that 
OSCAR[supreg] adds clinical and economic value derived from its 
simplification of peripheral vascular interventions.
    Response: We appreciate the applicant's input. We believe these 
comments are more appropriately related to the substantial clinical 
improvement criterion at Sec.  419.66(c)(2), and, therefore, we will 
take these comments into consideration in that discussion below.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines either of the following: (i) 
that a device to be included in the category has demonstrated that it 
will substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment; or (ii) for devices for which 
pass-through status will begin on or after January 1, 2020, as an 
alternative to the substantial clinical improvement criterion, the

[[Page 94208]]

device is part of the FDA's Breakthrough Devices Program and has 
received FDA marketing authorization for the indication covered by the 
Breakthrough Device designation. The applicant claimed that 
OSCAR[supreg] represents a substantial clinical improvement over 
existing technologies in the diagnosis and management of peripheral 
artery disease because it uses less equipment, cuts down procedure 
time, and mitigates risks like vascular damage, infections, and 
radiation exposure, thereby enhancing clinical efficiency and safety.
    The applicant provided four background documents supporting its 
substantial clinical improvement claim. Table 128 summarizes the 
applicant's assertions regarding the substantial clinical improvement 
criterion. Please see the online posting for OSCAR[supreg] for the 
applicant's complete statements regarding the substantial clinical 
improvement criterion and the supporting evidence provided.
[GRAPHIC] [TIFF OMITTED] TR27NO24.160

    After review of the information provided by the applicant, we 
stated we had the following concerns regarding whether OSCAR[supreg] 
meets the substantial clinical improvement criterion. First, the 
applicant did not submit peer-reviewed or published clinical evidence 
to substantiate clinical improvement over existing devices. The 
applicant submitted four background documents in support of 
OSCAR[supreg]: (1) a clinical benefit table, (2) a presentation on the 
Evaluation of Market Acceptance, (3) the OSCAR[supreg] U.S. Evaluation 
of Market Acceptance Report, and the (4) OSCAR[supreg] Clinical 
Evaluation Report. All four of these documents rely on data from the 
Evaluation of Market Acceptance. We noted these documents are not 
published or peer-reviewed, and reflect data collected for marketing 
purposes rather than clinical improvement purposes. The data included 
appear to be opinion-based survey questions asked of physicians 
recruited by the applicant for the Evaluation of Market Acceptance and 
noted that these documents suggest an implicit bias. We questioned the 
link between these documents and the claims the applicant made that 
OSCAR[supreg] shows substantial clinical improvement because it uses 
less equipment, cuts down procedure

[[Page 94209]]

time, and mitigates risks like vascular damage, infections, and 
radiation exposure, thereby enhancing clinical efficiency and safety. 
We requested clarification on how the supporting documents directly 
relate to the substantial clinical improvement claims.
    Further, we questioned how a collection of devices currently 
available on the market consolidated into a single packaged product 
demonstrates substantial clinical improvement. According to the 
applicant, with OSCAR[supreg], some procedures may be performed with a 
single device which cuts down procedure time and mitigates risks like 
vascular damage, infections, and radiation exposure, thereby enhancing 
clinical efficiency and safety. The applicant asserted several benefits 
of using OSCAR[supreg] over multiple devices, including reducing (1) 
the need to remove and replace multiple devices, which may reduce the 
incidence of complications like infection and vessel damage; (2) the 
need to use ill-fitting devices; (3) the need for multiple guidewires 
in several procedures; and (4) the incidence of complications, such as 
infections and vessel damage. However, we did not receive comparative 
data supporting the claim that OSCAR[supreg] offers superiority over 
currently available treatments in terms of clinical benefit or safety. 
The evidence provided did not discuss any advantages of using a single 
system of devices rather than multiple individual devices with diverse 
functionalities. We welcomed any additional evidence supporting these 
claims.
    Furthermore, per the applicant, OSCAR[supreg] is effective in 
preparing intravascular lesions for advanced interventions, 
particularly stenting, and by ensuring optimal lesion preparation, 
OSCAR[supreg] elevates the success rate of these procedures, enhances 
patient safety, and streamlines institutional operations. According to 
the applicant, OSCAR[supreg] can treat chronic total occlusions (CTOs) 
and incorporates reentry capabilities, features traditionally found in 
standalone devices. The applicant asserted this integration enhances 
patient safety, simplifies procedures, and elevates the efficiency of 
operations. However, we noted that the applicant did not provide 
clinical information in support of these claims. Again, we welcomed any 
additional evidence supporting these claims.
    In addition, we questioned whether OSCAR[supreg] can be 
sufficiently distinguished from similar existing technologies to 
demonstrate substantial clinical improvement. OSCAR[supreg] was 
determined to be substantially equivalent to a legally marketed device, 
the INFINITY Angioplasty Balloon CatheterTM, which received 
510(k) clearance on May 20, 2020. The FDA 510(k) summary for 
OSCAR[supreg] indicated that the devices share similar technological 
characteristics and that OSCAR[supreg] differs only in that it combines 
support catheters to be used with the dilator and balloon catheter. We 
did not receive data demonstrating how OSCAR[supreg] offers a 
substantial clinical improvement compared to the INFINITY Angioplasty 
Balloon CatheterTM. We stated that we would be interested in 
additional information to demonstrate whether the nominated device 
demonstrates a substantial clinical benefit in comparison to INFINITY 
Angioplasty Balloon CatheterTM.
    Finally, per the applicant, there are six device types that it 
believed OSCAR[supreg] is most closely related to: (1) workhorse 
guidewires (Abbott, Boston Scientific, Terumo, Medtronic, Biotronik, 
Cook Medical, Cordis); (2) premium guidewires (Abbott, Asahi Intecc, 
Boston Scientific, Cook Medical and more); (3) workhorse & premium 
support catheters (Philips, Boston Scientific, Cook Medical, Medtronic, 
Asahi Intecc, Teleflex and more); (4) angioplasty balloons (Abbott, BD 
Interventional, Biotronik, Cook Medical, Medtronic and more); (5) 
lesion preparation balloons (Philips, Medtronic, BD Interventional and 
Cagent Vascular); and (6) chronic total occlusion and reentry devices. 
We stated that we do not believe that OSCAR[supreg] is similar to the 
workhorse guidewires and premium guidewires listed because 
OSCAR[supreg] does not include guidewires. We welcomed additional 
information illustrating how OSCAR[supreg] is similar to the listed 
workhorse guidewires and premium guidewires and evidence demonstrating 
the benefits of OSCAR[supreg] over these other devices.
    While we noted that OSCAR[supreg] is comparable to other available 
technologies, we did not receive data demonstrating how OSCAR[supreg] 
offers a substantial clinical improvement compared to the workhorse 
guidewires and premium support catheters, angioplasty balloons, lesion 
preparation balloons, or chronic total occlusion and reentry devices 
and stated that we would be interested in additional evidence 
demonstrating the substantial clinical benefits of OSCAR[supreg] over 
these other devices.
    We stated that additional evidence comparing OSCAR[supreg] to 
existing technologies would be particularly helpful to determine 
whether the device demonstrates substantial clinical improvement over 
currently available treatments in the clinical setting where it is most 
likely to be used. Specifically, we welcomed published peer-reviewed 
clinical trials that show improved clinical outcomes, such as reduction 
in mortality, complications, subsequent interventions, future 
hospitalizations, recovery time, pain, or a more rapid beneficial 
resolution of the disease process compared to the standard of care.
    We invited public comment on whether OSCAR[supreg] meets the device 
category criterion at Sec.  419.66(c)(2)(i).
    Comment: In response to our concerns that the applicant did not 
provide sufficient peer-reviewed or published evidence to substantiate 
OSCAR[supreg]'s clinical improvement over existing devices, the 
applicant commented that other data sources are acceptable for 
transitional pass-through payment applications to prove substantial 
clinical improvement. Specifically, the applicant asserted that the 
provided documents show two sources of evidence: internal benchmark 
tests and a real-world user evaluation.
    Per the applicant, the clinical benefit table provided summarizes 
the industry's state-of-the-art device procedural success and 
complication rates from published literature about similarly marketed 
devices. The applicant asserted that the real-world market evaluation 
compares OSCAR[supreg]'s internal benchmark tests to these published 
state-of-the-art benchmarks to determine whether OSCAR[supreg] met or 
exceeded the benchmarks. To evaluate market acceptance, the applicant 
explained that it conducted internal benchmark tests of OSCAR[supreg] 
in a real-world setup, without any exclusion criteria in terms of 
lesion characteristic and patient population. The applicant noted that 
it did this to obtain the opinion of different users--a method of user 
experience testing that is well-accepted in the field. Furthermore, the 
applicant stated that the real-world user experience data showed that 
OSCAR[supreg] has the potential to simplify procedures with one 
platform, which could reduce device escalations and lead to procedural 
efficiencies. According to the applicant, this potential simplification 
is especially important as staffing shortages and availability issues 
continue to plague U.S. facilities.
    Response: We appreciate the applicant's input. We acknowledge that 
data sources other than peer-reviewed or published studies may be 
submitted for the purpose of supporting substantial clinical 
improvement in

[[Page 94210]]

transitional pass-through payment applications. CMS considers all 
submitted evidence when reviewing transitional pass-through payment 
applications, however, we note that higher levels of evidence, such as 
peer-reviewed controlled studies, will typically be more supportive and 
in some cases may be required to establish a substantial clinical 
improvement argument. We continue to believe that the predominance of 
the data submitted appears to be opinion-based survey questions asked 
of physicians for marketing purposes, is likely subject to implicit 
bias, and falls significantly short of demonstrating substantial 
clinical improvement. In addition, we do not believe that the documents 
submitted by the applicant demonstrate that OSCAR[supreg] mitigates 
risks like vascular damage, infections, and radiation exposure as 
claimed. Finally, we do not believe that the applicant has provided an 
appropriate level of evidence that the use of OSCAR[supreg] reduces 
procedure time, nor has the applicant established that a potential 
reduction in procedure time and/or the use of less equipment translates 
to a substantial improvement in treatment of the affected patient 
population. After consideration of the public comment received and our 
review of the application, we continue to have concerns about whether 
OSCAR[supreg] demonstrates substantial clinical improvement, and we 
believe that additional peer-reviewed evidence would be helpful.
    Comment: In response to our concern whether OSCAR[supreg] can be 
sufficiently distinguished from a legally marketed device, the INFINITY 
Angioplasty Balloon CatheterTM, to demonstrate substantial 
clinical improvement, the applicant commented that OSCAR[supreg] is not 
identical to the INFINITY Angioplasty Balloon CatheterTM. 
Specifically, the applicant asserted that, in its 510(k) approval 
summary, FDA stated that OSCAR[supreg] is comparable to the predicate 
device rather than equivalent. According to the applicant, the term 
comparable indicates that OSCAR[supreg] has similar characteristics and 
intended use as the predicate device, but it does not imply that the 
two devices are identical. The applicant asserted that the INFINITY 
Angioplasty Balloon CatheterTM is indicated for PTA in the 
peripheral vasculature, including iliac, femoral, popliteal, infra-
popliteal arteries, and for the treatment of obstructive lesions of 
native or synthetic arteriovenous dialysis fistulae; whereas 
OSCAR[supreg] facilitates the steps of PTA procedures (lesion access, 
cross and treat lesions of different length) using a single device for 
the entire procedure to reduce procedural time and simplify steps.
    Per the applicant, OSCAR[supreg] was designed to combine features 
of other marketed devices, such as support catheters and PTA balloon 
catheters. The applicant asserted the main benefits of OSCAR[supreg] 
are (1) the device's variable shaft stiffness which allows for lesion-
adapted access and crossing, and (2) its length adjustability features 
which allow for precise adjustment of the balloon length to match the 
target lesion's length. The applicant further explained that these 
features allow OSCAR[supreg] to treat residual stenosis using a single 
balloon, rather than the typical treatment's multiple balloons, 
resulting in the potential benefits of lower device consumption, fewer 
device exchanges, reduced overall procedural time, and fewer stock-
keeping units needed in the catheterization laboratory.
    Response: We appreciate the applicant's input. While FDA 
determination of substantial equivalence cannot alone be used to 
conclude that a device demonstrates substantial clinical improvement as 
required by the regulation at 42 CFR 419.66(c)(2), we note that the FDA 
510(k) summary provided by the applicant indicated that both the 
nominated and predicate devices share similar technological 
characteristics and that OSCAR[supreg] differs only in that it combines 
support catheters to be used with the dilator and balloon catheter. 
Specifically, OSCAR[supreg] was determined to be substantially 
equivalent to a legally marketed device, the INFINITY Angioplasty 
Balloon CatheterTM, which received 510(k) clearance on May 
20, 2020. The FDA 510(k) summary for OSCAR[supreg] indicated that the 
devices share similar technological characteristics and that 
OSCAR[supreg] differs only in that it combines support catheters to be 
used with the dilator and balloon catheter. While the applicant 
asserted that treatment of complex lesions with OSCAR[supreg] reduces 
device exchanges and procedural steps, procedure time, radiation 
exposure, contrast media, and crossing attempts, the applicant did not 
provide evidence that demonstrated how these reductions result in 
improved clinical outcomes. We did not receive data demonstrating how 
OSCAR[supreg] offers a substantial clinical improvement compared to the 
INFINITY Angioplasty Balloon CatheterTM. We expressed 
concern in the proposed rule regarding the language in the FDA 510(k) 
summary because we could not determine whether OSCAR[supreg] could be 
distinguished from the INFINITY Angioplasty Balloon 
CatheterTM sufficiently to demonstrate substantial clinical 
improvement. Neither could we determine exactly how the nominated 
device is superior to its earlier legally marketed device, as per the 
applicant's assertion. After consideration of the public comment 
received and our review of the application, we maintain our concern 
that OSCAR[supreg] does not demonstrate a substantial clinical 
improvement compared to the predicate device, INFINITY Angioplasty 
Balloon CatheterTM.
    Comment: In response to our concerns that OSCAR[supreg] may be 
substantially similar to six device types that the applicant indicated 
OSCAR[supreg] is most closely related to, the applicant commented that 
OSCAR[supreg] reduces the need for multiple devices and may lower 
procedural costs. Specifically, the applicant clarified that 
OSCAR[supreg] requires a guidewire but replaces the need for support 
catheters and percutaneous balloons and may replace the need for 
chronic total occlusion devices, reentry catheters, or lesion 
preparation devices. In response to our request that the applicant 
submit additional evidence comparing OSCAR[supreg]'s clinical outcomes 
to those of existing technologies to help us determine whether the 
device demonstrates substantial clinical improvement, the applicant 
commented that this request is unreasonable with these types of tools 
in percutaneous transluminal interventions. Specifically, the applicant 
asserted that, in below-the-knee interventions, global user experience 
has shown OSCAR[supreg] to be definitive as it allows length 
adjustability, which they believe is an improvement over other balloon 
catheters used for angioplasty. The applicant concluded that real-world 
user experience has shown that OSCAR[supreg] aids in the treatment of 
complex lesions through the reduction of device exchanges and 
procedural steps, reduction of procedure time, reduction of radiation 
exposure, reduction of contrast media, and fewer crossing attempts.
    Response: We appreciate the applicant's input. While the applicant 
asserted, both for this Sec.  419.66(c)(2) criterion and the Sec.  
419.66(c)(1) criterion discussed above, that OSCAR[supreg] may reduce 
the need for support catheters, percutaneous balloons, chronic total 
occlusion devices, reentry catheters, or lesion preparation devices 
during percutaneous transluminal interventions, the applicant did not 
provide evidence demonstrating that OSCAR[supreg]'s potential to reduce 
the

[[Page 94211]]

number of devices improved clinical outcomes for patients with PAD. We 
maintain that these potential reductions in procedural time and cost 
compared to other devices do not translate to improved clinical 
outcomes, such as reduction in mortality, complications, subsequent 
interventions, future hospitalizations, recovery time, pain, or a more 
rapid beneficial resolution of the disease process, required to 
demonstrate substantial clinical improvement.
    Regarding the applicant's statements that OSCAR[supreg] will save 
money for hospitals because hospitals will use less equipment, 
procedure times will be faster, and procedures will have higher success 
rates and case completion and, as a result, patients will avoid limb 
amputation, we appreciate the commenters' input. However, while 
reducing costs to the healthcare system is important, it is not a 
consideration for substantial clinical improvement for purposes of 
transitional pass-through payments. With respect to the higher success 
rates, case completion, and decrease in limb amputations, which could 
demonstrate substantial clinical improvement, the commenters did not 
provide evidence to support these claims. Similarly, regarding faster 
procedure times, no link was demonstrated between this and a 
substantial clinical improvement outcome, nor was evidence provided to 
support this claim. As such, we maintain our concern about whether the 
use of OSCAR[supreg] has a substantial clinical benefit compared to the 
six existing device types noted in the application and over other 
similar existing technologies.
    After consideration of the public comments received and our review 
of the application, we continue to believe the applicant has not 
demonstrated substantial clinical improvement over existing 
technologies in the treatment of PAD. Therefore, we have determined 
that OSCAR[supreg] does not meet the substantial clinical improvement 
criterion at Sec.  419.66(c)(2).
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that OSCAR[supreg] 
would be reported with HCPCS codes as shown in Table 129.
BILLING CODE 4120-01-P

[[Page 94212]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.161

[[Page 94213]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.162

BILLING CODE 4120-01-C
    To meet the cost criterion for device pass-through payment status, 
a device must pass all three tests of the cost criterion for at least 
one APC. As we explained in the CY 2005 OPPS final rule (69 FR 65775), 
we generally use the lowest APC payment rate applicable for use with 
the nominated device when we assess whether a device meets the cost 
significance criterion, thus increasing the probability the device will 
pass the cost significance test. Beginning in CY 2017, we calculate the 
device offset amount at the HCPCS/CPT code level instead of the APC 
level (81 FR 79657). We noted that the applicant used the CY 2023 
payment rates for the three tests of the cost criterion. For our 
calculations, we used APC 5183, which had a CY 2023 payment rate of 
$2,978.97 at the time the application was received. HCPCS code 75625 in 
APC 5183 had a CY 2023 device offset amount of $530.85 at the time the 
application was received.\130\ According to the applicant, the cost of 
OSCAR[supreg] is $2,020.00.
---------------------------------------------------------------------------

    \130\ We noted the applicant selected APC 5192 and an APC 
payment rate of $5,061.89 for the three tests of the cost criteria. 
However, for our calculation, we selected APC 5183, which we believe 
had the lowest applicable APC payment rate of $2,978.97 found in 
Addendum P to the CY 2023 OPPS/ASC final rule with comment period, 
among the APCs related to the HCPCS/CPT codes provided by the 
applicant. We selected the HCPCS/CPT code level device offset amount 
of $530.85 related to HCPCS 75625 in APC 5183. Based on our initial 
assessment in the proposed rule, using the APC payment rate of 
$2,978.97 and the device offset amount of $530.85 would result in 
OSCAR[supreg] meeting the cost significance requirement.
---------------------------------------------------------------------------

    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,020.00 for OSCAR[supreg] is 67.81 percent 
of the applicable APC payment amount for the service related to the 
category of devices of $2,978.97 (($2,020.00/$2,978.97) x 100 = 67.81 
percent). Therefore, we stated that we believe OSCAR[supreg] meets the 
first cost significance requirement.
    The second cost significance requirement, at Sec.  419.66(d)(2), 
provides that the estimated average reasonable cost of the devices in 
the category must exceed the cost of the device-related portion of the 
APC payment amount for the related service by at least 25 percent, 
which means that the device cost needs to be at least 125 percent of 
the offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $2,020.00 for 
OSCAR[supreg] is 380.52 percent of the cost of the device-related 
portion

[[Page 94214]]

of the APC payment amount for the related service of $530.85 
(($2,020.00/$530.85) x 100 = 380.52 percent). Therefore, we stated that 
we believe OSCAR[supreg] meets the second cost significance 
requirement.
    The third cost significance requirement, at Sec.  419.66(d)(3), 
provides that the difference between the estimated average reasonable 
cost of the devices in the category and the portion of the APC payment 
amount for the device must exceed 10 percent of the APC payment amount 
for the related service. The difference between the estimated average 
reasonable cost of $2,020.00 for OSCAR[supreg] and the portion of the 
APC payment amount for the device of $530.85 is 49.99 percent of the 
APC payment amount for the related service of $2978.97 ((($2,020.00-
$530.85)/$ 2,978.97) x 100 = 49.99 percent). Therefore, we stated that 
we believe OSCAR[supreg] meets the third cost significance requirement.
    We invited public comment on whether OSCAR[supreg] meets the device 
pass-through payment criteria discussed in this section, including the 
cost criterion for device pass-through payment status.
    We did not receive any comments regarding whether OSCAR[supreg] 
meets the cost significance criteria as described at Sec.  419.66(d). 
Based on our findings from the first, second, and third cost 
significance tests, we have determined that OSCAR[supreg] meets the 
cost significance criteria specified at Sec.  419.66(d).
    After consideration of the public comments, we received and our 
review of the device pass-through application, we are not approving 
OSCAR[supreg] for transitional pass-through payment status in CY 2025 
because the product does not meet the device category eligibility 
criterion at Sec.  419.66(c)(1) or the substantial clinical improvement 
criterion at Sec.  419.66(c)(2).
    Comment: The commenter recommended CMS calculate the device-related 
portion of APCs for purposes of determining device pass-through payment 
status eligibility and the device offset using only the cost of the 
devices replaced by the proposed device pass-through payment status 
device category. The commenter stated that many procedures with 
transitional pass-through devices require the use of multiple other 
devices, and the transitional pass-through device may replace only some 
(and in some cases none) of the devices included in the device-related 
portion of the APC. The commenter asserted that, if the device offset 
is calculated to include other devices that continue to be required to 
perform the procedure safely and successfully, without properly 
offsetting the cost of the nominated device, the final payment would 
fail to adequately reimburse facilities. The commenter requested that 
CMS also apply this methodology to the TPT applications for 
AGENTTM Paclitaxel-Coated Balloon Catheter, iFuse Bedrock 
GraniteTM Implant System, Paradise[supreg] Ultrasound RDN 
System, and Symplicity SpyralTM RDN System applications.
    Response: We thank the commenter's recommendation regarding the 
revision of the methodology for calculating the device-related portion 
of APCs for the purpose of determining the eligibility of transitional 
pass-through status of a nominated device. We will continue to consider 
this issue and any additional public comments related to it.

B. Device-Intensive Procedures

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

[[Page 94215]]

     The required devices must be surgically inserted or 
implanted devices that remain in the patient's body after the 
conclusion of the procedure (at least temporarily); and
     The device offset amount must be significant, which is 
defined as exceeding 40 percent of the procedure's mean cost.
    We changed our policy to apply these three criteria to determine 
whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66926), where we stated that we 
would apply the no cost/full credit and partial credit device policy--
which includes the three criteria listed previously--to all device-
intensive procedures beginning in CY 2015. We reiterated this position 
in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), 
where we explained that we were finalizing our proposal to continue 
using the three criteria established in the CY 2007 OPPS/ASC final rule 
with comment period for determining the APCs to which the CY 2016 
device intensive policy will apply. Under the policies we adopted in 
CYs 2015, 2016, and 2017, all procedures that require the implantation 
of a device and meet the previously described criteria are assigned 
device-intensive status, regardless of their APC placement.
2. Device-Intensive Procedure Policy
    As part of our effort to better capture costs for procedures with 
significant device costs, in the CY 2019 OPPS/ASC final rule with 
comment period (83 FR 58944 through 58948), for CY 2019, we modified 
our criteria for device-intensive procedures. We had heard from 
interested parties that the criteria excluded some procedures that 
interested parties believed should qualify as device-intensive 
procedures. Specifically, we were persuaded by interested party 
arguments that procedures requiring expensive surgically inserted or 
implanted devices that are not capital equipment should qualify as 
device-intensive procedures, regardless of whether the device remains 
in the patient's body after the conclusion of the procedure. We agreed 
that a broader definition of device-intensive procedures was warranted, 
and made two modifications to the criteria for CY 2019 (83 FR 58948). 
First, we allowed procedures that involve surgically inserted or 
implanted single-use devices that meet the device offset percentage 
threshold to qualify as device-intensive procedures, regardless of 
whether the device remains in the patient's body after the conclusion 
of the procedure. We established this policy because we no longer 
believe that whether a device remains in the patient's body should 
affect a procedure's designation as a device-intensive procedure, as 
such devices could, nonetheless, comprise a large portion of the cost 
of the applicable procedure. Second, we modified our criteria to lower 
the device offset percentage threshold from 40 percent to 30 percent, 
to allow a greater number of procedures to qualify as device intensive. 
We stated that we believe allowing these additional procedures to 
qualify for device-intensive status will help ensure these procedures 
receive more appropriate payment in the ASC setting, which will help 
encourage the provision of these services in the ASC setting. In 
addition, we stated that this change would help to ensure that more 
procedures containing relatively high-cost devices are subject to the 
device edits, which leads to more correctly coded claims and greater 
accuracy in our claims data. Specifically, for CY 2019 and subsequent 
years, we finalized that device-intensive procedures will be subject to 
the following criteria:
     All procedures must involve implantable devices assigned a 
CPT or HCPCS code;
     The required devices (including single-use devices) must 
be surgically inserted or implanted; and
     The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost (83 FR 
58945).
    In addition, to further align the device-intensive policy with the 
criteria used for device pass-through payment status, we finalized, for 
CY 2019 and subsequent years, that for purposes of satisfying the 
device-intensive criteria, a device-intensive procedure must involve a 
device that:
     Has received FDA marketing authorization, has received an 
FDA investigational device exemption (IDE), and has been classified as 
a Category B device by FDA in accordance with Sec. Sec.  405.203 
through 405.207 and 405.211 through 405.215, or meets another 
appropriate FDA exemption from premarket review;
     Is an integral part of the service furnished;
     Is used for one patient only;
     Comes in contact with human tissue;
     Is surgically implanted or inserted (either permanently or 
temporarily); and
     Is not either of the following:
    ++ Equipment, an instrument, apparatus, implement, or item of the 
type for which depreciation and financing expenses are recovered as 
depreciable assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or
    ++ A material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, scalpel, or clip, other 
than a radiological site marker) (83 FR 58945).
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of devices that do not yet have associated claims 
data, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79658), we finalized a policy for CY 2017 to apply device-intensive 
status with a default device offset set at 41 percent for new HCPCS 
codes describing procedures requiring the implantation or insertion of 
a device that did not yet have associated claims data until claims data 
are available to establish the HCPCS code-level device offset for the 
procedures. This default device offset amount of 41 percent was not 
calculated from claims data; instead, it was applied as a default until 
claims data were available upon which to calculate an actual device 
offset for the new code. The purpose of applying the 41-percent default 
device offset to new codes that describe procedures that implant or 
insert devices was to ensure ASC access for new procedures until claims 
data become available.
    As discussed in the CY 2019 OPPS/ASC proposed rule and final rule 
with comment period (83 FR 37108 through 37109 and 58945 through 58946, 
respectively), in accordance with our policy stated previously to lower 
the device offset percentage threshold for procedures to qualify as 
device-intensive from greater than 40 percent to greater than 30 
percent, for CY 2019 and subsequent years, we modified this policy to 
apply a 31-percent default device offset to new HCPCS codes describing 
procedures requiring the implantation of a device that do not yet have 
associated claims data until claims data are available to establish the 
HCPCS code-level device offset for the procedures. In conjunction with 
the policy to lower the default device offset from 41 percent to 31 
percent, we continued our current policy of, in certain rare instances 
(for example, in the case of a very expensive implantable device), 
temporarily assigning a higher offset percentage if warranted by 
additional information such as pricing data from a device manufacturer 
(81 FR 79658). Once claims data are available for a new procedure 
requiring the implantation or insertion of a device, device-intensive 
status is applied to the code if the HCPCS code-level device offset is 
greater than 30 percent,

[[Page 94216]]

according to our policy of determining device-intensive status by 
calculating the HCPCS code-level device offset.
    In addition, in the CY 2019 OPPS/ASC final rule with comment 
period, we clarified that since the adoption of our policy in effect as 
of CY 2018, the associated claims data used for purposes of determining 
whether or not to apply the default device offset are the associated 
claims data for either the new HCPCS code or any predecessor code, as 
described by CPT coding guidance, for the new HCPCS code. Additionally, 
for CY 2019 and subsequent years, in limited instances where a new 
HCPCS code does not have a predecessor code as defined by CPT, but 
describes a procedure that was previously described by an existing 
code, we use clinical discretion to identify HCPCS codes that are 
clinically related or similar to the new HCPCS code but are not 
officially recognized as a predecessor code by CPT, and to use the 
claims data of the clinically related or similar code(s) for purposes 
of determining whether or not to apply the default device offset to the 
new HCPCS code (83 FR 58946). Clinically related and similar procedures 
for purposes of this policy are procedures that have few or no clinical 
differences and use the same devices as the new HCPCS code. In 
addition, clinically related and similar codes for purposes of this 
policy are codes that either currently or previously describe the 
procedure described by the new HCPCS code. Under this policy, claims 
data from clinically related and similar codes are included as 
associated claims data for a new code, and where an existing HCPCS code 
is found to be clinically related or similar to a new HCPCS code, we 
apply the device offset percentage derived from the existing clinically 
related or similar HCPCS code's claims data to the new HCPCS code for 
determining the device offset percentage. We stated that we believe 
that claims data for HCPCS codes describing procedures that have minor 
differences from the procedures described by new HCPCS codes will 
provide an accurate depiction of the cost relationship between the 
procedure and the device(s) that are used, and will be appropriate to 
use to set a new code's device offset percentage, in the same way that 
predecessor codes are used. If a new HCPCS code has multiple 
predecessor codes, the claims data for the predecessor code that has 
the highest individual HCPCS-level device offset percentage is used to 
determine whether the new HCPCS code qualifies for device-intensive 
status. Similarly, in the event that a new HCPCS code does not have a 
predecessor code but has multiple clinically related or similar codes, 
the claims data for the clinically related or similar code that has the 
highest individual HCPCS level device offset percentage is used to 
determine whether the new HCPCS code qualifies for device-intensive 
status.
a. Change to the Device-Intensive Status Default Offset Methodology for 
New HCPCS Codes
    As described above, under our existing policies for assigning a 
device offset percentage to new HCPCS codes, we first rely on the 
associated claims data for new HCPCS codes. For new HCPCS codes that do 
not have available claims data yet, we rely on any available claims 
data from a predecessor code for the new HCPCS code, as described by 
CPT coding guidance. We assign the device offset percentage to the new 
HCPCS code that is the device offset percentage of the predecessor code 
for which we have available claims data. If claims data from the new 
HCPCS or any predecessor code is unavailable, we use clinical 
discretion to identify HCPCS codes that are clinically related or 
similar to the new HCPCS code but are not officially recognized as a 
predecessor code by CPT, and to use the claims data of the clinically 
related or similar code(s) for purposes of determining a device offset 
percentage to the new HCPCS code (83 FR 58946). Clinically related and 
similar procedures for purposes of this policy are procedures that have 
few or no clinical differences and use the same devices. If a 
clinically similar procedure that uses the same devices is not 
available, then for new HCPCS codes describing procedures requiring the 
insertion or implantation of devices that do not yet have claims data 
(from either the new HCPCS code or any predecessor code), we apply a 
default device offset set at 31 percent.
    As we stated previously, the purpose of applying the default device 
offset to new codes that describe procedures that implant or insert 
devices is to ensure access in the ASC setting for new procedures until 
claims data become available. Also, under the OPPS, the default device 
offset is useful for establishing a device amount for new device-
intensive procedures. For example, under our policy for no cost/full 
credit or partial credit devices, we reduce the OPPS payment for 
device-intensive procedures by the lesser of the full or partial credit 
a hospital receives for a replaced device or the device offset amount. 
Additionally, we may remove the device offset amount from the OPPS 
payment for procedures that are terminated prior to administering 
anesthesia (since the device was not used for the procedure).
    While we do allow for additional information in consideration of a 
higher offset percentage than the default device offset, it would be 
extremely rare that the appropriate determination of a device offset 
percentage would rely on pricing data or invoices from a device 
manufacturer rather than the default device offset percentage. However, 
we are aware that there may be certain situations where the default 
device offset percentage would not adequately reflect the existing 
device portion of the procedure's costs when compared to the cost of 
similar devices. This difference could impede our ability to accurately 
remove device offset amounts from new device-intensive procedures under 
the OPPS. As HOPDs and ASCs perform new procedures with significant 
device costs, we believe it is appropriate to modify our default device 
offset methodology to pay HOPDs and ASCs more appropriately when we 
lack claims data for these newer procedures. Therefore, for CY 2025 and 
subsequent calendar years, we proposed to modify our default device 
offset percentage policy for new device-intensive procedures. 
Specifically, for new HCPCS codes that both describe a procedure that 
requires the implantation or insertion of a single-use device that 
meets our requirements of a device as described above and lack claims 
data (from either the new HCPCS code or any predecessor code), we would 
apply a default device offset percentage that is the greater of 31 
percent or the device offset percentage of the APC to which the 
procedure has been assigned. We proposed this methodological change for 
both the OPPS and ASC Payment System for CY 2025 and subsequent 
calendar years. We explained that we still believe that a HCPCS code-
level device offset is, in most cases, a more accurate representation 
of a procedure's device cost than an APC-wide average device offset 
based on the average device offset of all the procedures assigned to an 
APC. However, because newer device-intensive procedures lack claims 
data, we believe the APC-wide average device offset percentage is, in 
many cases, a better reflection of the estimated device costs of the 
procedure than a default 31 percent offset. Additionally, there can be 
instances where the typical device costs of procedures in an APC can be 
significantly greater than the 31 percent default device offset. For 
these reasons, we proposed to modify our default device offset 
percentage for new device-

[[Page 94217]]

intensive procedures that describe the implantation or insertion of a 
single-use device that meets our requirements of a device (as described 
above) and that do not yet have associated claims data, by applying a 
default device offset percentage that is the greater of 31 percent or 
the device offset percentage of the APC to which the procedure has been 
assigned. We proposed to apply this policy to new procedures assigned 
to clinical APCs, but not to new procedures assigned to New Technology 
APCs.
    As we indicated in the CY 2019 OPPS/ASC proposed rule and final 
rule with comment period, we may consider additional information for an 
offset percentage greater than the default offset percentage (which, 
for the proposed rule, is the greater of 31 percent or the APC-level 
offset percentage) for new HCPCS codes describing procedures requiring 
the implantation (or, in some cases, the insertion) of a device that do 
not yet have associated claims data, such as pricing data or invoices 
from a device manufacturer. This would be for our consideration in 
extremely rare circumstances, such as an extremely high-cost 
implantable device. While we explained that we believe our proposed 
modification to the default device offset policy would improve payment 
under the OPPS and ASC payment system, we would continue to accept 
additional information in consideration of an alternative offset 
percentage. This information would be directed to the Division of 
Outpatient Care, Mail Stop C4-01-26, Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244-1850, or 
electronically at [email protected]. Additional information 
would be submitted prior to issuance of an OPPS/ASC proposed rule or as 
a public comment in response to an issued OPPS/ASC proposed rule. 
Device offset percentages would be set in each year's final rule with 
comment period.
    Comment: While commenters supported our proposed change to 
determining default device offset percentages under the ASC payment 
system, many commenters recommended that we delay implementing our 
proposed change under the OPPS as we have not fully discussed the 
implications of such a change under the OPPS. Some stakeholders were 
concerned that our proposed default device offset methodology could 
inappropriately inflate the device offset amount for transitional pass-
through cost significance tests, which utilize the device offset 
amounts under the OPPS.
    Response: Under the OPPS, our proposal, if finalized, would apply 
whenever a default device offset percentage and the associated device 
offset amount are utilized. This includes determining eligibility for 
transitional pass-through payment status for devices, setting the 
payment amount for transitional pass-through devices, determining the 
payment amount for discontinued device-intensive procedures, and 
determining the maximum credit amount for a device-intensive procedure 
under our device credits policy. The purpose of our proposal was to 
improve the accuracy of the way in which we determine the device 
portion for device-intensive procedures in the absence of claims data. 
We believe the average device cost of the APC can better reflect the 
expected device portion of a new procedure without claims data than a 
default device offset of 31 percent since procedures assigned to a 
clinical APC often have similar device costs. We believe this 
improvement in the accuracy of determining the device portion of an APC 
payment should be applied in both settings rather than just one setting 
as the commenters recommend. We understand that the increased device 
portion that would result from this change in policy may reduce payment 
in the OPPS setting if such newer procedures are reported with a 
transitional pass-through device category or in situations with a 
device credit or a terminated procedure, but we do not believe it would 
be appropriate to assign a device offset amount that we believe is less 
accurate to avoid such a payment reduction under the OPPS. Since our 
policy has been to keep device costs constant between the OPPS and ASC 
payment system for device-intensive procedures to appropriately account 
for the device costs of certain surgical procedures and maintain 
beneficiary access in the ASC setting for device-intensive procedures, 
for which interested parties have expressed strong support, we are not 
accepting the commenter's recommendation to delay implementing our 
proposed change under the OPPS.
    Comment: Several commenters noted that the device offset percentage 
for HCPCS code C9757 (Laminotomy (hemilaminectomy), with decompression 
of nerve root(s), including partial facetectomy, foraminotomy and 
excision of herniated intervertebral disc, and repair of annular defect 
with implantation of bone anchored annular closure device, including 
annular defect measurement, alignment and sizing assessment, and image 
guidance; 1 interspace, lumbar) was inaccurate and did not reflect the 
total costs for the procedure. The manufacturer of the Barricaid 
device--a device which is used with HCPCS code C9757--noted that there 
was an abundance of misreported claims for HCPCS code C9757 which they 
believe has undermined the integrity of the claims data. The 
manufacturer and other commenters recommended that we assign a device 
offset percentage based on claims that reported the use of the 
Barricaid device, or invoices for the Barricaid device, or using the 
proposed default device offset methodology that would assign the 
greater of the APC wide device offset percentage or 31 percent. 
Commenters also recommended we implement a device-specific edit for 
this procedure and issue a technical direction letter to ensure 
appropriate device reporting when billing for HCPCS code C9757. Without 
such hospital guidance, the commenters believe hospitals may continue 
to not report the associated device, which they believe could impede 
our ability to properly set payment rates for device-intensive 
procedures.
    Response: We appreciate commenters bringing this issue to our 
attention. We have taken these comments into consideration with respect 
to our modification of our device edits policy for CY 2025 in section 
IV.B.3 of this final rule with comment period. While we continue to 
rely on hospital claims data rather than external invoices or our 
default device offset methodology in determining device offset 
percentages when claims data is available, we believe the stakeholder 
raises an important issue regarding the nonreporting of device charges 
and potentially ``missing'' device costs from certain hospital 
outpatient claims. We are persuaded by commenters that a lack of a 
device edit for device-intensive procedures, particularly new 
technologies, might lead to an underreporting of device costs and total 
procedure costs and impede beneficiary access to such new technologies. 
Therefore, in conjunction with the modification to our finalized device 
edits policy as explained further in section IV.B.3 of this final rule 
with comment period, for procedures subject to our modified device 
edits policy for CY 2025 that cannot report modifier ``CG'' to bypass 
this claims processing edit, the device offset percentages calculated 
for CY 2025 (for the CPT/HCPCS code or its predecessor code) are based 
on hospital claims that reported a device code. We believe that 
hospital

[[Page 94218]]

outpatient claims that report a device code with device-intensive 
procedures provide, in general, a more accurate representation of the 
procedures' total costs. Therefore, based on claims data available for 
CY 2025 subject to this device-reporting requirement, HCPCS code C9757 
has a device offset percentage that exceeds the device-intensive 
threshold and is assigned device-intensive status for CY 2025. Final CY 
2025 device offset percentages based on claims data used for this CY 
2025 OPPS/ASC final rule with comment period can be found in Addendum 
P.
    Comment: Several commenters recommended that we assign device-
intensive status to CPT code 52284 (Cystourethroscopy, with mechanical 
urethral dilation and urethral therapeutic drug delivery by drug-coated 
balloon catheter for urethral stricture or stenosis, male, including 
fluoroscopy, when performed) based on the cost of the device or using 
the default device offset percentage. Further, the manufacturer of the 
Optilume[supreg] device recommended we create a new HCPCS code to 
describe the Optilume[supreg] device or a claims processing edit as 
hospital claims data do not accurately report the device code and 
device cost.
    Response: We continue to hear from stakeholders regarding hospital 
nonreporting of device charges. We note that CPT code 52284 was 
previously described by CPT code 0499T (Cystourethroscopy, with 
mechanical dilation and urethral therapeutic drug delivery for urethral 
stricture or stenosis, including fluoroscopy, when performed), which 
was effective from January 1, 2018, until January 1, 2024. Therefore, 
as explained further in section IV.B.3 of this final rule with comment 
period, in conjunction with our modified device edits policy for CY 
2025, we are utilizing the device offset percentages calculated for CY 
2025 based on hospital claims that reported a device code. Based on 
claims data available for CY 2025 subject to this device-reporting 
requirement, CPT code 0499T has a device offset percentage that exceeds 
our device-intensive threshold. Therefore, we are assigning device-
intensive status to successor CPT code 52284 for CY 2025. Final CY 2025 
device offset percentages based on claims data used for this CY 2025 
OPPS/ASC final rule with comment period can be found in Addendum P.
    Comment: One commenter recommended that we assign device-intensive 
status to CPT codes 0884T, 0885T, and 0886T, which became effective 
July 1, 2024.
    Response: We proposed to assign these procedures device-intensive 
status in the July 2024 OPPS update and in Addendum P to the CY 2025 
OPPS/ASC proposed rule. Since these are new procedures with no 
predecessor or clinically similar codes that use the same device, we 
are finalizing our proposal to assign device-intensive status to these 
three procedures and to use our default offset methodology to assign a 
device offset percentage to CPT codes 0884T, 0885T, and 0886T.
    Comment: One commenter recommended that we restore device-intensive 
status to CPT code 27412 (Autologous chondrocyte implantation, knee). 
The commenter stated the procedure is always performed with HCPCS Code 
J7330 (Autologous cultured chondrocytes, implant), which they argue is 
a device. Further, the commenter argues the procedure has historically 
been device-intensive and should continue to have that designation.
    Response: We disagree with the commenter. We believe we 
inadvertently assigned this procedure device-intensive status based on 
hospitals reporting significant device costs. However, as the commenter 
noted, CPT code 27412 is performed with J7330 which is categorized as a 
drug/biological and may have been incorrectly reported as an 
implantable device by certain hospitals. We note that J7330 is 
regulated as Human Cells, Tissues, and Cellular and Tissue-Based 
Products (HTC/Ps) by the FDA under 21 CFR part 1271 and is not 
regulated as a medical device by the FDA. Since CPT code 27412 does not 
involve a device that meets our requirement, we are not assigning 
device-intensive status to CPT code 27412.
    Comment: One commenter was concerned that Addendum P did not 
reflect the device offset amount that is applied to the transitional 
pass-through device performed with CPT code 0505T (Endovenous femoral-
popliteal arterial revascularization, with transcatheter placement of 
intravascular stent graft(s) and closure by any method, including 
percutaneous or open vascular access, ultrasound guidance for vascular 
access when performed, all catheterization(s) and intraprocedural 
roadmapping and imaging guidance necessary to complete the 
intervention, all associated radiological supervision and 
interpretation, when performed, with crossing of the occlusive lesion 
in an extraluminal fashion). The commenter suggested that the device 
offset amount is $0.00 and Addendum P should reflect this amount.
    Response: While we agree that the device offset amount for CPT code 
0505T is $0.00 as we stated in the July 2024 OPPS Change Request, the 
amount in Addendum P reflects the total device-related costs of the 
procedure. In certain situations where an approved transitional pass-
through device does not replace existing APC device costs, the amount 
reflected in Addendum P does not reflect the actual device offset 
amount that is applied against the separate payment for the 
transitional pass-through device.
    Comment: Some commenters recommended that we assign device-
intensive status to CPT code 0621T (Trabeculostomy ab interno by 
laser;) since the procedure was assigned a status indicator of ``E1''--
Items, codes, and services not covered by any Medicare outpatient 
benefit category; statutorily excluded; not reasonable and necessary--
in CY 2023 and the claims that would be used to determine device-
intensive status are invalid and not usable for this purpose. 
Similarly, one commenter argued that our device offset percentage for 
CPT code 0795T (Transcatheter insertion of permanent dual-chamber 
leadless pacemaker, including imaging guidance (e.g., fluoroscopy, 
venous ultrasound, right atrial angiography, right ventriculography, 
femoral venography) and device evaluation (e.g., interrogation or 
programming), when performed; complete system (i.e., right atrial and 
right ventricular pacemaker components)) should be revised to be set 
using the default device offset methodology as CPT code 0795T was also 
assigned status indicator of ``E1'' in CY 2023.
    Response: We agree with the commenters that claims with a status 
indicator of ``E1'' may not be appropriate for determining device 
offset percentages and device offset amounts as this status indicator 
can be used for procedures that involve a device where such device has 
not received FDA marketing authorization or received FDA 
investigational device exemption. For purposes of determining device 
offset percentages, we will not use claims data from procedures that 
had a status indicator of ``E1'' for determining device offset 
percentages. We will revise our claims accounting narrative to reflect 
this change.
    Comment: One commenter recommended that we evaluate, as part of 
rulemaking, procedures that utilize pass-through devices expiring mid-
year using the latest final rule claims data available to determine the 
appropriate APC assignment when the device no

[[Page 94219]]

longer has transitional pass-through status.
    Response: We thank the commenter for this recommendation and note 
we already conduct such an evaluation in our proposed and final rule 
ratesetting process. Devices for which pass-through status is expiring 
at any point in the prospective year are packaged in our ratesetting 
process for that prospective year so that we may reevaluate the APC 
assignments of these technologies as the commenter noted.
    Comment: One commenter recommended that we update the device offset 
percentages from predecessor codes annually rather than just in the 
first year we calculate the device offset percentage from the 
predecessor code.
    Response: We agree with the commenter and will refine our process 
for applying device offset percentages to use available claims data 
from predecessor codes annually rather than just in the first year.
    Comment: Commenters supported the proposed device offset percentage 
for CPT codes:
     0421T (Transurethral waterjet ablation of prostate, 
including control of post-operative bleeding, including ultrasound 
guidance, complete (vasectomy, meatotomy, cystourethroscopy, urethral 
calibration and/or dilation, and internal urethrotomy are included when 
performed));
     0737T (Xenograft implantation into the articular surface);
     0816T (Open insertion or replacement of integrated 
neurostimulation system for bladder dysfunction including electrode(s) 
(e.g., array or leadless), and pulse generator or receiver, including 
analysis, programming, and imaging guidance, when performed, posterior 
tibial nerve; subfascial);
     0817T (Revision or removal of integrated neurostimulation 
system for bladder dysfunction, including analysis, programming, and 
imaging, when performed, posterior tibial nerve; subcutaneous);
     66989 (Extracapsular cataract removal with insertion of 
intraocular lens prosthesis (1-stage procedure), manual or mechanical 
technique (e.g., irrigation and aspiration or phacoemulsification), 
complex, requiring devices or techniques not generally used in routine 
cataract surgery (e.g., iris expansion device, suture support for 
intraocular lens, or primary posterior capsulorrhexis) or performed on 
patients in the amblyogenic developmental stage; with insertion of 
intraocular (e.g., trabecular meshwork, supraciliary, suprachoroidal) 
anterior segment aqueous drainage device, without extraocular 
reservoir, internal approach, one or more);
     66991 (Extracapsular cataract removal with insertion of 
intraocular lens prosthesis (1 stage procedure), manual or mechanical 
technique (e.g., irrigation and aspiration or phacoemulsification); 
with insertion of intraocular (e.g., trabecular meshwork, supraciliary, 
suprachoroidal) anterior segment aqueous drainage device, without 
extraocular reservoir, internal approach, one or more);
     0671T (Insertion of anterior segment aqueous drainage 
device into the trabecular meshwork, without external reservoir, and 
without concomitant cataract removal, one or more);
     66683 (Implantation of iris prosthesis, including suture 
fixation and repair or removal of iris, when performed);
     C9781 (Arthroscopy, shoulder, surgical; with implantation 
of subacromial spacer (e.g., balloon), includes debridement (e.g., 
limited or extensive), subacromial decompression, acromioplasty, and 
biceps tenodesis when performed).
    Response: We thank the commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our proposal with modification to apply a default device 
offset percentage that is the greater of 31 percent or the device 
offset percentage of the APC to which the procedure has been assigned 
for a new HCPCS code that describes a procedure that requires the 
implantation or insertion of a single-use device that meets the 
definition of a device for purposes of our device offset policy and for 
which the procedure lacks claims data (from either the new HCPCS code 
or any predecessor code). Also, in conjunction with the modification to 
our finalized device edits policy as explained further in section 
IV.B.3 of this final rule with comment period, for procedures subject 
to our modified device edits policy for CY 2025 that cannot report 
modifier ``CG'' to bypass this claims processing edit, the device 
offset percentages calculated for CY 2025 (for the CPT/HCPCS code or 
its predecessor code) are based on hospital claims that reported a 
device code, as we believe that hospital outpatient claims that report 
a device code for these device-intensive procedures provide, in 
general, a more accurate representation of the procedures' total costs. 
We are also finalizing, for purposes of determining device offset 
percentages, that we will not use claims data from procedures that had 
a status indicator of ``E1'' during the calendar year we are using for 
ratesetting and determining device offset percentages. Lastly, we are 
refining our process for applying device offset percentages to use 
available claims data from predecessor codes annually, rather than the 
first year of the successor code's activation date, until we have 
available claims data from the successor code.
    The full listing of the final CY 2025 device-intensive procedures, 
which utilize the revised default device offset policy we are 
finalizing, can be found in Addendum P to the proposed rule (which is 
available via the internet on the CMS website). Further, our claims 
accounting narrative contains a description of our device offset 
percentage calculation. Our claims accounting narrative for this final 
rule can be found under supporting documentation for this CY 2025 OPPS/
ASC final rule with comment period on our website at: https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps.
3. Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we finalized a policy and implemented claims processing edits 
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code 
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC 
final rule with comment period (the CY 2015 device-dependent APCs) was 
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70422), we modified our previously existing 
policy and applied the device coding requirements exclusively to 
procedures that require the implantation of a device assigned to a 
device-intensive APC. In the CY 2016 OPPS/ASC final rule with comment 
period, we also finalized our policy that the claims processing edits 
are such that any device code, when reported on a claim with a 
procedure assigned to a device-intensive APC (listed in Table 42 of the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)), will 
satisfy the edit.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 
through 79659), we changed our policy for CY 2017 and subsequent years 
to apply the CY 2016 device coding requirements to the newly defined 
device-intensive procedures. For CY 2017 and subsequent years, we also 
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the

[[Page 94220]]

edit. In addition, we created HCPCS code C1889 to recognize devices 
furnished during a device-intensive procedure that are not described by 
a specific Level II HCPCS Category C-code. Reporting HCPCS code C1889 
with a device-intensive procedure will satisfy the edit requiring a 
device code to be reported on a claim with a device-intensive 
procedure. In the CY 2019 OPPS/ASC final rule with comment period, we 
revised the description of HCPCS code C1889 to remove the specific 
applicability to device-intensive procedures (83 FR 58950). For CY 2019 
and subsequent years, the description of HCPCS code C1889 is 
``Implantable/insertable device, not otherwise classified.''
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81758 
through 81759), we finalized our proposal to establish a procedure-to-
device edit for the procedures assigned to APC 5496 (Level 6 
Intraocular Procedures) and require hospitals to report the correct 
device HCPCS codes when reporting any of the four procedures--CPT codes 
0308T, 0616T, 0617T, and 0618T. While we noted that interested parties 
have previously recommended in past rulemaking that we reestablish all 
of our previous procedure-to-device edits, we did not expect to extend 
this policy beyond the procedures assigned to APC 5496 (Level 6 
Intraocular Procedures). This APC represents a unique situation--the 
APC (which was the Level 5 Intraocular APC in previous years) had been 
a Low Volume APC (fewer than 100 claims in a claims year) since we 
established our Low Volume APC policy, the procedures associated with 
this APC have significant procedure costs often greater than $15,000, 
and the procedures associated with this APC require the implantation of 
a high-cost intraocular device. Additionally, in our review of claims 
data for some of the procedures, we noticed unusual coding, charge, and 
cost data. These claims had an outsized impact because of the low 
volume of claims for the APC which impeded our ability to determine a 
payment rate accurately and appropriately for APC 5496 (Level 6 
Intraocular Procedures). Further, because of the low volume of 
procedures assigned to this APC, we did not believe the reinstatement 
of procedure-to-device edits for the four procedures assigned to this 
APC would be administratively burdensome to hospitals. We finalized our 
proposal to modify our device edits policy to require a procedure-to-
device edit for procedures assigned to APC 5496 (Level 6 Intraocular 
Procedures) for CY 2024. We proposed to continue this policy for APC 
5496 (Level 6 Intraocular Procedures) for CY 2025 and subsequent CYs in 
the CY 2025 OPPS/ASC proposed rule and noted that new CPT placeholder 
code 6X004 (Implantation of iris prosthesis, including suture fixation 
and repair or removal of iris, when performed) is replacing CPT code 
0616T (Insertion of iris prosthesis, including suture fixation and 
repair or removal of iris, when performed; without removal of 
crystalline lens or intraocular lens, without insertion of intraocular 
lens) effective January 1, 2025. Additionally, CPT codes 0617T and 
0618T currently assigned to APC 5496 (Level 6 Intraocular Procedures) 
will be deleted effective January 1, 2025. Therefore, for CY 2025, the 
procedure-to-device edit for procedures assigned to APC 5496 (Level 6 
Intraocular Procedures) would apply to CPT code 0308T and 66683 
(placeholder code 6X004). We did not propose any other changes to our 
device edit policy for CY 2025.
    Comment: One commenter supported our proposal to continue our 
procedure-to-device edit for the insertion of the Artificial Iris--from 
CPT code 0616T, which will be deleted on January 1, 2025, to CPT code 
66683 will become active on January 1, 2025.
    Response: We thank the commenters for their support. We are 
finalizing our proposal to apply the procedure-to-device edit for 
predecessor code 0616T to successor code 66683.
    Comment: Several commenters recommended reinstating a claims 
processing edit to improve hospital reporting of device costs. In 
particular, the manufacturer of the device Barricaid recommended we 
implement a device-specific edit for this procedure and issue a 
technical direction letter to ensure correct device code reporting with 
HCPCS code C9757 (Laminotomy (hemilaminectomy), with decompression of 
nerve root(s), including partial facetectomy, foraminotomy and excision 
of herniated intervertebral disc, and repair of annular defect with 
implantation of bone anchored annular closure device, including annular 
defect measurement, alignment and sizing assessment, and image 
guidance; 1 interspace, lumbar). Additionally, the manufacturer of the 
Optilume[supreg] device recommended we create a new HCPCS code to 
describe the Optilume[supreg] device or a claims processing edit as 
hospital claims data do not accurately report the device code and 
device cost on hospital outpatient claims with the appropriate 
procedure code--CPT code 52284 (Cystourethroscopy, with mechanical 
urethral dilation and urethral therapeutic drug delivery by drug-coated 
balloon catheter for urethral stricture or stenosis, male, including 
fluoroscopy, when performed). A few commenters requested that we 
implement a device edit for CPT code 30469 (Repair of nasal valve 
collapse with low energy, temperature-controlled (i.e., radiofrequency) 
subcutaneous/submucosal remodeling) to allow additional years of claims 
data to determine its device-intensive status as they claim hospitals 
have been slow to update their chargemasters. Further, one device 
manufacturer reiterated a longstanding recommendation that we reinstate 
all our previous device-to-procedure edits.
    Response: We appreciate commenters bringing to our attention their 
concerns regarding our assignment of device offset percentages and 
hospital reporting of device costs. We believe commenters raise an 
important issue that there may have been instances when a newly created 
procedure code loses device-intensive status if the device cost 
fluctuates below the device-intensive threshold of 30 percent of the 
total procedure cost and then is never able to regain device-intensive 
status because hospitals are no longer required to report a device code 
on the claim with that procedure. The commenters have indicated to us 
that the presence of the device edit requirement can have a significant 
impact on the device portion and geometric mean cost of a procedure. 
For example, the geometric mean cost was $9,218.47 for hospitals that 
reported a device code with HCPCS code C9757 and $6,287.47 for 
hospitals that did not report a device code. The geometric mean cost 
was $5,277.22 for hospitals that reported a device code with CPT code 
52284 and $3,791.95 for hospitals that did not report a device code. 
Additionally, removing claims from hospitals that do not report a 
device code with these procedures increased the device offset 
percentage for HCPCA code C9757 from 23.62 percent to 43.21 percent and 
from 32.17 percent to 32.225 percent for CPT code 52284. These results 
highlight the impact that hospital reporting of device codes can have 
on our assignment of device offset percentages, device-intensive 
status, and the geometric mean cost of a procedure and these results 
impacted our final CY 2025 device-intensive policy as described in 
section IV.B.2 of this final rule with comment period. We are persuaded 
by commenters that are our existing device edits policy may be 
insufficient for

[[Page 94221]]

certain procedures, particularly newer technologies with device costs 
that fluctuate around our device-intensive threshold.
    After consideration of the public comments we received, we are 
finalizing our proposal with modification. While historically our 
device edits policy has only applied to procedures that are device-
intensive based on the most recent claims data available, for CY 2025 
and subsequent calendar years, we are finalizing a policy to apply our 
device edit policy permanently once a procedure is designated as a 
device-intensive procedure in a given year. For the procedures 
designated as device-intensive for CY 2025, we propose that the device 
edit requirement would apply in CY 2025 and subsequent calendar years 
as well. We are concerned that the loss of an applicable device edit 
may impact hospital reporting of device costs and impede our ability to 
properly set payment rates and determine appropriate device offset 
percentages for device-intensive procedures. Additionally, we are 
finalizing a policy to reinstate our device edits policy for procedures 
that have been device-intensive since we began assigning device-
intensive status at the HCPCS code level on January 1, 2017. We believe 
that by applying our device edit policy to procedures that were device-
intensive on or after January 1, 2017, we might continue to receive 
device cost information for relatively new procedures with limited 
claims data, which may have been impacted by our policy to require that 
only existing device-intensive procedures be subject to our device 
edits policy. For CY 2025, under our modified device edits policy, our 
device edits requirement will apply to procedures that are device-
intensive in CY 2025 as well as procedures that have been device-
intensive on or after January 1, 2017.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial 
Credit Devices
a. Background
    To ensure equitable OPPS payment when a hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to reduce the payment for specified device-dependent APCs by the 
estimated portion of the APC payment attributable to device costs (that 
is, the device offset) when the hospital receives a specified device at 
no cost or with full credit (71 FR 68071 through 68077). Hospitals were 
instructed to report no cost/full credit device cases on the claim 
using the ``FB'' modifier on the line with the procedure code in which 
the no cost/full credit device is used. In cases in which the device is 
furnished without cost or with full credit, hospitals were instructed 
to report a token device charge of less than $1.01. In cases in which 
the device being inserted is an upgrade (either of the same type of 
device or to a different type of device) with a full credit for the 
device being replaced, hospitals were instructed to report as the 
device charge the difference between the hospital's usual charge for 
the device being implanted and the hospital's usual charge for the 
device for which it received full credit. In CY 2008, we expanded this 
payment adjustment policy to include cases in which hospitals receive 
partial credit of 50 percent or more of the cost of a specified device. 
Hospitals were instructed to append the ``FC'' modifier to the 
procedure code that reports the service provided to furnish the device 
when they receive a partial credit of 50 percent or more of the cost of 
the new device. We refer readers to the CY 2008 OPPS/ASC final rule 
with comment period for more background information on the ``FB'' and 
``FC'' modifiers payment adjustment policies (72 FR 66743 through 
66749).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), beginning in CY 2014, we modified our policy of 
reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. For CY 
2013 and prior years, our policy had been to reduce OPPS payment by 100 
percent of the device offset amount when a hospital furnishes a 
specified device without cost or with a full credit and by 50 percent 
of the device offset amount when the hospital receives partial credit 
in the amount of 50 percent or more of the cost for the specified 
device. For CY 2014, we reduced OPPS payment, for the applicable APCs, 
by the full or partial credit a hospital receives for a replaced 
device. Specifically, under this modified policy, hospitals are 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' (Credit Received from the Manufacturer 
for a Replaced Device) when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device. For CY 2014, we also limited the OPPS payment deduction for the 
applicable APCs to the total amount of the device offset when the 
``FD'' value code appears on a claim. For CY 2015, we continued our 
policy of reducing OPPS payment for specified APCs when a hospital 
furnishes a specified device without cost or with a full or partial 
credit and to use the three criteria established in the CY 2007 OPPS/
ASC final rule with comment period (71 FR 68072 through 68077) for 
determining the APCs to which our CY 2015 policy will apply (79 FR 
66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70424), we finalized our policy to no longer specify a 
list of devices to which the OPPS payment adjustment for no cost/full 
credit and partial credit devices would apply and instead apply this 
APC payment adjustment to all replaced devices furnished in conjunction 
with a procedure assigned to a device-intensive APC when the hospital 
receives a credit for a replaced specified device that is 50 percent or 
greater than the cost of the device.
b. Policy for No Cost/Full Credit and Partial Credit Devices
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 
through 79660), for CY 2017 and subsequent years, we finalized a policy 
to reduce OPPS payment for device-intensive procedures, by the full or 
partial credit a provider receives for a replaced device, when a 
hospital furnishes a specified device without cost or with a full or 
partial credit. Under our current policy, hospitals continue to be 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), we adopted a policy of reducing OPPS payment for 
specified APCs when a hospital furnishes a specified device without 
cost or with a full or partial credit by the lesser of the device 
offset amount for the APC or the amount of the credit. We adopted this 
change in policy in the preamble of the CY 2014 OPPS/ASC final rule 
with comment period and discussed it in subregulatory guidance, 
including Chapter 4, section 61.3.6 of the Medicare Claims Processing 
Manual. Further, in the CY 2021 OPPS/ASC final rule with comment period 
(85 FR 86017 through 86018, 86302), we made conforming changes to our 
regulations at Sec.  419.45(b)(1) and (2) that codified this policy.
    We did not propose any changes, and we did not receive any public 
comments related to our policies regarding

[[Page 94222]]

payment for no cost/full credit and partial credit devices for CY 2025.

V. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals

A. 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 final rule with comment period, the 
term ``biological'' is used because this is the term that appears in 
section 1861(t) of the Act. A ``biological'' as used in this final rule 
with comment period includes (but is not necessarily limited to) a 
``biological product'' or a ``biologic'' as defined under section 351 
of the PHS Act. As enacted by the Medicare, Medicaid, and SCHIP 
Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this 
pass-through payment provision requires the Secretary to make 
additional payments to hospitals for: current orphan drugs for rare 
diseases and conditions, as designated under section 526 of the Federal 
Food, Drug, and Cosmetic Act; current drugs and biologicals and 
brachytherapy sources used in cancer therapy; and current 
radiopharmaceutical drugs and biologicals. ``Current'' refers to those 
types of drugs or biologicals mentioned above that are hospital 
outpatient services under Medicare Part B for which transitional pass-
through payment was made on the first date the hospital OPPS was 
implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996, and whose cost is ``not 
insignificant'' in relation to the OPPS payments for the procedures or 
services associated with the new drug or biological. For pass-through 
payment purposes, radiopharmaceuticals are included as ``drugs.'' As 
required by statute, transitional pass-through payments for a drug or 
biological described in section 1833(t)(6)(C)(i)(II) of the Act can be 
made for a period of at least 2 years, but not more than 3 years, after 
the payment was first made for the drug as a hospital outpatient 
service under Medicare Part B. Final CY 2025 pass-through drugs and 
biologicals and their designated APCs are assigned status indicator 
``G'' in Addenda A and B to this final rule with comment period (which 
are available on the CMS website).\131\
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    \131\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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    Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through 
payment amount, in the case of a drug or biological, is the amount by 
which the amount determined under section 1842(o) of the Act for the 
drug or biological exceeds the portion of the otherwise applicable 
Medicare OPD fee schedule that the Secretary determines is associated 
with the drug or biological. The methodology for determining the pass-
through payment amount is set forth in regulations at 42 CFR 419.64. 
These regulations specify that the pass-through payment equals the 
amount determined under section 1842(o) of the Act minus the portion of 
the APC payment that CMS determines is associated with the drug or 
biological.
    Section 1847A of the Act establishes the average sales price (ASP) 
methodology, which is used for payment for drugs and biologicals 
described in section 1842(o)(1)(C) of the Act furnished on or after 
January 1, 2005. The ASP methodology, as applied under the OPPS, uses 
several sources of data as a basis for payment, including the ASP, the 
wholesale acquisition cost (WAC), and the average wholesale price 
(AWP). In this final rule with comment period, 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 our website at: https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price.
    The pass-through application \132\ and review process for drugs and 
biologicals is described on our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/pass-through-payment-status-new-technology-ambulatory-payment-classification-apc.
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    \132\ To apply for OPPS transitional Pass-Through Payment Status 
and New Technology Ambulatory Payment Classification (APC), 
applicants complete an application that is subject to the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). This 
information collection (CMS-10008) is currently approved under OMB 
control number of 0938-0802 and has an expiration date of January 
31, 2025.
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2. Transitional Pass-Through Payment Period for Pass-Through Drugs, 
Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass-
Through Status
    As required by statute, transitional pass-through payments for a 
drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act 
can be made for a period of at least 2 years, but not more than 3 
years, after the payment was first made for the drug or biological as a 
hospital outpatient service under Medicare Part B. Our current policy 
is to accept pass-through applications on a quarterly basis and to 
begin pass-through payments for approved pass-through drugs and 
biologicals on a quarterly basis through the next available OPPS 
quarterly update after the approval of a drug's or biological's pass-
through status. However, prior to CY 2017, we expired pass-through 
status for drugs and biologicals on an annual basis through notice-and-
comment rulemaking (74 FR 60480). In the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79662), we finalized a policy change, 
beginning with pass-through drugs and biologicals approved in CY 2017 
and subsequent calendar years, to allow for a quarterly expiration of 
pass-through payment status for drugs, biologicals, and 
radiopharmaceuticals to afford a pass-through payment period that is as 
close to a full 3 years as possible for all pass-through drugs, 
biologicals, and radiopharmaceuticals.
    This change eliminated the variability of the pass-through payment 
eligibility period, which previously varied based on when a particular 
application was initially received. We adopted this change for pass-
through approvals beginning on or after CY 2017, to allow, on a 
prospective basis, for the maximum pass-through payment period for each 
pass-through drug without exceeding the statutory limit of 3 years. 
Notice of drugs for which pass-through payment status is ending during 
the calendar year is included in the quarterly OPPS Change Request 
transmittals.
    Comment: One commenter expressed support for our policy of 
including radiopharmaceuticals as drugs eligible for pass-through 
status in the OPPS. In addition, this commenter supported our policy to 
allow drug pass-through status to expire on a quarterly basis to allow 
all drugs to have as close to three years of pass-through status as 
possible.
    Response: We appreciate the support of the commenter for our 
policies.
    Comment: Several commenters requested that we confirm that our 
proposal to pay separately for diagnostic radiopharmaceuticals with a 
per day cost greater than $630 that is described in section II.A.3.c of 
this final rule with comment period would not alter the qualification 
or payment methodology for those diagnostic radiopharmaceuticals 
applying for pass-through status under the OPPS.

[[Page 94223]]

    Response: The commenter is correct. This policy, which we are 
finalizing in section II.A.3.c of this final rule with comment period, 
is separate from the policies described in this section of this final 
rule with comment period, which describes the payment methodology for 
products that qualify for OPPS pass-through status.
3. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2024
    There are 25 drugs and biologicals for which pass-through payment 
status expires by December 31, 2024, as listed in Table 130. These 
drugs and biologicals will have received OPPS pass-through payment for 
3 years during the period of April 1, 2021, through December 31, 2024. 
In accordance with the policy finalized in CY 2017 and described 
earlier, pass-through payment status for drugs and biologicals approved 
in CY 2017 and subsequent years will expire on a quarterly basis, with 
a pass-through payment period as close to 3 years as possible.
    With the exception of those groups of drugs and biologicals that 
are always packaged when they do not have pass-through payment status 
(specifically, anesthesia drugs; drugs, biologicals, and 
radiopharmaceuticals \133\ 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 payment status in an upcoming calendar year is to 
determine the product's estimated per day cost and compare it with the 
OPPS drug packaging threshold for that calendar year, which will be 
$140 for CY 2025 for all drugs, biologicals, and therapeutic 
radiopharmaceuticals (for diagnostic radiopharmaceuticals we will 
provide separate payment when their per day cost exceeds the threshold 
we are adopting of $630). These policies are discussed further in 
section V.B.1 of this final rule with comment period. If the estimated 
per day cost for the drug or biological is less than or equal to the 
applicable OPPS drug packaging threshold, we 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 
provide separate payment at the applicable ASP methodology-based 
payment amount (which is generally ASP plus 6 percent), as discussed 
further in section V.B.2 of this final rule with comment period.
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    \133\ We are finalizing our proposal to pay separately for 
diagnostic radiopharmaceuticals with per-day costs above a 
threshold. This category of policy-packaged drugs that function as 
supplies in a diagnostic test or procedure includes diagnostic 
radiopharmaceuticals with per-day costs below the threshold for the 
applicable year. Please refer to Section II.A.3.c. for more 
information regarding this policy.
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[[Page 94224]]

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[[Page 94225]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.164

4. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through 
Payment Status Expiring in CY 2025
    We proposed to end pass-through payment status in CY 2025 for 28 
drugs and biologicals. These drugs and biologicals, which were 
initially approved for pass-through payment status between April 1, 
2022, and January 1, 2023, are listed in Table 131. The APCs and HCPCS 
codes for these drugs and biologicals, which have pass-through payment 
status that will end by December 31, 2025, are assigned status 
indicator ``G'' (Pass-Through Drugs and Biologicals) in Addenda A and B 
to this final rule with comment period (which are available on the CMS 
website).\134\ The APCs and HCPCS codes for these drugs and biologicals 
are assigned status indicator ``G'' only for the duration of their 
pass-through status.
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    \134\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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    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. For CY 2025, we are continuing our policy to pay 
for pass-through drugs and biologicals using the ASP methodology, 
meaning a

[[Page 94226]]

payment rate based on ASP, WAC, or AWP, as applicable. This payment 
rate is generally ASP plus 6 percent, equivalent to the payment rate 
these drugs and biologicals would receive in the physician's office 
setting in CY 2025. We note that, under the OPD fee schedule, 
separately payable drugs assigned to an APC are generally payable at 
ASP plus 6 percent. Therefore, a $0 pass-through payment amount would 
continue to be paid for pass-through drugs and biologicals under the CY 
2025 OPPS because the difference between the amount authorized under 
section 1842(o) of the Act, which is generally ASP plus 6 percent, and 
the portion of the otherwise applicable OPD fee schedule that the 
Secretary determines is appropriate, which is generally ASP plus 6 
percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \135\ 
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), their pass-through payment amount will continue to 
be equal to a payment rate calculated using the ASP methodology, 
meaning a payment rate based on ASP, WAC, or AWP. This payment rate 
will generally continue to be ASP plus 6 percent for CY 2025, minus a 
payment offset for the portion of the otherwise applicable OPD fee 
schedule that the Secretary determines is associated with the drug or 
biological. We note that if not for the pass-through payment status of 
these policy-packaged products, payment for these products would be 
packaged into the associated procedure and therefore, there are 
associated OPD fee schedule amounts for them.
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    \135\ We are finalizing our proposal to pay separately for 
diagnostic radiopharmaceuticals with per-day costs above a 
threshold. This category of policy-packaged drugs that function as 
supplies in a diagnostic test or procedure includes diagnostic 
radiopharmaceuticals with per-day costs below the threshold for the 
applicable year. Please refer to section II.A.3.c. for more 
information regarding this policy.
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    We will continue our policy to update pass-through payment rates on 
a quarterly basis on the CMS website during CY 2025 if later quarter 
ASP submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for these pass-through 
payment drugs or biologicals are necessary. For a full description of 
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 
comment period (70 FR 68632 through 68635).
    For CY 2025, consistent with our CY 2024 policy for diagnostic and 
therapeutic radiopharmaceuticals, we would continue to provide payment 
for both diagnostic and therapeutic radiopharmaceuticals that are 
granted pass-through payment status based on the ASP methodology. As 
stated earlier, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2025, we would continue 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 generally ASP plus 6 
percent. If ASP data are not available for a radiopharmaceutical, we 
would continue to provide pass-through payment at WAC plus 3 percent 
(consistent with our policy in section V.B.2.a of this final rule with 
comment period), the equivalent payment provided for pass-through drugs 
and biologicals without ASP information. Additional detail on the WAC 
plus 3 percent payment policy can be found in section V.B.2.a of this 
final rule with comment period. If WAC information also is not 
available, we would continue to provide payment for the pass-through 
radiopharmaceutical at 95 percent of its most recent AWP.
    We refer readers to Table 131 below for the list of drugs and 
biologicals with pass-through payment status expiring during CY 2025.
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[[Page 94227]]

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[[Page 94228]]

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[[Page 94229]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.167

BILLING CODE 4120-01-C
    We did not receive any public comments on our proposal and 
therefore, we are finalizing our proposal to end pass-through payment 
status in CY 2025 for 28 drugs and biologicals.
5. Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through 
Payment Status Continuing Through CY 2025
    We proposed to continue pass-through payment status in CY 2025 for 
80 drugs and biologicals. These drugs and biologicals, which were 
approved for pass-through payment status with effective dates beginning 
between April 1, 2023, and January 1, 2025, are listed in Table 132. 
The APCs and HCPCS codes for these drugs and biologicals, which have 
pass-through payment status that would continue after December 31, 
2025, are assigned status indicator ``G'' in Addenda A and B to this 
final rule with comment period (which are available on the CMS 
website).\136\
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    \136\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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    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. For CY 2025, we are continuing our policy to pay 
for pass-through drugs and biologicals at a payment rate based on the 
ASP methodology, which may be based on ASP, WAC, or AWP, but is 
generally ASP plus 6 percent, which is equivalent to the payment rate 
these drugs and biologicals would receive in the physician's office 
setting in CY 2025. We will continue with our policy of paying a $0 
pass-through payment amount for pass-through drugs and biologicals that 
are not policy-packaged under the CY 2025 OPPS, because the difference 
between the amount authorized under section 1842(o) of the Act, which 
would generally be ASP plus 6 percent, and the portion of the otherwise 
applicable OPD fee schedule that the Secretary determines is 
appropriate, which would also generally be ASP plus 6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals \137\ 
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), their pass-through payment amount would continue 
to be equal to a payment rate based on the ASP methodology, which may 
be based on ASP, WAC, or AWP, but would generally be ASP plus 6 percent 
for CY 2025, minus a payment offset for any predecessor drug products 
contributing to the pass-through payment. We note if not for the pass-
through payment status of these policy-packaged products, payment for 
these products would be

[[Page 94230]]

packaged into the associated procedure and therefore, there are 
associated OPD fee schedule amounts for them.
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    \137\ We are finalizing our proposal to pay separately for 
diagnostic radiopharmaceuticals with per-day costs above a 
threshold. This category of policy-packaged drugs that function as 
supplies in a diagnostic test or procedure includes diagnostic 
radiopharmaceuticals with per-day costs below the threshold for the 
applicable year. Please refer to section II.A.3.c. for more 
information regarding this policy.
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    We are continuing our policy to update pass-through payment rates 
on a quarterly basis on our website during CY 2025 if later quarter ASP 
submissions (or more recent WAC or AWP information, as applicable) 
indicate that adjustments to the payment rates for these pass-through 
payment drugs or biologicals are necessary. For a full description of 
this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 
comment period (70 FR 68632 through 68635).
    For CY 2025, consistent with our CY 2024 policy for diagnostic and 
therapeutic radiopharmaceuticals, we proposed to continue our policy to 
provide payment for both diagnostic and therapeutic 
radiopharmaceuticals that are granted pass-through payment status based 
on the ASP methodology. As stated earlier, for purposes of pass-through 
payment, we consider radiopharmaceuticals to be drugs under the OPPS. 
Therefore, if a diagnostic or therapeutic radiopharmaceutical receives 
pass-through payment status during CY 2025, we will continue to follow 
the standard ASP methodology to determine the pass-through payment rate 
that drugs receive under section 1842(o) of the Act, which would 
generally be ASP plus 6 percent. If ASP data are not available for a 
radiopharmaceutical, we would provide pass-through payment at WAC plus 
3 percent (consistent with our policy in section V.B.2.a of this final 
rule with comment period), the equivalent payment provided for pass-
through drugs and biologicals without ASP information. Additional 
detail on the WAC plus 3 percent payment policy can be found in section 
V.B.2.a of this final rule with comment period. If WAC information also 
is not available, we would provide payment for the pass-through 
radiopharmaceutical at 95 percent of its most recent AWP.
    The drugs and biologicals that would have pass-through payment 
status expire after December 31, 2025, are shown in Table 132.
BILLING CODE 4120-01-P

[[Page 94231]]

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[[Page 94232]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.169

[[Page 94233]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.170

[[Page 94234]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.171

[[Page 94235]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.172

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[GRAPHIC] [TIFF OMITTED] TR27NO24.173

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BILLING CODE 4120-01-C
    We did not receive any public comments on our proposal to continue 
pass-through payment status in CY 2025 for 80 drugs and biologicals and 
we are finalizing it as proposed. Additionally, we are finalizing our 
proposal to continue our policy to provide payment for both diagnostic 
and therapeutic radiopharmaceuticals that are granted pass-through 
payment status based on the ASP methodology.

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

1. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Packaging Threshold
    In accordance with section 1833(t)(16)(B) of the Act, the threshold 
for establishing separate APCs for payment of drugs and biologicals was 
set to $50 per administration during CYs 2005 and 2006. In CY 2007, we 
used the four-quarter moving average Producer Price Index (PPI) levels 
for Pharmaceutical Preparations (Prescription) to trend the $50 
threshold forward from the third quarter of CY 2005 (when the Pub. L. 
108-173 mandated threshold became effective) to the third quarter of CY 
2007. We then rounded the resulting dollar amount to the nearest $5 
increment in order to determine the CY 2007 threshold amount of $55. 
Using the same methodology as that used in CY 2007 (which is discussed 
in more detail in the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 68085 through 68086)), we set the packaging threshold for 
establishing separate APCs for drugs and biologicals at $135 for CY 
2024 (88 FR 81776 through 81777).
    Following the CY 2007 methodology, for the CY 2025 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 2025 and round the 
resulting dollar amount ($140.81) to the nearest $5 increment, which 
yielded a figure of $140. In performing this calculation, we used the 
most recent forecast of the quarterly index levels for the PPI for 
Pharmaceuticals for Human Use (Prescription) (Bureau of Labor 
Statistics series code WPUSI07003) from IGI. IGI is a nationally 
recognized economic and financial forecasting firm with which CMS 
contracts to forecast the various price indexes including the PPI 
Pharmaceuticals for Human Use (Prescription). Based on these 
calculations using the CY 2007 OPPS methodology, we proposed a 
packaging threshold for CY 2025 of $140 for drugs, biologicals, and 
therapeutic radiopharmaceuticals.
    We proposed in section II.A.3.c of the CY 2025 OPPS/ASC proposed 
rule (89 FR 59213 through 59222) to pay separately for diagnostic 
radiopharmaceuticals with a per-day cost above the proposed packaging 
threshold for CY 2025 of $630. We also proposed that starting in CY 
2026 and subsequent years, we would update this threshold by the PPI 
for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor 
Statistics series code WPUSI07003) from IHS Global, Inc (IGI). For the 
diagnostic radiopharmaceutical packaging threshold, we proposed to use 
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 and 68086)) to calculate the update to the OPPS drug packaging 
threshold. Specifically, we proposed that starting for the CY 2026 
rulemaking, we would use the most recently available four quarter 
moving average PPI levels to trend the final CY 2025 threshold forward 
from the third quarter of CY 2024 to the third quarter of CY 2025 and 
round the resulting dollar amount to the nearest $5 increment. We refer 
readers to section II.A.3.c.(4) of the CY 2025 OPPS/ASC proposed rule 
for information regarding our proposal to update the proposed 
diagnostic radiopharmaceutical packaging threshold in future years. We 
refer readers to section II.A.3.c of this final rule with comment 
period for additional details on our proposal to provide for separate 
payment for certain diagnostic radiopharmaceuticals, the comments we 
received on the proposal, and our final policy regarding separate 
payment for certain diagnostic radiopharmaceuticals in CY 2025.
    We received no comments on our proposal to increase the drug 
packaging threshold to $140. We are finalizing our proposal without 
modification to apply a drug packaging threshold of $140 for CY 2025.
b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, 
Certain Biologicals, and Certain Radiopharmaceuticals Under the Cost 
Thresholds
    To determine the proposed CY 2025 packaging status for all nonpass-
through drugs, biologicals, diagnostic and therapeutic 
radiopharmaceuticals that are not policy packaged, we calculated, on a 
HCPCS code-specific basis, the per day cost of all drugs, biologicals, 
and therapeutic radiopharmaceuticals that had a HCPCS code in CY 2023 
and were paid (via packaged or separate payment) under the OPPS. We 
used data from CY 2023 claims processed through December 31, 2023, for 
this calculation. However, we did not perform this calculation for 
those drugs and biologicals with multiple HCPCS codes that include 
different dosages, as described in section V.B.1.d of this final rule 
with comment period, or for the following policy-packaged items that we 
propose to continue to package in CY 2025: anesthesia drugs; drugs, 
biologicals, and contrast agents and other drugs 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. Consistent with our policy described in section V.B.5, in 
situations where we have no claims data and must determine if these 
products exceed the per-day cost threshold, we estimated the average 
number of units of each product that would typically be furnished to a 
patient during one day in the hospital outpatient setting and utilized 
the ASP methodology to determine whether their payment will be packaged 
as well as their payment status indicators.
    In order to calculate the per day costs for drugs, biologicals, 
diagnostic radiopharmaceuticals, and therapeutic radiopharmaceuticals 
to determine their proposed packaging status in CY 2025, we used the 
methodology that was described in detail in the CY 2006 OPPS proposed 
rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS 
final rule with comment period (70 FR 68636 through 68638). For each 
drug and biological HCPCS code, we used an estimated payment rate based 
on the ASP methodology, which is generally ASP plus 6 percent (which is 
the payment rate we proposed for separately payable drugs and 
biologicals for CY 2025, as discussed in more detail in section V.A.1 
of this final rule with comment period) to calculate the CY 2025 
proposed rule per day costs. We used the manufacturer-submitted ASP 
data from the fourth quarter of CY 2023 (data that were used for 
payment purposes in the physician's office setting, effective April 1, 
2024) to determine the CY 2025 OPPS/ASC proposed rule per day cost.
    As is our standard methodology, for CY 2025, we proposed to use 
payment rates based on the ASP data from the fourth quarter of CY 2023 
for budget neutrality estimates, packaging determinations, impact 
analyses, and completion of Addenda A and B to the

[[Page 94238]]

CY 2025 OPPS/ASC proposed rule (which are available via the internet on 
the CMS website) because these are the most recent data available for 
use at the time of development of the CY 2025 OPPS/ASC proposed rule. 
These data also are the basis for drug payments in the physician's 
office setting, effective April 1, 2024. Exceptions to our standard 
methodology include:
     For therapeutic radiopharmaceuticals that do not have 
pass-through status as of October 1, 2024, and do not have an ASP-based 
payment rate, we did not use a payment rate based on WAC or AWP for 
those items, consistent with our policy described in section V.B.3.a of 
the CY 2025 OPPS/ASC proposed rule. We used their mean unit cost 
derived from the CY 2023 hospital claims data to determine their per 
day cost.
     For diagnostic radiopharmaceuticals that do not have pass-
through status as of October 1, 2024, we used their mean unit cost 
derived from the CY 2023 hospital claims data to determine their per 
day cost. We did not use an ASP-based, WAC-based, or AWP-based payment 
rate for those items unless there was no mean unit cost reported for 
the product, consistent with our proposed policy described in section 
V.B.3.b of the CY 2025 OPPS/ASC proposed rule.
     For items other than diagnostic or therapeutic 
radiopharmaceuticals that did not have either an ASP-based payment 
rate, a payment rate based on WAC, or a payment rate based on AWP, we 
used mean unit cost of the items derived from the CY 2023 hospital 
claims data to determine their per day cost.
    We proposed to package drugs, biologicals, and therapeutic 
radiopharmaceuticals with a per day cost less than or equal to $140 and 
identify items with a per day cost greater than $140 as separately 
payable unless they are policy-packaged. For diagnostic 
radiopharmaceuticals, we propose to package those items with a per day 
cost less than or equal to $630 and identify items with a per day cost 
greater than $630 as separately payable. Consistent with our past 
practice, we cross-walked historical OPPS claims data from the CY 2023 
HCPCS codes that were reported to the CY 2023 HCPCS codes that we 
display in Addendum B to the CY 2025 OPPS/ASC proposed rule (which is 
available on the CMS website) \138\ for proposed payment in CY 2025.
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    \138\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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    Our policy during previous cycles of OPPS rulemaking has been to 
use updated ASP and claims data to make final determinations of the 
packaging status of HCPCS codes for drugs, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs, biologicals, and radiopharmaceuticals in the 
CY 2025 OPPS/ASC proposed rule, we proposed to use ASP data from the 
fourth quarter of CY 2023, which is the basis for calculating payment 
rates for drugs and biologicals in the physician's office setting using 
the ASP methodology, effective April 1, 2024, along with updated 
hospital claims data from CY 2023. We note that we also proposed to use 
these data for budget neutrality estimates and impact analyses for the 
CY 2025 OPPS/ASC proposed rule.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B of this CY 2025 OPPS/ASC final 
rule with comment period are based on ASP data from the second quarter 
of CY 2024. These data are the basis for calculating payment rates for 
drugs and biologicals in the physician's office setting using the ASP 
methodology, effective October 1, 2024. These payment rates would then 
be updated in the January 2025 OPPS update, based on the most recent 
ASP data to be used for physicians' office and OPPS payment as of 
January 1, 2025. For drugs and biologicals that do not currently have a 
payment rate based on ASP, WAC, or AWP, for therapeutic 
radiopharmaceuticals that do not currently have an ASP payment rate, 
and for all diagnostic radiopharmaceuticals, we calculated their mean 
unit cost from all of the CY 2023 claims data and updated cost report 
information available for this final rule with comment period to 
determine their final per day cost.
    All the comments we received regarding calculating per-day costs of 
drugs, biologicals, and radiopharmaceuticals pertained to our proposal 
to provide for separate payment for certain diagnostic 
radiopharmaceuticals for CY 2025. We address comments on the proposal 
in section II.A.3.c., where we are finalizing our proposal regarding 
calculating the per-day cost of diagnostic radiopharmaceuticals for 
purposes of determining eligibility for separate payment as proposed. 
We refer readers to section II.A.3.c of this final rule with comment 
period for a summary of the comments we received, our responses, and 
our final policy regarding separate payment for certain diagnostic 
radiopharmaceuticals in CY 2025.
    After consideration of the public comments we received, we are 
finalizing our proposal regarding the calculation of per day costs of 
drugs, biologicals, therapeutic radiopharmaceuticals, and diagnostic 
radiopharmaceuticals without modification.
    Because we use updated data to determine the packaging status of 
HCPCS codes for drugs, biologicals and radiopharmaceuticals for this 
final rule with comment period, the packaging status of some HCPCS 
codes for drugs, biologicals, and radiopharmaceuticals in this final 
rule with comment period may differ from the same HCPCS codes' 
packaging status determined based on the data used for proposed rule. 
Under such circumstances, we propose 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 costs 
fluctuate relative to the proposed CY 2025 OPPS drug packaging 
threshold and the drug's payment status (packaged or separately 
payable) in CY 2024. These established policies have not changed for 
many years and are the same as described in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70434). Specifically, for CY 2025 and 
subsequent years, consistent with our historical practice, we proposed 
to apply the following policies to those 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, biologicals, and 
radiopharmaceuticals that were paid separately in CY 2024 and that are 
proposed for separate payment in CY 2025, and that then have per day 
costs equal to or less than the CY 2025 final rule drug packaging 
threshold or diagnostic radiopharmaceutical packaging threshold, based 
on the updated ASPs and hospital claims data used for the CY 2025 final 
rule, would continue to receive separate payment in CY 2025.
     HCPCS codes for drugs, biologicals, and 
radiopharmaceuticals that were packaged in CY 2024 and that are 
proposed for separate payment in CY 2025, and that then have per day 
costs

[[Page 94239]]

equal to or less than the CY 2025 final rule drug packaging threshold 
or diagnostic radiopharmaceutical packaging threshold, based on the 
updated ASPs and hospital claims data used for the CY 2025 final rule, 
would remain packaged in CY 2025.
     HCPCS codes for drugs, biologicals, and 
radiopharmaceuticals for which we proposed packaged payment in CY 2025 
but that then have per-day costs greater than the CY 2025 final rule 
drug packaging threshold or diagnostic radiopharmaceutical packaging 
threshold, based on the updated ASPs and hospital claims data used for 
the CY 2025 final rule, would receive separate payment in CY 2025.
    We did not receive any public comments on our proposal and are 
finalizing it without modification.
c. Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals
    As mentioned earlier in this section, under the OPPS, we package 
several categories of nonpass-through drugs, biologicals, and 
radiopharmaceuticals, regardless of the cost of the products. Because 
the products are packaged according to the policies in 42 CFR 419.2(b), 
we refer to these packaged drugs, biologicals, and radiopharmaceuticals 
as ``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. 
These policies are either longstanding or based on longstanding 
principles and inherent to the OPPS and are as follows:
     Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations (Sec.  419.2(b)(4));
     Intraoperative items and services (Sec.  419.2(b)(14));
     Drugs, biologicals, and radiopharmaceuticals that function 
as supplies when used in a diagnostic test or procedure (including but 
not limited to, diagnostic radiopharmaceuticals,\139\ contrast agents, 
and pharmacologic stress agents) (Sec.  419.2(b)(15)); and
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    \139\ In this rule we adopt a policy to pay separately beginning 
in CY 2025 for diagnostic radiopharmaceuticals with per-day costs 
above a threshold. This category of policy-packaged drugs that 
function as supplies in a diagnostic test or procedure would include 
diagnostic radiopharmaceuticals with per-day costs at or below the 
threshold for the applicable year. Please refer to section II.A.3.c. 
for more information regarding this policy.
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     Drugs and biologicals that function as supplies when used 
in a surgical procedure (including, but not limited to, skin 
substitutes and similar products that aid wound healing and implantable 
biologicals) (Sec.  419.2(b)(16)).
    The policy at Sec.  419.2(b)(16) is broader than the policy at 
Sec.  419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule 
with comment period: ``We consider all items related to the surgical 
outcome and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy'' (79 FR 66875). The category described by Sec.  
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals that 
have a per day cost below the finalized diagnostic radiopharmaceutical 
packaging threshold that we discuss in section II.A.3 of this CY 2025 
OPPS/ASC final rule,\140\ contrast agents, stress agents, and some 
other products. The category described by Sec.  419.2(b)(16) includes 
skin substitutes and some other products. We believe it is important to 
reiterate that cost consideration is not a factor when determining 
whether an item is a surgical supply (79 FR 66875).
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    \140\ In section II.A.3 of this rule, we adopt a policy to pay 
separately for diagnostic radiopharmaceuticals with per-day costs 
above a d threshold. This category of policy-packaged drugs that 
function as supplies in a diagnostic test or procedure includes 
diagnostic radiopharmaceuticals with per-day costs below the 
threshold for the applicable year. Please refer to section II.A.3.c. 
for more information regarding this policy.
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    Comment: One commenter recommended that CMS continue to apply 
radiolabeled product edits to the nuclear medicine procedures to ensure 
that all packaged costs are included on nuclear medicine claims in 
order to establish appropriate payment rates in the future. The 
commenter was concerned that many providers performing nuclear medicine 
procedures are not including the cost of diagnostic 
radiopharmaceuticals used for the procedures in their claim 
submissions. The commenter believes this lack of drug cost reporting 
could be causing the cost of nuclear medicine procedures to be 
underreported and therefore requested that the radiolabeled product 
edits be reinstated. The commenter believes that after more than ten 
years without the radiolabeled product edits in place providers may not 
be as knowledgeable about ensuring radiolabeled products are reported 
with nuclear medicine procedures. The commenter believes reinstating 
the edits will improve billing accuracy.
    Response: We appreciate the commenter's feedback; however, we are 
not reinstating the radiolabeled product edits for nuclear medicine 
procedures, which required a diagnostic radiopharmaceutical to be 
present on the same claim as a nuclear medicine procedure for payment 
to be made under the OPPS. As previously discussed in the CY 2020 OPPS/
ASC final rule with comment period (85 FR 86033 and 86034), the edits 
were in place between CY 2008 and CY 2014 (78 FR 75033). We believe the 
period of time in which the edits were in place was sufficient for 
hospitals to gain experience reporting procedures involving 
radiolabeled products and to become accustomed to ensuring that they 
code and report charges so that their claims fully and appropriately 
reflect the costs of those radiolabeled products. 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.
    We welcome ongoing dialogue and engagement from interested parties 
regarding suggestions for payment changes for consideration in future 
rulemaking.
d. Packaging Determination for HCPCS Codes That Describe the Same Drug 
or Biological but Different Dosages
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believe 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 proposed 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 
2025.
    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 2023 claims data and our 
pricing information, which is based on the ASP methodology,

[[Page 94240]]

generally ASP plus 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 the CY 2025 
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 2023 claims data to make the proposed packaging 
determinations for them: HCPCS code C9257 (Injection, bevacizumab, 0.25 
mg); HCPCS code J3471 (injection, hyaluronidase, ovine, preservative 
free, per 1 usp unit (up to 999 usp units)); HCPCS code J3472 
(Injection, hyaluronidase, ovine, preservative free, per 1000 usp 
units); HCPCS code J7100 (Infusion, dextran 40,500 ml); and HCPCS code 
J7110 (Infusion, dextran 75,500 ml).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the proposed weighted 
average ASP methodology based payment rate, which is generally ASP plus 
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 if the estimated per day cost of each drug or biological 
is less than or equal to the proposed CY 2025 drug packaging threshold 
of $140 (in which case all HCPCS codes for the same drug or biological 
would be packaged) or greater than the proposed CY 2025 drug packaging 
threshold of $140 (in which case all HCPCS codes for the same drug or 
biological would be separately payable). The proposed packaging status 
of each drug and biological HCPCS code to which this methodology would 
apply in CY 2025 is displayed in Table 133.
[GRAPHIC] [TIFF OMITTED] TR27NO24.174

    We proposed that 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 2025 would also apply to diagnostic radiopharmaceuticals. 
In order to propose a packaging determination that is consistent across 
all HCPCS codes that describe different dosages of the same diagnostic 
radiopharmaceutical, we would aggregate our CY 2023 claims data across 
all of the HCPCS codes that describe each distinct diagnostic 
radiopharmaceutical in order to determine the mean units per day of the 
diagnostic radiopharmaceutical in terms of the HCPCS code with the 
lowest dosage descriptor. We would then analyze the aggregate per day 
cost of the

[[Page 94241]]

diagnostic radiopharmaceutical to determine if the per day cost is less 
than or equal to the proposed CY 2025 diagnostic radiopharmaceutical 
packaging threshold of $630 (in which case all HCPCS codes for the same 
diagnostic radiopharmaceutical would be packaged) or greater than the 
proposed CY 2025 diagnostic radiopharmaceutical packaging threshold of 
$630 (in which case all HCPCS codes for the same diagnostic 
radiopharmaceutical would be separately payable). There are currently 
no diagnostic radiopharmaceuticals that this policy would apply to.
    We did not receive any public comments on our proposal and are 
finalizing it without modification.
2. Payment for Drugs and Biologicals Without Pass-Through Status That 
Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other 
Separately Payable Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or 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 considering 
the hospital acquisition cost survey data collected by the Government 
Accountability Office (GAO) in CYs 2004 and 2005, and later periodic 
surveys conducted by the Secretary as set forth in the statute. If 
hospital acquisition cost data are not available, the law requires that 
payment be equal to payment rates established under the methodology 
described in section 1842(o), section 1847A, or section 1847B of the 
Act, as calculated and adjusted by the Secretary as necessary for 
purposes of paragraph (14). We refer to this alternative methodology as 
the ``statutory default.'' Most physician Part B drugs are paid at ASP 
plus 6 percent in accordance with section 1842(o) and section 1847A of 
the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to consider 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 consider 
the findings of the MedPAC study.\141\
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    \141\ Medicare Payment Advisory Committee. June 2005 Report to 
the Congress. Chapter 6: Payment for pharmacy handling costs in 
hospital outpatient departments. Available at: https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/June05_ch6.pdf.
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    It has been our policy since CY 2006 to apply the same treatment to 
all separately payable drugs and biologicals, which include SCODs, and 
drugs and biologicals that are not SCODs. Therefore, we apply the 
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, 
as required by statute, but we also apply it to separately payable 
drugs and biologicals that are not SCODs, which is a policy 
determination rather than a statutory requirement. For CY 2023 and 
subsequent years, we finalized a policy to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs; but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    For a detailed discussion of our OPPS drug payment policies from CY 
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we 
first adopted the statutory default policy to pay for separately 
payable drugs and biologicals at ASP plus 6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act. We have continued this policy of 
paying for separately payable drugs and biologicals at the statutory 
default for CYs 2014 through 2024.
    In the case of a drug or biological during an initial sales period 
in which data on the prices for sales of the drug or biological are not 
sufficiently available from the manufacturer, section 1847A(c)(4) of 
the Act permits the Secretary to make payments that are based on WAC. 
Under section 1833(t)(14)(A)(iii)(II) of the Act, the amount of payment 
for a separately payable drug equals the average price for the drug for 
the year established under, among other authorities, section 1847A of 
the Act. As explained in greater detail in the CY 2019 PFS final rule, 
under section 1847A(c)(4) of the Act, although payments may be based on 
WAC, unlike section 1847A(b) of the Act (which specifies that payments 
using ASP or WAC must be made with a 6 percent add-on), section 
1847A(c)(4) of the Act does not require that a particular add-on amount 
be applied to WAC-based pricing for this initial period when ASP data 
are not available. Consistent with section 1847A(c)(4) of the Act, in 
the CY 2019 PFS final rule (83 FR 59661 to 59666), we finalized a 
policy that, effective January 1, 2019, WAC-based payments for Part B 
drugs made under section 1847A(c)(4) of the Act will utilize a 3-
percent add-on in place of the 6 percent add-on that was being used 
according to our policy in effect as of CY 2018. For the CY 2019 OPPS, 
we followed the same policy finalized in the CY 2019 PFS final rule (83 
FR 59661 to 59666). Since CY 2020, we have continued to utilize a 3 
percent add-on instead of a 6 percent add-on for drugs that are paid 
based on WAC pursuant to our authority under section 
1833(t)(14)(A)(iii)(II) of the Act (84 FR 61318 and 85 FR 86039), which 
provides, in part, that the amount of payment for a SCOD is the average 
price of the drug in the year established under section 1847A of the 
Act. We also apply this provision to non-SCOD separately payable drugs. 
Because we establish the average price for a drug paid based on WAC 
under section 1847A of the Act as

[[Page 94242]]

WAC plus 3 percent instead of WAC plus 6 percent, we believe it is 
appropriate to price separately payable drugs paid based on WAC at the 
same amount under the OPPS. Our policy to pay for drugs and biologicals 
at WAC plus 3 percent, rather than WAC plus 6 percent, applies whenever 
WAC-based pricing is used for a drug or biological under section 
1847A(c)(4). We refer readers to the CY 2019 PFS final rule (83 FR 
59661 to 59666) for additional background on this policy.
    Consistent with our current policy, 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. Also, the budget neutral weight scalar is not applied in 
determining payments for these separately payable drugs and 
biologicals.
    Separately payable drug, biological, and radiopharmaceutical 
payment rates are listed in Addenda A and B to the CY 2025 OPPS/ASC 
proposed rule (available on the CMS website).\142\ These addenda 
provide the proposed CY 2025 payment rates based on the ASP methodology 
for separately payable nonpass-through drugs, biologicals, and 
radiopharmaceuticals and the ASP methodology for pass-through drugs, 
biologicals, and radiopharmaceuticals. Except for proposed payment 
rates for radiopharmaceuticals, these rates are based either on ASP 
information that is the basis for calculating payment rates for drugs 
and biologicals in the physician's office setting effective April 1, 
2024, or WAC, AWP, or mean unit cost from CY 2023 claims data and 
updated cost report information available for the CY 2025 OPPS/ASC 
proposed rule. For nonpass-through therapeutic radiopharmaceuticals, 
payment rates are based on ASP data or mean unit cost. We proposed in 
section II.A.3.c.(5) to pay separately at mean unit cost for diagnostic 
radiopharmaceuticals with per day costs above the proposed threshold; 
the payment rates proposed for qualifying diagnostic 
radiopharmaceuticals are entirely mean unit cost. In general, these 
published proposed payment rates are not the same as the actual January 
2025 payment rates. This is because payment rates for drugs, 
biologicals, and therapeutic radiopharmaceuticals with ASP information 
for January 2025 will be determined through the standard quarterly 
process where ASP data submitted by manufacturers for the third quarter 
of CY 2024 (July 1, 2024, through September 30, 2024) will be used to 
set the payment rates that are released for the quarter beginning in 
January 2025 in December 2024. In addition, in Addenda A and B to the 
CY 2025 OPPS/ASC proposed rule, payment rates for drugs, biologicals, 
and therapeutic radiopharmaceuticals for which there was no ASP, WAC, 
or AWP information available for April 2024, as well as all separately 
payable diagnostic radiopharmaceuticals, are based on mean unit cost in 
the available CY 2023 claims data. If new pricing information becomes 
available for payment for the quarter beginning in January 2025, we 
will price payment for these drugs, biologicals, therapeutic 
radiopharmaceuticals, and diagnostic radiopharmaceuticals based on 
their newly available information. Finally, there may be drugs, 
biologicals and therapeutic radiopharmaceuticals that have ASP, WAC, or 
AWP information available for the proposed rule (reflecting April 2024 
ASP data) that do not have ASP, WAC, or AWP information available for 
the quarter beginning in January 2025. These drugs, biologicals and 
therapeutic radiopharmaceuticals would then be paid based on mean unit 
cost data derived from CY 2023 hospital claims. Therefore, the proposed 
payment rates listed in Addenda A and B to the CY 2025 OPPS/ASC 
proposed rule are not for January 2025 payment purposes and are only 
illustrative of the CY 2025 OPPS payment methodology using the most 
recently available information at the time of issuance of the CY 2025 
OPPS/ASC proposed rule.
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    We note that payment amounts for most drugs separately payable 
under Medicare Part B are determined using the methodology in section 
1847A of the Act, and in many cases, payment is based on the average 
sales price (ASP) plus a statutorily mandated 6 percent add-on.
    For CY 2025, we proposed to clarify that only ASP data or, if ASP 
data are not available, mean unit cost data, would be used to set 
payment rates for separately payable nonpass-through therapeutic 
radiopharmaceuticals under the OPPS as described further in section 
V.B.3.a of the proposed rule. We proposed for CY 2025 to use mean unit 
cost data to set payment rates for separately payable nonpass-through 
diagnostic radiopharmaceuticals for which we propose separate payment 
because their cost exceeds the per-day threshold. Otherwise, we are not 
proposing any changes to our policies for payment for separately 
payable drugs and biologicals; and we propose to continue our payment 
policy that has been in effect since CY 2013 to pay for separately 
payable drugs and biologicals in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default).
    Most of the comments we received regarding our proposed policy for 
separately payable drugs, biologicals, and radiopharmaceuticals 
pertained to our proposal to pay separately for certain diagnostic 
radiopharmaceuticals in CY 2025. We refer readers to section II.A.3.c 
of this final rule with comment period for a summary of the comments we 
received, our responses to those comments, and our final policy for 
separate payment for certain diagnostic radiopharmaceuticals in CY 
2025.
    Comment: Multiple commenters expressed their approval for our 
proposal to pay separately payable for drugs and biologicals, but not 
radiopharmaceuticals, at ASP plus 6 percent. One commenter supported 
our proposal to continue to pay for new non-pass-through Part B drugs 
and biologicals during an initial sales period (two quarters) for which 
ASP pricing data are not yet available at a rate of wholesale 
acquisition cost (WAC) plus 3%. The commenter also supported our 
proposal that if ASP and WAC data are unavailable, Medicare would pay 
95% of the average wholesale price (AWP).
    Response: We appreciate the commenters' support for our policies.
    After consideration of the public comments we received, we are 
finalizing without modification our proposals regarding the payment 
methodology for separately payable drugs, biologicals, and 
radiopharmaceuticals.
b. Biosimilar Biological Products
    For CY 2024, we finalized the exception of biosimilars from the 
OPPS threshold packaging policy when their reference products are 
separately paid (88 FR 81783 through 81785). This policy allows for 
separate payment for biosimilars even if the biosimilar's per-day cost 
is below the packaging threshold if the biosimilar's reference product 
is separately paid. This policy removes the financial incentive to use 
a more expensive separately payable biological and promotes biosimilar 
use as a lower cost alternative to higher cost reference products.
    Payment rates for drugs and biologicals (including biosimilars) 
under Medicare Part B are determined using the methodology in section 
1847A of the Act, and in many cases, payment is based on the average 
sales price (ASP) plus a statutorily mandated 6 percent add-on. 
Additionally, Section 11403 of the IRA requires that a qualifying

[[Page 94243]]

biosimilar be paid at ASP plus 8 percent of the reference product's ASP 
rather than 6 percent during the applicable 5-year period. Section 
1847A(b)(8)(B)(ii) of the Act defines the applicable 5-year period for 
a qualifying biosimilar for which payment has been made using ASP (that 
is, payment under section 1847A(b)(8) of the Act) as of September 30, 
2022, as the 5-year period beginning on October 1, 2022. For a 
qualifying biosimilar for which payment is first made using ASP during 
the period beginning October 1, 2022, and ending December 31, 2027, the 
statute defines the applicable 5-year period as the 5-year period 
beginning on the first day of such calendar quarter of such payment (88 
FR 81783). These payment rates are published in the quarterly release 
of Addendum B or ASP pricing files.
c. Invoice Drug Pricing for CY 2026
    In recent years there has been an increasing number of drug and 
biological HCPCS codes for which ASP, WAC, AWP, and mean unit cost 
information is not available. These are often HCPCS codes for new drugs 
or biologicals that have been approved for marketing, but for which the 
manufacturer does not have sales data, and WAC, AWP, and mean unit cost 
information is not available. As a result, we are unable to assign a 
payable status indicator to these drugs or biologicals due to a lack of 
payment data. The numbers of drug and biological HCPCS codes without 
payment rates from Addendum B for the CY 2022 through CY 2024 OPPS/ASC 
final rules with comment period are listed in Table 134.
[GRAPHIC] [TIFF OMITTED] TR27NO24.175

    To provide appropriate payment rates for these drugs and 
biologicals without pricing data, we proposed to adopt an invoice 
pricing policy beginning in CY 2026. Because this policy necessitates 
significant operational changes to implement, we proposed to implement 
it beginning in CY 2026, rather than CY 2025. For CY 2025, we proposed 
that the affected drugs and biologicals would continue to be assigned a 
non-payable status indicator until we implement our invoice pricing 
policy, if adopted. We believe invoice pricing is appropriate for use 
under the OPPS because it provides temporary drug or biological cost 
information to generate a representative payment rate for a drug or 
biological and supports the utilization of new drug or biological HCPCS 
codes. Otherwise, the new drug and biological HCPCS codes would not 
receive payment under the OPPS, which would discourage their use by 
providers. Currently, the Physician Fee Schedule utilizes invoice 
pricing for drugs and biologicals when other types of pricing 
information are not available.
    We proposed that, for separately payable drugs or biologicals for 
which CMS does not provide a payment rate in Addendum B, which would 
indicate to MACs that CMS does not have pricing information 
(specifically, that ASP, WAC, AWP, and mean unit cost information is 
not available to determine a payment rate), MACs would calculate the 
payment based on provider invoices. The drug or biological invoice cost 
would be the net acquisition cost minus any rebates, chargebacks, or 
post-sale concessions. Before calculating an invoice-based payment 
amount, MACs would use the provider invoice to determine that: (a) the 
drug is not policy packaged; and (b) the per-day cost of the drug, 
biological, therapeutic radiopharmaceutical or diagnostic 
radiopharmaceutical is above the threshold packaging amount, as 
applicable. If both conditions are met, we proposed that MACs would use 
the provider invoice amount to set a payment rate for the separately 
payable drug, biological, or radiopharmaceutical until its payment 
amount becomes available to CMS. We generally would expect invoice 
pricing to be temporary, lasting two to three quarters, for qualified 
drugs required to report ASP under 1847A of the Act. For drug products 
that are not required to report ASP under 1847A of the Act (i.e., 
diagnostic pharmaceuticals), we proposed that invoice pricing may be 
used longer term until a MUC can be calculated. We proposed that we 
would not begin using invoice pricing for drugs, biologicals, and 
radiopharmaceuticals without pricing information until CY 2026 because 
we would need to make technical updates to outpatient hospital claims 
to allow the hospitals to report drug invoice pricing. We noted that we 
intended to work with the National Uniform Billing Committee (NUBC) in 
order to create a value code that would allow for the reporting of 
invoice prices of drugs, biologicals, and radiopharmaceuticals for 
purposes of this policy.
    Comment: Some commenters opposed our proposed drug invoice pricing 
policy, citing their concerns that the operational burden this policy 
would place on providers may lead to providers forgoing reimbursement. 
These commenters believe it is not feasible to provide these invoices 
because it would require considerable time and effort to track, 
document, and submit the necessary information because of the varied 
arrangements through which hospitals acquire drugs, as well as pricing 
variability and discount structures. Furthermore, commenters have 
concerns with using acquisition cost minus any rebates, chargebacks, or 
post-sale concessions because rebates are often made months after sale 
and commenters believed it would impede cash flow to hold claims for 
months until the rebate process has completed.
    These commenters urged CMS to work with manufacturers to report ASP 
and other pricing data in a timely

[[Page 94244]]

manner so that CMS will have up-to-date cost information. 
Alternatively, commenters suggested that CMS use WAC or AWP, as it does 
for other drugs without ASP data. WAC data is typically available in 
advance of ASP data and soon after a drug is on the market.
    Response: We appreciate the feedback from the commenters. We note 
that this policy would only apply to drugs where ASP, WAC, AWP, or mean 
unit cost information is not available. We will continue to examine the 
operational effect of this policy. We note that this policy has been in 
effect under the PFS and there is no evidence that healthcare 
professionals paid under the PFS forgo reimbursement for drugs paid at 
invoice prices because of administrative burden. We also note that the 
proposed effective date for this policy is January 1, 2026, which would 
allow providers a year to prepare for any operational changes.
    Comment: Some commenters opposed the proposed drug invoice pricing 
policy, citing concerns with participating 340B providers' disclosure 
of their 340B drug acquisition cost, which the commenters stated is 
proprietary data. Some commenters believed that we should exempt 340B 
providers from the proposed policy if we move forward with the 
proposal.
    Response: We understand providers' concerns regarding 340B drug 
acquisition cost data, and we note that it is not the intention of this 
policy to collect 340B drug acquisition cost data. Our policy goal is 
to provide temporary payment for these new drugs until their ASP, WAC, 
or AWP becomes available and would likely affect only a few new drugs 
each quarter. Invoice-based payment will result in collection of drug 
acquisition cost data for only a few drugs for only a short period of 
time, and only if the provider wants to submit the invoice in order to 
receive payment for the drug. We also note that CMS does not disclose 
proprietary data; we only disclose summarized population drug payment 
data in mean unit cost for ratesetting purposes.
    Comment: Some commenters supported our proposal to permit invoice 
pricing or suggested we permit the MACs to pay at WAC or continue our 
current approach to make retroactive adjustments to payment status and 
to update quarterly payment files as new data becomes available.
    Response: We thank the commenters who supported our proposal to 
allow invoice pricing. We believe the invoice pricing policy we are 
finalizing in this rule is a more appropriate and efficient way for us 
to pay for these drugs than our current approach of making retroactive 
adjustments. We note that this invoice pricing proposal only applies 
when data from a number of other payment methodologies, including WAC, 
are not available.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification for CY 2026 to allow MACs 
to use the provider invoice amount to set a payment rate for a 
separately payable drug, biological, or radiopharmaceutical until its 
payment amount becomes available and CMS provides a payment rate in 
Addendum B. HCPCS code(s) with missing payment rate in Addendum B for a 
separately payable drug, biological, or radiopharmaceutical will 
indicate to MACs that CMS does not have pricing information 
(specifically, that ASP, WAC, AWP, and mean unit cost information is 
not available to determine a payment rate) for a product, and MACs 
would then calculate the payment for the product based on provider 
invoices.
3. Payment Policy for Radiopharmaceuticals
    For a complete history of the OPPS payment policy for 
radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule 
with comment period (69 FR 65811), the CY 2006 OPPS final rule with 
comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60524).
a. Payment Policy for Therapeutic Radiopharmaceuticals
    In the CY 2023 OPPS/ASC final rule with comment period, we adopted 
as final our proposal to continue our longstanding payment policy for 
therapeutic radiopharmaceuticals for CY 2023 and subsequent years. 
Accordingly, this payment policy for therapeutic radiopharmaceuticals 
will continue to apply in CY 2025.
    Specifically, our policy of paying for separately payable pass-
through therapeutic radiopharmaceuticals under the ASP methodology 
adopted for separately payable drugs and biologicals described in 
section V.A.1 of the proposed rule will continue to apply for CY 2025. 
We will pay for separately payable nonpass-through therapeutic 
radiopharmaceuticals through a modified ASP methodology where we pay at 
ASP plus 6 percent if ASP data are available. However, if ASP 
information is unavailable for a separately payable nonpass-through 
therapeutic radiopharmaceutical, we will continue to base the payment 
rate on mean unit cost data derived from hospital claims. Our policy 
not to use WAC or AWP to establish payment for separately payable 
nonpass-through therapeutic radiopharmaceuticals if ASP is not 
available will continue for CY 2025. We explained our rationale in the 
CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through 
60525) when we first adopted our policy to apply the principles of 
separately payable drug pricing to therapeutic radiopharmaceuticals.
    We note that in the CY 2024 OPPS final rule with comment period (88 
FR 81786), we stated that the ASP payment methodology for separately 
payable nonpass-through therapeutic radiopharmaceuticals did allow for 
using WAC or AWP to establish a payment rate for these items. This was 
an error and conflicted with the policy implemented in CY 2010 and 
continued in subsequent years. The statement also conflicted with the 
policy that we proposed and finalized for CY 2023 and subsequent years 
in the CY 2023 OPPS/ASC final rule with comment period (87 FR 71969). 
The policy implemented in CY 2010 regarding ASP payment for separately 
payable nonpass-through therapeutic radiopharmaceuticals remains our 
intended policy. Therefore, we will pay for all nonpass-through 
separately payable therapeutic radiopharmaceuticals at ASP plus 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 will rely on CY 2023 mean unit cost data derived from 
hospital claims data for payment rates for separately payable nonpass-
through therapeutic radiopharmaceuticals for which ASP data are 
unavailable and update the payment rates for these products according 
to our usual process for updating the payment rates for separately 
payable drugs and biologicals on a quarterly basis if updated ASP 
information becomes available.
    The proposed CY 2025 payment rates for separately payable nonpass-
through therapeutic radiopharmaceuticals were included in Addenda A and 
B of the CY 2025 OPPS/ASC proposed rule (which are available on the CMS 
website).\143\
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    The final CY 2025 payment rates for separately payable nonpass-
through therapeutic radiopharmaceuticals are included in Addenda A and 
B of this

[[Page 94245]]

final rule with comment period (which are available on the CMS 
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b. Payment Policy for Diagnostic Radiopharmaceuticals
    For CY 2025, we proposed, as described in section II.A.3 of the CY 
2025 OPPS/ASC proposed rule, to pay separately for diagnostic 
radiopharmaceuticals with a per day cost above our proposed diagnostic 
radiopharmaceutical packaging threshold (proposed at $630 for CY 2025). 
We proposed to pay for pass-through diagnostic radiopharmaceuticals 
based on ASP, WAC, and AWP.
    We proposed to base the payment rate for separately payable 
nonpass-through diagnostic radiopharmaceuticals on mean unit cost data 
derived from hospital claims. As discussed in section II.A.3.c.(5), we 
did not propose to use ASP data when mean unit cost data are available 
for a separately payable nonpass-through diagnostic 
radiopharmaceutical, but we sought comment on using ASP for setting the 
payment rate for nonpass-through diagnostic radiopharmaceuticals in the 
future. Additionally, we did not propose to use WAC or AWP as a basis 
for payment for nonpass-through diagnostic radiopharmaceuticals when 
mean unit cost data derived from hospital claims is available. We 
believe that paying for nonpass-through diagnostic radiopharmaceuticals 
using mean unit cost would appropriately pay for the average price of a 
nonpass-through separately payable diagnostic radiopharmaceutical. In 
our view, MUC is an appropriate proxy for the average price for a 
diagnostic radiopharmaceutical for a given year, as it is calculated 
based on the average costs for a particular year and is directly 
reflective of the actual cost data that hospitals submit to CMS. As we 
stated in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60523), we believe that WAC or AWP is not an appropriate proxy to 
provide OPPS payment for radiopharmaceuticals because these pricing 
methodologies do not include discounts. Specifically, the absence of 
appropriate ASP reporting could result in payment for a separately 
payable diagnostic radiopharmaceutical based on WAC or AWP 
indefinitely, a result which we believe would be inappropriate, as 
these pricing metrics do not capture all of the pricing discounts that 
may be reflected in the ASP.
    Additionally, we proposed to base the initial payment for new 
diagnostic radiopharmaceuticals with HCPCS codes that do not have pass-
through status or claims data on ASP, and on the WAC for these products 
if ASP data for these diagnostic radiopharmaceuticals are not 
available. If the WAC also is unavailable, we proposed to make payment 
for new diagnostic radiopharmaceuticals at 95 percent of the products' 
most recent AWP. We believe the volume of products in this category 
will typically be very low; however, in these rare situations, we 
believe it would be appropriate to use ASP until a MUC is established 
for new diagnostic radiopharmaceuticals with HCPCS codes that do not 
have passthrough status or claims data.
    Please refer to section II.A.3.c of this final rule with comment 
period for information regarding our payment policies for diagnostic 
radiopharmaceuticals, including our policy to pay separately for 
diagnostic radiopharmaceuticals above a certain cost threshold, 
comments we received, and our final policies for CY 2025. The final CY 
2025 payment rates for separately payable nonpass-through diagnostic 
radiopharmaceuticals are included in Addenda A and B of this final rule 
with comment period (which are available on the CMS website).\145\
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4. Payment for Blood Clotting Factors
    For CY 2025, we proposed to continue our established policy to 
provide payment for blood clotting factors using the same methodology 
as other separately payable drugs and biologicals under the OPPS and to 
continue to pay a furnishing fee. For a full discussion of our 
established payment policy for blood clotting factors, please refer to 
the CY 2023 OPPS/ASC final rule with comment period (87 FR 71969 
through 71970). In accordance with our policy as finalized in the CY 
2008 OPPS/ASC final rule with comment period (72 FR 66765), we will 
announce the actual figure of the percent change in the applicable CPI 
and the updated furnishing fee calculation based on that figure through 
the applicable program instructions and posting on the CMS website at 
https://www.cms.gov/medicare/payment/fee-for-service-providers/part-b-drugs/average-drug-sales-price.
    We did not receive any public comments on our proposal and are 
finalizing it without modification.
5. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims 
Data
    In the CY 2023 OPPS/ASC final rule with comment period, we adopted 
as final our proposal to continue our longstanding payment policy for 
nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS 
codes but without OPPS hospital claims data for CY 2023 and subsequent 
years. Therefore, for CY 2025, this policy will continue to apply. For 
a detailed discussion of the payment policy and methodology, we refer 
readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70442 through 70443). Consistent with our policy, because we have no 
claims data and must determine if these products exceed the per-day 
cost threshold, we estimated the average number of units of each 
product that would typically be furnished to a patient during one day 
in the hospital outpatient setting and utilized the ASP methodology to 
determine whether their payment will be packaged as well as their 
payment status indicators.
    We did not receive any public comments on our proposal and are 
finalizing it without modification.
6. Requirement in the CY 2025 Physician Fee Schedule Proposed Rule for 
HOPDs and ASCs To Report Discarded Amounts of Certain Single-Dose or 
Single-Use Package Drugs
    Section 90004 of the Infrastructure Investment and Jobs Act (Pub. 
L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended 
section 1847A of the Act to re-designate subsection (h) as subsection 
(i) and insert a new subsection (h), which requires manufacturers to 
provide a refund to CMS for certain discarded amounts from a refundable 
single-dose container or single-use package drug. We explained in the 
CY 2025 OPPS/ASC proposed rule that the CY 2025 PFS proposed rule 
included proposals related to the discarded drug refund policy, 
including proposals that may impact hospital outpatient departments 
(HOPDs) and ambulatory surgical centers (ASCs). Similar to our CY 2023 
and CY 2024 notice in the OPPS/ASC proposed rule (87 FR 71988), we 
wanted to ensure interested parties were aware of these proposals and 
knew to refer to the CY 2025 PFS proposed rule for a full description 
of the proposed policy. Interested parties were asked to submit 
comments on any proposals to implement section 90004 of the 
Infrastructure Act to the CY 2025 PFS

[[Page 94246]]

proposed rule. We noted that public comments on these proposals would 
be addressed in the CY 2025 PFS final rule with comment period.
7. High-Cost/Low-Cost Threshold for Packaged Skin Substitutes
a. Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. As part of the policy to package skin substitutes, 
we also finalized a methodology that divides the skin substitutes into 
a high-cost group and a low-cost group, to ensure adequate resource 
homogeneity among APC assignments for the skin substitute application 
procedures (78 FR 74933). In the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66886), we stated that skin substitutes are best 
characterized as either surgical supplies or devices because of their 
required surgical application and because they share significant 
clinical similarity with other surgical devices and supplies.
    Skin substitutes assigned to the high-cost group are described by 
HCPCS codes 15271 through 15278. Skin substitutes assigned to the low-
cost group are described by HCPCS codes C5271 through C5278. Geometric 
mean costs for the various procedures are calculated using only claims 
for the skin substitutes that are assigned to each group. Specifically, 
claims billed with HCPCS codes 15271, 15273, 15275, or 15277 are used 
to calculate the geometric mean costs for procedures assigned to the 
high-cost group, and claims billed with HCPCS codes C5271, C5273, 
C5275, or C5277 are used to calculate the geometric mean costs for 
procedures assigned to the low-cost group (78 FR 74935).
    Each of the HCPCS codes described earlier are assigned to one of 
the following three skin procedure APCs according to the geometric mean 
cost for the code: APC 5053 (Level 3 Skin Procedures): HCPCS codes 
C5271, C5275, and C5277; APC 5054 (Level 4 Skin Procedures): HCPCS 
codes C5273, 15271, 15275, and 15277; or APC 5055 (Level 5 Skin 
Procedures): HCPCS code 15273. In CY 2024, the payment rate for APC 
5053 (Level 3 Skin Procedures) was $599.02, the payment rate for APC 
5054 (Level 4 Skin Procedures) was $1,739.33, and the payment rate for 
APC 5055 (Level 5 Skin Procedures) was $3,421.82. This information is 
also available in Addenda A and B of the CY 2024 final rule with 
comment period (88 FR 81540) (the Addenda A and B are available on the 
CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
    We have continued the high-cost/low-cost categories policy since CY 
2014. Under the current policy, skin substitutes in the high-cost 
category are reported with the skin substitute application CPT codes, 
and skin substitutes in the low-cost category are reported with the 
analogous skin substitute HCPCS C-codes. For a discussion of the CY 
2014 and CY 2015 methodologies for assigning skin substitutes to either 
the high-cost group or the low-cost group, we refer readers to the CY 
2014 OPPS/ASC final rule with comment period (78 FR 74932 through 
74935) and the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66882 through 66885).
    For a discussion of the high-cost/low-cost methodology that was 
adopted in CY 2016 and has been in effect since then, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 
through 70435). Beginning in CY 2016, we adopted a policy where we 
determined the high-cost/low-cost status for each skin substitute 
product based on either a product's geometric mean unit cost (MUC) 
exceeding the geometric MUC threshold or the product's per day cost 
(PDC) (the total units of a skin substitute multiplied by the mean unit 
cost and divided by the total number of days) exceeding the PDC 
threshold. We assigned each skin substitute that exceeded either the 
MUC threshold or the PDC threshold to the high-cost group. In addition, 
we assigned any skin substitute with a MUC or a PDC that did not exceed 
either the MUC threshold or the PDC threshold to the low-cost group (87 
FR 71976).
    However, some skin substitute manufacturers have raised concerns 
about significant fluctuation in both the MUC threshold and the PDC 
threshold from year to year using the methodology developed in CY 2016. 
The fluctuation in the thresholds may result in the reassignment of 
several skin substitutes from the high-cost group to the low-cost 
group, which, under current payment rates, can be a difference of over 
$1,000 in the payment amount for the same procedure. In addition, these 
interested parties were concerned that the inclusion of cost data from 
skin substitutes with pass-through payment status in the MUC and PDC 
calculations would artificially inflate the thresholds. Skin substitute 
interested parties requested that CMS consider alternatives to the 
current methodology used to calculate the MUC and PDC thresholds and 
whether it might be appropriate to establish a new cost group in 
between the low-cost group and the high-cost group to allow for 
assignment of moderately priced skin substitutes to a newly created 
middle group.
    We share the goal of promoting payment stability for skin 
substitute products and their related procedures as price stability 
allows hospitals using such products to more easily anticipate future 
payments associated with these products. We have attempted to limit 
year-to-year shifts for skin substitute products between the high-cost 
and low-cost groups through multiple initiatives implemented since CY 
2014, including: establishing separate skin substitute application 
procedure codes for low-cost skin substitutes (78 FR 74935); using a 
skin substitute's MUC calculated from outpatient hospital claims data 
instead of an average of ASP plus 6 percent as the primary methodology 
to assign products to the high-cost or low-cost group (79 FR 66883); 
and establishing the PDC threshold as an alternate methodology to 
assign a skin substitute to the high-cost group (80 FR 70434 through 
70435).
    To allow additional time to evaluate concerns and suggestions from 
interested parties about the volatility of the MUC and PDC thresholds, 
in the CY 2018 OPPS/ASC proposed rule (82 FR 33627), we proposed that a 
skin substitute that was assigned to the high-cost group for CY 2017 
would be assigned to the high-cost group for CY 2018, even if it did 
not exceed the CY 2018 MUC or PDC thresholds. We finalized this policy 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347). 
For more detailed information and discussion regarding the goals of 
this policy and the subsequent comment solicitations in CY 2019 and CY 
2020 regarding possible alternative payment methodologies for graft 
skin substitute products, please refer to the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 59347); the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 58967 to 58968); and the CY 2020 OPPS/ASC 
final rule with comment period (84 FR 61328 to 61331).
b. Packaged Skin Substitutes for CY 2025
    For CY 2025, consistent with our policy since CY 2016, we proposed 
to continue to determine the high-cost/low-cost status for each skin 
substitute product based on either a product's

[[Page 94247]]

geometric MUC exceeding the geometric MUC threshold or the product's 
PDC (the total units of a skin substitute multiplied by the MUC and 
divided by the total number of days) exceeding the PDC threshold. 
Consistent with the methodology as established in the CY 2014 OPPS/ASC 
through CY 2018 OPPS/ASC final rules with comment period, we analyzed 
CY 2023 claims data to calculate the MUC threshold (a weighted average 
of all skin substitutes' MUCs) and the PDC threshold (a weighted 
average of all skin substitutes' PDCs). The proposed CY 2025 MUC 
threshold is $50 per cm\2\ (rounded to the nearest $1) and the proposed 
CY 2025 PDC threshold is $840 (rounded to the nearest $1). Also, the 
availability of a HCPCS code for a particular human cell, tissue, or 
cellular or tissue-based product (HCT/P) does not mean that that 
product is appropriately regulated solely under section 361 of the PHS 
Act and the FDA regulations in 21 CFR part 1271. Manufacturers of HCT/
Ps should consult with the FDA Tissue Reference Group (TRG) or obtain a 
determination through a Request for Designation (RFD) on whether their 
HCT/Ps are appropriately regulated solely under section 361 of the PHS 
Act and the regulations in 21 CFR part 1271.
    For CY 2025, as we did for CY 2024, we proposed to assign each skin 
substitute that exceeds either the MUC threshold or the PDC threshold 
to the high-cost group. In addition, we propose to assign any skin 
substitute that does not exceed either the MUC threshold or the PDC 
threshold to the low-cost group except that we propose that any skin 
substitute product that is assigned to the high-cost group in CY 2024 
would be assigned to the high-cost group for CY 2025, regardless of 
whether it exceeds or falls below the CY 2025 MUC or PDC threshold. 
This policy was established in the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59346 through 59348).
    For CY 2025, we proposed to continue to assign skin substitutes 
with pass-through payment status to the high-cost category. We proposed 
to assign skin substitutes with pricing information but without claims 
data to calculate a geometric MUC or PDC to either the high-cost or 
low-cost category based on the product's ASP plus 6 percent payment 
rate as compared to the MUC threshold. If ASP is not available, we 
proposed to use WAC plus 3 percent to assign a product to either the 
high-cost or low-cost category. Finally, if neither ASP nor WAC is 
available, we proposed to use 95 percent of AWP to assign a skin 
substitute to either the high-cost or low-cost category. We proposed to 
continue to use WAC plus 3 percent instead of WAC plus 6 percent to 
conform to our proposed policy described in section V.B.2.b of the 
proposed rule to establish a payment rate of WAC plus 3 percent for 
separately payable drugs and biologicals that do not have ASP data 
available. We proposed that any skin substitute product that is 
assigned a code in the HCPCS A2XXX series would be assigned to the 
high-cost skin substitute group including new products without pricing 
information. New skin substitutes without pricing information that are 
not assigned a code in the HCPCS A2XXX series would be assigned to the 
low-cost category until pricing information is available to compare to 
the CY 2024 MUC and PDC thresholds. For a discussion of our policy 
under which we assign skin substitutes without pricing information that 
are not assigned a code in the HCPCS A2XXX series to the low-cost 
category until pricing information is available, we refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436).
    The CY 2025 OPPS/ASC proposed rule (89 FR 59373 through 593777) 
includes the proposed CY 2025 cost category assignment for each skin 
substitute product.
    Comment: The HOP Panel recommended, and several commenters 
supported, ending the packaging of the graft skin substitute 
administration add-on codes (CPT codes 15272, 15274, 15276, and 15278; 
HCPCS codes C5272, C5274, C5276, and C5278). The HOP Panel and the 
commenters requested that these codes be assigned to APCs that reflect 
the estimated costs of these service codes. Commenters claimed that 
packaging the graft skin substitute administration add-on codes 
eliminates the variation in payment for wound care treatments based on 
the size of the wound. They assert that providers are discouraged from 
treating wounds between 26 and 99 cm\2\ and over 100 cm\2\ in the 
outpatient hospital setting because of the financial losses they 
experience to provide such care. One of the commenters cited a recent 
study finding that between 2014 and 2019 treatment for larger area 
wounds has shifted from the outpatient hospital setting to the 
physician office setting where payment for individual services better 
reflects their cost because of the fee-for-service structure of 
physician payment. Commenters believe that packaging graft skin 
substitute administration add-on codes disrupts the methodology of how 
the American Medical Association (AMA), the organization that manages 
CPT service codes, intended graft skin substitute procedures to be 
paid. The commenters explained that CPT codes describe the actual 
amount of the graft skin substitute product that is used for an 
individual service when the amount of product used is 25 cm\2\ or more. 
Commenters believe that when more than 25 cm\2\ of product is used for 
a service that the cost of product used in excess of 25 cm\2\ should be 
paid at cost by making the add-on code reporting the additional product 
separately payable in addition to the cost to apply the graft skin 
substitute product. Commenters believe always packaging the cost of 
graft skin substitute products into the cost of the associated 
application procedures no matter how much product is used is an 
indiscriminate form of payment that, according to the commenters, does 
not promote payment accuracy or patient care and may raise health 
equity concerns because providers are not compensated for the cost of 
using more than 25 cm\2\ of graft skin substitute product for a wound. 
One commenter asserted that providers rarely experience a financial 
gain from performing a graft skin substitute application procedure and, 
in most cases, providers experience a financial loss when performing 
graft skin substitute procedures.
    Response: We do not agree that we should pay separately for graft 
skin substitute add-on codes under the OPPS. The OPPS is a prospective 
payment system rather than a fee-for-service payment system. That means 
that we generally attempt to make one payment for all the services 
billed with the primary medical procedure, including add-on procedures 
such as the ones described by CPT codes 15272, 15274, 15276, and 15278, 
and HCPCS codes C5272, C5274, C5276, and C5278. More specifically, we 
calculate the OPPS payment rate by first calculating the geometric mean 
cost of the procedure. This calculation includes claims for individual 
services that used a lower level of resources and claims for individual 
services that used a higher level of resources. The resulting geometric 
mean cost will reflect the average service cost for a given medical 
procedure. Next, we group the medical procedure with other medical 
procedures with clinical and resource similarity in an APC and 
calculate the geometric mean of these related procedures to generate a 
base payment rate for all procedures assigned to the APC. Skin 
substitutes are surgical supplies and are packaged into the cost of the 
associated procedure. The application of graft skin substitutes

[[Page 94248]]

cannot occur unless a graft skin substitute is used. So, the cost of 
the product will be reflected in the overall cost of the application 
procedure.
    Despite the text of the descriptors for CPT codes 15271 and 15275 
and HCPCS codes C5271 and C5275, the geometric mean service cost of 
these procedures is likely not the cost of the procedures plus 25 cm\2\ 
of graft skin substitute product. Instead, the geometric mean service 
cost should reflect the geometric mean of the cost of the graft skin 
substitute application procedure plus the cost of graft skin substitute 
product for all procedures where less than 100 cm\2\ of product is 
used. The commenters claimed that most graft skin substitute procedures 
use substantially more than 25 cm\2\ of graft skin substitute product. 
Therefore, the geometric mean cost of these procedures would account 
for the average amount of product used by providers over 25 cm\2\.
    A prospective payment system like the OPPS is designed to pay 
providers the geometric mean cost of the primary service they provide, 
and such a system encourages efficiencies and cost-savings in the 
administration of health care. However, a prospective payment system is 
not intended to discourage providers from rendering medically necessary 
care to patients. For example, it is possible that a provider could 
experience a financial loss when they perform a service where a patient 
receives 85 cm\2\ of a graft skin substitute product, but that same 
provider could see a financial gain when the next patient receives a 
skin graft where 40 cm\2\ of product is used. Paying separately for 
add-on codes for the administration of graft skin substitutes in a 
prospective payment system defeats the goals of such a payment system. 
Therefore, we will continue to package the add-on codes for the 
administration of graft skin substitutes in the OPPS to encourage cost-
savings and efficiencies with wound care treatment. If providers are 
paid at cost or nearly at cost for each individual service they render, 
there is no incentive for them to control costs.
    Add-on codes for the administration of graft skin substitutes 
should be packaged with the primary medical service to be able to 
establish a geometric mean payment rate that gives providers incentives 
to keep their costs in line with typical providers throughout the 
Medicare program. The need for cost efficiencies in the application of 
graft skin substitutes to treat wounds is no different than the need 
for cost efficiencies in other procedures administered in the 
outpatient hospital setting. Packaging product costs with the costs of 
the associated procedures is not an indiscriminate method of paying for 
medical care nor is it a system where providers lose money on most of 
the procedures they administer and rarely receive more payment than the 
cost of the procedure. Prospective payment methodology helps to control 
the cost of hospital care, while incentivizing providers to provide 
quality care in an efficient manner. Packaging add-on codes to have a 
uniform distribution of costs for individual procedure is critical for 
prospective payment. Therefore, we believe that add-on codes, including 
the add-on codes for the administration of graft skin substitutes, 
should remain packaged to maintain the integrity of the OPPS.
    Comment: The HOP Panel recommended, and several commenters 
supported, ensuring that the payment rate for graft skin substitute 
procedures be the same no matter where on the body the graft skin 
substitute product is applied to the patient. There are four graft skin 
substitute application procedures for high-cost skin substitute 
products (CPT codes 15271, 15273, 15275, and 15277) and a similar four 
graft skin substitute application procedures for low-cost skin 
substitute products (HCPCS codes C5271, C5273, C5275, and C5277). 
Commenters claim that the cost to apply graft skin substitute products 
does not depend on the location of the wound because the same amount of 
product is used on the wound and the same clinical resources are used 
to treat the wound independent of the location of the wound. Other 
commenters made a similar request, asking that CPT code 15277 
(Application of skin substitute graft to face, scalp, eyelids, mouth, 
neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, 
total wound surface area greater than or equal to 100 sq cm; first 100 
sq cm wound surface area, or 1 percent of body area of infants and 
children) that is currently assigned to APC 5054 (Level 4 Skin 
Procedures) be reassigned to APC 5055 (Level 5 Skin Procedures). That 
would mean that the two graft skin substitute application procedures 
for the application of high-cost skin substitute products for wounds 
greater than 100 cm\2\ (CPT codes 15273 and 15277) would be in the same 
APC. One commenter expressed their concern that CMS seems to not 
understand that provider resources and graft skin substitute product 
used for the procedures described by CPT codes 15273 and 15277 and for 
the procedures described by HCPCS codes C5273 and C5277 are the same, 
and that CPT codes 15273 and 15277 must be assigned to the same APC and 
C5273 and C5277 also must be assigned to the same APC.
    Response: The reason there are four CPT codes describing graft skin 
substitute application services is that there are different CPT codes 
for applying graft skin substitutes for wounds up to 100 cm\2\ and for 
wounds that are greater than 100 cm\2\; and there are different CPT 
codes for applying graft skin substitutes to the trunk, arms, and legs 
as compared to the face, scalp, eyelids, mouth, neck, ears, orbits, 
genitalia, hands, feet, fingers, and toes. We appreciate commenters' 
concerns and note that the two current codes describing the application 
of high-cost graft skin substitutes for wounds less than 100 cm\2\ (CPT 
codes 15271 and 15275) have been assigned to the same APC (5054), and 
the two current codes describing the application of low-cost graft skin 
substitutes for wounds less than 100 cm\2\ (HCPCS codes C5271 and 
C5275) have been assigned to the same APC (5053). Because they are 
currently included in the same APC, the OPPS payment for them is the 
same; and this payment policy is consistent with the recommendation 
from the HOP Panel and other commenters. This means for the application 
of graft skin substitute products up to 100 cm\2\, the location where 
the graft skin substitute is applied does not affect the payment rate 
for the service.
    We note that the code describing the application of high-cost 
products for wounds that are greater than 100 cm\2\ on the trunk, arms, 
and legs (CPT code 15273) has been assigned to a higher-paying APC (APC 
5055) than the APC assignment for the code describing the application 
of high-cost graft skin substitute products for wounds greater than 100 
cm\2\ on the face, scalp, eyelids, mouth, neck, ears, orbits, 
genitalia, hand, feet, fingers, and toes (CPT code 15277), which is 
assigned to APC 5054. Likewise, the code describing the application of 
low- cost products for wounds that are greater than 100 cm\2\ on the 
trunk, arms, and legs (HCPCS code C5273) has been assigned to a higher-
paying APC (APC 5054) than the code for the application of low-cost 
graft skin substitute products for wounds greater than 100 cm\2\ on the 
face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hand, feet, 
fingers, and toes (HCPCS code C5277), which is assigned to APC 5054. 
The differences in costs that have determined APC assignments for these 
services for wounds greater than 100 cm\2\ have been supported by 
historical cost data. We also note that none of these service codes are 
in violation of the 2 times rule, which requires that the geometric 
mean cost of significant items

[[Page 94249]]

and services within an APC group to be no more than two-times the 
geometric mean cost of the lowest geometric mean cost for a significant 
item or service within the same APC group.
    In response to the claim of one of the commenters that we do not 
understand that similar amounts of product and resources are used for 
the procedures described by CPT codes 15273 and 15277 or for the 
procedures described by HCPCS codes C5273 and C5277, we note that the 
cost data for CY 2023 and for many years prior show substantial cost 
differences between the procedures described by CPT codes 15273 and 
15277 and likewise for the procedures described by HCPCS codes C5273 
and C5277. We set our payment rates based on claims cost data which 
continue to show that these procedures have substantial cost 
differences and should be assigned to different APCs.
    Comment: The HOP Panel recommended, and several commenters 
supported, that all new graft skin substitute products be assigned to 
the low-cost group whether they have a Q-code or an A-code until cost 
data become available for the product. Commenters believe it is not 
appropriate that products assigned Q-codes are assigned to the low-cost 
group while products assigned A-codes are assigned to the high-cost 
group. Commenters note that A-codes are being assigned to graft skin 
substitute products that have FDA 510(k) clearance but are not 
synthetic products, which conflicts with the expectation of the 
commenters that only graft skin substitute products that would have 
been described by the now-deleted HCPCS code C1849 (Skin substitute, 
synthetic, resorbable, per square centimeter) be assigned to the high-
cost group. More broadly, commenters believed that no category of graft 
skin substitute products should be assigned to the high-cost group 
until there is cost data supporting that assignment.
    Response: We appreciate the concerns of the commenters. However, we 
decided on an approach that would ensure that any graft skin substitute 
product that could potentially have been described by deleted HCPCS 
code C1849 be included in the high-cost group. As explained in the CY 
2023 OPPS final rule (87 FR 71980 and 71981), we wanted to ensure that 
graft skin substitute products that were described by HCPCS code C1849 
or could potentially be described by HCPCS code C1849 would be granted 
time to develop the cost data necessary to allow us to determine if the 
product should stay in the high-cost group, which provides stability 
for the payment of these graft skin substitute products. We wanted to 
avoid having products with less than two years of claims data that were 
originally in the high-cost group be reassigned to the low-cost group 
simply because of a lack of available data.
    Also, as discussed in the CY 2023 OPPS final rule (87 FR 71981), 
the current categorization of skin substitutes as either synthetic or 
non-synthetic is not mutually exclusive given the expansion of skin 
substitute products that may contain both biological and synthetic 
elements. Having products with both biological and synthetic elements 
leads to difficulty defining which of the products assigned to the 
A2XXX series would be considered ``synthetic'' and described by HCPCS 
code C1849. Therefore, for CY 2023, we finalized a policy, which will 
continue for CY 2025, to assign to the high-cost group any skin 
substitute product that is assigned a code in the HCPCS A2XXX series 
including new products without pricing information. This policy gives 
the broadest definition of products that could have been described by 
HCPCS code C1849 and ensures that none of those graft skin substitute 
products would be assigned to the low-cost group until we receive cost 
data for them.
    Comment: One commenter supported having us realign both the high-
cost and low-cost application procedure codes to potentially higher-
paying APC groups that reflect the current average sales prices of 
graft skin substitute products as manufacturers now are required to 
submit average sales prices for graft skin substitute products. The 
commenter believes combining ASP prices for graft skin substitutes and 
the cost of the graft skin substitute application procedures would 
better reflect the costs of those procedures than our current 
methodology of using cost data from claims to assign application 
procedures to APCs.
    Response: We disagree with the commenter that using ASP instead of 
using claims cost data would be a preferrable method for estimating the 
graft skin substitute product cost of graft skin substitute application 
procedures. It is unclear from the commenter's suggestion how the 
product cost of the graft skin substitute would be calculated if not 
using the charges reported by providers. Presumably, their approach 
would involve extracting the units of graft skin substitute product 
used on a particular packaged service and then multiplying by an ASP on 
file to revise the cost of packaged procedure to reflect the ASP price 
of the graft skin substitute product units. We do not believe this is a 
feasible approach and it appears to be a different approach to pricing 
one group of packaged supplies as compared to how all other packaged 
supplies are priced in the OPPS. We normally use a provider's reported 
charges for supplies and use the appropriate cost-to-charge ratio to 
estimate the contribution of the supply cost to the overall cost of the 
procedure.
    Comment: One commenter supported our current policy not to assign 
graft skin substitute products that are not in sheet form (e.g., gel, 
powder, ointment, foam, liquid, or injected) to any APC group, because 
these products cannot be reported with the graft skin substitute 
application codes of CPT codes 15271 through 15278 (the high-cost 
group) or with HCPCS codes C5271 through C5278 (the low-cost group). 
The commenter notes that skin substitutes that are not in sheet form 
are used primarily for clinic visits and the debridement of chronic 
wounds. Also, according to the commenter, the use of skin substitutes 
that are not in sheet form does not conform to the AMA's directions for 
the application of skin substitute products.
    Response: We appreciate the commenter's support of our policy.
    Comment: One commenter requested that skin substitute products that 
receive an FDA approval through either the Premarket Approval (PMA) 
process, the Biological License Application (BLA) process, or the New 
Drug Application (NDA) process no longer be packaged in the OPPS, but 
instead be separately payable at a rate of ASP + 6 percent. In 
addition, the commenter requested that two previously approved skin 
substitute products, Apligraf and Dermagraft, should no longer be 
packaged and should be paid separately at a rate of ASP + 6 percent 
because these products are now regulated by the Center for Biologics 
Evaluation and Research (CBER) within the FDA. CBER is the center 
within FDA that regulates biological products for human use. The 
commenter notes the rigorous process that biological products must go 
through to confirm their safety and effectiveness to receive either a 
PMA, BLA, or NDA approval. The commenter states that when Apligraf and 
Dermagraft received their FDA approval, the products had a review 
process comparable to the reviews done for a PMA, BLA, or NDA approval. 
The commenter believes the intensive review process that skin 
substitute products undergo to get a PMA, BLA, or NDA approval should 
allow those products to be separately paid rather than packaged in the 
OPPS.
    Response: The commenter appears to be referencing comments that 
were previously made for the CY 2014 OPPS/

[[Page 94250]]

ASC final rule with comment period (78 FR 74931) where commenters 
asserted that specified covered outpatient drugs (SCODs) under section 
1833(t)(14)(B) of the Act cannot be packaged in the OPPS and instead 
must be paid separately. Section 1833(t)(14)(B) of the Act defines a 
SCOD as a ``covered outpatient drug (as defined in section 
1927(k)(2))''. Covered outpatient drugs under section 1927(k)(2) of the 
Act are generally limited to products approved as drugs by the FDA, 
biologicals licensed under section 351 of the Public Health Service 
Act, and insulin. However, skin substitute products that have either a 
PMA, BLA, or NDA are still considered to be supplies under the policy 
we implemented in CY 2014 OPPS/ASC final rule with comment period (78 
FR 74938). Under our policy, we unconditionally packaged skin 
substitute products into their associated surgical procedures as part 
of a broader policy to package all drugs and biologicals that function 
as supplies when used in a surgical procedure. Finally, as we explained 
in finalizing our policies of packaging diagnostic radiopharmaceuticals 
and contrast agents in the CY 2008 OPPS final rule (72 FR 66766), CMS 
has the authority to package the payment of SCODs in the OPPS and we 
may consider additional packaging options for SCODs and other 
separately payable drugs in the future (78 FR 74931).
    Comment: Several commenters supported our current skin substitute 
payment policy to assign graft skin substitute products to either a 
high-cost or a low-cost group based on the product's cost. Likewise, 
commenters also supported our policy of keeping graft skin substitute 
products in the high-cost group once the cost of the product exceeds 
either the MUC or the PDC threshold for at least one year even if in 
future years the cost of the product is less than either the MUC or PDC 
threshold.
    Response: We appreciate the commenters' support of our policies.
    Comment: The manufacturer of the products described by HCPCS codes 
Q4122 (Dermacell, dermacell awm or dermacell awm porous, per square 
centimeter) and Q4150 (Allowrap dds or dry, per square centimeter) 
requested that these graft skin substitute products continue to be 
assigned to the high-cost skin substitute group for CY 2025.
    Response: Based on their cost data and our policies, we are 
finalizing that both HCPCS codes Q4122 (Dermacell, dermacell awm or 
dermacell awm porous, per square centimeter) and Q4150 (Allowrap dds or 
dry, per square centimeter) will remain in the high-cost group for CY 
2025.
    Comment: The manufacturer of the products described by HCPCS codes 
Q4148 (Neox cord 1k, neox cord rt, or clarix cord 1k, per square 
centimeter) and Q4156 (Neox 100 or clarix 100, per square centimeter) 
requested that these graft skin substitute products continue to be 
assigned to the high-cost skin substitute group for CY 2025.
    Response: Based on their cost data and our policies, we are 
finalizing that both HCPCS codes Q4148 (Neox cord 1k, neox cord rt, or 
clarix cord 1k, per square centimeter) and Q4156 (Neox 100 or clarix 
100, per square centimeter) will remain in the high-cost group for CY 
2025.
    After consideration of the public comments we received, we are 
finalizing our proposals without modification. Our final policies are 
to:
     Continue to assign skin substitutes with pass-through 
payment status to the high-cost category.
     Assign skin substitutes with pricing information but 
without claims data to calculate a geometric MUC or PDC to either the 
high-cost or low-cost category based on the product's ASP plus 6 
percent payment rate as compared to the MUC threshold. If ASP is not 
available for the product, we will use WAC plus 3 percent to assign a 
product to either the high-cost or low-cost category. Finally, if 
neither ASP nor WAC is available, we will use 95 percent of AWP to 
assign a skin substitute to either the high-cost or low-cost category.
     Continue to use WAC plus 3 percent instead of WAC plus 6 
percent to conform to our policy described in section V.B.2.b of this 
final rule with comment period to establish a payment rate of WAC plus 
3 percent for separately payable drugs and biologicals that do not have 
ASP data available.
     Assign any skin substitute product that is assigned a code 
in the HCPCS A2XXX series to the high-cost skin substitute group, 
including new products without pricing information. New skin 
substitutes without pricing information that are not assigned a code in 
the HCPCS A2XXX series would be assigned to the low-cost category until 
pricing information is available to compare to the CY 2024 MUC and PDC 
thresholds.
    Finally, we have updated the MUC and PDC thresholds for CY 2025. 
The final MUC threshold will be $50 per cm\2\ (rounded to the nearest 
$1) and the final PDC threshold will be $833 (rounded to the nearest 
$1). Table 135 includes the final CY 2024 cost category assignment for 
each skin substitute product.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
8. Radioisotopes Derived From Non-Highly Enriched Uranium (non-HEU) 
Sources/Radioisotopes Derived From Domestically Produced Mo-99
    Radioisotopes are widely used in modern medical imaging, 
particularly for cardiac imaging and predominantly for the Medicare 
population. Technetium-99m (Tc-99m), the radioisotope used in the 
majority of such diagnostic imaging services, is produced through the 
radioactive decay of molybdenum-99 (Mo-99). Historically, most of the 
Mo-99 used in the United States was produced in legacy reactors outside 
of the United States using highly enriched uranium (HEU).
    The United States wanted to eliminate domestic reliance on these 
reactors and promoted the conversion of all medical radioisotope 
production to non-HEU sources. Alternative methods for producing Tc-99m 
without HEU are technologically and economically viable, but it was 
expected that this change in the supply source for the radioisotope 
used for modern medical imaging would introduce increased costs into 
the payment system that would not be fully accounted for in the 
historical claims data until all Tc-99m was produced from non-HEU 
sources.
    Therefore, beginning in CY 2013, we finalized a policy to provide 
an additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals 
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium 
source, full cost recovery add-on per study dose) once per dose along 
with any diagnostic scan or scans furnished using Tc-99m as long as the 
Tc-99m doses used can be certified by the hospital to be at least 95 
percent derived from non-HEU sources (77 FR 68323).
    We stated in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68321) that our expectation was that this additional payment 
would be needed for the duration of the industry's conversion to 
alternative methods of producing Tc-99m without HEU. We also stated 
that we would reassess, and propose, if necessary, on an annual basis 
whether such an adjustment continued to be necessary and whether any 
changes to the adjustment were warranted (77 FR 68321). The Secretaries 
of Energy and Health and Human Services issued a certification 
regarding the supply of non-HEU-sourced Mo-99 effective January 2, 2022 
(86 FR 73270). Mo-99 is the precursor material from which Tc-99m is 
sourced. The certification by the Secretary of Energy stated that there 
was a sufficient global supply of Mo-99 produced without the use of HEU 
available to meet the needs of patients in the United States. In the CY 
2023 OPPS/ASC final rule with comment period, we stated that we 
believed the conversion to non-HEU sources of Tc-99m had reached a 
point where it was necessary to reassess our policy of providing an 
additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (87 FR 71987).

[[Page 94257]]

    Historically, diagnostic radiopharmaceuticals have been packaged 
into the cost of the associated diagnostic imaging procedure no matter 
the per-day cost (we are adopting a policy beginning in CY 2025 to pay 
separately for higher cost diagnostic radiopharmaceuticals). The cost 
of the radiopharmaceutical, whether it is included as a part of the 
cost of the diagnostic imaging procedure or is separately paid, is 
reported through Medicare claims data. Medicare claims data used to set 
payment rates under the OPPS generally are from two years prior to the 
payment year.
    As we explained in the CY 2023 OPPS/ASC final rule with comment 
period (87 FR 71987), the claims data we used to set payment rates for 
CY 2024 (generally CY 2022 claims data) contained claims for diagnostic 
radiopharmaceuticals that reflect both HEU-sourced Tc-99m and non-HEU-
sourced Tc99m, rather than radiopharmaceuticals sourced solely from 
non-HEU Tc-99m. The cost of HEU-sourced Tc-99m is substantially lower 
than the cost of non-HEU-sourced Tc-99m. Therefore, we explained that 
providers who use radiopharmaceuticals in CY 2024 that contain only 
non-HEU-sourced Tc-99m might not receive a payment that is reflective 
of the radiopharmaceutical's current cost without the add-on payment. 
We believed that extending the additional $10 add-on payment described 
by HCPCS code Q9969 for non-HEU-sourced Tc-99m through the end of CY 
2024 would ensure adequate payment for non-HEU-sourced Tc-99m. Starting 
in CY 2025, we believed the Medicare claims data utilized to set 
payment rates (likely CY 2023 claims data) would only include claims 
for diagnostic radiopharmaceuticals that utilized non-HEU-sourced Tc-
99m, meaning the data would reflect the full cost of the Tc-99m 
diagnostic radiopharmaceuticals that would be used by providers in CY 
2025. As a result, we believed there would no longer be a need for the 
additional $10 add-on payment for CY 2025 or future years.
    The conversion of the last major global Mo-99 producer from HEU to 
Low Enriched Uranium (LEU) was previously expected to be completed by 
December 31, 2022, but the conversion did not occur until March 2023. 
As a result, it is possible that some claims for diagnostic 
radiopharmaceuticals in CY 2023 would report the cost of HEU-sourced 
Tc-99m. This means that in CY 2025, as in CY 2024, there is the 
possibility that the payment rate for procedures using diagnostic 
radiopharmaceuticals could be lower than the costs providers will incur 
for these procedures because providers will only have access to non-
HEU-sourced Tc-99m. Therefore, we adopted a policy in the CY 2024 OPPS 
final rule with comment period (88 FR 81803) to extend the additional 
$10 add-on payment described by HCPCS code Q9969 for non-HEU-sourced 
Tc-99m through the end of CY 2025 to continue to ensure adequate 
payment for non-HEU-sourced Tc-99m.
    Recently, the Department of Energy and other interested parties 
raised another issue affecting the domestic supply chain for Mo-99 and 
Tc-99 that, left unaddressed, could cause payment inequity among 
outpatient hospital providers. Foreign Mo-99 production has 
historically been subsidized by foreign governments, resulting in 
prices below the true cost of production. These artificially low, 
government-subsidized prices have created a disincentive for 
investments in Mo-99 production infrastructure, and they also created a 
barrier to entry for new producers, including U.S. companies. This in 
turn has resulted in unreliable production and periodic shortages. In 
response to the 2009-2010 shortages, Congress passed the American 
Medical Isotopes Production Act of 2012 (AMIPA), which directs the 
Secretary of Energy to provide financial and technical support to U.S. 
companies working to build new irradiation and manufacturing facilities 
to produce Mo-99 without HEU.
    It was expected that the transition from HEU to LEU-based 
production would also involve the transition to a Full Cost Recovery 
pricing model; however, it does not appear that this transition has 
occurred in practice. Foreign producers continue to rely on 
multipurpose nuclear research reactors for Mo-99 production, and the 
global Mo-99 supply chain has not established a system of verifying 
that all of the costs attributable to Mo-99 production are being 
incorporated into the price of the product.
    U.S. companies have made significant progress towards establishing 
the infrastructure needed for large-scale Mo-99 production. Unlike many 
foreign producers, U.S. companies must price their products high enough 
to cover the full cost of operating their production facilities. Based 
in part on the differences in pricing models, U.S. companies have 
experienced challenges in competing with foreign producers for 
customers. Currently, there is no domestic production of Mo-99.
    Once U.S. companies initiate or resume Mo-99 production, the 
difference in pricing models will likely create a payment inequity, as 
hospitals purchasing Tc-99m derived from domestically produced Mo-99 
would likely pay higher prices than those purchasing Tc-99m derived 
from imported Mo-99. We proposed to address the payment inequity 
resulting from the higher cost of domestically produced Tc-99m by 
establishing a new add-on payment of $10 per dose for 
radiopharmaceuticals that use Tc-99m derived from domestically produced 
Mo-99 starting on January 1, 2026, using our equitable adjustment 
authority under section 1833(t)(2)(E) of the Act. We stated that we 
believe the $10 add-on payment for domestically produced Tc-99m would 
ensure equitable payments by paying providers who use domestically 
produced Tc-99m radiopharmaceuticals when available an amount that 
reflects the anticipated higher cost of these products. We explained 
that the $10 add-on payment will help to ensure provider and 
beneficiary access to domestically produced Tc-99m radiopharmaceuticals 
by providing an additional payment amount that addresses the additional 
costs of domestically produced Tc-99m radiopharmaceuticals. The 
Department of Energy, National Nuclear Security Administration, (DOE/
NNSA) would establish the criteria to certify whether the Tc-99m 
radiopharmaceutical dose is domestically produced and eligible for the 
add-on payment, which would be included in the CY 2026 OPPS/ASC 
proposed rule. The CY 2026 OPPS/ASC proposed rule would include 
additional details on how providers would bill for this add-on payment 
in CY 2026.
    Comment: Multiple commenters supported our proposal to establish a 
new add-on payment of $10 per dose for radiopharmaceuticals that use 
Tc-99m derived from domestically produced Mo-99.
    Response: We appreciate the support of the commenters for our 
proposal.
    Comment: Multiple commenters expressed support for an add-on 
payment for domestically produced Tc-99m radiopharmaceuticals, but the 
commenters expressed several concerns about how the add-on payment 
policy would work. Some commenters believe the proposed payment amount 
for the add-on of $10 is too low and encouraged us to work with 
interested parties to determine a different payment amount that would 
adequately cover the cost difference between domestically produced Tc-
99m radiopharmaceuticals and foreign produced Tc-99m 
radiopharmaceuticals. One commenter asked us to provide additional 
analysis to support the payment amount for the add-on payment.

[[Page 94258]]

    Commenters had concerns about the effectiveness of the policy based 
on their experiences with the current add-on payment for Tc-99m 
radiopharmaceuticals produced from non-HEU sources. Commenters do not 
believe the add-on payment for Tc-99m radiopharmaceuticals produced 
from non-HEU sources has substantially influenced the types of Tc-99m 
radiopharmaceuticals purchased by outpatient hospitals or remedied cost 
differences between HEU and non-HEU Tc-99m for the companies who supply 
Tc-99m radiopharmaceuticals to hospitals. Commenters encouraged us to 
work with DOE/NNSA and other government agencies to ensure that 
domestic Mo-99 producers and Tc-99m generator manufacturers receive 
assistance to handle the higher costs of their products.
    Commenters were also concerned about how a Tc-99m 
radiopharmaceutical will be defined as a domestically produced product. 
They asked that CMS and other government agencies show flexibility when 
coming up with a definition of domestically produced Tc-99m 
radiopharmaceuticals to avoid increasing production costs. Commenters 
noted that Tc-99m generators often mix Mo-99 from several sources, 
which may make it challenging for suppliers to adhere to strict 
domestic Tc-99m content requirements. Commenters want to ensure that 
the tracking and documentation requirements for outpatient hospital 
providers to prove the Tc-99m radiopharmaceuticals they use are 
domestically produced are easy to understand and use, and do not add an 
additional burden to hospitals.
    Response: We will continue to monitor the differences in cost 
between domestically produced Tc-99m and foreign produced Tc-99m for 
future rulemaking. Using available information from the Organization 
for Economic Co-operation and Development, Nuclear Energy Agency (OECD/
NEA), the methodology for a $10 add-on payment accounts for the per-
dose cost of implementing full-cost recovery pricing. As such, DOE/NNSA 
recommends maintaining the $10 value as the add-on payment transitions 
from a non-HEU payment to a domestically sourced Tc-99m payment. We 
believe $10 is an appropriate amount for an add-on payment for 
domestically produced Tc-99m radiopharmaceuticals to address this 
expected cost difference.
    We understand commenters' concerns about the ability of the add-on 
payment to change the purchasing behavior of providers. However, the 
$10 add-on payment is intended to address the expected additional cost 
of domestically-produced Tc-99m radiopharmaceuticals if providers 
choose to utilize these radiopharmaceuticals in the future. If 
commenters have data showing that the price differential between 
domestically produced and foreign produced Mo-99 will be significantly 
more or less than $10, they may provide that data to CMS so we can 
consider it for CY 2026 OPPS rulemaking.
    We appreciate commenters' suggestions for how to establish 
requirements to determine that a Tc-99m radiopharmaceutical is 
domestically produced. As we stated in the CY 2025 OPPS/ASC proposed 
rule (89 FR 59378), DOE/NNSA is establishing the criteria to certify 
whether the Tc-99m radiopharmaceutical dose is domestically produced 
and eligible for the add-on payment, and those criteria will be 
included in the CY 2026 OPPS/ASC proposed rule. We will consider in CY 
2026 rulemaking any additional requirements for Medicare providers to 
document that the Tc-99m radiopharmaceutical used in a procedure was 
domestically produced and can qualify to receive the add-on payment 
based on the criteria developed by DOE/NNSA.
    Comment: One commenter was opposed to the $10 add-on payment for 
domestically produced Tc-99m radiopharmaceuticals. According to the 
commenter, the central challenge for the proposal is that the Mo-99 
used to create the Tc-99m generators will come from both domestic and 
foreign sources, and suppliers would need to assess each generator 
individually to determine its domestic Tc-99 content and whether the 
Tc-99 meets the standard to be considered domestically produced. The 
Tc-99m generator suppliers would need to communicate the domestic 
production status of each generator to the provider receiving the 
generator. The provider would then have to track the Tc-99m generators 
and link them to the Tc-99m radiopharmaceutical administered to a 
patient to be able to claim the add-on payment for domestically 
produced Tc-99m radiopharmaceuticals. The commenter believes most 
providers will not be able to track or document information on the 
production source of the Tc-99m generators they purchase.
    The commenter also does not believe that if a domestic company 
starts to produce Mo-99, it will price it higher than Mo-99 from 
foreign sources because the domestic producer will need to charge the 
same price for Mo-99 to stay competitive with foreign producers. Per 
the commenter, this would mean when the Tc-99m radiopharmaceuticals are 
purchased by outpatient hospital providers at the point where the add-
on payment may have a policy impact, there will be no price difference 
between the domestically produced product and the foreign produced 
product, and no purpose for the add-on payment. The commenter also 
expressed concern that the add-on payment policy will not help the 
pharmacies, Tc-99m generator manufacturers, or the Mo-99 producers who 
supply Tc-99m radiopharmaceuticals to outpatient hospitals, and those 
suppliers will end up paying for the higher cost of domestically 
produced Tc-99m, not hospitals. The commenter asked that we not 
finalize our proposal or at least wait until CY 2027 before 
implementing it. The commenter believes that it will take until at 
least 2027 before a domestic producer can start producing Mo-99 for Tc-
99m generators.
    Response: We appreciate the concerns of the commenter. As stated in 
the previous comment, DOE/NNSA will be establishing the criteria to 
certify whether the Tc-99m radiopharmaceutical dose is domestically 
produced and eligible for the add-on payment, and those criteria will 
be included in the CY 2026 OPPS/ASC proposed rule. Regarding the 
challenges providers may face identifying a Tc-99m radiopharmaceutical 
as a domestically produced product, once requirements are established 
defining a domestically produced Tc-99m radiopharmaceutical, we will 
consider in future rulemaking any requirements for providers to 
document that the Tc-99m radiopharmaceutical used in a procedure was 
domestically produced and can qualify to receive the add-on payment. We 
understand commenters' concerns regarding the cost of domestically-
produced Tc-99m radiopharmaceuticals for entities other than outpatient 
hospital departments, but note that this policy is only intended to 
address the additional cost to hospital outpatient departments of 
utilizing domestically-produced Tc-99m radiopharmaceuticals.
    The commenter noted that currently there are no producers of 
domestically sourced Mo-99 and Tc-99, and the earliest that domestic 
production of Mo-99 and Tc-99 could begin is in 2027. While there may 
not be domestic production of Mo-99 and Tc-99in CY 2026, we believe it 
is better to have a regulatory framework for this policy in place when 
domestic production of Tc-99m radiopharmaceuticals begins. With

[[Page 94259]]

a regulatory framework already in place, providers will be 
knowledgeable about the availability of additional payments for 
domestically sourced Tc-99m radiopharmaceuticals. Likewise, producers 
of domestic Mo-99m will have certainty that the Medicare OPPS payment 
policy takes into account the additional costs of domestic production 
of Mo-99.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification to establish a new add-on 
payment of $10 per dose for radiopharmaceuticals that use Tc-99m 
derived from domestically produced Mo-99 starting on January 1, 2026. 
As established in the CY 2024 OPPS/ASC final rule with comment period, 
CY 2025 will be the final year of the $10 add-on payment for TC-99m 
derived from non-HEU sources.

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

A. Amount of Additional Payment and Limit on Aggregate Annual 
Adjustment

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payment for drugs, biologicals, 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 pro rata 
reduction to the conversion factor for the projected level of pass-
through spending in the following year to ensure that total estimated 
pass-through spending for the prospective payment year is budget 
neutral, as required by section 1833(t)(6)(E) of the Act.
    For devices, developing a proposed estimate of pass-through 
spending in CY 2025 entails estimating spending for two groups of 
items. The first group of items consists of device categories that are 
currently eligible for pass-through payment and that will continue to 
be eligible for pass-through payment in CY 2025. 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 devices that we know 
are newly eligible, or project may be newly eligible, for device pass-
through payment in the remaining quarters of CY 2024 or beginning in CY 
2025. The sum of the proposed CY 2025 pass-through spending estimates 
for these two groups of device categories equals the proposed total CY 
2025 pass-through spending estimate for device categories with pass-
through payment status. We determined the device pass-through estimated 
payments for each device category based on the amount of payment as 
required by 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 
methodology for implantable biologicals newly approved for pass-through 
payment beginning on or after January 1, 2010, that are surgically 
inserted or implanted (through a surgical incision or a natural 
orifice) use the device pass-through process and payment methodology 
(74 FR 60476). As has been our past practice (76 FR 74335), in the 
proposed rule, we proposed to include an estimate of any implantable 
biologicals eligible for pass-through payment in our estimate of pass-
through spending for devices. Similarly, we finalized a policy in CY 
2015 that applications for pass-through payment for skin substitutes 
and similar products be evaluated using the medical device pass-through 
process and payment methodology (76 FR 66885 through 66888). Therefore, 
as we did beginning in CY 2015, for CY 2025, we also proposed to 
include an estimate of any skin substitutes and similar products in our 
estimate of pass-through spending for devices.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount by which the amount authorized under 
section 1842(o) of the Act (or, if the drug or biological is covered 
under a competitive acquisition contract under section 1847B of the 
Act, an amount determined by the Secretary equal to the average price 
for the drug or biological for all competitive acquisition areas and 
year established under such section as calculated and adjusted by the 
Secretary) exceeds the portion of the otherwise applicable fee schedule 
amount that the Secretary determines is associated with the drug or 
biological. Consistent with current policy, we proposed to apply a rate 
of ASP plus 6 percent to most drugs and biologicals for CY 2025, and 
therefore our estimate of drug and biological pass-through payment for 
CY 2025 for this group of items was $10.2 million.
    Payment for certain drugs,\146\ specifically contrast agents 
without pass-through payment status, is packaged into payment for the 
associated procedures, and these products are not separately paid. In 
addition, we policy-package non-pass-through drugs and biologicals that 
function as supplies when used in a diagnostic test or procedure unless 
a high-cost diagnostic radiopharmaceutical with a per day cost greater 
than $630 is used for the test or procedure. We policy-package all 
drugs and biologicals that function as supplies when used in a surgical 
procedure or for anesthesia, and other categories of drugs and 
biologicals, as discussed in section V.B.1.c of the CY 2025 OPPS/ASC 
proposed rule (89 FR 59364). Consistent with current policy, we propose 
that all of these policy-packaged drugs and biologicals with pass-
through payment status will be paid at ASP+6 percent, like other pass-
through drugs and biologicals, for CY 2025, less the policy-packaged 
drug APC offset amount described below. Our estimate of pass-through 
payment for policy-packaged drugs and biologicals with pass-through 
payment status approved prior to CY 2025 is not $0. This is because the 
pass-through payment amount and the fee schedule amount associated with 
the drug or biological will not be the same, unlike for separately 
payable drugs and biologicals. In the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81774 through 81776), we discussed 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 proposed to offset the amount of pass-through 
payment for the policy-packaged drug or biological. For these

[[Page 94260]]

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. Consistent with current policy, if we determine that an offset 
is appropriate for a specific policy-packaged drug or biological 
receiving pass-through payment, we proposed to reduce our estimate of 
pass-through payments for these drugs or biologicals by the APC offset 
amount.
---------------------------------------------------------------------------

    \146\ Please see section II.A.3.c. for more information 
regarding the payment of diagnostic radiopharmaceuticals.
---------------------------------------------------------------------------

    Similar to pass-through spending estimates for devices, the first 
group of drugs and biologicals requiring a pass-through payment 
estimate consists of those products that were recently made eligible 
for pass-through payment and that will continue to be eligible for 
pass-through payment in CY 2025. The second group contains drugs and 
biologicals that we know are newly eligible, or project will be newly 
eligible, in CY 2025. The sum of the CY 2025 pass-through spending 
estimates for these two groups of drugs and biologicals equals the 
total CY 2025 pass-through spending estimate for drugs and biologicals 
with pass-through payment status.

B. Final Estimate of Pass-Through Spending for CY 2025

    For CY 2025, we proposed to set the applicable pass-through payment 
percentage limit at 2.0 percent of the total projected OPPS payments 
for CY 2025, consistent with section 1833(t)(6)(E)(ii)(II) of the Act 
and our OPPS policy from CY 2004 through CY 2024 (88 FR 81805). The 
pass-through payment percentage limit is calculated using pass-through 
spending estimates for devices and for drugs and biologicals.
    For the first group of devices, consisting of device categories 
that are currently eligible for pass-through payment and will continue 
to be eligible for pass-through payment in CY 2025, there are 8 active 
categories for CY 2025. The active categories are described by HCPCS 
codes C1747, C1826, C1827, C1600, C1601, C1602, C1603 and C1604. Based 
on the information from the device manufacturers, we estimated that 
HCPCS code C1747 will cost $19.5 million in pass-through expenditures 
in CY 2025, HCPCS code C1826 will cost $151,991 in pass-through 
expenditures in CY 2025, HCPCS code C1827 will cost $364,793 in pass-
through expenditures in CY 2025, HCPCS code C1600 will cost $21.9 
million in pass-through expenditures in CY 2025, HCPCS code C1601 will 
cost $14.4 million in pass-through expenditures in CY 2025, HCPCS code 
C1602 will cost $8.2 million in pass-through expenditures in CY 2025, 
HCPCS code C1603 will cost $6.6 million in pass-through expenditures in 
CY 2025, and HCPCS code C1604 will cost $20.0 million in pass-through 
expenditures in CY 2025. Therefore, we proposed an estimate for the 
first group of devices of $91.1 million.
    We did not receive any public comments on our proposed estimate. 
Using our methodology for this final rule with comment period, the 
final estimated pass through costs based on updated data for HCPCS code 
C1747 will cost $18.9 million in pass-through expenditures in CY 2025, 
HCPCS code C1826 will cost $176,594 in pass-through expenditures in CY 
2025, HCPCS code C1827 will cost $844,031 in pass-through expenditures 
in CY 2025, HCPCS code C1600 will cost $21.9 million in pass-through 
expenditures in CY 2025, HCPCS code C1601 will cost $14.4 million in 
pass-through expenditures in CY 2025, HCPCS code C1602 will cost $8.2 
million in pass-through expenditures in CY 2025, HCPCS code C1603 will 
cost $6.6 million in pass-through expenditures in CY 2025, and HCPCS 
code C1604 will cost $20.0 million in pass-through expenditures in CY 
2025. Therefore, we have finalized the CY 2025 spending estimate for 
the first group of devices of approximately $91.0 million.
    In estimating our proposed CY 2025 pass-through spending for device 
categories in the second group, we included the following: (1) device 
categories that we assumed at the time of the development of the 
proposed rule would be newly eligible for pass-through payment in CY 
2025; (2) additional device categories that we estimated could be 
approved for pass-through status after the development of the CY 2025 
OPPS/ASC proposed rule (89 FR 59379) and before January 1, 2025; and 
(3) contingent projections for new device categories established in the 
second through fourth quarters of CY 2025. For CY 2025, we proposed to 
use the general methodology described in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66778), while also taking into account 
recent OPPS experience in approving new pass-through device categories. 
For the CY 2025 OPPS/ASC proposed rule (89 FR 59379), the proposed 
estimate of CY 2025 pass-through spending for this second group of 
device categories was $523.7 million.
    We did not receive any public comments on the proposed estimate. As 
stated earlier in this final rule with comment period, we are approving 
eight devices for pass-through payment status in the CY 2025 rulemaking 
cycle: AGENTTM Paclitaxel-Coated Balloon Catheter, 
AVEIRTM DR Dual Chamber Leadless Pacemaker System 
(AveirTM DR System), DETOURTM System, the 
Ultrasound Disposable Kit--Diagnostic/Therapeutic (UDK-T) component of 
the EndoSound Vision SystemTM (EVSTM), iFuse 
Bedrock GraniteTM Implant System, Paradise[supreg] 
Ultrasound Renal Denervation (RDN) System, Precision GI and Symplicity 
SpyralTM Renal Denervation (RDN) System.\147\ The 
manufacturers of these systems provided utilization and cost data that 
indicate the amount of spending for the devices would be approximately 
$36.0 million for AGENTTM Paclitaxel-Coated Balloon 
Catheter; $113.0 million for AVEIRTM DR Dual Chamber 
Leadless Pacemaker System; $280,000 for the UDK-T component of the 
EVSTM; $25.3 million for iFuse Bedrock GraniteTM 
Implant System; $32.8 million for Paradise[supreg] Ultrasound RDN 
System; $0.78 million for Precision GI; and $16.0 million for 
Symplicity SpyralTM RDN System. In addition, we note that 
HCPCS code C8000 was preliminarily approved as part of the device pass-
through quarterly review process with an effective date of October 1, 
2024.\148\ For this final rule based on updated data, we estimate that 
HCPCS code C8000 will cost $2.9 million in pass-through expenditures in 
CY 2025. Therefore, we are finalizing an estimate of $227.1 million for 
this second group of devices for CY 2025.
---------------------------------------------------------------------------

    \147\ As discussed in section IV.A.2 of this final rule with 
comment period, the DETOURTM System pass-through 
application was preliminarily approved for transitional pass-through 
payment under the alternative pathway effective January 1, 2024, and 
the AveirTM DR System pass-through application and the 
UDK-T component of the EVSTM pass-through application 
were preliminarily approved for transitional pass-through payment 
under the alternative pathway effective July 1, 2024. We are 
finalizing the approvals for device pass-through payment status for 
the DETOURTM System, the AveirTM DR System and 
the UDK-T component of the EVSTM in this final rule with 
comment period. Due to the timing of the preliminary approvals, the 
CY 2025 spending estimate for the DETOURTM System is 
included in the CY 2025 spending estimate for the first group of 
devices; and the CY 2025 spending estimate for the 
AveirTM DR System and the UDK-T component of the 
EVSTM is included in the CY 2025 spending estimate for 
the second group of devices.
    \148\ The device application associated with HCPCS code C8000 
will be included and discussed in the CY 2026 OPPS/ASC proposed and 
final rules.
---------------------------------------------------------------------------

    The estimated amount of pass-through spending of $227.1 million in 
this final rule is substantially less that the estimated amount of 
pass-through spending in the CY 2025 OPPS/ASC proposed rule (89 FR 
59379) of $523.7

[[Page 94261]]

million because, in the proposed rule we assumed that all of the 
devices with pending applications to receive pass-through status would 
receive approval. For the final rule, we have determined the some of 
these devices have received pass-through status, and some of these 
devices have been denied pass-through status, and we adjusted our 
device pass-through spending estimates accordingly.
    To estimate proposed CY 2025 pass-through spending for drugs and 
biologicals in the first group, specifically those drugs and 
biologicals recently made eligible for pass-through payment and 
continuing on pass-through payment status for at least one quarter in 
CY 2025, we proposed to use the CY 2023 Medicare hospital outpatient 
claims data regarding their utilization, information provided in their 
respective pass-through applications, other historical hospital claims 
data, pharmaceutical industry information, and clinical information 
regarding these drugs and biologicals to project the CY 2025 OPPS 
utilization of the products.
    For the known drugs and biologicals (excluding policy-packaged 
contrast agents, drugs, biologicals, radiopharmaceuticals with per-day 
costs at or below the packaging threshold that function as supplies 
when used in a diagnostic test or procedure, and drugs and biologicals 
that function as supplies when used in a surgical procedure) that will 
be continuing on pass-through payment status in CY 2025, we estimated 
the pass-through payment amount as the difference between the general 
payment rate of ASP+6 percent and the payment rate for non-pass-through 
drugs and biologicals that would be separately paid. Because we 
proposed to utilize a payment rate of ASP plus 6 percent for most 
separately payable drugs and biologicals in the proposed rule, the 
proposed payment rate difference between the pass-through payment 
amount and the non-pass-through payment amount was $0 for this group of 
drugs.
    Because payment for policy-packaged drugs and biologicals is 
packaged if the product is not paid separately due to its pass-through 
payment status, we propose to include in the CY 2025 pass-through 
estimate the difference between payment for the policy-packaged drug or 
biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if 
ASP or WAC information is not available) and the policy-packaged drug 
APC offset amount, if we determine that the policy-packaged drug or 
biological approved for pass-through payment resembles a predecessor 
drug or biological already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment. Diagnostic 
radiopharmaceuticals that currently have pass-through status, but would 
be paid separately because of the policy we are adopting described in 
Section II.A.3.c. to separately pay for diagnostic radiopharmaceuticals 
with a per day cost over $630, are not considered to be policy-packaged 
and are not included in this group. For this first group of policy-
packaged drugs and biologicals, we estimated a pass-through spending 
for CY 2025 of $200,000.
    We did not receive any public comments on our proposed estimate. 
Using our methodology for this final rule with comment period, the CY 
2025 spending estimate for this first group of drugs and biologicals is 
around $200,000.
    To estimate proposed CY 2025 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 the proposed rule were newly 
eligible or recently became eligible for pass-through payment in CY 
2024, additional drugs and biologicals that we estimated could be 
approved for pass-through status subsequent to the development of the 
proposed rule and before January 1, 2025, and projections for new drugs 
and biologicals that could be initially eligible for pass-through 
payment in the second through fourth quarters of CY 2025), we proposed 
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 
2025 pass-through payment estimate. We also proposed to consider the 
most recent OPPS experience in approving new pass-through drugs and 
biologicals. Using our proposed methodology for estimating CY 2025 
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 $10 million.
    We did not receive any public comments on our proposed estimate. 
Using our methodology for this final rule with comment period, we are 
finalizing our estimate of pass-through spending for the second group 
of drugs and biologicals to be $10 million.
    We estimated for the CY 2025 OPPS/ASC proposed rule (89 FR 59380) 
that the amount of pass-through spending for the device categories and 
the drugs and biologicals that are continuing to receive pass-through 
payment in CY 2025 and the amount of pass-through spending for those 
device categories, drugs, and biologicals that first become eligible 
for pass-through payment during CY 2025 would be approximately $625 
million (approximately $614.8 million for device categories and 
approximately $10.2 million for drugs and biologicals), which 
represented 0.71 percent of total projected OPPS payments for CY 2025 
(approximately $88.2 billion). Therefore, we estimated for the proposed 
rule that pass-through spending in CY 2025 would not amount to 2.0 
percent of total projected OPPS CY 2025 program spending.
    We estimate for this final rule with comment period that the amount 
of pass-through spending for the device categories and the drugs and 
biologicals that are continuing to receive pass-through payment in CY 
2025 and the amount of pass-through spending for those device 
categories, drugs, and biologicals that first become eligible for pass-
through payment during CY 2025 would be approximately $328.3 million 
(approximately $318.1 million for device categories and approximately 
$10.2 million for drugs and biologicals), which represents only 0.37 
percent of total projected OPPS payments for CY 2025 (approximately 
$87.7 billion). Therefore, we estimate that pass-through spending in CY 
2025 will not exceed the 2.0 percent of total projected OPPS CY 2025 
program spending limit provided for in section 1833(t)(6)(E) of the 
Act.

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

    For CY 2025, we proposed to continue our current clinic and 
emergency department (ED) hospital outpatient visits payment policies. 
For a description of these policies, we refer readers to the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70448). We also proposed 
to continue our payment policy for critical care services for CY 2025. 
For a description of this policy, we refer readers to the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70449), and for the history 
of this payment policy, we refer readers to the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75043).
    As we stated in the CY 2022 OPPS/ASC final rule with comment period 
(86 FR 63663), the volume control method for clinic visits furnished by 
non-excepted off-campus provider-based departments (PBDs) applies for 
CY 2022 and subsequent years. More specifically, we finalized a policy 
to continue to utilize a PFS-equivalent payment rate

[[Page 94262]]

for the hospital outpatient clinic visit service described by HCPCS 
code G0463 when it is furnished by these departments for CY 2022 and 
subsequent years. The PFS-equivalent rate for CY 2025 is 40 percent of 
the proposed OPPS payment. Under this policy, these departments will be 
paid approximately 40 percent of the OPPS rate for the clinic visit 
service in CY 2025.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
71748), we finalized a policy that excepted off-campus provider-based 
departments (PBDs) (departments that bill the modifier ``PO'' on claim 
lines) of rural Sole Community Hospitals (SCHs), as described under 42 
CFR 412.92 and designated as rural for Medicare payment purposes, are 
exempt from the clinic visit payment policy that applies a PFS-
equivalent payment rate for the clinic visit service, as described by 
HCPCS code G0463, when provided at an off-campus PBD excepted from 
section 1833(t)(21) of the Act. For the full discussion of this policy, 
we refer readers to the CY 2023 OPPS/ASC final rule with comment period 
(87 FR 72047 through 72051). For CY 2025, we proposed to continue to 
exempt excepted off-campus PBDs of rural SCHs from the clinic visit 
payment policy. We stated that we would continue to monitor the effect 
of this change in Medicare payment policy, including on the volume of 
these types of OPD services.
    Comment: We received several comments on our overall clinic visit 
payment policy. Many commenters continued to express the belief that 
this policy undermines Congressional intent and exceeds the agency's 
legal authority. As they have in previous years, commenters stated that 
the policy is based on flawed assumptions and urged CMS to eliminate it 
altogether. One commenter suggested that we lack the statutory 
authority to implement this policy in a non-budget neutral manner. 
While acknowledging that American Hospital Association v. Azar, 964 
F.3d 1230 (D.C. Cir. 2020), affirmed our authority to implement our 
policy under section 1833(t)(2)(F), the commenter stated that it has 
been overtaken by Loper Bright v. Raimondo, 144 S. Ct. 2244 (2024), and 
so should be disregarded. They requested that CMS reverse this payment 
adjustment or, at a minimum, budget neutralize its application 
consistent with statute.
    Response: We continue to believe that section 1833(t)(2)(F) of the 
Act gives the Secretary authority to develop a method for controlling 
unnecessary increases in the volume of covered OPD services, including 
a method that controls unnecessary volume increases by removing a 
payment differential that is driving a site-of-service decision, and as 
a result, is unnecessarily increasing service volume.
    As we noted in the CY 2019 OPPS/ASC proposed rule (83 FR 37138 
through 37143), ``[a] large source of growth in spending on services 
furnished in hospital outpatient departments (HOPDs) appears to be the 
result of the shift of services from (lower cost) physician offices to 
(higher cost) HOPDs.'' We continue to believe that these shifts in the 
sites of service are unnecessary if the beneficiary can safely receive 
the same services in a lower cost setting but instead receives care in 
a higher cost setting due to payment incentives. In most cases, the 
difference in payment is leading to unnecessary increases in the volume 
of covered outpatient department services, and we remain concerned that 
this shift in care setting increases beneficiary cost-sharing liability 
because Medicare payment rates for the same or similar services are 
generally higher in hospital outpatient departments than in physician 
offices. We continue to believe that our method addresses the concerns 
described in the CY 2019 OPPS/ASC final rule with comment period (83 FR 
59005).
    As we stated in the CY 2019 OPPS ASC final rule with comment period 
(83 FR 59013), we believe implementing a volume control method in a 
budget neutral manner would not appropriately reduce the overall 
unnecessary volume of covered OPD services, and instead would simply 
shift services within the OPPS system because of payment rather than 
medical necessity. We also outlined in the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 59013) that while section 1833(t)(9)(B) of 
the Act requires that certain changes made under the OPPS be made in a 
budget neutral manner, this section does not apply to the volume 
control method under section 1833(t)(2)(F) of the Act.
    As noted, the D.C. Circuit previously held that our regulation was 
a reasonable interpretation of the statutory authority to adopt a 
method to control for unnecessary increases in the volume of the 
relevant service. AHA v. Azar, 964 F.3d at 1241-45, Loper Bright does 
not change the result. As an initial matter, while Loper Bright changed 
certain aspects of the interpretative framework the D.C. Circuit used, 
the Supreme Court cautioned that the ``holdings of those cases that 
specific agency actions are lawful . . . are still subject to statutory 
stare decisis despite our change in interpretive methodology.'' 144 S. 
Ct. at 2273. AHA's holding is therefore still good law. And even under 
the new Loper Bright framework, the Supreme Court clarified that 
Congress ``often'' enacts statutes that ``delegate[] discretionary 
authority to an agency.'' Id. at 2263. Section 1833(t)(2)(F) is just 
such a statute. By instructing the Secretary to ``develop a method for 
controlling unnecessary increases in the volume of covered OPD 
services'' without specifying the method, the statute delegates 
discretionary authority to the Secretary. Because, as the D.C. Circuit 
explained, our policy ``falls comfortably within the plain text of 
subparagraph (2)(F)'' and is further supported by its structure, 964 
F.3d at 1241, it does not fall outside the ``outer statutory bounds'' 
of the delegation, as discussed in Loper Bright. That aspect of the 
D.C. Circuit's holding, coupled with the considerations of stare 
decisis, indicate that there is no reason to doubt the continued 
validity of our policy. 144 S. Ct. at 2268.
    Comment: We received comments supporting CMS's efforts to continue 
implementing its method to control for unnecessary increases in the 
volume of outpatient services. These commenters asked that CMS continue 
to consider ways to expand the current site-neutral payment policies to 
other services and settings. Commenters reiterated their statements 
from previous years suggesting that CMS apply the site-neutral payment 
policy to a list of 57 APCs for which MedPAC determined it would be 
reasonable and appropriate to align the OPPS and ASC payment rates with 
those set in the physician fee schedule (PFS). Other commenters 
recommended that CMS consider expanding the site-neutral payment policy 
to all services provided by excepted, off-campus PBDs. Others suggested 
that the site-neutral policy be extended to on-campus PBDs, ASCs, and 
emergency departments.
    Response: We appreciate the commenters' support and we will 
continue to monitor this policy and take commenters' suggestions into 
consideration for potential future rulemaking.
    After consideration of the public comments, we are continuing the 
volume control method under which we utilize a PFS-equivalent payment 
rate for the hospital outpatient clinic visit service described by 
HCPCS code G0463 when it is furnished by excepted off-campus PBDs in CY 
2025.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
71748), we finalized a policy that excepted off-campus provider-based 
departments (PBDs) (departments that bill the

[[Page 94263]]

modifier ``PO'' on claim lines) of rural Sole Community Hospitals 
(SCHs), as described under 42 CFR 412.92 and designated as rural for 
Medicare payment purposes, are exempt from the clinic visit payment 
policy that applies a Physician Fee Schedule-equivalent payment rate 
for the clinic visit service, as described by HCPCS code G0463, when 
provided at an off-campus PBD excepted from section 1833(t)(21) of the 
Act. For the full discussion of this policy, we refer readers to the CY 
2023 OPPS/ASC final rule with comment period (87 FR 72047 through 
72051). For CY 2025, we proposed to continue to exempt excepted off-
campus PBDs of rural SCHs from the clinic visit payment policy. We 
stated that we will continue to monitor the effect of this change in 
Medicare payment policy, including on the volume of these types of OPD 
services.
    The following is a summary of the comments we received and our 
responses to those comments.
    Comment: Commenters continued to support our proposal to exempt 
excepted off-campus PBDs of rural SCHs from the clinic visit payment 
policy for CY 2025. Commenters stated that the continuation of the 
exemption is an important step in maintaining access to care for a 
segment of the population that is underserved.
    Response: We thank the commenters for their support.
    Comment: Several commenters reiterated their requests from previous 
proposed rules that CMS consider expanding the exemption to excepted 
off-campus PBDs of rural hospitals with fewer than 100 beds, Medicare 
Dependent Hospitals (MDHs), Urban SCHs, and low-volume hospitals in 
future rulemaking, arguing that the same reasoning that led CMS to 
propose to exempt SCHs also applies to these hospitals.
    Response: In the CY 2006 OPPS final rule with comment period (70 FR 
68556 through 68561) we uniquely identified rural SCHs as providers 
with demonstrated additional resource costs. We found that rural SCHs 
have significantly higher costs per unit than urban hospitals. We have 
continued to adjust payments for rural SCHs by 7.1 percent each year 
since 2006. Building upon that foundation, for CY 2018 we finalized a 
policy to exclude rural SCHs from our 340B drug payment policy and 
continued to do so until September 27, 2023, when the 340B drug payment 
policy ended and we resumed paying for 340B drugs and biologicals under 
the OPPS at the same rates we pay for non-340B drugs and biologicals 
(generally, ASP plus 6 percent)). We believe exempting rural SCHs, 
which have demonstrated additional resource costs, is appropriate to 
ensure these hospitals can remain open to serve the beneficiaries who 
rely on them for their care. We share commenters' concerns about the 
financial difficulties associated with maintaining access to care in 
medically vulnerable communities. However, in each of these cases, the 
Congress did not determine that any of these hospital types required 
additional payments for outpatient services. Section 1833(t)(13)(B) of 
the Act authorizes an appropriate adjustment for hospitals located in 
rural areas where the Secretary determines, based on a study, that the 
costs incurred by these hospitals by APC group exceed costs incurred by 
hospitals in urban areas. In the CY 2006 OPPS final rule with comment 
period (70 FR 68556 through 68561), we summarized our study of the cost 
of covered outpatient department services to hospitals in rural areas 
and found that rural SCHs were the only rural hospital type that had 
higher resource costs for covered outpatient department services. Rural 
SCHs demonstrated significantly higher cost per unit than urban 
hospitals after controlling for labor input prices, service-mix 
complexity, volume, facility size, and type of hospital. In the CY 2006 
OPPS final rule with comment period (70 FR 68556 through 68561) we 
stated that we found no significant difference in cost between all 
small rural hospitals with 100 or fewer beds and urban hospitals. We 
found that there was insufficient evidence to conclude that rural 
hospitals with 100 or fewer beds have higher costs than urban 
hospitals. We proposed a narrow exception to our clinic visit policy 
largely based upon the historical treatment and documented additional 
resource costs of rural SCHs under the OPPS. We are only accepting 
rural SCHs because we continue to believe that the underlying 
principles of the clinic visit policy continue to justify application 
of the volume control method for clinic visits to the remaining 
hospital types, including most rural and safety-net providers. Where 
the difference in payment is leading to unnecessary increases in the 
volume of covered outpatient department services, we remain concerned 
that this shift in care setting increases beneficiary cost-sharing 
liability because Medicare payment rates for the same or similar 
services are generally higher in hospital outpatient departments than 
in physician offices. Further, we do not believe that commenters 
provided sufficient reasoning or data to show that the other provider 
types suggested (Medicare Dependent Hospitals, Urban SCHs, and low-
volume hospitals) demonstrate the additional resource costs that rural 
SCHs do and should therefore also be exempted from this OPPS payment 
policy. We continue to share commenters' concerns about maintaining 
access to care in urban and rural settings and enhancing access to care 
in medically vulnerable communities. We also share commenters' concerns 
about profit margins. However, we must balance the concerns of 
providers with the concerns of beneficiaries regarding the 
affordability of their care. For hospitals subject to the clinic visit 
policy, the proposed PFS-equivalent rate for a clinic visit brings the 
approximate average copayment down from $26 to $10. We will continue to 
study access and cost to see if further exemptions to the clinic visit 
policy are appropriate.
    Comment: One commenter noted that, while it is necessary to 
distinguish between urban and rural hospitals for a number of payment 
and policy mechanisms, they believe the Metropolitan Statistical Areas 
(MSAs) CMS uses to delineate between these areas are not the most 
precise tool. This commenter argued that CMS should extend this 
exemption to urban SCHs because using MSAs to determine urban and rural 
areas is imprecise and unfairly disadvantages urban SCHs that may be 
the sole source of hospital services in their communities.
    Response: We acknowledge the commenters' points about the important 
role that urban SCHs serve in their communities. However, we have not 
found that urban SCHs have the additional resource costs for covered 
outpatient department services that rural SCHs have, and as such, we 
are only applying the clinic visit policy exemption to rural SCHs.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to exempt excepted off-campus PBDs 
of rural SCHs from the clinic visit payment policy in CY 2025.

VIII. Payment for Partial Hospitalization and Intensive Outpatient 
Services

    This section discusses payment for partial hospitalization services 
as well as intensive outpatient services. Since CY 2000, Medicare has 
paid for partial hospitalization services under the OPPS. Beginning in 
CY 2024, as authorized by section 4124 of the Consolidated 
Appropriations Act (CAA), 2023 (Pub. L. 117-328), Medicare began paying 
for intensive

[[Page 94264]]

outpatient services furnished by hospital outpatient departments, 
community mental health centers, federally qualified health centers, 
and rural health clinics in addition to opioid treatment programs. 
Additional background on the partial hospitalization and intensive 
outpatient benefits is included in the following paragraphs.

A. Background

1. Partial Hospitalization
    A partial hospitalization program (PHP) is an intensive outpatient 
program of psychiatric services provided as an alternative to inpatient 
psychiatric care for individuals who have an acute mental illness, 
which includes, but is not limited to, conditions such as depression, 
schizophrenia, and substance use disorders (SUD). Section 1861(ff)(1) 
of the Act defines partial hospitalization services as the items and 
services described in paragraph (2) prescribed by a physician and 
provided under a program described in paragraph (3) under the 
supervision of a physician pursuant to an individualized, written plan 
of treatment established and periodically reviewed by a physician (in 
consultation with appropriate staff participating in such program), 
which sets forth the physician's diagnosis, the type, amount, 
frequency, and duration of the items and services provided under the 
plan, and the goals for treatment under the plan. Section 1861(ff)(2) 
of the Act describes the items and services included in partial 
hospitalization services. Section 1861(ff)(3)(A) of the Act specifies 
that a PHP is a program furnished by a hospital to its outpatients or 
by a community mental health center (CMHC), as a distinct and organized 
intensive ambulatory treatment service, offering less than 24-hour-
daily care, in a location other than an individual's home or inpatient 
or residential setting. Section 1861(ff)(3)(B) of the Act defines a 
CMHC for purposes of this benefit. We refer readers to sections 
1833(t)(1)(B)(i), 1833(t)(2)(B), 1833(t)(2)(C), and 1833(t)(9)(A) of 
the Act and 42 CFR 419.21, for additional information regarding PHP.
    PHP policies and payment have been addressed under OPPS since CY 
2000. In CY 2008, we began efforts to strengthen the PHP benefit 
through extensive data analysis, along with policy and payment changes, 
by implementing two refinements to the methodology for computing the 
PHP median. For a detailed discussion on these policies, we refer 
readers to 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. For a detailed discussion on these 
policies, we refer readers to the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68688 through 68697). In CY 2010, we retained the 
two-tier payment approach for partial hospitalization services and used 
only hospital-based PHP data in computing the PHP APC per diem costs, 
upon which PHP APC per diem payment rates are based (74 FR 60556 
through 60559). In CY 2011 (75 FR 71994), we established four separate 
PHP APC per diem payment rates: two for CMHCs (APC 0172 and APC 0173) 
and two for hospital-based PHPs (APC 0175 and APC 0176) and instituted 
a 2-year transition period for CMHCs to the CMHC APC per diem payment 
rates. For a detailed discussion, we refer readers to section X.B of 
the CY 2011 OPPS/ASC final rule with comment period (75 FR 71991 
through 71994). In CY 2012, we determined the relative payment weights 
for partial hospitalization services provided by CMHCs based on data 
derived solely from CMHCs and the relative payment weights for partial 
hospitalization services provided by hospital-based PHPs based 
exclusively on hospital data (76 FR 74348 through 74352). In the CY 
2013 OPPS/ASC final rule with comment period, we finalized our proposal 
to base the relative payment weights that underpin the OPPS APCs, 
including the four PHP APCs (APCs 0172, 0173, 0175, and 0176), on 
geometric mean costs rather than on the median costs. For a detailed 
discussion on this policy, we refer readers to the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68406 through 68412).
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622) 
and CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 
through 66908), we continued to apply our established policies to 
calculate the four PHP APC per diem payment rates based on geometric 
mean per diem costs using the most recent claims data for each provider 
type. For a detailed discussion on this policy, we refer readers to the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 75047 through 
75050). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70453 through 70467), we described our extensive analysis of the claims 
and cost data and ratesetting methodology, corrected a cost inversion 
that occurred in the final rule data with respect to hospital-based PHP 
providers, and renumbered the PHP APCs. In the CY 2017 OPPS/ASC final 
rule with comment period (81 FR 79687 through 79691), we continued to 
apply our established policies to calculate the PHP APC per diem 
payment rates based on geometric mean per diem costs and finalized a 
policy to combine the Level 1 and Level 2 PHP APCs for CMHCs and for 
hospital-based PHPs. We also implemented an eight-percent outlier cap 
for CMHCs to mitigate potential outlier billing vulnerabilities. For a 
comprehensive description of PHP payment policy, including a detailed 
methodology for determining PHP per diem amounts, we refer readers to 
the CY 2016 and CY 2017 OPPS/ASC final rules with comment period (80 FR 
70453 through 70455 and 81 FR 79678 through 79680, respectively).
    In the CYs 2018 and 2019 OPPS/ASC final rules with comment period 
(82 FR 59373 through 59381 and 83 FR 58983 through 58998, 
respectively), we continued to apply our established policies to 
calculate the PHP APC per diem payment rates based on geometric mean 
per diem costs, designated a portion of the estimated 1.0 percent 
hospital outpatient outlier threshold specifically for CMHCs, and 
proposed updates to the PHP allowable HCPCS codes. We finalized these 
proposals in the CY 2020 OPPS/ASC final rule with comment period (84 FR 
61352).
    In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61339 
through 61350), we finalized a proposal to use the calculated CY 2020 
CMHC geometric mean per diem cost and the calculated CY 2020 hospital-
based PHP geometric mean per diem cost, but with a cost floor equal to 
the CY 2019 final geometric mean per diem costs as the basis for 
developing the CY 2020 PHP APC per diem rates. Also, we continued to 
designate a portion of the estimated 1.0 percent hospital outpatient 
outlier threshold specifically for CMHCs, consistent with the 
percentage of projected payments to CMHCs under the OPPS, excluding 
outlier payments.
    In the April 30, 2020 interim final rule with comment (85 FR 27562 
through 27566), effective as of March 1, 2020 and for the duration of 
the COVID-19 Public Health Emergency (PHE), hospital and CMHC staff 
were permitted to furnish certain outpatient therapy, counseling, and 
educational services (including certain PHP services), incident to a 
physician's services, to beneficiaries in temporary expansion 
locations, including the beneficiary's home, as long as the location 
met all conditions of participation to the extent not waived. A 
hospital or CMHC could furnish such services using

[[Page 94265]]

telecommunications technology to a beneficiary in a temporary expansion 
location if that beneficiary was registered as an outpatient. In the CY 
2023 OPPS/ASC final rule with comment period (87 FR 72247), we 
confirmed that these provisions applied only for the duration of the 
COVID-19 PHE. On May 11, 2023, the COVID-19 PHE ended, and accordingly, 
these flexibilities ended as well.
    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86073 
through 86080), we continued our current methodology to utilize cost 
floors, as needed. Since the final calculated geometric mean per diem 
costs for both CMHCs and hospital-based PHPs were significantly higher 
than each proposed cost floor, a floor was not necessary at the time, 
and we did not finalize the proposed cost floors in the CY 2021 OPPS/
ASC final rule with comment period.
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63665 
through 63666), we explained that we observed a number of changes, 
likely as a result of the COVID-19 PHE, in the CY 2020 OPPS claims that 
we would have ordinarily used for CY 2022 ratesetting, and this 
included changes in the claims for partial hospitalization. We 
explained that significant decreases in utilization and in the number 
of hospital-based PHP providers who submitted CY 2020 claims led us to 
believe that CY 2020 data were not the best overall approximation of 
expected PHP services in CY 2022. Therefore, we finalized our proposal 
to calculate the PHP per diem costs using the year of claims consistent 
with the calculations that would be used for other OPPS services, by 
using the CY 2019 claims and the cost reports that were used for CY 
2021 final rulemaking to calculate the CY 2022 PHP per diem costs. In 
addition, for CY 2022 and subsequent years, we finalized our proposal 
to use cost and charge data from the Hospital Cost Report Information 
System (HCRIS) as the source for the CMHC cost-to-charge ratios (CCRs), 
instead of using the Outpatient Provider Specific File (OPSF) (86 FR 
63666).
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
71995), we explained that we continued to observe a decrease in the 
number of hospital-based and CMHC PHP days in our trimmed dataset due 
to the continued effects of COVID-19; however, the Medicare outpatient 
service volumes appeared to be returning to more normal, pre-pandemic 
levels. Therefore, we finalized our proposal to use the latest 
available CY 2021 claims but use the cost information from prior to the 
COVID-19 PHE for calculating the CY 2023 CMHC and hospital-based PHP 
APC per diem costs. The application of the OPPS standard methodology, 
including the effect of budget neutralizing all other OPPS policy 
changes unique to CY 2023, resulted in the final calculated CMHC PHP 
APC payment rate being unexpectedly lower than the CY 2022 final CMHC 
PHP APC rate. Therefore, in the interest of accurately paying for CMHC 
PHP services, under the unique circumstances of budget neutralizing all 
other OPPS policy changes for CY 2023, and in keeping with our 
longstanding goal of protecting continued access to PHP services 
provided by CMHCs by ensuring that CMHCs remain a viable option as 
providers of mental health care in the beneficiary's own community, we 
finalized utilizing the equitable adjustment authority of section 
1833(t)(2)(E) of the Act to appropriately pay for CMHC PHP services at 
the same payment rate as for CY 2022, that is, $142.70. In addition, we 
clarified the payment under the OPPS for new HCPCS codes that designate 
non-PHP services provided for the purposes of diagnosis, evaluation, or 
treatment of a mental health disorder and are furnished to 
beneficiaries in their homes by clinical staff of the hospital would 
not be recognized as PHP services; however, none of the PHP regulations 
would preclude a patient that is under a PHP plan of care from 
receiving other reasonable and medically necessary non-PHP services 
from a hospital (87 FR 72001 and 72002).
    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81811), we revised the regulation at Sec.  424.24(e)(1)(i) to require 
the physician certification for PHP services to include a certification 
that the patient requires such services for a minimum of 20 hours per 
week, as required by section 1861(ff)(1) of the Act, as amended by 
section 4124(a) of Division FF of the CAA, 2023. In addition, we 
modified the regulations for PHP at Sec.  410.43 to include references 
to SUD. In the same CY 2024 OPPS/ASC final rule with comment period, we 
also established separate payment rates for PHP days with 3 services 
and days with 4 or more services. Accordingly, we established four 
separate PHP APC per diem payment rates: one for CMHCs for 3-service 
days and another for CMHCs for 4-service days (APC 5853 and APC 5854, 
respectively), and one for hospital-based PHPs for 3-service days and 
another for hospital-based PHPs for 4-service days (APC 5863 and APC 
5864, respectively). We also finalized a policy to utilize the separate 
CMHC rates for 3-service and 4-service PHP days as the Medicare 
Physician Fee Schedule (MPFS) rates, depending upon whether a 
nonexcepted off-campus hospital outpatient department furnishes 3 or 4 
PHP services in a day. Lastly, we finalized several changes beginning 
in CY 2024 to align coding, billing, and payment between PHPs and 
intensive outpatient programs.
2. Intensive Outpatient Program Services
    Section 4124(b) of the CAA, 2023 established Medicare coverage for 
intensive outpatient services effective for items and services 
furnished on or after January 1, 2024. An intensive outpatient program 
(IOP) is a distinct and organized program of psychiatric services for 
individuals who have an acute mental illness, which includes, but is 
not limited to, conditions such as depression, schizophrenia, and SUD. 
Intensive outpatient services are not required to be provided in lieu 
of inpatient hospitalization. Section 1861(ff)(4) of the Act defines 
intensive outpatient services as the items and services described in 
paragraph (2) prescribed by a physician for an individual determined 
(not less frequently than every other month) by a physician to have a 
need for such services for a minimum of 9 hours per week 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 plan 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 intensive outpatient 
services. Section 1861(ff)(4)(C) of the Act specifies that an IOP is a 
program furnished by a hospital to its outpatients, a CMHC, a Federally 
qualified health center (FQHC), or by a rural health clinic (RHC) as a 
distinct and organized intensive ambulatory treatment service, offering 
less than 24-hour-daily care, in a location other than an individual's 
home or inpatient or residential setting. Section 1861(ff)(3)(B) of the 
Act defines a CMHC for purposes of this benefit. We refer readers to 
sections 1833(t)(1)(B)(i), 1833(t)(2)(B), 1833(t)(2)(C), and 
1833(t)(9)(A) of the Act and 42 CFR 419.21, for additional information 
regarding IOP.

[[Page 94266]]

    In the CY 2024 OPPS/ASC final rule with comment period (88 FR 81812 
through 81857), we established payment and program requirements for the 
IOP benefit furnished by a hospital to its outpatients, or by a CMHC, 
an FQHC, or an RHC. In addition, we established Medicare Part B 
coverage for IOP services provided by Opioid Treatment Programs (OTPs) 
for the treatment of opioid use disorder (OUD).
    Consistent with the statutory definition of intensive outpatient 
services under section 1861(ff)(2) of the Act, we finalized regulations 
at 42 CFR 410.44 to set forth the conditions and exclusions applicable 
for intensive outpatient services, and at Sec.  424.24 to set forth the 
content of the certification and plan of treatment requirements for 
intensive outpatient services. We also revised certain existing 
regulations at Sec. Sec.  410.2, 410.3, 410.10, 410.27, 410.150, and 
419.21 to add a regulatory definition of intensive outpatient services 
and to include intensive outpatient services in the regulations for 
medical and other health services paid for under Medicare Part B, and 
in the case of Sec.  419.21, under the OPPS. Additionally, we created 
regulations at Sec.  410.111 to establish the requirements for coverage 
of IOP services furnished in CMHCs, and at Sec.  410.173 to establish 
conditions of payment for IOP services furnished in CMHCs. Lastly, we 
revised Sec.  410.155 to exclude IOP services from the outpatient 
mental health treatment limitation, consistent with the statutory 
requirement of section 1833(c)(2) of the Act, as amended by section 
4124(b)(3) of the CAA, 2023.
    In addition, as discussed in greater detail in the following 
sections, we established coding, billing, and payment policies for IOP 
that align with the policies established for PHP provided in the same 
settings. Specifically, we established four separate IOP APC per diem 
payment rates at the same rates we proposed for the PHP APCs: one for 
CMHCs for 3-service days and another for CMHCs for 4-service days (APC 
5851 and APC 5852, respectively), and one for hospital-based IOPs for 
3-service days and another for hospital-based IOPs for 4-service days 
(APC 5861 and APC 5862, respectively). Similar to the policy finalized 
for PHP, we finalized a policy to utilize the CMHC rates for 3-service 
and 4-service IOP days as the MPFS rates, depending upon whether a 
nonexcepted hospital outpatient department furnishes 3 or 4 IOP 
services in a day.
    We also established payment for IOP provided by an RHC or FQHC at 
the same rate as APC 5861, which is the 3-service hospital-based IOP 
rate (Sec.  405.2462(j)). Furthermore, we established a payment 
adjustment for IOP provided by an OTP based on 3 times the payment rate 
for APC 5861 beginning in CY 2024 (Sec.  410.67(d)(4)(i)(F)).

B. Coding and Billing for PHP and IOP Services Under the OPPS

    In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized a billing requirement that all providers use condition code 
41 to indicate that a claim is for partial hospitalization services and 
use condition code 92 to identify intensive outpatient claims, 
effective January 1, 2024. Since the statutory definitions of both IOP 
and PHP generally include the same types of items and services covered, 
we stated in the CY 2024 OPPS/ASC final rule with comment period that 
we believe it is appropriate to align the programs using a consistent 
list of services, so that level of intensity would be the only 
differentiating factor between partial hospitalization services and 
intensive outpatient services. The use of condition codes 41 for PHP 
claims and 92 for IOP claims allows us to differentiate between these 
services for billing purposes.
    We recognize that the level of intensity of mental health services 
that a patient requires may vary over time; therefore, we believe 
utilizing a consolidated list of HCPCS codes to identify services under 
both the IOP and PHP benefits supports a smooth transition for patients 
when a change in the intensity of their services is necessary to best 
meet their needs. For example, a patient receiving IOP services may 
experience an acute mental health need that necessitates more intense 
services through a PHP. Alternatively, an IOP patient that no longer 
requires the level of intensity provided by the IOP can access less 
intense mental health services, such as individual mental health 
services. The full list of HCPCs codes recognized under the PHP and IOP 
benefits can be found in the Medicare Claims Processing internet Only 
Manual, Chapter 4, sections 260.1 and 261.1, respectively, and their 
subsections, available at https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c04.pdf.
    To qualify for payment for the IOP APC (5851, 5852, 5861, or 5862) 
or the PHP APC (5853, 5854, 5863, or 5864), one service provided that 
day must be from the Partial Hospitalization and Intensive Outpatient 
Primary list. We refer readers to the CY 2024 OPPS final rule with 
comment period for further discussion regarding our expectation that at 
least one of the services on the PHP and IOP Primary list will be 
indicated per day for patients who need the level of care offered by a 
PHP or IOP program. The PHP and IOP Primary List can be found in the CY 
2024 OPPS/ASC final rule with comment period at 88 FR 81821.
    Beginning in CY 2024, we recognized caregiver training services and 
Principal Illness Navigation (PIN) services as PHP and IOP services. We 
explained that the reported costs associated with providing such 
services are included when we calculate the PHP and IOP payment rates; 
however, these services do not count toward the determination of 
whether a PHP or IOP day is paid at the 3-service or 4-service rate. We 
refer readers to the CY 2024 OPPS/ASC final rule with comment period 
for a detailed discussion of this policy (88 FR 81823 through 81825).
    As finalized in the CY 2024 OPPS/ASC final rule with comment 
period, if new codes are established that represent the PHP and IOP 
services described under Sec. Sec.  410.43(a)(4) and 410.44(a)(4), 
respectively, such codes are added to the list of codes recognized for 
payment for PHP or IOP through sub-regulatory guidance. We note that 
coding updates frequently occur outside of the standard rulemaking 
timeline. We adopted this sub-regulatory process in order to pay 
expeditiously when new codes are created that describe any of the 
services enumerated at Sec. Sec.  410.43(a)(4) and 410.44(a)(4), which 
PHPs and IOPs, respectively, would provide. We explained that this 
policy applies to new codes that are cross walked to a previously 
included code, or whose code descriptor is substantially similar to a 
descriptor for a code on the list or describes a service on the list. 
We stated that any additional services not described at Sec.  
410.43(a)(4) or Sec.  410.44(a)(4) would be added to the lists in 
regulation through notice and comment rulemaking. We note that for CY 
2025, we did not propose to add any new services not described at Sec.  
410.43(a)(4) or Sec.  410.44(a)(4) to the list of PHP and IOP services. 
However, we received comments regarding the addition of new services to 
the PHP and IOP benefits. A summary of these comments and our response 
is provided.
    Comment: Several commenters advocated for caregiver training 
services and principal illness navigation (PIN) services to be included 
in the number of PHP or IOP services per day for payment. Commenters 
also strongly supported the inclusion of discharge support and peer 
services be adopted as applicable for PHP and IOP.

[[Page 94267]]

    Response: We thank commenters for their feedback. As discussed in 
the CY 2024 OPPS/ASC final rule with comment period (88 FR 81825), PIN 
services are reported monthly and represent time spent throughout the 
month; therefore, we did not include these services in the evaluation 
of whether a particular PHP or IOP day receives the 3-service or 4-
service day for payment. We intend to continue to analyze utilization 
and cost data for these services and consider any payment changes in 
future rulemaking to better recognize such costs. Additionally, as 
discussed in the CY 2024 PFS final rule with comment period (88 FR 
78938 through 78949), CMS finalized to pay separately for PIN services 
to account for resources when clinicians involve certain types of 
health care support staff such as peer support specialists in 
furnishing medically necessary care. We believe that including these 
PIN HCPCS codes in the services recognized for PHP and IOP 
appropriately indicates that the services of peer support specialists 
are eligible services for inclusion in PHP and IOP.
    Regarding the suggestion to count caregiver training services in 
the evaluation of whether a PHP or IOP day receives the 3-service or 4-
service day for payment, we note that, as explained in the CY 2024 
OPPS/ASC final rule with comment period (88 FR 81822), we believe it 
would be appropriate to exclude these services from the determination 
of the number of services provided per day, but we would include such 
services in the calculation of cost per day for determining the PHP and 
IOP payment rates. We recognize that caregiver training services are an 
integral part of many PHPs and IOPs; however, we believe that until we 
have actual utilization data for the provision of caregiver training 
services, it would be more appropriate to base the payment for a 
higher-intensity PHP or IOP day on the provision of therapeutic, 
diagnostic, and training services that have historically been 
recognized for PHP or OPPS payment.
    We did not propose to include caregiver training services in the 
determination of whether a PHP or IOP day receives the 3-service or 4-
service day for payment, and we are not finalizing any changes to this 
policy for CY 2025. We intend to continue analyzing utilization and 
cost data for these services to consider whether payment changes may be 
appropriate in the future.
    Comment: One commenter suggested CMS include the treatment of 
postpartum depression as applicable for PHP and IOP.
    Response: We thank the commenter for their suggestion, and note 
that currently, the ICD-10-CM code F53.0 (Postpartum depression) is 
included in the ICD-10-CM Codes that Support Medical Necessity list for 
PHP.\149\ A patient may receive treatment of postpartum depression 
under a PHP as long as all other patient eligibility requirements are 
met, including that PHP patients are required to be certified by a 
physician as needing at least 20 hours of services per week, and the 
patient would require inpatient hospitalization if they did not receive 
PHP services.
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    In addition, we are clarifying in this CY 2025 OPPS/ASC final rule 
with comment period that ICD-10-CM code F53.0 (Postpartum depression) 
is included in the ICD-10-CM Codes that Support Medical Necessity list 
for IOP. A patient may receive treatment of postpartum depression under 
an IOP as long as all other patient eligibility requirements are met, 
including that IOP patients are required to be certified by a physician 
as needing at least 9 hours of services per week.
    Comment: One commenter requested CMS clarify the expectation that 
PHP and IOP participants identified as needing medically necessary 
occupational therapy (OT) services should receive those services as 
part of the overall interdisciplinary plan of care. This commenter also 
requested that CMS clarify whether occupational therapists can bill for 
other PHP and IOP services, which the commenter stated are within the 
scope of practice for occupational therapists. The commenter included 
the following services in their letter:

 97153 Adaptive behavior tx by tech
 97154 Grp adapt bhv tx by tech
 97155 Adapt behavior tx phys/qhp
 97156 Fam adapt bhv tx gdn phy/qhp
 97157 Mult fam adapt bhv tx gdn
 97158 Grp adapt bhv tx by phy/qhp
 96112 Devel tst phys/qhp 1st hr
 96156 Hlth bhv assmt/reassessment
 96158 Hlth bhv ivntj indiv 1st 30
 96161 Admin of caregiver-focused hlth risk asst for ben of 
patient
 96164 Hlth bhv ivntj grp 1st 30
 96167 Hlth bhv ivntj fam 1st 30
 97151 Bhv id assmt by phys/qhp
 97152 Bhv id suprt assmt by 1 tech

    Response: We thank the commenter for their feedback. We are 
clarifying in this CY 2025 OPPS/ASC final rule with comment period that 
occupational therapy services are an important part of PHPs and IOPs, 
specifically listed in the statute at section 1861(ff)(2)(B) and in the 
regulations at Sec. Sec.  410.43(a)(4)(ii) and 410.44(a)(4). Currently, 
HCPCS code G0129 is the recognized code for OT services provided for 
PHP and IOP patients. However, occupational therapists working within 
their scope of practice as determined by state law can provide and bill 
for other services as part of a PHP or IOP, including the services 
mentioned by the commenter which are listed above. We note that because 
these codes are already included in the list of HCPCS applicable for 
PHP and IOP, which are identified in Table 98 in the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81827 through 81828), it is not 
necessary to make any changes to the list to permit them to be billed 
as part of a PHP or IOP. We are not adding any new HCPCS codes to the 
list at this time. However, we remind readers that we established a 
sub-regulatory process in the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 81818 through 81822) to consider the inclusion of 
additional codes that represent the PHP and IOP services described 
under Sec. Sec.  410.43(a)(4) and 410.44(a)(4), respectively. We 
periodically review these code lists and may add new codes to the list 
of codes applicable for PHP and IOP if they describe services included 
under the regulatory definitions of partial hospitalization services or 
intensive outpatient services.
    Comment: A few commenters were concerned CMS did not propose to 
allow PHP and IOP services to be furnished remotely. Commenters noted 
that the availability of remote PHP services during the COVID-19 Public 
Health Emergency (PHE) increased access to these services, especially 
in rural areas. The commenters believed allowing PHP and IOP services 
to be furnished remotely to beneficiaries in their homes would also 
increase access to these benefits.
    Response: As discussed in the March 31, 2020, interim final rule 
with comment entitled ``Medicare and Medicaid Programs; Policy and 
Regulatory Revisions in Response to the COVID-19 Public Health 
Emergency'' (85 FR 19232), CMS announced the expansion of telehealth 
services on a temporary and emergency basis pursuant to waiver 
authority added under section 1135(b)(8) of the Act by the Coronavirus 
Preparedness and Response Supplemental Appropriations Act, 2020 (Pub. 
L. 116-123, March 6, 2020). In addition, in the April 30, 2020, interim 
final rule with comment entitled

[[Page 94268]]

``Additional Policy and Regulatory Revisions in Response to the COVID-
19 Public Health Emergency'' (85 FR 27562 through 27566), we discussed 
that effective March 1, 2020, and for the duration of the COVID-19 PHE, 
a hospital or CMHC could furnish such services using telecommunications 
technology to a beneficiary in a temporary expansion location if that 
beneficiary is registered as an outpatient. The flexibility to provide 
PHP services remotely to a beneficiary in his or her home ended with 
the expiration of the PHE on May 11, 2023.
    In terms of the request to allow IOP services to be furnished 
remotely to beneficiaries in their homes, we note that section 1861(ff) 
of the Act, as amended by section 4124(b)(2)(B) of the CAA, 2023 adopts 
much of the statutory definition of PHP for IOP. Section 1861(ff)(3)(A) 
provides, in part, that a PHP (and through the cross-reference in 
section 1861(ff)(4), an IOP) is a distinct and organized intensive 
ambulatory treatment offering less than 24-hour-daily care other than 
in an individual's home or in an inpatient or residential setting. 
Thus, neither PHP nor IOP services can be furnished remotely to 
beneficiaries in their homes.
    However, we clarified in the CY 2023 OPPS/ASC final rule with 
comment period (87 FR 72001) that none of the PHP regulations would 
preclude a patient that is under a PHP plan of care from receiving 
other reasonable and medically necessary non-PHP services from a 
hospital. This means that patients in a PHP are not precluded from 
receiving remote mental health services provided outside of the PHP by 
the same or another hospital when such services are reasonable and 
medically necessary.
    Likewise, none of the IOP regulations would preclude a patient that 
is under an IOP plan of care from receiving other reasonable and 
medically necessary non-IOP services from a hospital. Additionally, we 
are reiterating in this final rule with comment period that we would 
expect that a physician would update the patient's PHP or IOP plan of 
care to appropriately reflect any change to the type, amount, duration, 
or frequency of the therapeutic services planned for that patient in 
circumstances when a PHP or IOP patient receives non-PHP/IOP remote 
mental health services from a hospital outpatient department. We also 
note that the medical documentation should continue to support the 
patient's eligibility for participation in a PHP or IOP.
    Final Decision: After consideration of the public comments we 
received, we are maintaining our coding and billing policies for PHP 
and IOP as established in the CY 2024 OPPS/ASC final rule with comment 
period.

C. CY 2025 Payment Rates for PHP and IOP

1. Background
    Beginning in CY 2024, we established four separate PHP APC per diem 
payment rates: one for CMHCs for 3-service days and another for CMHCs 
for 4-service days (APC 5853 and APC 5854, respectively), and one for 
hospital-based PHPs for 3-service days and another for hospital-based 
PHPs for 4-service days (APC 5863 and APC 5864, respectively). In 
addition, for hospital-based PHPs, we finalized a policy to calculate 
payment rates using the broader OPPS data set, instead of using 
hospital-based PHP data only. We explained that using the broader OPPS 
data set allows CMS to capture data from claims not identified as PHP, 
but that also include the service codes and intensity required for a 
PHP day. Because we established consistent coding and payment between 
the PHP and IOP benefits, we considered all OPPS data for PHP days and 
non-PHP days that include 3 or more of the same service codes. We 
established four separate IOP APC per diem payment rates at the same 
rates we proposed for the PHP APCs: one for CMHCs for 3-service days 
and another for CMHCs for 4-service days (APC 5851 and APC 5852, 
respectively), and one for hospital-based IOPs for 3-service days and 
another for hospital-based IOPs for 4-service days (APC 5861 and APC 
5862, respectively).
    In the CY 2024 OPPS/ASC final rule with comment period, we noted 
that the standard PHP day is typically four services or more per day. 
We explained that we have historically provided payment for three 
services a day for extenuating circumstances when a beneficiary would 
be unable to complete a full day of PHP treatment. As we stated in the 
CY 2008 OPPS/ASC final rule with comment period (72 FR 66672), it was 
never our intention that days with only three units of service should 
represent the number of services provided in a typical PHP day. Our 
intention was to cover days that consisted of three units of service 
only in certain limited circumstances. For example, as we noted in the 
CY 2009 OPPS/ASC proposed rule (73 FR 41513), we believe 3-service days 
may be appropriate when a patient is transitioning towards discharge 
(or days when a patient is at the beginning of his or her PHP stay). 
Another example of when it may be appropriate for a program to provide 
only three units of service in a day is when a patient is required to 
leave the PHP early for the day due to an unexpected medical 
appointment.
    We also explained that prior to CY 2024, we historically prepared 
the data by first applying PHP-specific trims and data exclusions and 
assessing CCRs. We direct the reader to the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70463 through 70465) for a more complete 
discussion of these trims, data exclusions, and CCR adjustments. In 
prior rules, we have typically included a discussion of PHP-specific 
data trims, exclusions, and CCR adjustments; we did not include that 
discussion in the CY 2024 OPPS/ASC proposed rule or final rule with 
comment period. We stated that these PHP-specific data trims and 
exclusions addressed limitations as well as anomalies in the PHP data. 
However, as noted earlier, we finalized a methodology for CY 2024 to 
calculate hospital-based PHP payment rates for 3 services per day and 4 
services per day based on cost per day using the broader OPPS data set. 
Accordingly, we did not apply PHP-specific trims and data exclusions, 
but rather we applied the same trims and data exclusions consistent 
with the OPPS.
    We stated in the CY 2024 OPPS/ASC final rule with comment period 
(88 FR 81830) that while no IOP benefit existed prior to the CAA, 2023, 
the types of items and services included in IOP had been, and were, 
paid for by Medicare either as part of the PHP benefit or under the 
OPPS more generally. Additionally, we stated that prior to the CAA, 
2023, CMS had begun gathering information from interested parties on 
IOP under Medicare. In the CY 2023 OPPS/ASC proposed rule (87 FR 
44679), we issued a comment solicitation on intensive outpatient mental 
health treatment, including SUD treatment furnished by IOPs, to collect 
information regarding whether there are any gaps in coding that may be 
limiting access to needed levels of care for treatment of mental health 
disorders or SUDs for Medicare beneficiaries, and specific information 
about IOP services, such as the settings of care in which these 
programs typically furnish services, the range of services typically 
offered, and the range of practitioner types that typically furnish 
these services.
    We explained that along with the requirements for IOP mandated by 
the CAA, 2023, we took into consideration information we received from 
the comment solicitation to construct an appropriate data set to 
develop

[[Page 94269]]

proposed rates for IOP. Since IOPs furnish the same types of services 
as PHP, just at a lower intensity, we stated that we believe it was 
appropriate to use the same data and methodology for calculating 
payment rates for both PHP and IOP for CY 2024. We explained that 
although PHP claims can be specifically identified, there was no 
specific identifier or billing code to indicate IOP services that may 
have been provided before CY 2024. However, we noted that hospitals 
have been permitted to furnish and bill for many of these services as 
outpatient services under the OPPS. Thus, we analyzed a broader set of 
data that included both PHP and non-PHP days with 3 or more services in 
order to calculate proposed payment for PHP services. In order to 
establish consistent payment between PHP and IOP, we set IOP payment 
rates at the same rates as PHP. We stated that the primary goal in 
developing the payment rate methodology for IOP and PHP services was to 
pay providers an appropriate amount relative to the patients' needs, 
and to avoid cost inversion in future years. We stated that setting the 
IOP payment rates equal to the PHP payment rates was appropriate 
because IOP was a newly established benefit, and we did not have 
definitive data on utilization. However, we explained that both 
programs utilize the same services, but furnish them at different 
levels of intensity, with different numbers of services furnished per 
day and per week, depending on the program. Therefore, we stated that 
we expect it would be appropriate to pay the same per diem rates for 
IOP and PHP services unless future data analysis supports calculating 
rates independently.
2. CY 2025 Payment Rate Methodology for PHP and IOP
    For CY 2025, we proposed to use the latest available cost 
information, from cost reports beginning three fiscal years prior to 
the year that is the subject of the rulemaking, and CY 2023 OPPS claims 
to update the payment rates for the four PHP APCs and the four IOP APCs 
finalized in the CY 2024 OPPS/ASC final rule with comment period. The 
proposal is consistent with the overall proposed use of cost data for 
the OPPS, which is discussed in section II.A.1.a of this final rule 
with comment period. In accordance with the methodology finalized in 
the CY 2024 OPPS/ASC final rule with comment period, we proposed to 
base the payment rate for each PHP APC on the geometric mean per diem 
cost for days with three services and four or more services, calculated 
separately for CMHCs and hospital outpatient departments. We proposed 
to use the broader set of OPPS data to calculate the geometric mean 
costs for hospital outpatient departments, and we proposed to apply the 
same trims and exclusions consistent with the OPPS. We also proposed to 
set the payment rates for the four IOP APCs based on the geometric mean 
per diem cost for PHP days with three services and four or more 
services, calculated separately for CMHCs and hospital outpatient 
departments. Lastly, we proposed that if more recent data subsequently 
became available after the publication of the CY 2025 OPPS/ASC proposed 
rule, we would use such updated data, if appropriate, to determine the 
CY 2025 payment rates for the four PHP APCs and the four IOP APCs 
finalized in the CY 2024 OPPS/ASC final rule with comment period.
    For beneficiaries in a PHP or IOP, we proposed to apply the four-
service payment rate (that is, payment for PHP APCs 5854 for CMHCs and 
5864 for hospitals, and IOP APCs 5852 for CMHCs and 5862 for hospitals) 
for days with 4 or more services. For days with three or fewer 
services, we proposed to apply the three-service payment rate (that is, 
payment for PHP APCs 5853 for CMHCs and 5863 for hospitals, and IOP 
APCs 5851 for CMHCs and 5861 for hospitals), which is consistent with 
the policy we established in the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81833). As we noted in the CY 2024 OPPS/ASC final 
rule with comment period, we expect days with fewer than three services 
would be very infrequent, and we intend to monitor the provision of 
these days among providers and individual patients.
    Comment: We received five comments from providers, hospital 
associations, and national organizations expressing concerns about the 
proposed PHP and IOP per diem rates. Commenters expressed that the 
proposed rates would not be sufficient to ensure the sustainability of 
PHP and IOP programs and could negatively affect access to PHP 
services. Some commenters noted that the proposed payment rates for PHP 
and IOP APCs published in Addendum A were lower than the geometric mean 
per diem cost figures published in the proposed rule. The commenters 
requested that CMS reconsider its approach to rate structures for IOPs 
and PHPs so that rates sufficiently cover the cost of these programs.
    Response: We understand the concerns that commenters raised 
regarding the proposed PHP and IOP rates for CY 2025. We proposed to 
calculate the PHP payment rates based on our longstanding methodology, 
in accordance with the statutorily required relative payment weight 
calculations under the OPPS. Under the longstanding OPPS ratesetting 
methodology, CMS establishes APC payment rates by annually reviewing 
and revising the APC groups and relative payment weights for APCs in 
accordance with sections 1833(t)(2) and 1833(t)(9)(A) of the Act, as 
further described in section II.A.4 of this final rule with comment 
period. We further note that the OPPS is subject to budget neutral 
adjustments to the weight scaler as described in section II.A.4 of this 
final rule with comment period and APC payment rates are calculated 
using the OPPS conversion factor described in section II.B. of this 
final rule with comment period. As a result of the OPPS budget 
neutrality adjustments, the proposed and final APC payment rates may be 
higher or lower than their estimated APC geometric mean costs. We 
believe these per diem costs are in line with 2024 per diem costs and 
appropriately use hospital and CMHC cost data. The final payment rates 
for the PHP and IOP APCs can be found in Addendum A of this CY 2025 
OPPS/ASC final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing the payment rate methodology for CY 2025 as proposed. Table 
136 below shows the final APCs and the calculated geometric mean per 
diem costs for this CY 2025 OPPS/ASC final rule with comment period. 
Additional information about the data trims, data exclusions, and CCR 
adjustments applicable to the data used for this final rule can be 
found online at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html).\150\
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Proposed Rulemaking'', which can be found under the heading 
``Hospital Outpatient Prospective Payment System Rulemaking'' and 
open the claims accounting document link at the bottom of the page, 
which is labeled ``2025 NPRM OPPS Claims Accounting (PDF)''.

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D. Outlier Policy for CMHCs

    For CY 2025, we proposed to maintain the calculations of the CMHC 
outlier percentage, cutoff point and percentage payment amount, outlier 
reconciliation, outlier payment cap, and fixed dollar threshold 
according to previously established policies to include PHP and IOP 
services. We refer readers to the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81834 through 81836) for more details on CMHC 
outlier policies, and to section II.G.1 of this final rule with comment 
period for our general policies for hospital outpatient outlier 
payments.
1. Background
    As discussed in the CY 2004 OPPS final rule with comment period (68 
FR 63469 through 63470), we created a separate outlier policy specific 
to the estimated costs and OPPS payments provided to CMHCs. We 
designated a portion of the estimated OPPS outlier threshold 
specifically for CMHCs, consistent with the percentage of projected 
payments to CMHCs under the OPPS each year, excluding outlier payments, 
and established a separate outlier threshold for CMHCs.
2. CMHC Outlier Percentage
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 
through 59268), we described the current outlier policy for hospital 
outpatient payments and CMHCs. We note that we also discussed our 
outlier policy for CMHCs in more detail in section VIII.C of that same 
final rule (82 FR 59381). We set our projected target for all OPPS 
aggregate outlier payments at 1.0 percent of the estimated aggregate 
total payments under the OPPS (82 FR 59267). This same policy was also 
reiterated in the CY 2019 OPPS/ASC final rule with comment period (83 
FR 58996), the CY 2020 OPPS/ASC final rule with comment period (84 FR 
61350), and the CY 2021 OPPS/ASC final rule with comment period (85 FR 
86082). We did not propose any changes to the CMHC outlier percentage 
policy for CY 2025.
3. Cutoff Point and Percentage Payment Amount
    Also described in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59381), our policy has been to pay CMHCs for outliers if 
the estimated cost of the day exceeds a cutoff point. In CY 2006, we 
set the cutoff point for outlier payments at 3.4 times the highest CMHC 
PHP APC payment rate implemented for that calendar year (70 FR 68551). 
For CY 2018, the highest CMHC PHP APC payment rate was the payment rate 
for CMHC PHP APC 5853. In addition, in CY 2002, the final OPPS outlier 
payment percentage for costs above the multiplier threshold was set at 
50 percent (66 FR 59889). In CY 2018, we continued to apply the same 50 
percent outlier payment percentage that applies to hospitals to CMHCs 
and continued to use the existing cutoff point (82 FR 59381). 
Therefore, for CY 2018, we continued to pay for partial hospitalization 
services that exceeded 3.4 times the CMHC PHP APC payment rate at 50 
percent of the amount of CMHC PHP APC geometric mean per diem costs 
over the cutoff point. This same policy was also reiterated in the CY 
2019 OPPS/ASC final rule with comment period (83 FR 58996 through 
58997), the CY 2020 OPPS/ASC final rule with comment period (84 FR 
61351), the CY 2021 OPPS/ASC final rule with comment period (85 FR 
86082 through 86083), the CY 2022 OPPS/ASC final rule with comment 
period (86 FR 63670), the CY 2023 OPPS/ASC final rule with comment 
period (87 FR 72004), and the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 81835). For CY 2024, we extended this policy to intensive 
outpatient services. We did not propose any changes to the cutoff point 
and payment amount policy for CY 2025.
4. Outlier Reconciliation
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 
through 68599), we established an outlier reconciliation policy to 
address charging aberrations related to OPPS outlier payments. We 
addressed vulnerabilities in the OPPS outlier payment system that led 
to differences between billed charges and charges included in the 
overall CCR, which are used to estimate cost and would apply to all 
hospitals and CMHCs paid under the OPPS. We initiated steps to ensure 
that outlier payments appropriately account for the financial risk when 
providing an extraordinarily costly and complex service but are only 
being made for services that legitimately qualify for the additional 
payment.
    For a comprehensive description of outlier reconciliation, we refer 
readers to the CY 2023 OPPS/ASC and CY 2019 OPPS/ASC final rules with 
comment period (83 FR 58874 through 58875 and 81 FR 79678 through 
79680, respectively). We did not propose any changes to the outlier 
reconciliation policy for CY 2025.
5. Outlier Payment Cap
    In the CY 2017 OPPS/ASC final rule with comment period, we 
implemented a CMHC outlier payment cap to be applied at the provider 
level, such that in any given year, an individual CMHC will receive no 
more than a set percentage of its CMHC total per diem payments in 
outlier payments (81 FR 79692 through 79695). Our analysis of

[[Page 94271]]

CY 2014 claims data found that CMHC outlier payments began to increase 
similarly to the way they had prior to CY 2004. This was due to 
inflated cost from three CMHCs that accounted for 98 percent of all 
CMHC outlier payments that year and received outlier payments that 
ranged from 104 percent to 713 percent of their total per diem 
payments. To balance our concern about disadvantaging CMHCs with our 
interest in protecting the benefit from excessive outlier payments and 
to mitigate potential inappropriate outlier billing vulnerabilities, we 
finalized the CMHC outlier payment cap at 8 percent of the CMHC's total 
per diem payments (81 FR 79694 through 79695) to limit the impact of 
inflated CMHC charges on outlier payments. This outlier payment cap 
only affects CMHCs; it does not affect other provider types (that is, 
hospital-based PHPs), and is in addition to and separate from the 
current outlier policy and reconciliation policy in effect. We did not 
propose any changes to the outlier payment cap for CY 2025. We received 
comments on the outlier payment cap for CMHCs, which are summarized 
below and include our responses.
    Comment: Several commenters urged CMS to implement a site-neutral 
payment for CMHCs and hospital-based providers for PHP and IOP 
services, stating CMS policy creates arbitrary incentives for PHP and 
IOP services in settings other than CMHCs; a few of these commenters 
went on to state that a site-neutral payment would eliminate the need 
for a separate outlier policy for CMHCs.
    Response: We disagree with commenters who believe CMS policy 
creates an incentive for PHP and IOP services in settings other than 
CMHCs and that a site-neutral payment would eliminate the need for a 
separate outlier policy for CMHCs. Current data for partial 
hospitalization reflect significant cost structure differences between 
hospitals and CMHCs, and our longstanding payment policies reflect 
those differences as well. We have no factual basis at this time on 
which to assume, as many commenters suggest, that the stark difference 
between hospital and CMHC payment rates for PHP services indicate that 
such services do not reflect the actual cost structure differences 
between facility types. As discussed in the CY 2004 OPPS final rule 
with comment period (68 FR 63469 and 63470), we noted the use of 
historical cost-to-charge ratios applied to current charges resulted in 
an excessive amount of outlier payments being made to CMHCs. As a 
result of more in-depth analysis of the 2001 data files that were used 
to compute the CY 2003 PHP per diem amount, we discovered a significant 
difference in the amount of outlier payments made to hospitals and 
CMHCs for PHP. Therefore, we finalized a policy to designate a portion 
of the estimated 2.0 percent outlier target amount specifically for 
CMHCs, consistent with the percentage of projected payments to CMHCs 
under the OPPS in CY 2004, excluding outlier payments. Given the 
difference in PHP charges between hospitals and CMHCs, we did not 
believe it was appropriate to make outlier payments to CMHCs using the 
outlier percentage target amount and threshold established for 
hospitals. Therefore, beginning in CY 2004, we created a separate 
outlier policy specific to the estimated costs and OPPS payments 
provided to CMHCs. We designated a portion of the estimated OPPS 
outlier threshold specifically for CMHCs, consistent with the 
percentage of projected payments to CMHCs under the OPPS each year, 
excluding outlier payments, and established a separate outlier 
threshold for CMHCs. Furthermore, to balance our concern about 
disadvantaging CMHCs with our interest in protecting the benefit from 
excessive outlier payments and to mitigate potential inappropriate 
outlier billing vulnerabilities, we finalized the CMHC outlier payment 
cap at 8 percent of the CMHC's total per diem payments (81 FR 79694 and 
79695) to limit the impact of inflated CMHC charges on outlier 
payments. In conclusion, CMS does not believe our payment methodology 
has any effect on outlier policy.
    Final Decision: After consideration of the public comments we 
received, we are maintaining our existing policy to apply a cap on 
outlier payments as we finalized in the CY 2017 OPPS/ASC final rule 
with comment period,
6. Fixed-Dollar Threshold
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 
through 59268), for the hospital outpatient outlier payment policy, we 
set a fixed-dollar threshold in addition to an APC multiplier 
threshold. Fixed-dollar thresholds are typically used to drive outlier 
payments for very costly items or services, such as cardiac pacemaker 
insertions. Currently, for CY 2024, CMHC PHP APCs (5853 or 5854) and 
IOP APCs (5851 or 5852) are the only APCs for which CMHCs may receive 
payment under the OPPS, and these APCs are for providing a defined set 
of services that are relatively low cost when compared to other OPPS 
services. Because of the relatively low cost of CMHC services that are 
used to comprise the structure of CMHC PHP APCs (5853 or 5854) and IOP 
APCs (5851 or 5852), it is not necessary to also impose a fixed-dollar 
threshold on CMHCs. Therefore, in the CY 2018 OPPS/ASC final rule with 
comment period, we did not set a fixed-dollar threshold for CMHC 
outlier payments (82 FR 59381). This same policy was also reiterated in 
the CY 2020 OPPS/ASC final rule with comment period (84 FR 61351), the 
CY 2021 OPPS/ASC final rule with comment period (85 FR 86083), the CY 
2022 OPPS/ASC final rule with comment period (86 FR 63508), the CY 2023 
OPPS/ASC final rule with comment period (87 FR 72004), and the CY 2024 
OPPS/ASC final rule with comment period (88 FR 81836). We did not 
propose any changes to the fixed-dollar threshold policy for CY 2025, 
which will continue in CY 2025.

IX. Services That Will Be Paid Only as Inpatient Services

A. Background

    Established in rulemaking as part of the initial implementation of 
the OPPS, the inpatient only (IPO) list identifies services for which 
Medicare will only make payment when the services are furnished in the 
inpatient hospital setting because of the invasive nature of the 
procedure, the underlying physical condition of the patient, or the 
need for at least 24 hours of postoperative recovery time or monitoring 
before the patient can be safely discharged (70 FR 68695). The IPO list 
was created based on the premise (rooted in the practice of medicine at 
that time), that Medicare should not pay for procedures furnished as 
outpatient services that are performed on an inpatient basis virtually 
all of the time for the Medicare population, for the reasons described 
above, because performing these procedures on an outpatient basis would 
not be safe or appropriate, and therefore not reasonable and necessary 
under Medicare rules (63 FR 47571). Services included on the IPO list 
were those determined to require inpatient care, such as those that are 
highly invasive, result in major blood loss or temporary deficits of 
organ systems (such as neurological impairment or respiratory 
insufficiency), or otherwise require intensive or extensive 
postoperative care (65 FR 67826). There are some services designated as 
inpatient only that, given their clinical intensity, would not be 
expected to be performed in the hospital outpatient setting. For 
example, we have traditionally considered certain surgically invasive

[[Page 94272]]

procedures on the brain, heart, and abdomen, such as craniotomies, 
coronary-artery bypass grafting, and laparotomies, to require inpatient 
care (65 FR 18456). Designation of a service as inpatient only does not 
preclude the service from being furnished in a hospital outpatient 
setting but rather means that Medicare will not make payment for the 
service if it is furnished to a Medicare beneficiary in the hospital 
outpatient setting (65 FR 18443). Conversely, the fact that a procedure 
is not on the IPO list should not be interpreted to mean the procedure 
is only appropriately performed in the hospital outpatient setting (70 
FR 68696).
    As part of the annual update process, we have historically worked 
with interested parties, including professional societies, hospitals, 
surgeons, hospital associations, and beneficiary advocacy groups, to 
evaluate the IPO list and to determine whether services should be added 
to or removed from the list. Interested parties are encouraged to 
request reviews for a particular code or group of codes; and we have 
asked that their requests include evidence that demonstrates that the 
procedure was performed on an outpatient basis in a safe and 
appropriate manner in a variety of different types of hospitals--
including but not limited to--operative reports of actual cases, peer-
reviewed medical literature, community medical standards and practice, 
physician comments, outcome data, and post-procedure care data (67 FR 
66740).
    We traditionally have used five longstanding criteria to determine 
whether a procedure should be removed from the IPO list. As noted in 
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74353), we 
assess whether a procedure or service meets these criteria to determine 
whether it should be removed from the IPO list and assigned to an APC 
group for payment under the OPPS when provided in the hospital 
outpatient setting. We have explained that while we only require a 
service to meet one criterion to be considered for removal, satisfying 
only one criterion does not guarantee that the service will be removed; 
instead, the case for removal is strengthened with the more criteria 
the service meets. The criteria for assessing procedures for removal 
from the IPO list are as follows:
     Most outpatient departments are equipped to provide the 
services to the Medicare population.
     The simplest procedure described by the code may be 
furnished in most outpatient departments.
     The procedure is related to codes that we have already 
removed from the IPO list.
     A determination is made that the procedure is being 
furnished in numerous hospitals on an outpatient basis.
     A determination is made that the procedure can be 
appropriately and safely furnished in an ASC and is on the list of 
approved ASC services or has been proposed by us for addition to the 
ASC covered procedures list.
    In the past, we have requested that interested parties submit 
corresponding evidence in support of their claims that a code or group 
of codes meet the longstanding criteria for removal from the IPO list 
and are safe to perform on the Medicare population in the hospital 
outpatient setting--including, but not limited to case reports, 
operative reports of actual cases, peer-reviewed medical literature, 
medical professional analysis, clinical criteria sets, and patient 
selection protocols. Our clinicians then thoroughly review all 
information submitted within the context of the established criteria 
and if, following this review, we determine that there is sufficient 
evidence to confirm that the code could be safely and appropriately 
performed on an outpatient basis, we assign the service to an APC and 
include it as a payable procedure under the OPPS (67 FR 66740). We 
determine the APC assignment for services removed from the IPO list by 
evaluating the clinical similarity and resource costs of the service 
compared to other services paid under the OPPS and by reviewing the 
Medicare Severity Diagnosis Related Groups (MS-DRG) rate for the 
service under the IPPS, though we note we would generally expect the 
cost to provide a service in the outpatient setting to be less than the 
cost to provide the service in the inpatient setting.
    We stated in prior rulemaking that, over time, given advances in 
technology and surgical technique, we would continue to evaluate 
services to determine whether they should be removed from the IPO list. 
Our goal is to ensure that inpatient only designations are consistent 
with the current standards of practice. We have asserted in prior 
rulemaking that, insofar as advances in medical practice mitigate 
concerns about these procedures being performed on an outpatient basis, 
we would be prepared to remove procedures from the IPO list and provide 
payment for them under the OPPS (65 FR 18443). Further, CMS has at 
times had to reclassify codes as inpatient only services with the 
emergence of new information.
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74352 through 74353) for a full discussion of our 
historic policies for identifying services that are typically provided 
only in an inpatient setting and that, therefore, will not be paid by 
Medicare under the OPPS, as well as the criteria we have used to review 
the IPO list to determine whether any services should be removed.

B. Changes to the Inpatient Only (IPO) List

    As stated above, we encourage interested parties to request reviews 
for a particular code or group of codes for removal from the IPO list. 
For the CY 2025, we received requests from interested parties 
recommending that certain services be removed from the IPO list. 
Following our clinical review using the five criteria listed above, we 
did not find sufficient evidence that any of those services meet the 
criteria to be removed from the IPO list for CY 2025. Therefore, we did 
not propose to remove any services from the IPO list for CY 2025.
    We proposed to add three services for which codes were newly 
created by the AMA CPT Editorial Panel for CY 2025 to the IPO list. 
These new services are described by CPT codes 0894T, 0895T, and 0896T, 
which will be effective on January 1, 2025. After clinical review of 
these services, we found that they require a hospital inpatient 
admission or stay and are not appropriate for payment under the OPPS. 
We proposed to assign these services to status indicator ``C'' 
(Inpatient Procedures) for CY 2025. The CPT codes, long descriptors, 
and the proposed CY 2025 payment indicators are displayed in Table 137.
    Table 137 contains the proposed changes to the IPO list for CY 
2025. The complete list of codes describing services that we proposed 
to designate as inpatient only services beginning in CY 2025 is also 
included as Addendum E to the CY 2025 proposed rule, which is available 
via the internet on the CMS website.

[[Page 94273]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.183

    Comment: We received several comments in support of our proposal to 
add CPT codes 0894T, 0895T, and 0896T to the IPO list for CY 2025.
    Response: We thank the commenters for their support.
    Comment: We received one comment requesting that we remove CPT code 
22848 (Pelvic fixation (attachment of caudal end of instrumentation to 
pelvic bony structures) other than sacrum (List separately in addition 
to code for primary procedure)) from the IPO list. Additionally, the 
commenter presented at the 2024 Hospital Outpatient Panel (HOP) on 
August 26, 2024, with the Panel recommending CMS remove the service 
from the IPO list.
    The commenter stated that the service described by CPT code 22848 
met the following criteria for removal: (1) most outpatient departments 
are equipped to provide the services to the Medicare population; (2) 
the simplest procedure described by the code may be furnished in most 
outpatient departments; (3) the procedure is related to codes that we 
have already removed from the IPO list; and (4) a determination is made 
that the procedure is being furnished in numerous hospitals on an 
outpatient basis.
    Response: We thank the commenter for their feedback. After further 
in-depth review of the evidence provided, we agree with the commenter 
that this service meets criteria 1, 2, 3, and 4 in our regulation text 
at Sec.  419.23(b)(1) through (4). For criteria 1 and 2, we found that 
most outpatient departments are equipped to provide this service to the 
Medicare population and the simplest procedure described by CPT code 
22848 may be furnished in most outpatient departments. For criterion 3, 
the procedure is related to codes that we have already removed from the 
IPO list. Our review found that this procedure is the related to CPT 
codes 22612 (Arthrodesis, posterior or posterolateral technique, single 
interspace; lumbar (with lateral transverse technique, when performed)) 
and 22614 (Arthrodesis, posterior or posterolateral technique, single 
interspace; each additional interspace (list separately in addition to 
code for primary procedure)). Finally, for criterion 4, we found that 
this procedure is being furnished in numerous hospitals on an 
outpatient basis. Since CPT code 22848 is an add-on code and will 
always be packaged, we are reassigning this code to status indicator 
``N'' (Items and Services Packaged into APC Rates).
    Comment: We received one comment requesting that we add CPT code 
31647 (Bronchoscopy, rigid or flexible, including fluoroscopic 
guidance, when performed; with balloon occlusion, when performed, 
assessment of air leak, airway sizing, and insertion of bronchial 
valve(s), initial lobe) to the IPO list. The commenter cited that the 
standard of care for this procedure required a stay of 3 to5 days for 
this procedure. The commenter was also concerned that, while a 
procedure on the IPO list can be performed as either outpatient or 
inpatient, outside payors who depend on the IPO list may refuse to 
approve inpatient admissions for surgeries not on the IPO list that 
require inpatient stays over two midnights.
    Response: We thank the commenter for their feedback. CPT code 31647 
was created in 2013 and is currently assigned to APC 5155 (Level 5 
Airway Endoscopy) and status indicator ``J1'' (Hospital Part B Services 
Paid Through a Comprehensive APC). While our review found that the mean 
length of stay from the OPPS claims for CY 2020-2024 ranged from 2.10 
to 3.02 days, showing that this procedure does require an overnight 
hospital stay for some patients, our review also found that a portion 
of patients are receiving

[[Page 94274]]

this service in the hospital outpatient setting. Because a portion of 
beneficiaries have been receiving this procedure in the hospital 
outpatient setting, we believe that it is appropriate for CPT code 
31647 to remain off the IPO list and assigned to a clinical APC. As 
stated above, the fact that a procedure is not on the IPO list should 
not be interpreted to mean the procedure is only appropriately 
performed in the hospital outpatient setting.
    Comment: We received four comments requesting that we assign 
services newly removed from the IPO list to New Technology APCs until 
sufficient data is collected to assign these services to clinical APCs.
    Response: We thank the commenters for their input. As we previously 
stated in the CY 2021 OPPS/ASC final rule with comment period (85 FR 
86093), consistent with our regulation at 42 CFR 419.31(a)(1), we 
classify outpatient services and procedures that are comparable 
clinically and in terms of resource use into APC groups. As we stated 
in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74224), 
the OPPS is a prospective payment system that provides payment for 
groups of services that share clinical and resource use 
characteristics. It should be noted that for all codes newly paid under 
the OPPS, including codes removed from the IPO list, our policy has 
been to assign the service or procedure to an APC based on feedback 
from a variety of sources, including but not limited to, review of the 
clinical similarity of the service to existing procedures; advice from 
CMS medical advisors; information from interested specialty societies; 
and review of all other information available to us, including 
information provided to us by the public, whether through meetings with 
stakeholders or additional information that is mailed or otherwise 
communicated to us (84 FR 61229). Therefore, we believe assigning 
procedures removed from the IPO list to existing clinical APCs that are 
similar in clinical characteristics and resource costs is appropriate. 
We note that procedures assigned to New Technology APCs cannot be 
placed in clinical APCs due to insufficient clinical and cost data, 
unlike the procedures transitioning from the IPO list.
    Comment: One commenter was concerned about the transparency of 
CMS's review of requests to remove or add services to the IPO list and 
asked that CMS publish a list of these requests in the OPPS/ASC 
proposed rules.
    Response: We thank the commenter for their input and will consider 
it for future rulemaking. As stated above, we review the IPO list on a 
yearly basis and encourage interested parties to request reviews for a 
particular code or group of codes for removal or addition to the IPO 
list, after which our clinicians thoroughly review all information 
submitted within the context of the established criteria. While we have 
not historically published pre-proposed rule recommendations for which 
we did not propose any changes, we do address all codes that are 
recommended during the public comment period in the OPPS/ASC final 
rule.
    Comment: We received one comment requesting that CMS preserve the 
treating physician's autonomy and create a formal review panel of 
physicians to evaluate changes to the IPO list. Another commenter also 
stated that the determination of the appropriate surgical site of 
service should be left to the judgment of surgeons.
    Response: We thank the commenters for their feedback. In the CY 
2022 OPPS/ASC final rule with comment period, we explained that we 
recognized that while physicians are able to make safety determinations 
for a specific beneficiary, CMS is in the position to make safety 
determinations for the broader population of Medicare beneficiaries. 
Furthermore, we explained that we want to afford physicians and 
hospitals the maximum flexibility in choosing the most clinically 
appropriate site of service for the procedure, as long as the 
characteristics of the procedure are consistent with the criteria 
listed above (86 FR 63673). While we are open to suggestions from 
interested parties on improving the IPO list review process, we 
reiterate that recommendations and changes to the IPO list are 
thoroughly reviewed by our clinicians.
    In summary, after consideration of the public comments we received, 
we are finalizing our proposal with modification to add CPT codes 
0894T, 0895T, and 0896T to the IPO list and assign them to status 
indicator ``C'' (Inpatient Procedures). We are also removing CPT code 
22848 from the IPO list and reassigning it to status indicator ``N'' 
(Items and Services Packaged into APC Rates). Table 138 below contains 
the changes to the IPO list for CY 2025. The complete list of codes 
that are designated as inpatient only services beginning in CY 2025 is 
also included as Addendum E to this final rule with comment period, 
which is available via the internet on the CMS website.

[[Page 94275]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.184

X. Nonrecurring Policy Changes

A. Remote Services

1. Payment for Outpatient Therapy Services, Diabetes Self-Management 
Training, and Medical Nutrition Therapy When Furnished by Institutional 
Staff to Beneficiaries in Their Homes Through Communications Technology
    Section 1861(p) of the Act establishes the benefit category for 
outpatient PT, SLP and OT services (expressly for PT services and, 
through section 1861(ll)(2) of the Act, for outpatient SLP services 
and, through section 1861(g) of the Act, for outpatient OT services).
    Section 1861(p) of the Act defines outpatient therapy services in 
the three disciplines as those furnished by a provider of services, a 
clinic, rehabilitation agency, or a public health agency, or by others 
under an arrangement with, and under the supervision of, such provider, 
clinic, rehabilitation agency, or public health agency to an individual 
as an outpatient; and those furnished by a therapist not under 
arrangements with a provider of services, clinic, rehabilitation 
agency, or a public health agency. As such, section 1861(p) of the Act 
defines outpatient therapy services very broadly to include those 
furnished by providers and other institutional settings, as well as 
those furnished in office settings. Section 1834(k)(3) of the Act 
requires payment for outpatient therapy services to be made based on 
the PFS (via section 1848 of the Act), for all institutional providers 
listed at sections 1833(a)(8) and (9) of the Act. These providers 
include clinics, rehabilitation agencies, public health agencies, 
comprehensive outpatient rehabilitation agencies (CORFs), SNFs, home 
health agencies (HHAs) (to individuals who are not homebound), 
hospitals to outpatients or hospital inpatients who are entitled to 
benefits under Part A but have exhausted benefits for inpatient 
hospital services during a spell of illness or are not so entitled to 
benefits under Part A, and all other CORF services.
    Section 1861(qq) of the Act defines Diabetes Self-Management 
Training (DSMT) services and authorizes CMS to regulate Medicare DSMT 
outpatient services. A ``certified provider'' of DSMT is further 
defined in section 1861(qq)(2)(A) of the Act as a physician or other 
individual or entity designated by the Secretary who meets certain 
quality requirements described in section 1861(qq)(2)(B) of the Act. In 
CY 2000, we finalized a standalone rule titled ``Medicare Program; 
Expanded Coverage for Outpatient Diabetes Self-Management Training and 
Diabetes Outcome Measurements.'' In that rule, we finalized that 
payment for outpatient DSMT would be made under the PFS (65 FR 83132). 
We further established that, in the case of payments made to other 
approved entities, such as hospital outpatient departments, ESRD 
facilities, and durable medical equipment suppliers, the payment would 
be equal to the amounts established under the PFS and made under the 
appropriate payment systems (65 FR 83142).

[[Page 94276]]

    Section 1861(s)(2)(V) of the Act authorizes Medicare Part B 
coverage of medical nutrition therapy services (MNT) for certain 
beneficiaries who have diabetes or a renal disease. In the CY 2002 PFS 
final rule, we established that payment for MNT services furnished in 
the institutional setting, including hospital outpatient departments 
(HOPDs), would be made under the PFS, not under the hospital Outpatient 
Prospective Payment System (OPPS) (66 FR 55279). Telehealth services 
may be paid under the PFS only when the services are furnished to a 
beneficiary at an originating site (defined at Sec.  410.78), which 
prior to the PHE was not typically defined to include a beneficiary's 
home.
    During the PHE for COVID-19, outpatient therapy services, DSMT, and 
MNT could be furnished via a telecommunications system to beneficiaries 
in their homes, and bills for these services were submitted and paid 
either separately or as part of a bundled payment, when either 
personally provided by the billing practitioner or provided by 
institutional staff and billed for by institutions, such as HOPDs, 
SNFs, and HHAs. For professionals, CMS used waiver authority provided 
under section 1135 of the Act to expand the range of practitioners that 
could serve as distant site practitioners for Medicare telehealth 
services as described in section 1834(m)(4)(E) of the Act and 42 CFR 
410.78(b)(2), as well as to waive the originating site requirements for 
Medicare telehealth services described in section 1834(m)(4)(C) of the 
Act. This allowed for outpatient therapy services to be furnished and 
billed by therapists (PTs, OTs and SLPs) in private practice, and for 
DSMT and MNT to be furnished via Medicare telehealth to beneficiaries 
in urban areas, as well as rural areas, including to beneficiaries 
located in their homes.\151\
---------------------------------------------------------------------------

    \151\ https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf.
---------------------------------------------------------------------------

    When CMS expanded the types of practitioners who may bill for their 
services when furnished as Medicare telehealth services from a distant 
site to include therapists using section 1135 waiver authority during 
the PHE for COVID-19, CMS generally took the position for services 
furnished in HOPDs that separate waiver authority was needed to allow 
hospitals to bill for services furnished by hospital staff through 
communication technology to beneficiaries in their homes. CMS 
implemented the Hospitals Without Walls (HWW) policy that relied on 
waiver authority, which allowed hospitals to reclassify patients' homes 
as part of the hospital. HWW allowed hospitals to bill two different 
kinds of fees for services furnished remotely to patients in their 
homes: (1) hospital facility payment in association with professional 
services billed under the PFS; and (2) single payment for a limited 
number of practitioner services, when statute or other applicable rules 
only allow the hospital to bill for services personally provided by 
their staff. These services are either billed by hospitals or by 
professionals, there would not be separate facility and professional 
billing. This latter category includes outpatient therapy services, 
DSMT, and MNT. However, while CMS relied upon PHE-specific waiver 
authority to allow hospital billing for these services, CMS also issued 
guidance instructing HOPDs to bill using modifiers consistent with 
those used for Medicare telehealth services. For further background, we 
refer readers to https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf. In the same referenced document, CMS also issued specific 
guidance for other institutional providers of therapy services to use 
modifier 95 (indicating a Medicare telehealth service), along with the 
specific bill types for outpatient therapy services furnished by their 
staff.
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328) 
extended many of the flexibilities that were available for Medicare 
telehealth services during the PHE for COVID-19 under emergency waiver 
authorities, including adding PTs, OTs and SLPs as distant site 
practitioners through the end of CY 2024. In developing post-PHE 
guidance, CMS initially took the position that institutions billing for 
services furnished remotely by their employed practitioners (where the 
practitioners do not bill for their own services), would end with the 
PHE for COVID-19 along with the HWW waivers.\152\ However, after 
reviewing input from interested parties, as well as relevant guidance, 
including applicable billing instructions, we considered whether 
certain institutions, as the furnishing providers, can bill for certain 
remotely furnished services personally performed by employed 
practitioners.
---------------------------------------------------------------------------

    \152\ https://www.cms.gov/files/document/frequently-asked-questions-cms-waivers-flexibilities-and-end-covid-19-public-health-emergency.pdf.
---------------------------------------------------------------------------

    In the CY 2024 PFS final rule, we stated that, while we considered 
how we might address this topic in future rulemaking, in the interests 
of maintaining access to outpatient therapy, DSMT, and MNT services 
furnished remotely by institutional staff to beneficiaries in their 
homes consistent with the accessibility of these services when 
furnished by professionals via Medicare telehealth, we finalized that 
we would continue to allow institutional providers to bill for these 
services when furnished remotely in the same manner they have during 
the PHE for COVID-19 through the end of CY 2024. We sought comment on 
current practice for these services when billed, including how and to 
what degree they continue to be provided remotely to beneficiaries in 
their homes. We sought comment as to whether these services may fall 
within the scope of Medicare telehealth at section 1834(m) of the Act 
or if there are other relevant authorities CMS might consider in future 
rulemaking. For further information on this comment solicitation, 
please see the discussion in the CY 2024 PFS final rule (88 FR 78886 
through 78888).
    For DSMT specifically, we stated that the clinical staff personally 
delivering the service may be a type of practitioner authorized to 
furnish Medicare telehealth services under section 1834(m) of the Act; 
but we also understood that DSMT may be provided by other types of 
staff. Accordingly, we noted in an FAQ that we were exercising 
enforcement discretion in reviewing the telehealth eligibility status 
of the practitioner personally providing any part of a remotely 
furnished DSMT service, so long as the persons were otherwise qualified 
to provide the service until the end of 2024. For more background we 
refer readers to https://www.cms.gov/files/document/frequently-asked-questionscms-waivers-flexibilities-and-end-covid19-public-health-emergency.pdf.
    While the amendments made by section 4113 of the CAA, 2023 to 
section 1834(m) of the Act have continued to expand the range of 
practitioners eligible to furnish telehealth services through CY 2024, 
without subsequent legislation these practitioners will no longer be 
able to bill for Medicare telehealth services beginning January 1, 
2025.
    In the CY 2024 PFS final rule, we articulated the importance of 
maintaining access to outpatient therapy, DSMT, and MNT services 
furnished remotely by institutional staff to beneficiaries in their 
homes consistent with the availability of these services when furnished 
by professionals via Medicare telehealth as part of our rationale for 
allowing institutional providers to bill for these services when 
furnished remotely in the

[[Page 94277]]

same manner they have during the PHE for COVID-19 through the end of CY 
2024.
    We recognize that for the past several years, through the PHE for 
COVID-19 and several legislative extensions of PHE-related 
flexibilities for Medicare telehealth services under section 1834(m) of 
the Act, we have generally aligned payment policies for outpatient 
therapy, DSMT, and MNT services furnished remotely by hospital staff to 
beneficiaries in their homes with policies for Medicare telehealth 
services. We noted in the CY 2025 OPPS/ASC proposed rule that, to the 
extent that therapists and DSMT and MNT practitioners continue to be 
distant site practitioners for purposes of Medicare telehealth 
services, we anticipated aligning our policy for these services with 
policies under the PFS and continuing to make payment to the hospital 
for these services when furnished by hospital staff.
    Comment: Commenters supported our clarification that we would 
continue to align our policies for outpatient therapy, DSMT, and MNT 
services when furnished by hospital staff with the Medicare telehealth 
policies that apply when these services are billed by the same 
clinicians but in private practice. Commenters stated that aligning 
these policies would ensure clarity and consistency for providers and 
beneficiaries. Other commenters, while supportive, requested that CMS 
provide additional guidance for how outpatient therapy, DSMT, and MNT 
services should be billed when provided by hospitals staff versus how 
these services should be billed when furnished by practitioners in 
private practice. A few commenters suggested that CMS permanently allow 
payment for remote or virtual services under the OPPS.
    Response: We thank commenters for their support for our 
clarification. Section 4113 of the CAA, 2023 expanded the range of 
practitioners eligible to furnish telehealth services only through CY 
2024, which included PTs, OTs, and SLPs. Beginning January 1, 2025, 
these practitioners will no longer be able to bill for Medicare 
telehealth services. Consequently, beginning January 1, 2025, we 
likewise will no longer pay for outpatient therapy, DSMT, and MNT 
services when furnished remotely by hospital staff to beneficiaries in 
their homes. As we have stated before, and as noted by other 
commenters, continuing to align our policies for outpatient therapy, 
DSMT, and MNT services when furnished by hospital staff with the 
Medicare telehealth policies that apply when these services are billed 
by the same clinicians but in private practice ensures clarity and 
consistency for providers and beneficiaries.
    We may consider refinements to our policies in future rulemaking.
2. Periodic In-Person Visits for Mental Health Services Furnished 
Remotely by Hospital Staff to Beneficiaries in Their Homes
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72017), we finalized a requirement that payment for mental health 
services furnished remotely to beneficiaries in their homes using 
telecommunications technology may only be made if the beneficiary 
receives an in-person service within 6 months prior to the first time 
the hospital clinical staff provides the mental health services 
remotely; and that there must be an in-person service without the use 
of telecommunications technology within 12 months of each mental health 
service furnished remotely by the hospital clinical staff. We also 
finalized that we would permit exceptions to the requirement that there 
be an in-person service without the use of communications technology 
within 12 months of each remotely furnished mental health service when 
the hospital clinical staff member and beneficiary agree that the risks 
and burdens of an in-person service outweigh the benefits. We stated 
that exceptions to the in-person visit requirement should involve a 
clear justification documented in the beneficiary's medical record, 
including the clinician's professional judgement that the patient is 
clinically stable and/or that an in-person visit has the risk of 
worsening the person's condition, creating undue hardship on the person 
or their family, or would otherwise result in disengaging with care 
that has been effective in managing the person's illness. We also 
finalized that hospitals must document that the patient has a regular 
source of general medical care and has the ability to obtain any needed 
point of care testing, including vital sign monitoring and laboratory 
studies. We finalized that these requirements would not go into effect 
until the 152nd day after the PHE for COVID-19 ends to maintain 
consistency with similar policies implemented for professional services 
paid under the PFS, and for RHCs/FQHCs (87 FR 72018).
    Section 4113(d) of the CAA, 2023, extended the delay in 
implementing the in-person visit requirements until January 1, 2025, 
for both professionals billing for mental health services via Medicare 
telehealth and for RHCs/FQHCs furnishing remote mental health visits. 
In the CY 2024 OPPS final rule with comment period, we reiterated that 
we believe it is important to maintain consistent requirements for 
these policies across payment systems; therefore, we finalized delaying 
the in-person visit requirements for mental health services furnished 
remotely by hospital staff to beneficiaries in their homes until 
January 1, 2025. As such, these in-person visit requirements are 
currently set to take effect for services furnished on or after January 
1, 2025 (88 FR 81874).
    However, we noted in the CY 2025 OPPS/ASC proposed rule that, to 
the extent that these in-person visit requirements are delayed in the 
future for professionals billing for mental health telehealth services 
under the PFS, we anticipate that we would align the requirements for 
mental health services furnished remotely to beneficiaries in their 
homes through communications technology with mental health services 
furnished via Medicare telehealth in future rulemaking.
    Comment: Commenters supported our clarification that we would 
continue to align our policies for in person visit requirements for 
mental health services furnished remotely to beneficiaries in their 
homes through communications technology with similar policies for 
mental health services furnished via Medicare telehealth. Of these 
supportive comments, many recommended that CMS permanently remove the 
in-person visit requirements for these services.
    Response: We appreciate the supportive comments but note that the 
in-person visit requirement for professionals billing for mental health 
services via Medicare telehealth applies again beginning January 1, 
2025. We continue to believe in the principle of aligning payment 
policy for remotely furnished mental health services across the OPPS 
and PFS payment systems, and accordingly, the in-person visit 
requirements will also apply for mental health services furnished 
remotely by hospital staff to beneficiaries in their homes through 
communications technology beginning January 1, 2025. We may consider 
refinements to our policy through future rulemaking.
3. HOPD Payment for Telemedicine Evaluation and Management Services
    The CPT Editorial Panel created 17 new codes describing audio/video 
and audio-only telemedicine E/M services. For further discussion of 
these 17 new codes and CMS' related proposals, please see section 
II.E.4.18 of the CY 2025 PFS proposed rule.
    In 2014, CMS established HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of

[[Page 94278]]

a patient) to describe the service associated with a hospital 
outpatient clinic visit for assessment and management of a patient. In 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75042), we 
stated that the code is applicable for hospital use only representing 
any clinic visit under the OPPS. We further stated that HCPCS code 
G0463 replaces evaluation and management (E/M) CPT codes 99201-99205 
(new patient) and 99211-99215 (established patient), thereby 
eliminating the distinction between new and established clinic visits.
    Given the similarities between the new telemedicine E/M code set 
and the office/outpatient E/M code set, we believe that the 
telemedicine E/M codes fall within the scope of the hospital outpatient 
clinic visit policy because the predecessor codes (the office/
outpatient E/M code set) would be reported by hospitals using HCPCS 
code G0463. Under the hospital outpatient clinic visit policy, the CPT 
codes describing office/outpatient E/M visits are not recognized under 
the OPPS and instead hospitals report HCPCS code G0463 (Hospital 
outpatient clinic visit for assessment and management of a patient) 
when billing for the facility costs associated with an outpatient E/M 
visit. Therefore, we proposed to not recognize the telemedicine E/M 
code set under OPPS. We invited comment on the hospital resources 
associated with the telemedicine E/M services, particularly any 
resource costs that would not be included in the payment for HCPCS code 
G0463. We also invited comment, should CMS finalize separate payment 
for these telemedicine E/M codes under the PFS, on the resource costs 
that would be associated with these services for hospitals and whether 
we should develop separate coding to describe the resource costs 
associated with a telemedicine E/M service.
    We received public comments on the proposal. The following is a 
summary of the comments we received and our responses.
    Comment: Some commenters supported our proposal to maintain our 
policy of not recognizing office/outpatient E/M visits, including those 
furnished via telemedicine, as payable under the OPPS and instead using 
HCPCS code G0463 to capture the associated facility costs. Other 
commenters recommended that CMS allow HCPCS code G0463 to be reported 
when the beneficiary is not physically in the hospital, while others 
encouraged CMS to provide separate payment for the telemedicine E/Ms, 
including recommending clinical APC assignments.
    Response: We thank commenters for the additional information and 
may consider this issue, including any refinements to our clinic visit 
policy, for future rulemaking. As we are not finalizing payment for the 
telemedicine E/M CPT codes under the PFS, we do not believe there is a 
programmatic need to recognize these codes for payment under the OPPS.
    After consideration of the public comments we received, we are 
finalizing our proposal not to recognize the telemedicine E/M code set 
under the OPPS as proposed.

B. Virtual Direct Supervision of Cardiac Rehabilitation (CR), Intensive 
Cardiac Rehabilitation (ICR), Pulmonary Rehabilitation (PR) Services 
and Diagnostic Services Furnished to Hospital Outpatients

1. Background
a. Virtual Direct Supervision of CR, ICR and PR Services Furnished to 
Hospital Outpatients (42 CFR 410.27(a)(1)(B)(1))
    In the interim final rule with comment period titled ``Policy and 
Regulatory Provisions in Response to the COVID-19 Public Health 
Emergency,'' published on April 6, 2020 (the April 6th COVID-19 IFC) 
(85 FR 19230, 19246, 19286), we changed the regulation at 42 CFR 
410.27(a)(1)(iv)(D) \153\ to provide that, during a Public Health 
Emergency as defined in 42 CFR 400.200, the presence of the physician 
for purposes of the direct supervision requirement for PR, CR, and ICR 
services includes virtual presence through audio/video real-time 
communications technology when use of such technology is indicated to 
reduce exposure risks for the beneficiary or health care provider. 
Specifically, the required direct physician supervision can be provided 
through virtual presence using audio/video real-time communications 
technology (excluding audio-only) subject to the clinical judgment of 
the supervising practitioner. We further amended Sec.  
410.27(a)(1)(iv)(B) \154\ in the CY 2021 OPPS/ASC final rule with 
comment period to provide that this flexibility continues until the 
later of the end of the calendar year in which the PHE as defined in 
Sec.  400.200 ends or December 31, 2021 (85 FR 86113 and 86299). In the 
CY 2021 OPPS/ASC final rule with comment period we also clarified that 
this flexibility excluded the presence of the supervising practitioner 
via audio-only telecommunications technology (85 FR 86113).
---------------------------------------------------------------------------

    \153\ In the CY 2023 OPPS/ASC final rule with comment period, we 
removed Sec.  410.27(a)(1)(iv)(D) in its entirety and added its 
language regarding pulmonary rehabilitation, cardiac rehabilitation, 
and intensive cardiac rehabilitation services and the virtual 
presence of a physician through audio/video real-time communications 
technology during the PHE to the newly designated Sec.  
410.27(a)(1)(iv)(B)(1) (87 FR 72024).
    \154\ Ibid.
---------------------------------------------------------------------------

    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized a policy to extend the revised definition of direct 
supervision of CR, ICR, and PR to include the presence of the 
supervising practitioner through two-way, audio/video 
telecommunications technology until December 31, 2023 (87 FR 72019 and 
72020). In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized a policy to further revise Sec.  410.27(a)(1)(iv)(B)(1) \155\ 
to allow for the direct supervision requirement for CR, ICR, and PR to 
include the virtual presence of the physician through audio-video real-
time communications technology (excluding audio-only) through December 
31, 2024, and to extend this policy to the nonphysician practitioners, 
that is NPs, PAs, and CNSs, who were eligible to supervise these 
services beginning in CY 2024 (88 FR 81863 through 81867).
---------------------------------------------------------------------------

    \155\ Ibid.
---------------------------------------------------------------------------

b. Virtual Direct Supervision of Diagnostic Services Furnished to 
Hospital Outpatients (42 CFR 410.28(e)(2)(iii))
    In the April 6th COVID-19 IFC, for consistency with the revisions 
made to 42 CFR 410.27(a)(1)(iv)(D) \156\ and 410.32(b)(3)(ii), we 
changed the regulation at 42 CFR 410.28(e) to provide that, during a 
Public Health Emergency as defined in 42 CFR 400.200, the presence of 
the physician for purposes of the direct supervision requirement for 
diagnostic services includes virtual presence through audio/video real-
time communications technology when use of such technology is indicated 
to reduce exposure risks for the beneficiary or health care provider 
(85 FR 19245 and 19246).
---------------------------------------------------------------------------

    \156\ Ibid.
---------------------------------------------------------------------------

    In the CY 2023 OPPS/ASC final rule with comment period, to ensure 
consistency with additional revisions made to 42 CFR 
410.27(a)(1)(iv)(B)(1) and 410.32(b)(3)(ii) extending the end date of 
the flexibility allowing for the virtual supervision of the services 
governed by those regulations, we revised Sec.  410.28(e) to extend the 
end date of the flexibility allowing for the virtual supervision of 
outpatient diagnostic services through audio/video real-time 
communications technology (excluding audio-only) from the end of the 
PHE to the end of the calendar year

[[Page 94279]]

in which the PHE ends (87 FR 72024 through 72026).
    In the CY 2024 final OPPS rule with comment period, to again ensure 
consistency with further revisions made to 42 CFR 
410.27(a)(1)(iv)(B)(1) and 410.32(b)(3)(ii) extending the end date of 
the flexibility allowing for the virtual supervision of the services 
governed by those regulations, we revised Sec.  410.28(e) to extend the 
end date of the flexibility allowing for the virtual supervision of 
outpatient diagnostic services through audio/video real-time 
communications technology (excluding audio-only) through December 31, 
2024 (88 FR 81866 and 81867).
2. Extension of Virtual Direct Supervision of CR, ICR, PR Services and 
Diagnostic Services Furnished to Hospital Outpatients Through December 
31, 2025.
    In the CY 2025 PFS proposed rule, we proposed to revise the 
definition of direct supervision at Sec.  410.32(b)(3)(ii) to extend 
the availability of virtual direct supervision of therapeutic and 
diagnostic services under the PFS through December 31, 2025. As 
described in that proposed rule, we proposed this extension based on 
our concern that an immediate reversion to the pre-PHE definition of 
direct supervision would prohibit virtual direct supervision, which may 
present a barrier to access to many services that have been facilitated 
by our PHE-related policy over the past several years; and that 
physicians and other practitioners need time to reorganize their 
practice patterns established during the PHE to reimplement the pre-PHE 
approach to direct supervision without the use of audio/video 
technology.
    As we explained in the CY 2025 OPPS/ASC proposed rule, in addition 
to desiring uniformity under the PFS and OPPS in how regulations are 
applied to similarly situated providers, the beneficiary access and 
provider preparedness concerns that motivated us to propose extending 
the availability of virtual direct supervision of therapeutic and 
diagnostic services under the PFS through December 31, 2025, were also 
concerns with respect to the direct supervision of CR, ICR, PR and 
diagnostic services under the OPPS. Consequently, in the CY 2025 OPPS/
ASC proposed rule, we proposed to revise Sec. Sec.  
410.27(a)(1)(iv)(B)(1) and 410.28(e)(2)(iii) to allow for the direct 
supervision of CR, ICR, PR services and diagnostic services via audio-
video real-time communications technology (excluding audio-only) 
through December 31, 2025.
    The following is a summary of the comments we received on the 
proposal and our responses to those comments.
    Comment: All commenters supported our proposal to make conforming 
revisions to Sec. Sec.  410.27 and 410.28 to allow for the direct 
supervision of CR, ICR, PR services and diagnostic services via audio-
video real-time communications technology (excluding audio-only) 
through December 31, 2025. These commenters indicated that this 
extension would reduce burden on providers, ensure the continuity of 
ongoing services, allow more time for providers to reorganize and 
readjust policies to meet pre-PHE requirements, improve patient access 
to historically underutilized services and be of particular value in 
rural and other underserved areas where workforce shortages remain 
acute.
    Response: We thank commenters for their support.
    Comment: Many commenters additionally requested that the 
availability of virtual direct supervision of these services be made 
permanent, arguing that virtual supervision has been in place long 
enough for its safety to have been established and any serious problems 
identified. One commenter expressed concern that if virtual supervision 
was not made permanent it would be more difficult to recruit and retain 
non-physician staff with the necessary training and experience to 
safely deliver services under virtual supervision and to recruit and 
retain physicians who can effectively provide virtual supervision 
because those staff and physicians would be concerned that the policy 
enabling remote supervision is temporary and could be revoked within a 
year. One commenter requested that once the virtual supervision of 
these services is made permanent that CMS retire the requirement for a 
service-level modifier to identify when direct supervision is provided 
via appropriate telehealth technology.
    Response: We appreciate the commenters' suggestions to make the 
virtual direct supervision of CR, ICR, PR and diagnostic services 
permanent and will take them under consideration for future rulemaking 
as we continue to evaluate safety, quality of care, and other 
considerations related to virtual direct supervision.
    Comment: One commenter, while supporting the proposed extension, 
specifically requested that the extension not be made permanent. The 
commenter opined that permanently allowing for the virtual direct 
supervision of CR, ICR, PR and diagnostic services would be undesirable 
because it would increase the amount of physician ``incident to'' 
billing (a Medicare billing provision that applies in the office or 
clinic setting and allows medical services to be performed by auxiliary 
personnel as an incident to the services of the billing practitioner 
and under their supervision) for services provided by PAs and NPs, 
which would obscure the extent to which PAs and NPs are actually 
performing the services.
    Response: We appreciate the commenter's input regarding the 
appropriate attribution of services performed by PAs and NPs when those 
services are billed ``incident to'' a physician's service and we look 
forward to reviewing the information provided as we consider the most 
appropriate way to balance patient safety concerns with the interest of 
supporting access that we may address in future rulemaking. We 
reiterate that we did not propose to extend the availability of the 
direct supervision of CR, ICR, PR services and diagnostic services via 
audio-video real-time communications technology (excluding audio-only) 
beyond December 31, 2025.
    Comment: One commenter requested that audio-only virtual 
supervision of CR, ICR and PR be allowed during system downtimes or 
situations where patients may not be comfortable or willing to 
participate in the video portion of the supervision of their CR, ICR, 
and PR. The commenter also contended that allowing this flexibility 
would reduce barriers to care for patients with disabilities or 
mobility issues who might have trouble getting into a physical 
location.
    Response: We appreciate the commenter's suggestion that we allow 
for the virtual supervision of CR, ICR, and PR to be provided via 
audio-only, however, under the applicable definition of direct 
supervision, the physician/practitioner is required to be available 
using both audio and video. As a reminder, direct supervision means 
that the physician or nonphysician practitioner must be immediately 
available to furnish assistance and direction throughout the 
performance of the procedure. We have traditionally defined 
``immediately available'' to require the physical presence of the 
supervising practitioner, given the importance of certain services 
being furnished under direct supervision to ensuring quality of care 
and patient safety, and in particular the ability of the supervising 
practitioner to intervene if complications arise. As we continue to 
evaluate safety, quality of care, and other considerations related to 
virtual direct supervision and the role of virtual direct supervision 
after the COVID-19

[[Page 94280]]

PHE, we proposed to temporarily extend the availability of virtual 
direct supervision of therapeutic and diagnostic services only through 
December 31, 2025. To ensure quality of care and patient safety, any 
direct supervision furnished remotely will continue to require the use 
of real-time audio and visual interactive telecommunications 
technology. We note that does not necessarily mean that any interaction 
between the patient and the physician/practitioner supervising the 
service would require a video component.
    Comment: One commenter questioned whether patient access to care is 
fully addressed by the virtual supervision of CR services in the 
absence of nationally available free or low-income access to broadband 
quality technology and telecommunications services. The commenter 
requested that CMS simultaneously adjust the facility and non-facility 
policies and prices under the Physician Fee Schedule (PFS) for 
outpatient CR services (HCPCS codes 93797 or 93798) so that Medicare 
pays hospital outpatient departments the PFS non-facility price at 
higher than current rates to allow facilities to subsidize the cost of 
supplying patients with broadband internet technologies for the 
duration of their enrollment in cardiac rehabilitation sessions.
    Response: We appreciate the commenter's suggestion, but we note 
this comment is out of scope for this final rule.
    Comment: One commenter encouraged CMS to consider additional 
services that could be safely supervised virtually in future years.
    Response: We thank the commenter for their input and will consider 
taking it under consideration in future rulemaking.
    Comment: Two commenters requested that CMS allow for CR and ICR to 
be provided virtually to patients in their homes, contending that CMS 
has the authority to do so under existing statute. These commenters 
stated that CMS has the authority under section 1861(eee) of the Act to 
(1) designate a patient's home as a setting for delivery of CR and ICR 
services and (2) allow CR and ICR services to be delivered virtually.
    Response: We appreciate commenters' suggestion that section 
1861(eee) of the Act provides the authority to furnish virtual CR and 
ICR services to outpatients in their homes and we will take their 
interpretation under consideration in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing, without modification, our proposal to revise Sec. Sec.  
410.27(a)(1)(iv)(B)(1) and 410.28(e)(2)(iii) to allow for the direct 
supervision of CR, ICR, PR services and diagnostic services via audio-
video real-time communications technology (excluding audio-only) 
through December 31, 2025.

C. All-Inclusive Rate (AIR) Add-On Payment for High-Cost Drugs Provided 
by Indian Health Service and Tribal Facilities

1. Background
    In the CY 2000 OPPS final rule (65 FR 18434), CMS implemented the 
PPS for hospital outpatient services furnished to Medicare 
beneficiaries, as set forth in section 1833(t) of the Act. In this 
final rule, we noted that the OPPS applies to covered hospital 
outpatient services furnished by all hospitals participating in the 
Medicare program with a few exceptions. We identified one of these 
exceptions as ``outpatient services provided by hospitals of the Indian 
Health Service (IHS).'' We stated that these services would ``continue 
to be paid under separately established rates which are published 
annually in the Federal Register'' and, in the CY 2002 OPPS/ASC final 
rule (66 FR 59856), we finalized a revision to Sec.  419.20 (Hospitals 
subject to the hospital outpatient prospective payment system) by 
adding paragraph (b)(4), which specifies that hospitals of the IHS are 
excluded from the OPPS.
    In the intervening years, IHS and tribal facilities have been paid 
under the separately established All-Inclusive Rate (AIR). On an annual 
basis, the IHS calculates and publishes, in the Federal Register, 
calendar year reimbursement rates.\157\ Due to the higher cost of 
living in Alaska, separate rates are calculated for Alaska and the 
lower 48 States. For CY 2024, the Medicare Outpatient per Visit Rate is 
$667 for the lower 48 states and $961 for Alaska.\158\
---------------------------------------------------------------------------

    \157\ https://www.ihs.gov/BusinessOffice/reimbursement-rates/.
    \158\ 88 FR 87789 (December 19, 2023); https://www.federalregister.gov/documents/2023/12/19/2023-27815/reimbursement-rates-for-calendar-year-2024.
---------------------------------------------------------------------------

    IHS and tribal facilities have continued to expand the breadth of 
services that they provide to their communities. Increasingly, this has 
meant providing higher-cost drugs and biologics (hereinafter referred 
to as ``drugs'') along with more complex and expensive services. While 
the majority of IHS and tribal facilities appear to be well served by 
the AIR, some IHS and tribal facilities provide specialized services 
for which the AIR might not adequately represent Medicare's share of 
costs. If providing a drug or service costs IHS and tribal facilities 
thousands of dollars more than the payment they receive through the 
AIR, it is likely not financially feasible for these facilities to 
routinely provide that drug or service. For example, the cost of 
providing a frequently used cancer drug such as Opdualag (HCPCS code 
00003-7125), which has a per day cost of $28,975, greatly exceeds the 
$667 payment an IHS or tribal facility receives through the AIR. We are 
concerned that, if payments under the AIR are inadequate for high-cost 
drugs, this could potentially threaten the viability of the few IHS and 
tribal hospital outpatient specialty programs currently in operation 
and provide less incentive to IHS hospitals and tribal facilities not 
currently offering specialty services to begin doing so. This 
constitutes a significant equity and beneficiary access concern if IHS 
and tribal hospitals are not able to provide oncology services or other 
services that require high-cost drugs because the hospital would always 
receive payment for those services that is far below what it would have 
to pay to acquire those high-cost drugs.
    Consequently, in the CY 2024 OPPS/ASC proposed rule, we sought 
comment on whether Medicare should pay separately for certain high-cost 
drugs provided by IHS and tribal facilities and, if so, how we might do 
so. Among other topics, we specifically requested input on which drugs 
it would be appropriate to pay separately for (high-cost oncology drugs 
or all high-cost drugs), how we might define high-cost drugs (for 
example, a list of named drugs versus any drugs exceeding a certain 
cost threshold), and what the appropriate payment amount for the 
separately paid drugs should be (ASP plus 6 percent, which is what 
hospitals are generally paid under the OPPS for separately payable 
drugs, or the Federal Supply Schedule (FSS), which is where IHS and 
tribal hospitals acquire the majority of their drugs at rates 
significantly lower than ASP plus 6 percent). For a full discussion of 
the comment solicitation, we refer readers to the CY 2024 OPPS/ASC 
proposed rule (88 FR 49741 through 49742).
    Commenters, including a tribal facility, the CMS Tribal Technical 
Advisory Group (TTAG), organizations representing tribal healthcare 
providers, pharmaceutical companies, and other interested parties, 
expressed universal support for establishing a policy that would allow 
IHS and tribal healthcare facilities to receive separate payment 
outside of the AIR for high-cost drugs. The preferred approach of those

[[Page 94281]]

commenters who provided input on how to define a high-cost drug 
eligible for separate payment was to treat the amount of the Medicare 
Outpatient per Visit Rate for the lower 48 States' AIR (hereinafter 
referred to as ``the lower 48 AIR'') as a payment threshold. Under this 
approach, if the cost of a particular drug is less than or equal to the 
lower 48 AIR, the provider would not receive a separate payment for the 
drug and if the cost of the drug was more than the lower 48 AIR, then 
the provider would receive a separate payment for the drug. Commenters 
noted that this payment approach is currently being used for all drugs 
(oncology and otherwise) receiving payment through Arizona Medicaid 
(AHCCCS) for IHS and tribal facilities located in Arizona. With respect 
to the payment amount, several commenters requested that separately 
payable drugs furnished by IHS and tribal facilities be paid at a rate 
of ASP plus 6 percent rather than the FSS rate. These commenters argued 
that the IHS is chronically underfunded and that paying ASP plus 6 
percent for high-cost drugs could help with remedying those funding 
issues. For a full discussion of the comments we received as a result 
of our comment solicitation and our responses to those comments, we 
refer readers to the CY 2024 OPPS/ASC final rule with comment period 
(88 FR 81896 through 81897).
2. AIR Add-On Payment for High-Cost Drugs Provided by Indian Health 
Service and Tribal Facilities
    In light of the equity and beneficiary access concerns that 
prompted our CY 2024 comment solicitation and the input received in 
response to that solicitation, in the CY 2025 OPPS/ASC proposed rule we 
proposed, starting January 1, 2025, to separately pay IHS and tribal 
hospitals \159\ for high-cost drugs furnished in hospital outpatient 
departments through an add-on payment in addition to the AIR using the 
authority under which the annual AIR is calculated.\160\ We emphasized 
that the amount of the proposed add-on payment would not be carved out 
of the annual AIR payment amount calculation. In other words, we 
proposed that the add-on payment would have no effect on the 
calculation of the annual AIR payment amount. We invited comment on 
separately paying IHS and tribal hospitals for high-cost drugs 
furnished in hospital outpatient departments through the establishment 
of an add-on payment to the AIR using the authority under which the 
annual AIR is calculated.
---------------------------------------------------------------------------

    \159\ IHS Critical Access Hospitals (CAHs) are paid for covered 
outpatient services based on 101 percent of an all-inclusive 
facility specific rate rather than the national AIR rate. 
Consequently, they are excluded from the proposed separate payment 
policy.
    \160\ Sections 321(a) and 322(b) of the Public Health Service 
Act (42 U.S.C. 248), Public Law 83-568 (42 U.S.C. 2001(a)), and the 
Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
---------------------------------------------------------------------------

    Comment: All commenters on the proposed policy supported separately 
paying IHS and tribal hospitals for high-cost drugs furnished in 
hospital outpatient departments through the establishment of an add-on 
payment to the AIR using the authority under which the annual AIR is 
calculated. These commenters cited as the basis for their support the 
need to address beneficiary equity and access concerns resulting from 
the current payment policy for high-cost drugs under the AIR, historic 
and ongoing health disparities of American Indian and Alaska Native 
people compared to other Americans, including lower life expectancy, 
disproportionate disease burden and higher rates of colorectal, kidney, 
liver, lung, and stomach cancers, ensuring the continued viability of 
IHS and tribal hospital outpatient specialty programs currently in 
operation and enabling IHS and tribal facilities not currently offering 
specialty services to begin doing so. Several of these commenters 
additionally expressed support for the exclusion of the add-on payment 
from the calculation of the annual AIR payment, stating that it was a 
critically important component of the proposal because it would ensure 
that the add-on payment would have no effect on IHS and tribal 
facilities that do not seek reimbursement for high-cost drugs.
    Response: We thank the commenters for their support.
    After consideration of the public comments we received on the 
proposed policy to separately pay IHS and tribal hospitals for high-
cost drugs furnished in hospital outpatient departments through the 
establishment of an add-on payment to the AIR using the authority under 
which the annual AIR is calculated and to exclude the add-on payment 
from the calculation of the annual AIR payment, we are finalizing the 
policy as proposed.
    In the CY 2025 OPPS/ASC proposed rule, we proposed that the drugs 
to which the add-on payment would apply would not be limited to high-
cost oncology drugs but would include all high-cost drugs furnished in 
hospital outpatient departments of IHS and tribal hospitals to the 
extent those drugs were covered under Medicare Part B and would be paid 
for under the OPPS if furnished by a hospital paid under that system. 
In determining which drugs would be eligible for the add-on payment, we 
considered limiting the add-on payment to high-cost oncology drugs. 
However, as we discussed in the CY 2025 OPPS/ASC proposed rule, we 
determined that it would be appropriate to apply the add-on payment to 
all high-cost drugs for several reasons. First, the same equity and 
access concerns that supported utilizing an add-on payment for oncology 
drugs also supported utilizing an add-on for high-cost drugs used in 
other care specialties. Although this issue arose in the context of 
removing barriers to beneficiaries' access to high-cost oncology drugs, 
we concluded that there were presumably similar barriers to other 
specialties that used high-cost drugs that would be addressed through a 
broader application of the add-on payment. Second, we determined that 
applying the add-on payment to all high-cost drugs would eliminate the 
possibility of unintentionally excluding an oncology drug from separate 
payment due to the inherent challenge of defining a class of drugs. 
Third, the proposal would parallel how drugs are being paid for under 
Arizona Medicaid (AHCCCS) for IHS and tribal facilities. In the CY 2025 
OPPS/ASC proposed rule we invited comment on applying the add-on 
payment to all high-cost drugs furnished in hospital outpatient 
departments of IHS and tribal hospitals to the extent those drugs were 
covered under Medicare Part B and would be paid for under the OPPS if 
furnished by a hospital paid under that system.
    Comment: Several commenters supported applying the add-on payment 
to all high-cost drugs furnished in hospital outpatient departments of 
IHS and tribal hospitals to the extent those drugs are covered under 
Medicare Part B and would be paid for under the OPPS if furnished by a 
hospital paid under that system. These commenters observed that there 
are many other types of high-cost drugs that can be administered in an 
outpatient hospital setting that are unrelated to oncology and that the 
same equity and access concerns that support an add-on payment for 
high-cost oncology drugs applies to other high-cost drugs.
    Response: We thank the commenters for their support.
    After consideration of the public comments we received on the 
proposed policy to apply the add-on payment to all high-cost drugs 
furnished in hospital outpatient departments of IHS and tribal 
hospitals to the extent those drugs are covered under Medicare Part B 
and would be paid for under the OPPS if furnished by a hospital paid 
under that

[[Page 94282]]

system, we are finalizing the policy as proposed.
    As to what constitutes a high-cost drug, we proposed in the CY 2025 
OPPS/ASC proposed rule to define high-cost drugs for the purpose of the 
policy as all drugs covered under Medicare Part B and for which payment 
would otherwise be made under the OPPS whose per day cost exceeds two 
times the lower 48 AIR ($1,334 in CY 2024). We proposed a threshold 
greater than the lower 48 AIR to account for the fact that IHS and 
tribal hospitals would continue to receive the lower 48 AIR payment, in 
addition to the add-on payment, for encounters that include a high-cost 
drug. While we acknowledged that it was true that under the Arizona 
Medicaid program, IHS and tribal hospitals are paid the lower 48 AIR 
payment in addition to an add-on payment for drugs whose costs exceed 
the lower 48 AIR, we were concerned that providing separate payment for 
drugs whose costs only slightly exceed the lower 48 AIR could result in 
excessive payment for those drugs. For example, we pointed out that for 
a drug costing $700, using the CY 2024 lower 48 AIR as the threshold 
for our proposal would result in a payment of at least $1,367 (the $667 
lower 48 AIR encounter payment plus an add-on payment for the high-cost 
drug as calculated under the payment methodology we proposed in the CY 
2025 OPPS/ASC proposed rule) for the provision of a drug whose cost 
exceeds the lower 48 AIR by only $33.00. We concluded that such an 
outcome would be at odds with the objective of the proposed policy, 
which was to provide adequate payment for drugs that are high cost in 
relation to the lower 48 AIR. Consequently, in the CY 2025 OPPS/ASC 
proposed rule, we proposed two times the lower 48 AIR as the threshold 
triggering the add-on payment because that amount would ensure that the 
add-on payment would apply only to drugs whose costs significantly 
exceed the lower 48 AIR. The proposed cost-multiplier approach was also 
consistent with how CMS has implemented thresholds relating to payments 
to hospitals under other payment systems. For example, the OPPS outlier 
policy \161\ requires that the cost of a service exceed 1.75 times the 
payment amount for the service to qualify for an additional payment. 
Similarly, the OPPS two-times rule requires that the highest calculated 
cost of an individual procedure categorized to any given Ambulatory 
Payment Classification (APC) not exceed two times the calculated cost 
of the lowest cost procedure categorized to that same APC.
---------------------------------------------------------------------------

    \161\ 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. Outlier payments are provided on a 
service basis when the cost of a service exceeds the APC payment 
amount multiplier threshold (the APC payment amount multiplied by 
1.75) as well as the APC payment amount plus a fixed-dollar amount 
threshold (the APC payment plus a certain dollar amount).
---------------------------------------------------------------------------

    In the CY 2025 OPPS/ASC proposed rule, we stated that an 
alternative to our proposal to set the threshold at two times the lower 
48 AIR would be to set the threshold at the lower 48 AIR despite our 
concerns about excessive payment. We also stated that another 
alternative would be to set the threshold at 1.75 times the lower 48 
AIR ($1,167.25 in CY 2024) to align it with the multiplier used to 
calculate the threshold triggering outlier payments under the OPPS. In 
the CY 2025 OPPS/ASC proposed rule, we invited comment on the 
alternatives of using the lower 48 AIR or 1.75 times the lower 48 AIR 
as the threshold amount for triggering the add-on payment for high-cost 
drugs.
    Comment: Three commenters provided input on setting the threshold 
at the lower 48 AIR, agreeing with CMS that providing a separate 
payment for drugs whose costs only slightly exceed the lower 48 AIR 
could result in excessive payment because the facility would be 
receiving the lower 48 AIR payment plus the add-on payment for the 
drug.
    Response: We thank commenters for their feedback.
    Comment: Four commenters suggested that we set the threshold at 
1.75 times the lower 48 AIR. Three of these commenters argued that the 
threshold be set at 1.75 times the lower 48 AIR because (1) doing so 
would align it with the multiplier used to calculate the threshold 
triggering outlier payments under the OPPS and (2) there were, based on 
the proposed rule data and example threshold of $1,334, three high-use 
drugs (Bendeka [Bendamustine HCL], Xembify [immune globulin] and 
Neulasta On-Pro [Pegfilgrastim]) that would not qualify for the add-on 
payment if the threshold was two times the lower 48 AIR but would 
qualify for the add-on payment if the threshold was 1.75 times the 
lower 48 AIR and one high-use drug (Vivitrol [Naltrexone]) that would 
qualify for the add-on payment if the threshold was two times the lower 
48 AIR but was sufficiently close to the threshold that it could easily 
fall below the threshold and not qualify for separate payment in the 
future.
    Response: We appreciate the commenters' preference for using 1.75 
times the lower 48 AIR, but our view is that two times the lower 48 AIR 
is the most appropriate threshold to use as it would best ensure that 
only those drugs whose costs significantly exceed the amount of the 
annual lower 48 AIR payment would qualify for the add-on payment. It is 
also consistent with the two-times rule the OPPS uses to determine 
Ambulatory Payment Classification (APC) levels and the calculation of 
the diagnostic radiopharmaceutical packaging threshold that that we are 
finalizing in section II.A.3.c.(2) of this rule. With respect to the 
four high-use drugs referenced by the commenters, using final rule 
data, Bendeka and Xembify have per day costs that are well above $1,334 
and thus qualify for the add-on payment under two times the lower 48 
AIR threshold. Neulasta has a per day cost significantly below the 
lower 48 AIR of $667 and thus would not qualify for the add-on payment 
under any threshold that we are considering. Vivitrol has a per day 
cost that is slightly above $1,334 and therefore qualifies for the add-
on payment under two times the lower 48 AIR threshold. While we 
acknowledge that this closeness to the threshold could cause Vivitrol 
to fluctuate from qualifying for separate payment to not qualifying for 
separate payment on an annual basis, there will always be drugs for 
which this is true when using any threshold-based payment criterion.
    Comment: Two commenters suggested that we use non-AIR thresholds to 
calculate the list of drugs for which the add-on payment would be made. 
One of these commenters suggested that we use the standard drug 
packaging threshold of $140 to better recognize the costs for IHS and 
tribal facilities that furnish expensive drug treatment services to 
Native Americans with cancer. The other commenter, expressing concern 
that the proposed threshold was too high and might exclude some drugs 
that are clinically necessary and significantly costly for IHS and 
tribal hospitals, suggested that CMS establish a threshold based on 
CMS' specialty tier cost threshold criteria under Medicare Part D.\162\
---------------------------------------------------------------------------

    \162\ 42 CFR 423.104(d)(2)(iv).
---------------------------------------------------------------------------

    Response: We appreciate the commenters' suggested alternatives to 
using a multiple of the AIR as the threshold; however, we do not think 
that these thresholds would achieve the objective of providing a 
separate add-on payment only for drugs that greatly exceed the lower 48 
AIR.

[[Page 94283]]

    Comment: One commenter suggested that, regardless of which approach 
CMS selects to determine the high-cost threshold, that CMS 
``categorically apply separate payment'' for biosimilar \163\ products 
when administered in IHS and tribal facilities. The commenter observes 
that American Indians and Alaska Natives experience disparities in 
healthcare access and outcomes and argues that by ensuring that 
biosimilar products are financially accessible in IHS and tribal 
facilities, CMS would be taking a step toward reducing these 
disparities and promoting health equity. The commenter also stated that 
a ``separate payment system'' for biosimilar products could also 
incentivize their use over more expensive reference products, fostering 
a competitive market that may, in turn, lead to further reductions in 
prescription drug costs over time.
---------------------------------------------------------------------------

    \163\ A biosimilar is a biologic medication. It is highly 
similar to a biologic medication already approved by FDA--the 
original biologic (also called the reference product).
---------------------------------------------------------------------------

    Response: It isn't entirely clear what the commenter means by 
``categorically apply separate payment'' for biosimilar products or a 
``separate payment system'' for biosimilar products, but it appears 
that the commenter is suggesting that all biosimilars be paid for 
separately when furnished by an IHS or tribal hospital outpatient 
department regardless of the payment threshold. We appreciate the 
commenter's suggestion; however, we do not think that paying separately 
for all biosimilars would achieve the objective of providing a separate 
add-on payment only for drugs and biologicals that greatly exceed the 
lower 48 AIR.
    After consideration of the public comments we received on the 
proposed policy to define high-cost drugs as all drugs covered under 
Medicare Part B and for which payment would otherwise be made under the 
OPPS whose per day cost exceeds two times the lower 48 AIR ($1,334 in 
CY 2024), we are finalizing the policy as proposed.
    We also sought comment in the CY 2025 OPPS/ASC proposed rule on 
whether we should adopt an exception to whichever AIR-based threshold 
we adopted that would parallel the drug packaging threshold exception 
for biosimilars under the OPPS. As we explained in the CY 2025 OPPS/ASC 
proposed rule, under the OPPS, if a drug's per-day cost is less than or 
equal to the drug packaging threshold, then payment for the drug is 
packaged. Conversely, if a drug's per-day cost exceeds the drug 
packaging threshold, then it is paid for separately (unless it is 
policy packaged). For a more detailed discussion of the drug packaging 
threshold, we referred readers to the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81776 through 81778). In CY 2024, we established 
an exception to this threshold for biosimilars when the biosimilar's 
per-day cost does not exceed the threshold, but its reference product's 
per-day cost does. In other words, if the biosimilar's reference 
product is paid separately (because its per-day cost exceeds the 
threshold), then we also pay separately for the biosimilar even if its 
per-day cost does not exceed the threshold. This exception was based on 
our concern that packaging biosimilars when the reference product or 
other marketed biosimilars are separately paid might create financial 
incentives for providers to select more expensive, but clinically 
similar, products. For a more detailed discussion of the exception for 
biosimilars to the drug packaging threshold, we referred readers to the 
CY 2024 OPPS/ASC final rule with comment period (88 FR 81783 through 
81786). Because we proposed to use a threshold to trigger application 
of the add-on payment for high-cost drugs to IHS and tribal hospitals, 
we stated that we had the same concerns about financial incentives that 
motivated us to establish the exception for biosimilars to the drug 
packaging threshold. Consequently, in the CY 2025 OPPS/ASC proposed 
rule, we sought comment on whether we should pay the add-on payment to 
IHS and tribal hospitals for biosimilars whose per-day costs do not 
exceed the threshold but whose reference products per-day costs do 
exceed the threshold.
    Comment: We received several comments on whether we should pay the 
add-on payment to IHS and tribal hospitals for biosimilars whose per-
day costs do not exceed the threshold but whose reference products do 
exceed the threshold. All commenters supported doing so, indicating 
that they shared CMS' concerns that packaging biosimilars when the 
reference product is separately paid might create financial incentives 
for providers to select more expensive but clinically similar products.
    Response: We thank the commenters for their feedback and, based on 
this feedback, we will adopt a drug packaging threshold exception for 
biosimilars in which we will pay the add-on payment to IHS and tribal 
hospitals for biosimilars whose per-day costs do not exceed the 
threshold of two times the lower 48 AIR but whose reference products do 
exceed the threshold.
    In the CY 2025 OPPS/ASC proposed rule, we also proposed that the 
amount of the add-on payment for a high-cost drug would be the average 
sales price (ASP) for the drug with no additional payment (i.e., ASP). 
We explained that this payment amount would be consistent with what 
hospitals receive as payment for most drugs under the OPPS (ASP plus 6 
percent) but would exclude the 6 percent additional payment in 
recognition of the fact that IHS and tribal facilities, unlike 
hospitals paid under the OPPS, primarily obtain their drugs through the 
FSS, whose rates are significantly lower than ASP. We also emphasized 
that this approach would be consistent with our existing policies of 
paying ASP without any additional payment for certain Opioid Treatment 
Program drugs under 42 CFR 410.67(d)(2)(i)(A) and (B). In the event ASP 
pricing information was not available for a particular drug, we 
proposed to pay the Wholesale Acquisition Cost (WAC) plus 0 percent and 
if WAC pricing information was not available, we proposed to pay 89.6 
percent of Average Wholesale Price (AWP).
    In the CY 2025 OPPS/ASC proposed rule, we sought comment on an 
alternative policy of paying ASP plus 6 percent instead of ASP plus 0 
percent. We also proposed that if we were to adopt this alternative 
policy and pricing information was not available for a particular drug, 
we would pay WAC plus 6 percent and if WAC pricing information was not 
available, we would pay 95 percent of AWP. We sought comment on our 
proposal to pay an add-on of ASP plus 0 percent in addition to the 
lower 48 AIR for drugs administered by IHS and tribal facilities with 
costs that exceed two times the lower 48 AIR. We also sought comment on 
our proposed pricing hierarchy for drugs for which ASP pricing 
information was not available.
    Comment: Three tribal commenters supported paying ASP with no 
additional payment. In their view this would adequately compensate IHS 
and tribal hospital outpatient departments for their costs because the 
facilities would be receiving both the add-on payment for the drug and 
the lower 48 AIR encounter payment.
    Response: We thank commenters for their support.
    Comment: Multiple commenters suggested that the payment amount for 
the add-on payment should be ASP plus 6 percent. One of these 
commenters additionally requested that CMS pay ASP plus 8 percent for 
certain

[[Page 94284]]

qualifying biosimilar products. Many of these commenters argued that 
paying ASP plus 6 percent is necessary to ensure access to high-cost 
drugs because only ASP plus 6 percent adequately reflects the true 
acquisition and administration costs of high-cost drugs. Some of these 
commenters, while acknowledging that IHS and tribal facilities 
primarily obtain their drugs through the FSS, argued that not all IHS 
and tribal facilities might have access to the FSS and that not all 
drugs are necessarily available through the FSS. One commenter 
expressed concern that providers might perceive reimbursement without 
the 6 percent add-on as a ``penalty'' for furnishing higher-cost drugs 
in these settings. Finally, some of these commenters argued that CMS 
should pay ASP plus 6 percent for consistency with how separately 
payable Part B drugs are reimbursed in the OPPS setting.
    Response: We thank the commenters for their input and share their 
concerns that the payment amount for separately paid for drugs reflect 
the acquisition and administration costs of those drugs and that IHS 
and tribal hospital outpatient departments be paid consistently with 
how outpatient hospital departments are paid for drugs under the OPPS. 
However, it is our view that paying ASP plus 0 percent would achieve 
these goals. We believe that ASP with no add-on payment captures the 
acquisition and administration costs of the drugs given that (1) IHS 
and tribal facilities acquire most of their drugs through the FSS at 
rates significantly lower than ASP plus 6 percent; and (2) IHS and 
tribal facilities will continue to receive the lower 48 AIR payment for 
the encounter in addition to the add-on payment for the drug. Given 
these two factors, we believe that an add-on payment equal to ASP is 
sufficient.
    With respect to paying IHS and tribal hospital outpatient 
departments consistently with how we pay hospital outpatient 
departments under the OPPS, our view is that paying IHS and tribal 
hospital outpatient departments ASP with no additional add-on is 
consistent with how we pay hospital outpatient departments under the 
OPPS given the differences in how hospitals under the two payment 
systems primarily acquire their drugs. As we stated in our proposed 
rule, our rationale for paying ASP was to pay IHS and tribal hospitals 
the same rate we pay hospital outpatient departments under the OPPS for 
separately payable drugs, while excluding the 6 percent add-on in 
recognition of the fact that IHS and tribal hospitals, unlike hospitals 
under the OPPS, primarily acquire their drugs through the FSS at a 
significantly lower rate than hospitals under the OPPS.
    Comment: Three commenters expressed support for our proposed 
pricing hierarchy for drugs for which ASP pricing information is not 
available. These commenters indicated that there may be many times when 
new drugs are available for which an ASP has not yet been set and the 
proposed hierarchy would allow IHS and tribal facilities to be 
reimbursed for those high-cost drugs at these other rates until an ASP 
is set. Without such a hierarchy in place, these commenters warned, 
many new drugs would not be eligible for the add-on payment.
    Response: We thank commenters for their support.
    After consideration of the public comments we received on the 
proposed policy to set the amount of the add-on payment for a high-cost 
drug at ASP with no additional payment (ASP plus zero percent) and the 
proposed pricing hierarchy for drugs for which ASP pricing information 
was not available, we are finalizing the policies as proposed.
    To implement this policy, in the CY 2025 OPPS/ASC proposed rule we 
proposed that, starting with IHS's annual announcement in the Federal 
Register in December 2024 of the lower 48 AIR amount for CY 2025, we 
would multiply the lower 48 AIR amount for the payment year by two and 
then compare the result to the estimated per day costs of all drugs 
covered under Part B for which payment would otherwise be made under 
the OPPS. To determine the calculated per day cost for each drug and 
biological HCPCS code, we proposed to follow a methodology similar to 
our longstanding methodology used to calculate the per day cost of 
drugs and biologicals for OPPS payment purposes as discussed in section 
V.B.1.b of this final rule with comment period. Specifically, to 
calculate the per day cost, we proposed to use an estimated payment 
rate based on the ASP methodology payment rate, which for purposes of 
the proposal was generally ASP plus 0 percent (which is the payment 
rate we proposed for separately payable IHS drugs and biologicals) for 
CY 2025. We used the manufacturer-submitted ASP data from the fourth 
quarter of CY 2023 to determine the proposed rule per day cost. For 
drugs and biologicals that did not have either an ASP-based payment 
rate or a payment rate based on WAC, we used mean unit cost of the 
items derived from the CY 2023 hospital claims data to determine their 
per day cost.
    In the CY 2025 OPPS/ASC proposed rule, we proposed that a list of 
drugs whose costs exceeded two times the lower 48 AIR would be 
generated using the above-described methodology and then communicated 
to IHS and tribal hospitals prior to January 1, 2025. During CY 2025, 
IHS and tribal hospitals would submit claims for drugs included on this 
list. The list of drugs would be updated on a quarterly basis using 
existing drug compendia and CMS ASP quarterly reporting only to account 
for newly introduced drugs. The payment rates for drugs on the list 
would be updated quarterly as well based on changes in drug prices. We 
proposed to then repeat this process on an annual basis each December 
when the lower 48 AIR amount for the following calendar year was 
announced by IHS. As an example, we included in our proposed rule a 
list of the drugs for which the add-on payment would have been made 
(drugs with a per day cost exceeding two times the CY 2024 lower 48 
AIR) had our proposed policy been in place for CY 2024. We sought 
comment on our proposed implementation plan.
    Comment: We received three comments specifically supporting our 
proposed implementation plan with one requested alteration. These 
commenters requested that when we annually create the list of drugs 
that qualify for the add-on payment that we use the lower 48 AIR in 
effect at the time of the release of the CY OPPS/ASC final rule with 
comment period to calculate the threshold for creating the list rather 
than waiting for IHS's release of the lower 48 AIR for the payment year 
(typically released in December). For example, to create the drug list 
for CY 2025, CMS would use the lower 48 AIR for 2024 rather than 
waiting for the release of the lower 48 AIR for 2025. These commenters 
indicated that while IHS has issued the lower 48 AIR in December in 
recent years, that has not always been the case and that in some years 
the lower 48 AIR was not released until months into the payment year. 
If that were to occur in future years, the commenters were concerned 
that it would delay the release of the drug list until after January 1 
of the payment year. Accordingly, the commenters suggested that CMS use 
the lower 48 AIR in effect at the time the final OPPS rule is released 
and then update the list in the first quarterly update during the 
payment year using the new lower 48 AIR amount once it has been 
released by IHS.
    Response: We share the commenters' concern about the release of the 
list being delayed beyond January 1 of the

[[Page 94285]]

payment year. Adopting the commenters' suggestion would allow the final 
list of covered drugs to be included in the OPPS/ASC final rule which 
must be released by November 1 of each year. In addition to ensuring 
that the list would not be delayed beyond January 1 of the payment 
year, this would also have the advantage of avoiding the operational 
complexity of having to finalize and release a covered drug list 
separately from the final OPPS rule. It would also give CMS more time 
to communicate the drug list to IHS and tribal hospitals and would 
provide those hospitals with more time to familiarize themselves with 
the list. With respect to the commenter's suggestion that we update the 
list in the next quarterly update using the new lower 48 AIR once it's 
released by IHS, we should explain that, as we stated in the proposed 
rule, the quarterly updates consist solely of adding newly introduced 
drugs to the list and updating the ASP for listed drugs. In other 
words, we will only use the lower 48 AIR once, annually, to establish 
the list of qualifying drugs for the payment year and we will not 
update that list again using the AIR during the payment year. The only 
quarterly updates will be to add new-to-market drugs with per-day costs 
that exceed two times the lower 48 AIR and to update qualifying drugs' 
ASPs, not to add to/change the list of qualifying drugs.
    For both operational simplicity and to ensure that the list of 
separately paid drugs is released prior to January 1 of each year, we 
are finalizing using the lower 48 AIR in effect at the time of the 
release of the CY OPPS/ASC final rule with comment period to annually 
create the list of drugs qualifying for the add-on payment for the 
following calendar year.
    Comment: Two commenters commented on CMS' proposed process to 
create the list of drugs qualifying for the add-on payment. One 
suggested that CMS clearly communicate to IHS facilities the final 
process to develop the list and the results of the quarterly and annual 
updates to that list. The other recommended that CMS maintain a 
transparent process that would allow manufacturers to validate the 
results and establish a process whereby manufacturers could seek to 
correct any identified errors.
    Response: We agree with the commenters on the importance of 
employing a transparent process to develop the list of high-cost drugs 
for which separate payment will be made and clearly communicating that 
process and its results to IHS and tribal facilities on an annual and 
quarterly basis. The process we are using to create the list of drugs 
qualifying for the add-on payment is described in detail earlier in 
this section. The results of that process are contained in Addendum Q 
to this final rule, which is the list of drugs qualifying for the add-
on payment for CY 2025. Quarterly updates to the list will be posted on 
the CMS website \164\ as they occur during CY 2025. Additionally, links 
to Addendum Q and the quarterly updates to the list during the calendar 
year will be posted on the IHS website \165\ and IHS will be sending 
``Dear Tribal Leader Letters'' \166\ to tribal officials informing them 
of the new policy and where the list can be found. With respect to 
allowing for the validation of the results of the process, we direct 
commenters to the cost statistics files \167\ which can be used to 
validate the results of the per day cost calculations.
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    \164\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/addendum-a-b-updates.
    \165\ https://www.ihs.gov/businessoffice/reimbursement-rates/.
    \166\ https://www.ihs.gov/newsroom/triballeaderletters/.
    \167\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient.
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    Comment: Another commenter encouraged CMS to monitor whether 
adoption of the separate payment policy will adequately facilitate 
equitable patient access to drugs administered in hospital outpatient 
facilities in tribal communities. The commenter also suggested that CMS 
consider reporting on access to drugs within American Indian/Alaskan 
Native and other racial and ethnic communities within Health and Human 
Services Dashboards, such as those produced by the IHS.
    Response: Given the health equity and beneficiary access concerns 
motivating our separate payment policy, we agree with the commenter on 
the importance of monitoring the effects of the separate payment policy 
on equitable patient access to drugs administered in hospital 
outpatient facilities in tribal communities and we plan on assessing 
the impact of our separate payment policy following its implementation. 
We will take the commenter's suggestion to report the outcome of such 
monitoring within Health and Human Services Dashboards under 
consideration for future rulemaking.
    Comment: We received a comment supporting the policy and requesting 
that we consider expanding the scope of the add-on payments to include 
other high-cost services beyond drugs, such as radiology services.
    Response: We appreciate the commenter's suggestion to expand the 
scope of the add-on payments to include other high-cost services beyond 
drugs and may consider this in future rulemaking.
    Comment: We received two comments supporting the policy and 
requesting that it be expanded to include Urban Indian Organization 
(UIOs) clinics. These commenters emphasized that UIOs are severely 
underfunded and the same equity and access concerns that support 
providing IHS and tribal facilities with the proposed AIR add-on 
payment for high-cost drugs are also relevant to the needs of UIOs.
    Response: We appreciate the commenters' suggestion; however, UIO 
clinics are not paid the outpatient AIR for hospital outpatient 
services furnished to Medicare beneficiaries and therefore are outside 
of the scope of the AIR add-on payment policy that we are finalizing in 
this rule.
    Finally, we proposed to implement this policy on a permanent basis 
but may revisit it in the future if we have any concerns about its 
impact once it has been implemented.
    Comment: We received two comments supporting our proposal to 
implement the policy on a permanent basis.
    Response: We thank the commenters for their input.
    After consideration of the public comments we received on our 
proposed plan to implement the separate payment policy, we are 
finalizing the policy as proposed except we will use the lower 48 AIR 
in effect at the time of the release of the CY OPPS/ASC final rule with 
comment period (rather than the lower 48 AIR for the payment year) to 
annually create the list of drugs qualifying for the add-on payment for 
the following calendar year.
    As discussed in the preceding sections, after consideration of the 
public comments we received, we are finalizing the policy to separately 
pay IHS and tribal hospitals for high-cost drugs furnished in hospital 
outpatient departments as proposed with modifications to (1) use the 
lower 48 AIR amount in effect at the time of the release of the CY 
OPPS/ASC final rule with comment period to calculate the threshold for 
the list of drugs qualifying for the add-on payment for the following 
calendar year and (2) adopt a drug packaging threshold exception for 
biosimilars that parallels the drug packaging threshold exception for 
biosimilars under the OPPS.

[[Page 94286]]

D. Request for Information--Paying All IHS and Tribally Operated 
Clinics the IHS Medicare Outpatient All Inclusive Rate (AIR)

    CMS established a Tribal Technical Advisory Group (TTAG) in 2004 to 
provide advice and input to CMS on policy and program issues impacting 
American Indians and Alaska Natives (AI/AN) populations served by CMS 
programs. Although not a substitute for formal consultation with tribal 
leaders, the TTAG enhances the government-to-government relationship 
between HHS and federally recognized tribes and improves understanding 
between CMS and tribes. The TTAG has subject specific subcommittees 
that meet on a regular basis in order to be more effective and perform 
in-depth analysis of Medicare, Medicaid, Children's Health Insurance 
Program (CHIP), and Health Insurance Marketplace[supreg] \168\ policies 
that may have tribal implications. The TTAG is composed of 17 
representatives. It has historically included an elected tribal leader 
or an appointed representative from each of the 12 geographic areas of 
the Indian Health Service (IHS) delivery system and a representative 
from each of the national Indian organizations headquartered in 
Washington, DC--the National Indian Health Board, the National Congress 
of American Indians, and the Tribal Self-Governance Advisory Group. 
Section 5006(e)(1) of the American Recovery and Reinvestment Act of 
2009, which became effective July 1, 2009, mandates that TTAG shall be 
maintained within CMS and added two new representatives: a 
representative from a national urban Indian health organization; and a 
representative from the IHS.
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    \168\ Health Insurance Marketplace[supreg] is a registered 
service mark of the U.S. Department of Health & Human Services.
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    In June 2020, the TTAG suggested[thinsp]that CMS amend its Medicare 
regulations to make all IHS and tribally operated outpatient facilities 
eligible for Medicare payment at the IHS Medicare outpatient per visit 
rate/AIR. The TTAG explained that outpatient clinics, which are 
otherwise similar to grandfathered tribal Federally Qualified Health 
Centers (FQHCs), are paid at different rates depending upon whether 
they meet the requirements as a provider-based facility, a 
grandfathered tribal FQHC, a non-grandfathered tribal FQHC, or none of 
the above. TTAG's position is that the rates vary based on Medicare 
regulatory definitions, rather than the actual costs of the outpatient 
clinic.\169\ There are varying payment differentials among Medicare 
enrolled providers and suppliers under the authorities of the Social 
Security Administration (SSA). For example, Ambulatory Surgical Centers 
(ASCs) are paid differently than Hospital Outpatient Departments 
(HOPDs); which are paid differently depending on whether they are 
located in a critical access hospital.
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    \169\ https://www.nihb.org/tribalhealthreform/wp-content/uploads/2020/06/TTAG-letter-to-CMS-requesting-IHS-rate-for-all-tribal-clinics-06.10.2020.pdf.
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    In the CY 2022 PFS proposed rule (86 FR 39240), we acknowledged 
that the TTAG is concerned about ensuring appropriate Medicare payments 
for similar services and is also concerned about the impact on tribal 
Medicare beneficiaries and on ensuring equitable access to healthcare. 
We take these concerns seriously but noted in the CY 2022 PFS proposed 
rule that we had insufficient information to evaluate the costs and 
benefits of potential changes to these policies. Therefore, we 
solicited comments on the TTAG's request for CMS to amend its Medicare 
regulations to make all IHS- and tribally operated outpatient 
facilities/clinics eligible for payment at the Medicare outpatient per 
visit rate/AIR, regardless of whether they were owned, operated, or 
leased by IHS. In response to the solicitation, we did not receive 
specific information on costs or specific types of clinics; however, in 
the CY 2022 PFS final rule (86 FR 65211 through 65214), we stated we 
would like to continue these discussions to evaluate the impact of the 
commenters' proposed changes to the current Medicare payment policies 
and will consider these recommendations for future rulemaking. Thus, to 
continue these discussions, we requested this information again in the 
CY 2025 proposed rule (89 FR 59394).
    Additionally, beginning in the Fall of 2023, CMS began 
participating in a workgroup related to the TTAG's Medicare priority to 
make the IHS Medicare outpatient AIR available to all IHS and tribally 
operated outpatient facilities that request it. Although we have 
received some information through the workgroup, we requested 
additional information consistent with our previous comment 
solicitation in the CY 2022 PFS proposed rule (86 FR 39238).
    We requested information on the kinds of and number of facilities 
or clinics to which the Medicare outpatient IHS AIR could apply; It was 
unclear whether TTAG anticipated that these facilities enroll in 
Medicare as FQHCs going forward, or whether they are referring to FQHCs 
that are currently paid under the FQHC Prospective Payment System 
(PPS). Moreover, we requested information on whether the facilities in 
question were freestanding or provider-based. We asked commenters to 
confirm or clarify whether the clinics are physician offices, or 
whether they are recommending establishment of a new provider type. We 
solicited information regarding the relative operating costs of 
tribally operated outpatient clinics, as well as feedback and 
supporting evidence to address whether or why payment set at the IHS 
AIR would be more appropriate than payment rates under the FQHC PPS, 
the physician fee schedule, or other some other Medicare payment 
system. Further, we solicited comment on how the Medicare outpatient 
AIR, which is based upon a limited number of hospital cost reports, 
related to costs in tribal clinics and the kinds of services that the 
clinics furnish. Finally, we solicited comment on the concerns that the 
AI/AN community may have regarding access to or inequity of care in 
situations where a payment differential exists (86 FR 39240).
    We noted in the CY 2025 RFI that we have information on 
historically excepted FQHCs, the outpatient provider-based clinics to 
the hospital, and some general information about the composition of IHS 
and tribal facilities and clinics. However, we stated there are still 
gaps in the data and therefore we requested responses to the following 
questions: If the clinic or facilities in question are not enrolled in 
Medicare as an FQHC or provider-based to a hospital, are they physician 
practices? How are these facilities organized and related? (89 FR 
59394.)
    Because paying the Medicare outpatient AIR to additional IHS and 
tribally operated facilities that are currently paid under another 
Medicare payment methodology or not yet enrolled in Medicare as all 
would potentially increase expenditures, we also solicited information 
on how tribally operated facilities participate in Medicare currently, 
which would assist us with estimating the impacts of such a policy 
change.
    We received a few comments in response to the information we 
requested. Below, we provide a summary of the comments we received and 
our responses.
    Comment: Commenters support CMS' continuing efforts to better 
understand the request to make all IHS and tribally operated outpatient 
facilities eligible for Medicare payment at the IHS Medicare outpatient 
per visit rate/AIR as it would provide financial stability and improve

[[Page 94287]]

comprehensive care delivery for tribal communities. Some of the 
commenters believe the current Medicare payment rates for outpatient 
Indian health providers are inequitable, increasingly illogical and 
contrary to National Indian policies, as the requested change would 
increase Medicare expenditures only a negligible amount. One commenter 
believes the most efficient, expeditious, reliable and appropriate way 
for CMS to gather the requested information is through the TTAG, not a 
Request for Information (RFI), but they provided information on the 
known or likely enrollment status of potentially affected programs, 
discussed why many small Indian Health Programs currently bill Medicare 
(if at all) under the Physician Fee Schedule (PFS), explained why 
neither the PFS nor the FQHC PPS rates come close to covering their 
costs, discussed why the AIR is the most appropriate payment option for 
all Outpatient Indian Programs, and provided some illustrative 
examples. Another commenter would like CMS to consider using the IHS 
Medicare outpatient per visit rate/AIR to pay for hospital outpatient 
services furnished by Urban Indian Organizations (UIOs) to Medicare 
beneficiaries.
    Response: CMS acknowledges comments received on this important 
issue, and, commits to continuing close collaboration with TTAG to 
evaluate IHS and Tribally Operated Clinics without IHS Medicare 
outpatient AIR payments to identify opportunities for improving 
financial stability and equitable healthcare delivery in these 
communities, including determining whether these clinics would receive 
a net benefit from being paid the IHS Medicare Outpatient AIR.

D. Coverage Changes for Colorectal Cancer (CRC) Screening Services

    Medicare coverage for colorectal cancer (CRC) screening tests under 
Part B is described in statutes (sections 1861(s)(2)(R), 1861(pp), 
1862(a)(1)(H) and 1834(d) of the Social Security Act (the Act)), 
regulation (42 CFR 410.37), and a National Coverage Determination (NCD) 
(Section 210.3 of the Medicare National Coverage Determinations 
Manual). Section 1861(pp)(1)(D) of the Act includes in its definition 
of colorectal cancer screening test ``[s]uch other tests or procedures, 
and modifications to the tests and procedures described under this 
subsection, with such frequency and payment limits, as the Secretary 
determines appropriate, in consultation with appropriate 
organizations.''
    The regulations at 42 CFR 410.37 list and define the tests and 
procedures covered by Medicare as colorectal cancer screening tests. 
Specifically, the following tests and procedures furnished to an 
individual for the purpose of early detection of colorectal cancer are 
covered by Medicare:
     Screening fecal-occult blood tests.
     Screening flexible sigmoidoscopies.
     Screening colonoscopies, including anesthesia furnished in 
conjunction with the service.
     Screening barium enemas.
     Other tests or procedures established by a national 
coverage determination, and modifications to tests under this 
paragraph, with such frequency and payment limits as CMS determines 
appropriate, in consultation with appropriate organizations.
    In recent years we have received recommendations from the public to 
remove Medicare coverage for the barium enema test since the test no 
longer meets modern clinical standards and is no longer recommended in 
clinical guidelines. As a replacement to the barium enema test, 
organizations have suggested the use of CT colonography, which is a 
more effective test for colorectal cancer screening. For a more 
extensive discussion on the background and proposal to revise the 
Medicare coverage for colorectal cancer screening services, we refer 
readers to the CY 2025 Physician Fee Schedule (PFS) proposed rule.
    For CY 2025, based on public input and consultation with specialty 
societies, and as discussed in the CY 2025 PFS proposed rule, we 
proposed to exercise our authority under section 1861(pp)(1)(D) of the 
Act to update and expand coverage for CRC screening. As discussed in 
the CY 2025 PFS proposed rule, we proposed to make the following 
revisions to Sec.  410.37:
     Remove coverage for the barium enema procedure.
     Add coverage for the computed tomography colonography 
(CTC) procedure.
     Expand the existing definition of a ``complete colorectal 
cancer screening'' to include a follow-on screening colonoscopy after a 
Medicare covered blood-based biomarker CRC screening test (described 
and authorized in NCD 210.3).
    The above screening tests are currently described by existing HCPCS 
codes. These HCPCS codes are listed in Table 139 along with their long 
descriptors.

[[Page 94288]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.185

    Based on the proposed coverage changes for CRC screening, we 
proposed to make the following changes under the OPPS for CY 2025:
     HCPCS codes G0106 and G0120 (screening barium enema): 
These codes were established by CMS effective January 1, 1998, to 
implement Medicare coverage for barium enema as a test for colorectal 
cancer screening. Since we proposed to remove Medicare coverage for 
barium enema colorectal cancer screening effective January 1, 2025, and 
we no longer need to keep these codes active, we proposed to delete 
them on December 31, 2024. Therefore, we proposed to revise the status 
indicator for the HCPCS codes from status indicator ``S'' (Procedure or 
Service, Not Discounted When Multiple. Paid under OPPS; separate APC 
payment.) to ``D'' (Discontinued code) to indicate that HCPCS codes 
G0106 and G0120 will be deleted on December 31, 2024. In addition to 
the deletion of these codes, we also proposed to delete HCPCS code 
G0122 (Colorectal cancer screening; barium enema), which is already 
non-covered by Medicare, on December 31, 2024.
     CPT code 74263 (screening computed tomography colonography 
(CTC)/virtual colonoscopy): We proposed to reassign this code from 
status indicator ``E1'' (not covered/not payable) to status indicator 
``S'' and APC 5522 (Level 2 Imaging Without Contrast) to indicate that 
the code is separately payable. Based on our review, we noted that we 
believed the time and resources associated with performing a screening 
virtual colonoscopy was similar to a diagnostic virtual colonoscopy, 
which is described by CPT code 74261 (Computed tomographic (ct) 
colonography, diagnostic, including image postprocessing; without 
contrast material). Consequently, the proposed APC assignment for CPT 
code 74263 was based on its clinical and resource homogeneity to CPT 
code 74261, which was assigned to APC 5522.
     HCPCS code G0327 (screening blood-based biomarker): This 
HCPCS code is currently assigned to status indicator ``A'' to indicate 
that the test is paid separately under a different Medicare payment 
system than the OPPS. Since HCPCS G0327 is currently separately payable 
under the Clinical Laboratory Fee Schedule (CLFS), we did not propose 
to revise the status indicator. Specifically, with the expanded 
coverage to include blood-based biomarker as a screening test to detect 
colorectal cancer, we proposed to continue to assign HCPCS code G0327 
to status indicator ``A'' for CY 2025.
    In summary, based on the proposed coverage changes for colorectal 
cancer screening services, we proposed to revise the OPPS status 
indicator for certain HCPCS codes for CY 2025. Table 140 shows the long 
descriptors, current CY 2024 OPPS status indicators, and proposed CY 
2025 OPPS status indicators for HCPCS codes G0106, G0120, G0122, 74263, 
and G0327. The proposed CY 2025 OPPS payment rates, where applicable, 
for these HCPCS codes can be found in Addendum B to the proposed rule. 
In addition, for the complete list of the proposed status indicators 
and their definitions, refer to Addendum D1 of the CY 2025 OPPS/ASC 
proposed rule.

[[Page 94289]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.186

    Comment: Overall, commenters supported our proposals of the 
following Colorectal Cancer (CRC) Screening Services changes:
     Deleting HCPCS codes G0106 and G0120 (screening barium 
enema) effective December 31, 2024, and deleting HCPCS code G0122 
(Colorectal cancer screening; barium enema), which is already non-
covered by Medicare, on December 31, 2024.
     Reassigning the status indicator of CPT code 74263 
(screening computed tomography colonography (CTC)/virtual colonoscopy) 
from status indicator ``E1'' (not covered/not payable) to status 
indicator ``S'' to indicate that the code is separately payable and 
assigning CPT code 74263 to APC 5522 (Level 2 Imaging Without 
Contrast).
     Maintaining the status indicator of HCPCS code G0327 
(screening blood-based biomarker) as status indicator ``A'' to indicate 
that the test is paid separately under a different Medicare payment 
system than the OPPS.
    Response: We thank commenters for supporting our proposals related 
to Sec.  410.37 and NCD 210.3 on Colorectal Cancer (CRC) Screening 
Services.
    Comment: A commenter requested that CMS exercise our authority in 
section 1861(pp)(1)(D) of the Act to expand our approach to a 
``complete CRC screening'' to add CTC along with the Medicare covered 
blood-based biomarker CRC screening test and the Medicare covered non-
invasive stool-based CRC screening test within the definition of a 
``complete colorectal cancer screening.''
    Response: We disagree with commenters that requested a further 
expansion of a complete colorectal cancer screening to include CTC. CTC 
is a visualization procedure along with colonoscopy and flexible 
sigmoidoscopy whereas stool-based and blood-based CRC screening tests 
are non-visualization tests. CTC provides visualization of the contours 
of the whole colon and demonstrates mucosal surface abnormalities 
consistent with polyps and tumors. CTC tests are unlike noninvasive 
modalities such as stool-based and blood-based CRC screening, which 
present a binary positive/negative result with variable specificity and 
may result (in the case of a positive test) in the need for a 
visualization study to confirm the derived suspicion of adenoma or 
cancer. The follow-on colonoscopy in cases of stool-based or blood-
based CRC screenings represents an extension of screening in a patient 
who has converted from average risk to increased risk as a result of 
the positive test. In the case of CTC, however, visualization of the 
colonic mucosal contour, as well as the remainder of the colonic wall 
and surrounding structures, has already been achieved and the 
determination of a suspicious finding has already been made. Polyps 
over the size threshold prompt a referral for diagnostic/therapeutic 
colonoscopy for the purpose of polypectomy. A follow-up colonoscopy 
after an abnormal finding from a CTC would be considered a diagnostic 
colonoscopy to biopsy or remove visualized polyps and/or cancer.
    After consideration of the public comments we received, we are 
finalizing the proposals made in the CY 2025 OPPS/ASC proposed rule 
affecting Colorectal Cancer (CRC) Screening Services with one 
modification. Specifically, we are finalizing the deletion of HCPCS 
codes G0106 and G0120 (screening barium enema) effective December 31, 
2024. We are finalizing the reassignment of CPT code 74263's status 
indicator as proposed from status indicator ``E1'' (not covered/not 
payable) to ``S'' to indicate that the code is separately payable. 
However, we are reassigning CPT code 74263 to APC 5523 (Level 3 Imaging 
Without Contrast) in this final rule. We refer readers to section III.E 
of this final rule with comment period for a detailed discussion of CPT 
code 74263's APC assignment. We are maintaining the status indicator of 
HCPCS code G0327 (screening blood-based biomarker) as status indicator 
``A'' to indicate that the test is paid separately under a different 
Medicare payment system than the OPPS.
    Table 141 shows the long descriptors proposed and final CY 2025 
OPPS status indicators for HCPCS codes G0106, G0120, G0122, 74263, and 
G0327. The finalize CY 2025 OPPS payment rates, where applicable, for 
these HCPCS codes can be found in Addendum B to

[[Page 94290]]

this final rule. In addition, for the complete list of the final status 
indicators and their definitions, refer to Addendum D1 of this final 
rule with comment period.
[GRAPHIC] [TIFF OMITTED] TR27NO24.187

E. Request for Comment on Payment Adjustments Under the IPPS and OPPS 
for Domestic Personal Protective Equipment

1. General Background
    As discussed in the FY 2023 IPPS/LTCH PPS and CY 2023 OPPS/ASC 
rules, President Biden issued Executive Order (E.O.) 13987, 
``Organizing and Mobilizing the United States Government To Provide a 
Unified and Effective Response To Combat COVID-19 and To Provide United 
States Leadership on Global Health and Security,'' on January 20, 2021 
(86 FR 7019). This order launched a whole-of-government effort to 
combat the coronavirus disease 2019 (COVID-19) and prepare for future 
biological and pandemic threats. As the COVID-19 pandemic eased, work 
has continued to prepare for future pandemics. As the COVID-19 pandemic 
demonstrated, sufficient availability of personal protective equipment 
(PPE) in the health care sector is a critical component of 
preparedness.
    The CY 2023 OPPS/ASC final rule with comment period implemented 
payment adjustments under the OPPS and IPPS to support a resilient and 
reliable supply of surgical N95 respirators--a specific type of 
filtering facepiece respirator that is a subset of N95 masks used in 
some clinical settings under conditions requiring respiratory 
protection from airborne pathogens and splash protection from exposure 
to fluids. Early on in the COVID-19 pandemic, ``just-in-time'' supply 
chains, minimal stockpiling, and overreliance on foreign imports left 
U.S. hospitals unable to obtain enough N95 respirators to protect 
health care workers. Prices for surgical N95s soared from an estimated 
$0.25-$0.40/unit to $5.75/unit (and up to $12.00/unit in some reported 
cases). Unable to obtain surgical N95s regulated by NIOSH, hospitals 
had to turn to KN95s--a Chinese standard respirator--and other non-
NIOSH-approved respirators under Emergency Use Authorization (EUA). 
Skyrocketing demand during the COVID-19 pandemic also raised 
counterfeit respirator concerns.
    Currently available payment adjustments offset the marginal costs 
that hospitals face in procuring domestically made NIOSH-approved and 
FDA-certified surgical N95 respirators. These marginal costs are due to 
higher per-unit acquisition prices that stem from higher costs of 
inputs and labor in the U.S., as compared to international suppliers, 
where many N95 and other respirators are made, as well as a 
demonstrated record of more consistent high quality for domestically 
made products.\170\ These payment adjustments offset the additional 
marginal costs of hospitals that purchase domestically made NIOSH-
approved surgical N95 respirators to help sustain demand for--and thus 
domestic production of--high-quality domestically made respirators in 
order to ensure quality PPE is available to health care personnel when 
needed.
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    \170\ https://www.cdc.gov/niosh/npptl/respirators/testing/NonNIOSHresults.html.
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    The policy goal to maintain a baseline domestic production capacity 
of high-quality PPE in order to ensure that quality PPE is readily 
available to health care personnel when needed is emphasized in the 
National Strategy for a Resilient Public Health Supply Chain, published 
in July 2021 as directed by President Biden's Executive Order 14001 on 
``A Sustainable Public Health Supply Chain.'' The U.S. Government has 
committed to purchase wholly domestically-made PPE in line with section 
70953 of the Infrastructure Investment and Jobs Act (Pub. L. 117-58).

[[Page 94291]]

2. Potential Modifications to Payment Adjustments for Domestic NIOSH-
Approved Surgical N95 Respirators
    Although the payment adjustments for domestic NIOSH-approved 
surgical N95 respirators under the OPPS and IPPS have applied to cost 
reporting periods beginning on or after January 1, 2023, use of the 
payment adjustments has been limited. Furthermore, market data suggests 
that a majority of surgical N95 respirators purchased by hospitals are 
not wholly domestically made. In the CY 2023 OPPS/ASC final rule with 
comment period, we stated that as we gain more experience with this 
policy and the data collected, we may also consider modifications to 
the reasonable cost-based payment approach we were finalizing. HHS has 
conducted stakeholder outreach to better understand barriers to 
awareness and uptake and seek feedback on potential modifications that 
could increase effectiveness, and continues to engage hospitals and 
other manufacturers on these payment adjustments. Furthermore, as 
discussed in more detail below, in the CY 2025 OPPS/ASC proposed rule 
(89 FR 59396 through 59399), we solicited feedback and comments on 
potential modifications to the payment adjustment in order to reduce 
reporting burden and achieve the policy goal to maintain a baseline 
domestic production capacity of PPE in order to ensure that quality PPE 
is readily available to health care personnel when needed.
    Payment adjustment methodology: In the CY 2023 OPPS/ASC final rule 
with comment period, we finalized to initially base the payment 
adjustments on the IPPS and OPPS shares of the estimated difference in 
the reasonable costs. We created a new supplemental cost reporting form 
to enable calculation of a hospital-specific unit cost differential 
between domestic and non-domestic NIOSH-approved surgical N95 
respirators. We noted that, based on available data, our best estimate 
of the difference in the average unit cost of domestic and non-domestic 
NIOSH-approved surgical N95 respirators was $0.20. In the CY 2023 OPPS/
ASC final rule with comment period, we also noted that MedPAC, while 
not supportive of the proposed payment adjustments, stated that CMS 
should set the unit cost differential between domestic and non-domestic 
NIOSH-approved surgical N95 respirators at a national level (rather 
than on a hospital-by-hospital basis). MedPAC believed this would 
reduce the administrative burden on hospitals, encourage hospitals to 
purchase the most economical domestically made product, and reduce the 
ability of hospitals to increase their payments by artificially 
inflating reported N95 costs. In the CY 2025 OPPS/ASC proposed rule, we 
solicited comment on the following questions:
     Should we consider modifying the payment adjustment 
methodology calculation to provide a national standard unit cost 
differential between domestic and non-domestic NIOSH-approved surgical 
N95 respirators (rather than on a hospital-by-hospital basis)?
     If so, how should we calculate that standard unit cost 
differential between domestic and non-domestic NIOSH-approved surgical 
N95 respirators, and what should the current unit cost differential be?
     If we modified the payment adjustment methodology 
calculation to provide a national standard unit cost differential, 
would it be appropriate to calculate the payment adjustment by 
multiplying the unit cost differential by the total quantity of 
domestic NIOSH-approved surgical N95 respirators used by the hospital, 
and then multiplying by the Medicare Part A hospital inpatient cost 
share (to calculate the IPPS payment adjustment) or the Medicare Part B 
hospital outpatient cost share (to calculate the OPPS payment 
adjustment)?
     Do hospitals need additional support to purchase domestic-
made surgical N95 respirators as opposed to non-domestic surgical N95 
respirators? If so, how much support is needed, and in what form?
    Comment: We received several comments supporting a modification to 
the payment adjustment methodology calculation that would provide a 
national standard unit cost differential between domestic and non-
domestic NIOSH-approved surgical N95 respirators. Several commenters 
emphasized that this modification would minimize reporting burden for 
hospitals and ensure payments to hospitals are equitable. One commenter 
stated that CMS should provide hospitals the option of calculating 
their payment adjustment utilizing a national standard unit cost 
differential or a hospital-specific unit cost differential. A commenter 
stated that the national differential should be set at $0.50. Other 
commenters encouraged CMS to collaborate with external partners and use 
external resources to determine the national standard unit cost 
differential. Commenters suggested regularly collaborating with 
reliable benchmarking services, distributors, and group purchasing 
organizations to establish and recalibrate, if necessary, an accurate 
national standard unit cost differential.
    Several commenters provided suggestions on additional support for 
hospitals to purchase domestic-made surgical N95 respirators as opposed 
to non-domestic surgical N95 respirators. Several commenters requested 
that CMS work with Congress to give CMS authority to apply this payment 
policy in a non-budget neutral manner under the OPPS. Other commenters 
requested that CMS work with Congress to give CMS authority to offset 
all the marginal costs incurred by the hospital in procuring 
domestically made surgical N95 respirators rather than just the 
Medicare-share of these costs. One commenter stated that CMS should pay 
the full cost of procuring domestically made surgical N95 respirators 
rather than the marginal costs of procuring domestically made surgical 
N95 respirators over non-domestically made surgical N95 respirators. A 
couple of commenters stated that CMS should reimburse hospitals 5 times 
the differential between the acquisition cost of domestic surgical N95 
respirators and non-domestic surgical N95 respirators. One commenter 
stated that CMS should create a HCPCS code for surgical N95 respirators 
and develop a formula that reimburses hospitals that purchase domestic 
surgical N95s directly from manufacturers at a locked price. A few 
commenters encouraged CMS to increase education and communication of 
the payment adjustment to hospital purchasing decision-makers within 
the healthcare system.
    Some comments addressed the issue of why use of the payment 
adjustments has been limited. A few commenters supportive of the 
payment adjustment stated that they believe providers may not be taking 
advantage of the adjustment because they still have stockpiles of 
surgical N95 respirators available to them that were purchased during 
the COVID-19 pandemic. A commenter stated its belief that use of the 
payment adjustments has been limited because the current supply and 
production capacity of wholly domestically made surgical N95 
respirators is insufficient. One commenter stated that the payment 
adjustment does not result in a significant decrease in cost for 
providers. One commenter expressed that hospitals primarily buy 
surgical N95 respirators through distributors and that these 
distributors are not incentivized to purchase and make available to 
hospitals more expensive domestically produced surgical N95 
respirators.

[[Page 94292]]

    One commenter indicated that hospitals would be more inclined to 
purchase domestically made surgical N95 respirators if more information 
was made available regarding the production capabilities of domestic 
suppliers. The commenter stated it is crucial for any health care 
facility considering incorporating new types of surgical N95 
respirators into their operations to understand certain factors such as 
whether the manufacturer has the capability to scale up production to 
meet spikes in demand and what the manufacturer's lead time is for 
supplying new customers with surgical N95 respirators. The commenter 
stated that due to the fit-testing requirements, it is crucial for 
health care facilities to understand lead times of N95 manufacturers to 
ensure that respiratory protection is available when it is needed.
    As reflected in the following discussion of the comments on payment 
adjustment eligibility, some commenters also believe that challenges in 
identifying surgical N95 respirators that are wholly domestically 
manufactured and documenting that fact for any purchased surgical N95 
respirators have disincentivized hospitals from utilizing the payment 
adjustment. As reflected in the following discussion of the types of 
N95 respirators, a few commenters indicated that because non-surgical 
N95 respirators represent most of the N95 respirators purchased by 
hospitals, the fact that non-surgical N95 respirators are not eligible 
for the payment adjustment contributes to the lack of uptake for 
surgical N95 respirators.
    Payment adjustment eligibility: In the CY 2023 OPPS/ASC final rule 
with comment period, we stated that we recognize that a hospital cannot 
fully independently determine if a NIOSH-approved surgical N95 
respirator it purchases is domestic under our definition. Therefore, we 
finalized that a hospital may rely on a written statement from the 
manufacturer stating that the NIOSH-approved surgical N95 respirator 
the hospital purchased is domestic under our definition. In the CY 2025 
OPPS/ASC proposed rule, we solicited comment on the following 
questions:
     Do hospitals have sufficient access to information on 
which surgical N95 models on the market are wholly domestically made?
     Have hospitals been able to obtain written statements from 
manufacturers stating that the NIOSH-approved surgical N95 respirator 
the hospital purchased is domestic under our definition?
     Would a publicly available list of products eligible for 
the payment adjustment (for example, if provided by CMS, NIOSH, or 
another government entity) make it easier for hospitals to locate 
products eligible for the payment adjustment?
     If we modified the payment adjustment such that hospitals 
that attested to purchasing wholly domestically made surgical N95 
models from such a list did not need to obtain a written statement from 
the manufacturer, would hospitals more easily be able to utilize the 
payment adjustment?
    Comment: In general, commenters were supportive of making publicly 
available a list of products eligible for the payment adjustment. Some 
commenters indicated that hospitals have had difficulty ascertaining 
which products meet the definition of domestic under this policy. Some 
commenters stated that hospitals have had difficulty obtaining written 
statements from manufacturers attesting to their products meeting the 
policy's definition of domestic.
    Commenters stated that a publicly available list would simplify the 
procurement process and make it easier for hospitals to identify, 
locate, and purchase products eligible for the payment adjustment. 
Commenters also indicated that if such a list was made available, CMS 
should modify the payment adjustment such that hospitals that attest to 
purchasing wholly domestically made surgical N95 models from such a 
list do not need to obtain a written statement from the manufacturer. A 
commenter stated that removing the attestation requirement would 
streamline the process of purchasing eligible products and could 
encourage uptake of the payment adjustment. A commenter encouraged CMS 
to establish an ongoing process that would enable manufacturers or 
hospitals to submit products for certification and addition to the 
list. Some commenters stated that, if a list of eligible products were 
established, products not on the list should still be eligible for the 
payment adjustment if the product could be verified as domestic by some 
other means, such as through a written statement from the manufacturer.
    One commenter stated that requiring hospitals to acquire this 
written attestation from manufacturers is not burdensome and believes 
that CMS should retain this requirement to ensure hospital 
accountability. One commenter stated that CMS should explore labeling 
requirements for manufacturers to facilitate the identification of 
domestic and non-domestic products. Another commenter stated that to 
alleviate hospital burden, CMS should work with hospital and supply 
chain communities to automate the reporting to CMS of domestic products 
purchased by hospitals.
    Types of N95 respirators: In the CY 2023 OPPS/ASC proposed rule, 
for purposes of the payment adjustment policy, we proposed to 
categorize all NIOSH-approved surgical N95 respirators purchased by 
hospitals into two categories: (1) Domestic NIOSH-approved surgical N95 
respirators; and (2) Non-domestic NIOSH-approved surgical N95 
respirators. Feedback from external stakeholders has suggested that it 
is a challenge that the payment adjustments are limited to surgical N95 
respirators, given some hospitals also procure non-surgical N95 
respirators. Both surgical N95 respirators and non-surgical N95 
respirators are primarily used to protect the wearer from inhaling 
airborne particles, including infectious agents like bacteria and 
viruses. They are highly efficient at filtering out at least 95% of 
airborne particles and are commonly used by healthcare workers during 
procedures that may generate aerosols, such as intubation or 
suctioning, or when caring for patients with infectious respiratory 
diseases like tuberculosis or coronavirus. Both types of N95 
respirators serve as frontline defense for medical professionals. They 
are crucial for preventing the transmission of diseases within 
healthcare settings and safeguarding the health and well-being of both 
healthcare workers and patients. Surgical N95 respirators have the 
added protection against fluid penetration, and may be most useful in 
specialized healthcare settings (e.g., ICU, Emergency Department, 
Operating Room) where the risk of fluid exposure may be greater. 
Additionally, during the COVID-19 pandemic, both types of N95 
respirators saw issues around lack of availability and risk of 
counterfeit outlined in the CY 2023 OPPS/ASC final rule with comment 
period--issues which could compromise the safety of healthcare 
personnel and patients. In the CY 2025 OPPS/ASC proposed rule, we 
solicited comment on the following questions:
     Do hospitals procure both surgical N95 respirators and 
non-surgical N95 respirators?
     Has the payment adjustment's current focus on surgical N95 
respirators inhibited uptake of the payment adjustments?
     Are the quality differentials between domestic and non-
domestic surgical respirators also applicable to non-surgical 
respirators, and is a

[[Page 94293]]

sustained and reliable source of domestically made non-surgical N95 
respirators important for strengthening hospitals' ability to protect 
the health and safety of personnel and patients in a public health 
emergency?
     Should CMS consider expanding the payment adjustments to 
include all domestic NIOSH-approved N95 respirators--i.e., non-surgical 
and surgical N95 respirators?
     If we expanded the payment adjustments to include all 
domestic NIOSH-approved N95 respirators, and if we modified the payment 
adjustment methodology calculation to provide a national standard unit 
cost differential between domestic and non-domestic NIOSH-approved 
surgical N95 respirators (rather than on a hospital-by-hospital basis), 
would the unit cost differential for non-surgical N95 respirators be 
different than the one for surgical N95 respirators?
    Comment: Commenters were supportive of expanding the payment 
adjustment to include non-surgical N95 respirators. Commenters stated 
that expanding the payment adjustment to include non-surgical N95 
respirators would ensure a more comprehensive and resilient domestic 
supply chain. A few commenters indicated that non-surgical N95 
respirators represent most of the N95 respirators purchased by 
healthcare providers and that including them in the payment adjustment 
would lead to greater utilization of the payment adjustment by 
hospitals. A commenter stated that it would be less burdensome and more 
cost-effective for hospitals to procure and receive the payment 
adjustment for all domestic NIOSH-approved N95 respirators. A commenter 
stated the payment adjustment methodology could utilize the same 
national standard unit cost differential for surgical and non-surgical 
N95 respirators.
3. Potential Modifications To Include Nitrile Gloves
    In addition to N95 respirators, nitrile gloves are another type of 
PPE for which it is particularly crucial to maintain a resilient, 
quality supply. Nitrile gloves protect healthcare workers and patients 
from the spread of micro-organisms that may potentially cause infection 
or illness during medical procedures and examination. They create a 
barrier between germs and the wearer's hands, and are generally worn 
anytime a healthcare worker touches blood, bodily fluids, bodily 
tissues, mucous membranes, or broken skin. They are disposable, 
enabling the use of new gloves for each patient. A resilient healthcare 
system needs readily available, high-quality nitrile gloves to respond 
efficiently and effectively to public health emergencies. During the 
COVID-19 pandemic, supply chain breakdowns limited the supply of 
quality nitrile gloves, putting U.S. healthcare workers and patients at 
risk. As with N95 respirators, non-domestic-sourced gloves during the 
COVID-19 pandemic saw counterfeit and quality challenges. The receipt 
of non-U.S.-made counterfeit or already-used gloves put the safety of 
healthcare workers and patients at risk.171 172 Prior to 
2020, over 95 percent of nitrile gloves sold in the U.S. came from 
other countries. As the pandemic escalated in 2020, U.S. demand for 
gloves outstripped available supply, leading to shortages. Around the 
same time, supply was also limited by coronavirus-related lockdowns in 
other countries that decreased production capacity, and by export 
restrictions of PPE. Further adding to supply pressures, forced labor 
violations by subsidiaries of a major glove producer led U.S. Customs 
and Border Protection (CBP) to issue a Withhold and Release Order, 
resulting in seizure of all listed products, including nitrile gloves, 
at CBP inspections. During the initial months of the pandemic, the cost 
of gloves increased, rising 18 percent from July to August 2020 (to 
$0.03 per glove) and then an additional 20 percent from November to 
December 2020 (to $0.05 per glove).\173\
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    \171\ https://www.cnn.com/2021/10/24/health/medical-gloves-us-thailand-investigation-cmd-intl/index.html.
    \172\ https://www.propublica.org/article/ppe-covid-scams-fraud-nitrile-gloves.
    \173\ Glove Story Global Glove Production Amidst the COVID-19 
Pandemic (usitc.gov).
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    During the pandemic, the U.S. government has invested in domestic 
glove manufacturing capabilities. U.S. glove-manufacturing projects 
received approximately $290 million in public funding as part of a 
broader $1.5-billion investment to support domestic glove 
manufacturing. These investments have resulted in an increase of 3.91 
billion in annual production capacity for domestically manufactured 
nitrile gloves. The U.S. government also invested in manufacturing 
capacity for nitrile glove inputs such as nitrile butadiene rubber, and 
this manufacturing capacity is expected to become available in 2026.
    However, since the pandemic began, some U.S. factories have been 
forced to consolidate operations or exit the industry. Further, non-
U.S. nitrile glove producers have deployed cost-cutting tactics such as 
using lower-grade raw materials, prompting some purchasers to seek 
other sources out of concern for quality.\174\ Producers of these lower 
quality products began selling gloves for the price of $0.02 each, 
rapidly increasing U.S. market share, going from 13% of U.S. market 
share in July 2020 to 19 percent in February 2021. As of 2024, only 
three producers of nitrile gloves are left in the United States, and 
they supply an estimated .05% percent of U.S. demand for nitrile 
gloves.
---------------------------------------------------------------------------

    \174\ Glove Story Global Glove Production Amidst the COVID-19 
Pandemic (usitc.gov).
---------------------------------------------------------------------------

    As with N95 respirators, a resilient public health industrial base 
requires baseline manufacturing capacity for nitrile gloves as critical 
PPE items, to ensure that hospitals and other institutions will be able 
to procure high quality gloves reliably. To help achieve this goal, 
certain U.S. Government departments have committed to purchase wholly 
domestically made nitrile gloves in line with the requirements in 
section 70953 of the Infrastructure Investment and Jobs Act. However, 
Federal demand alone cannot sustain a baseline level of nitrile glove 
production in the U.S. Private medical and health care users are the 
primary purchasers and users of medical-grade PPE, including nitrile 
gloves.
    To ensure access to high quality products, as with N95 respirators, 
it is critically important to ensure that a sufficient share of nitrile 
gloves is wholly made in the U.S.--that is, including raw materials and 
components. In the CY 2023 OPPS/ASC rule, we stated our belief that the 
most appropriate framework for determining if a NIOSH-approved surgical 
N95 respirator is wholly made in the U.S. and therefore, considered 
domestic for purposes of the proposed adjustments, is the Berry 
Amendment. The Berry Amendment is a statutory requirement familiar to 
manufacturers that restricts the Department of Defense (DoD) from using 
funds appropriated or otherwise available to DoD for procurement of 
food, clothing, fabrics, fibers, yarns, other made-up textiles, and 
hand or measuring tools that are not grown, reprocessed, reused, or 
produced in the United States. For nitrile gloves, which are not 
covered by the Berry Amendment, we believe the Make PPE in America 
domestic content requirements outlined in section 70953 of the 
Infrastructure Investment and Jobs Act is the most appropriate 
framework for determining if a nitrile glove is wholly made in the U.S. 
These statutory requirements, which apply to procurement of nitrile 
gloves and other PPE by the U.S. Departments of Health and Human 
Services, and Veterans Affairs, and Homeland Security, require

[[Page 94294]]

the procurement PPE, including the materials and components thereof, 
that is grown, reprocessed, reused, or produced in the U.S. These 
statutory requirements have become familiar to manufacturers of nitrile 
gloves and other PPE. With respect to domestic manufacturing 
capabilities for raw materials and components, we understand that 
nitrile butadiene rubber (NBR), a key nitrile glove input, is currently 
not yet available domestically in sufficient quantity or quality to 
meet market needs. We understand that U.S. manufacturers do anticipate 
having the capability to source and manufacture all glove components 
domestically within the next two years.
    Wholly domestically made, high quality nitrile gloves are generally 
more expensive than foreign-made ones, especially those of lower 
quality. This fact is also true for domestically made nitrile gloves 
that include non-domestically sourced NBR. These higher prices 
primarily stem from higher costs of manufacturing labor in the U.S. 
compared to costs in other countries, where most nitrile gloves and 
their inputs are made, and higher quality standards. These higher 
prices mean higher marginal costs for hospitals for procuring wholly 
domestically made nitrile gloves. Based on available data, our best 
estimate of the difference in the average unit cost of domestic and 
non-domestic nitrile gloves, is $0.13 per glove.
    As outlined in this section, quality nitrile gloves are a crucial 
component of PPE needed to ensure the safety of health care workers and 
patients. The COVID-19 pandemic highlighted how overreliance on foreign 
imports of gloves jeopardized public health and the health and safety 
of healthcare workers and patients. In the CY 2025 OPPS/ASC proposed 
rule, we solicited comment on the following questions:
     Would modifying the payment adjustment to include nitrile 
gloves help offset the marginal costs that hospitals face in procuring 
high quality domestically made nitrile gloves?
     Would modifying the payment adjustment to include nitrile 
gloves help to sustain a baseline level of domestic manufacturing of 
nitrile gloves to ensure that hospitals and other stakeholders have 
ongoing, reliable access to an adequate supply of quality product?
     Would having access to a sustained and reliable source of 
domestically made nitrile gloves strengthen hospitals' ability to 
protect the health and safety of personnel and patients in a public 
health emergency?
     Are there other reasons why hospitals would benefit from 
an extension of the payment adjustment to include nitrile gloves not 
covered in the preceding questions?
     Do stakeholders believe a significant portion of hospitals 
would use domestic nitrile gloves if the payment adjustment were 
offered?
     If the payment adjustment was modified to include nitrile 
gloves, how should CMS define wholly domestically made nitrile gloves? 
Would it be appropriate to categorize all nitrile gloves purchased by 
hospitals into two categories: (1) domestic nitrile gloves that--with 
the exception of nitrile butadiene rubber (NBR)--comply with the 
Infrastructure Investment and Jobs Act's Make PPE in America Act 
domestic content requirements; and (2) non-domestic nitrile gloves?
     If the payment adjustment was modified to include nitrile 
gloves, and the categories were defined as described previously, would 
it be appropriate to eliminate the domestic content exception for NBR 
if domestic NBR production reaches a sufficient level to meet market 
needs?
     If the payment adjustment was modified to include nitrile 
gloves, should a national standard unit cost differential between 
domestic and non-domestic nitrile gloves be used to calculate the 
payment adjustment, and if so, what should the current unit cost 
differential be (or, what should the data source be)?
    Comment: In general, commenters were supportive of modifying the 
payment adjustment to include nitrile gloves. Commenters explained why 
they believe it is important for the United States to maintain a 
baseline level of domestic manufacturing of nitrile gloves. For 
example, commenters cited quality concerns that have arisen with non-
domestic nitrile gloves purchased by hospitals, especially during times 
of emergencies. A commenter stated that a domestic supply chain of 
nitrile gloves would significantly improve lead times compared to a 
foreign supply chain. One commenter stated that hospitals and 
purchasing entities desire to purchase domestically manufactured 
nitrile gloves to maintain stable supplies during global supply chain 
disruptions and to better ensure the health and safety of patients and 
workers.
    Commenters indicated that certain domestic nitrile glove 
manufacturers have ceased operations. A commenter stated that the 
driving factor in these closures was a lack of market for domestic 
nitrile gloves due to their higher prices. This commenter, and other 
commenters, indicated that reducing or eliminating the price difference 
between domestic and non-domestic nitrile gloves would increase 
utilization of domestic nitrile gloves.
    A few commenters that supported including nitrile gloves in the 
payment adjustment stated that it would be appropriate to apply the 
Make PPE in America Act requirements when defining domestic nitrile 
gloves for purposes of this policy. These commenters also agreed that 
there should be a temporary exception for NBR that could be eliminated 
when domestic supply of NBR is sufficient to support domestic demand. 
One commenter expressed concerns that neither the Berry Amendment nor 
the Make PPE in America Act requirements are commonly used by hospitals 
and health systems and therefore urged CMS to consider utilizing 
another standard.
    A few commenters that supported including nitrile gloves in the 
payment adjustment also supported using a national standard unit cost 
differential between domestic and non-domestic nitrile gloves to 
calculate the payment adjustment. One commenter stated that the $0.13 
per glove difference in the average unit cost of domestic and non-
domestic nitrile gloves estimated by CMS is accurate and appropriate to 
use as the national standard unit cost differential. This commenter 
urged CMS to monitor the nitrile glove market and regularly update this 
differential to ensure hospitals are adequately reimbursed for their 
purchases of domestic nitrile gloves. Another commenter stated that the 
$0.13 per glove estimate was significantly higher than what they 
believe is the actual price differential between domestic and non-
domestic nitrile gloves. This commenter stated that 100 percent 
domestically produced nitrile medical gloves sell for less than $0.13 
per glove and that the actual price differential would likely be 
between $0.01 to $0.03 per glove. This commenter also requested that 
CMS work with industry experts to establish the national standard unit 
cost differential.
    One commenter that supported including nitrile gloves in the 
payment adjustment stated that CMS should maintain a publicly available 
list of nitrile glove products that would qualify as domestic under 
such a policy. One commenter stated that access to a payment adjustment 
should be limited to hospitals that purchase at least 25% to 35% of 
their nitrile gloves from domestic manufacturers. A couple of 
commenters stated that the current production capability of domestic 
manufacturers is too small for the inclusion of nitrile gloves in the 
payment adjustment to have a meaningful impact. For this reason, a

[[Page 94295]]

commenter urged CMS to not include nitrile gloves in the payment 
adjustment.
4. Potential Modifications To Include Other PPE and Medical Devices
    As noted in the CY 2023 OPPS/ASC final rule with comment period, we 
received many comments urging CMS to expand this policy to cover other 
forms of PPE and critical medical supplies. A few commenters stated 
that other forms of PPE suffered shortages during the pandemic similar 
to surgical N95 respirators and therefore investing in domestic 
production for these products was also important for future emergency 
preparedness. We stated that we will consider these comments for future 
rulemaking if appropriate as we gain more experience with our policy. 
We sought comment on other PPE types and medical devices that could be 
appropriate for a similar payment adjustment.
    Comment: Several commenters urged CMS to expand the payment 
adjustment to include other PPE types and medical devices. Examples 
included gowns, hair nets, beard covers, bouffant caps, shoe covers, 
face shields, ASTM level II and III surgical masks, powered air 
purifying respirators, elastomeric respirators, syringes, needles, 
catheters, and wound care dressings. Commenters indicated that many of 
these products are currently being purchased from non-domestic 
manufacturers and have been prone to shortages and quality issues. For 
example, a commenter cited safety concerns regarding the quality of 
imported syringes and needles which they stated have had issues ranging 
from leaks to breakages that compromise patient safety. Some commenters 
indicated that domestic versions of the products they recommend 
including in the payment adjustment are more costly to produce than 
non-domestic versions. For example, one commenter stated that the 
higher cost of labor in the U.S. in addition to imbalances in costs of 
manufacturing certain inputs contributes to the cost differential 
between domestic and non-domestic syringes and needles. Commenters 
expressed that expanding the payment adjustment to more products would 
increase uptake of the payment adjustment by hospitals, strengthen the 
existing U.S. manufacturing base, incentivize other manufacturers to 
prioritize domestic production, and protect access to high-quality 
products.
    Response: We greatly appreciate the many thoughtful and informative 
comments we received in response to our request for comment on payment 
adjustments under the IPPS and OPPS for domestic personal protective 
equipment, including potential modifications to include non-surgical 
N95 respirators, potential modifications to include nitrile gloves, 
potential modifications to include other PPE and medical devices, and 
potential modifications to the methodology used to calculate the 
payment adjustments. We thank the commenters for their feedback and 
agree with comments calling for improvements to and expansion of these 
payment adjustments. In 2026 rulemaking, we intend to propose a new 
payment methodology, such as one that no longer relies exclusively on 
hospital-specific data. In this rulemaking, we also intend to propose 
to expand the payment adjustments to domestic non-surgical N95 
respirators and domestic nitrile gloves. We also intend to continue 
exploring expansion of the payment adjustments to include other types 
of domestically made PPE and other medical products. Hospitals are the 
primary purchasers and users of medical PPE, and PPE are essential for 
the protection of patients and hospital personnel. We believe payment 
modifications that account for the potentially higher cost of 
domestically produced critical PPE help to safeguard hospital personnel 
and beneficiary safety over the long term by sustaining domestic 
production and availability of these PPE. Finally, we will explore the 
feasibility of creating a list of qualifying surgical N95 respirators 
that are domestically made PPE given feedback from commenters. We again 
thank commenters for their feedback regarding these payment 
adjustments.

F. Payment for HIV Pre-Exposure Prophylaxis (PrEP) in Hospital 
Outpatient Departments

    On July 12, 2023, we proposed a National Coverage Determination 
(NCD) to cover Pre-Exposure Prophylaxis (PrEP) to prevent Human 
Immunodeficiency Virus (HIV) under Medicare Part B. The proposed 
coverage would include coverage for the PrEP for HIV drugs, drug 
administration, HIV and hepatitis B screening, and individual 
counseling performed by either physicians or certain other health care 
practitioners. We explained that, if finalized as proposed, all of the 
components would be covered as an additional preventive service without 
Part B cost-sharing (i.e., deductibles or co-pays). The final NCD was 
not issued before the proposed rule was issued.\175\ (89 FR 59399 
through 59402) The final decision memorandum for the NCD was issued and 
was effective on September 30, 2024. [https://www.cms.gov/medicare-coverage-database/view/ncacal-decision-memo.aspx?proposed=N&ncaid=310&fromTracking=Y&]
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    \175\ https://www.cms.gov/files/document/faq-prep-hiv-06242024.pdf.
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    As explained in the proposed rule, the HCPCS codes that describe 
these services are outlined in Table 142.

[[Page 94296]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.188

    For CY 2025, we proposed to pay for PrEP for HIV drugs and related 
services as additional preventive services under the OPPS, if covered 
in the final NCD. We stated that we believe the resource costs for 
HCPCS codes listed in Table 142 would be similar across different 
settings of care, including the HOPD and physician office, and 
therefore the proposed policies for determining the payment limits for 
drugs covered as additional preventive services (DCAPS drugs) in the CY 
2025 PFS proposed rule (89 FR 61596), which would include PrEP for HIV 
drugs, would be appropriate for use under the OPPS as well. Therefore, 
we proposed to pay for the HCPCS codes listed in Table 142 that are 
furnished in HOPDs in a similar manner as when these codes are 
furnished in the physician office.
    HCPCS code G0012 (Injection of pre-exposure prophylaxis (prep) drug 
for hiv prevention, under skin or into muscle) may be used to describe 
the injection of a PrEP drug for HIV prevention. For CY 2025, if 
covered as an additional preventive service, we proposed to assign this 
HCPCS code to APC 5692 (Level 2 Drug Administration) based on the 
crosswalk to HCPCS code 96372 (Therapeutic, prophylactic, or diagnostic 
injection (specify substance or drug); subcutaneous or intramuscular) 
based on the anticipated similarity in resource use. For the PrEP for 
HIV counseling services performed by hospital staff, specifically HCPCS 
code G0013, if covered as an additional preventive service, we proposed 
to assign this service to a clinical APC with a payment rate that 
approximates the payment rate in the physician office setting. The 
proposed CY 2025 payment rates can be found in Addendum B to the CY 
2025 OPPS/ASC proposed rule on the CMS website. We did not propose to 
pay for PrEP for HIV counseling, described by HCPCS code G0011, 
performed by physicians under the OPPS as this is a physician-only 
service.
    To determine the OPPS payment amount for PrEP for HIV drugs, we 
proposed to utilize the ASP methodology under section 1847A of the Act 
when ASP data is available. As discussed in the CY 2025 PFS proposed 
rule (89 FR 61596), we believed and continue to believe, that the use 
of ASP data would be preferable for determining the payment amounts for 
DCAPS drugs, including PrEP for HIV, for two reasons. First, this 
approach would determine the payment amount for these drugs in the same 
way as the payment amount is usually determined for most other drugs 
that are separately payable under Part B, when possible. This would 
include the application of payment limit calculations for multiple 
source drugs, single source drugs and biologicals, and biosimilar 
biological products, as is done for products under section 1847A of the 
Act, for each applicable billing and payment code. Second, because 
section 1847A(c)(3) of the Act requires that calculation of the

[[Page 94297]]

manufacturer's ASP for an NDC must include volume discounts, prompt pay 
discounts, cash discounts, free goods that are contingent on any 
purchase requirement, chargebacks, and rebates (other than rebates 
under the Medicaid drug rebate program, discounts under the 340B 
Program, and rebates under the Part B and Part D Medicare inflation 
rebate program), this would set a payment amount that would likely 
better reflect acquisition cost of the drug than list prices in 
available compendia (such as Wholesale Acquisition Cost (WAC)).
    Specifically, if ASP data is not available for a particular DCAPS 
drug, the PFS proposal described the use of alternative pricing 
sources. As previously stated, we believe the resource costs should be 
similar regardless of whether DCAPS drugs like PrEP for HIV drugs are 
furnished in the HOPD or the physician office, and we propose to use 
the same method of utilizing alternative pricing sources for drugs paid 
under the OPPS as additional preventive services as was proposed under 
the PFS.
    If ASP data for DCAPS drugs like PrEP for HIV is not available, we 
proposed to determine the payment amount for the applicable billing and 
payment code using the most recently published amount for the drug in 
Medicaid's National Average Drug Acquisition Cost (NADAC) survey (OMB 
control number 0938-1041).\176\ When using NADAC data, we proposed to 
determine the payment amount per billing unit, which would be an 
average of NADAC prices for all NDCs for the drug. If a drug is 
available in generic and brand formulations, we proposed all NDCs will 
be averaged together to determine the payment amount.
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    \176\ https://www.medicaid.gov/medicaid/prescription-drugs/retail-price-survey/index.html.
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    As described in the CY 2025 OPPS/ASC proposed rule (89 FR 59401), 
regarding which NADAC survey will be used, we specified that we will 
use the survey ``most recently published for purposes of this policy,'' 
which means the most recently updated NADAC survey available 30 days 
after the close of the quarter for which ASP data would have been 
reported if it were available.\177\ For example, if NADAC is used to 
determine the payment amount effective for dates of service in the 
third calendar quarter, CMS would use the most recent NADAC survey 
update available on the 30th day after the close of the first calendar 
quarter. This survey provides a national drug pricing benchmark for 
certain drugs that is adequately comprehensive to serve as the first 
alternative pricing source in the case that ASP data is not available. 
CMS conducts surveys of retail community pharmacy prices to develop the 
NADAC pricing benchmark in the annual NADAC pricing file. The pricing 
benchmark is reflective of the prices paid by retail community 
pharmacies to acquire prescription and over-the-counter covered 
outpatient drugs. NADAC data is publicly available and it can be 
accessed at https://data.medicaid.gov/nadac.
---------------------------------------------------------------------------

    \177\ 42 CFR 414.804(a)(5).
---------------------------------------------------------------------------

    We stated in the CY 2025 OPPS/ASC proposed rule (89 FR 59401), that 
since NADAC pricing is only available for drugs typically dispensed 
through retail community pharmacies, there could be circumstances in 
which ASP and NADAC are not available for DCAPS drugs like PreP for 
HIV. Therefore, if both ASP and NADAC pricing data are not available 
for a DCAPS drug, we proposed to use the most recently published and 
listed prices for pharmaceutical products in the Federal Supply 
Schedule (FSS) to calculate the payment amount for the applicable 
billing and payment code. Most recently published for purposes of this 
policy means the most recently updated FSS survey available 30 days 
after the close of the quarter for which ASP data would have been 
reported if it were available.\178\ For example, if FSS is used to 
determine the payment amount effective for dates of service in the 
third calendar quarter, CMS would use the most recent FSS update 
available on the 30th day after the close of the first calendar 
quarter. When using the FSS, we proposed that we would calculate the 
average price per billing unit (as described in the billing and payment 
code for the drug) for all NDCs listed for a drug. Drug pricing 
information, including FSS pricing, from the Veteran Affairs' (VA's) 
pharmaceutical pricing database is publicly available at the NDC level 
and published at https://www.va.gov/opal/nac/fss/pharmPrices.asp.
---------------------------------------------------------------------------

    \178\ 42 CFR 414.804(a)(5).
---------------------------------------------------------------------------

    We proposed to use FSS data when ASP and NADAC data are not 
available because FSS data is one of the few existing options for drug 
pricing that includes a wide variety of drug formulations, including 
both self-administered drugs typically dispensed through retail 
community pharmacies and drugs administered incident to a physician's 
service. For more details on the proposed pricing methodology for the 
physician office setting, please see the CY 2025 PFS proposed rule (89 
FR 61596).
    We note that the PFS proposal included a final step of invoice 
pricing; however, invoice pricing is not currently available under the 
OPPS, so we proposed not to adopt that portion of the PFS proposal. 
However, please see our Invoice Drug Pricing Policy for CY 2026 in 
section V.B.2.d. of this final rule with comment period. Because 
invoice pricing is not available in the OPPS currently, we proposed 
that if ASP, NADAC, and FSS pricing are not available for a particular 
drug covered as an additional preventive service, we will use WAC plus 
6 percent, or 3 percent if in an initial sales period, consistent with 
payment for separately payable drugs paid under the OPPS. This would 
result in different pricing between the OPPS and PFS if ASP, NADAC, and 
FSS pricing are not available, but we believe it is appropriate because 
invoice pricing is not currently an option under the OPPS and this 
pricing metric should only apply to a small subset of drugs covered as 
additional preventive services until one of the other pricing metrics 
becomes available. We proposed to treat other drugs covered as 
additional preventive services under this same methodology.
    As we stated in the CY 2025 OPPS/ASC proposed rule (89 FR 59401), 
if the PreP for HIV drugs would be covered as additional preventive 
services, we proposed to update the payment rates determined using the 
methodologies previously summarized on January 1, 2025, or the date of 
coverage, whichever is later, which would be further updated on the 
same schedule as the ASP pricing file, which is updated each calendar 
quarter. We proposed to assign the drug products covered as additional 
preventive services to status indicator K (Nonpass-Through Drugs and 
Nonimplantable Biologicals, Including Therapeutic Radiopharmaceuticals; 
Paid under OPPS; separate APC payment), as this status indicator 
identifies drugs and biologicals that are separately paid under the 
OPPS and therefore would allow us to operationalize separate payment 
for PrEP drugs. We explained that if the PrEP for HIV drugs are covered 
as additional preventive services, on January 1, 2025, or the date of 
coverage, whichever is later, we proposed that we would assign each 
PrEP for HIV drug covered as an additional preventive service to its 
own APC, which will have a payment rate assigned according to the 
previously defined methodology.
    As described in the CY 2025 OPPS/ASC proposed rule (89 FR 59401 
through 59402), HCPCS code J0799 (HIV prep, FDA approved, noc) was 
created effective January 2, 2024, and may be

[[Page 94298]]

used to describe a PrEP for HIV drug that is FDA approved but is not 
otherwise classified. We proposed to pay 95 percent of AWP for HCPCS 
code J0799, which is consistent with how unlisted drugs and biologicals 
are paid under the OPPS when they are reported with HCPCS code C9399 
(Unclassified drugs or biologicals). As HCPCS code J0799 and HCPCS code 
C9399 both describe drugs that are unclassified or not otherwise 
classified, we believe the payment methodologies should be similarly 
aligned. Section 1833(t)(15) of the Act, as added by section 621(a)(1) 
of the Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (Pub. L. 108-173), provides for payment under the OPPS for new 
drugs and biologicals until HCPCS codes are assigned. Under this 
provision, we are required to make payment for a covered outpatient 
drug or biological that is furnished as part of covered outpatient 
department services but for which a HCPCS code has not yet been 
assigned in an amount equal to 95 percent of AWP for the drug or 
biological.
    In the CY 2005 OPPS/ASC final rule with comment period (69 FR 
65805), we implemented section 1833(t)(15) of the Act by instructing 
hospitals to bill for a drug or biological that is newly approved by 
the FDA and that does not yet have a HCPCS code by reporting the NDC 
for the product along with the newly created HCPCS code C9399 
(Unclassified drugs or biologicals). We explained that when HCPCS code 
C9399 appears on a claim, the Shared Systems suspends the claim for 
manual pricing by the Medicare Administrative Contractor (MAC). The MAC 
prices the claim at 95 percent of the drug or biological's AWP, using 
Red Book or an equivalent recognized compendium, and processes the 
claim for payment. We emphasized that this approach enables hospitals 
to bill and receive payment for a new drug or biological concurrent 
with its approval by the FDA. The hospital does not have to wait for 
the next quarterly release or for approval of a product-specific HCPCS 
code to receive payment for a newly approved drug or biological or to 
resubmit claims for adjustment. We instructed that hospitals would 
discontinue billing HCPCS code C9399 and the NDC upon implementation of 
a product specific HCPCS code, status indicator, and appropriate 
payment amount with the next quarterly update. While the statute does 
not require DCAPS drugs to be paid at 95 percent of AWP when not 
assigned to a product specific HCPCS code, we believe it would be 
appropriate to create a parallel policy given that HCPCS code J0799 and 
HCPCS code C9399 both describe drugs that are unclassified or not 
otherwise classified. As the payment amount for HCPCS code C9399 is 
statutorily mandated at 95 percent of AWP, we believe that the payment 
amount for HCPCS code J0799 should also be 95 percent of AWP.
    Therefore, we proposed to establish an identical payment policy for 
HCPCS code J0799, which may be used to describe drugs that are FDA-
approved for PrEP for HIV and are covered as additional preventive 
services. In order to effectuate payment at 95 percent of AWP, we 
proposed to require hospitals to bill for a drug that is newly FDA 
approved for PrEP for HIV, and covered as an additional preventive 
service, and that does not yet have a HCPCS code, by reporting the NDC 
for the product along with the newly created HCPCS code J0799. Similar 
to HCPCS code C9399, when HCPCS code J0799 appears on a claim, the 
Shared Systems will suspend the claim for manual pricing by the MAC. 
The MAC would price the claim at 95 percent of the drug or biological's 
AWP, using Red Book or an equivalent recognized compendium, and process 
the claim for payment. This approach would enable hospitals to bill and 
receive payment for a drug that is newly FDA approved for PrEP for HIV 
and covered as an additional preventive service concurrent with its 
approval by the FDA. The hospital would not have to wait for the next 
quarterly release or for approval of a product-specific HCPCS code to 
receive payment for a newly approved drug or to resubmit claims for 
adjustment. We would instruct hospitals to discontinue billing HCPCS 
code J0799 and the NDC upon implementation of a product specific HCPCS 
code, status indicator, and appropriate payment amount with the next 
quarterly update.
    Finally, if covered as an additional preventive service, we 
proposed to assign all HCPCS codes describing pharmacy supplying fees 
for PrEP for HIV to an OPPS status indicator of ``B''. This follows the 
longstanding OPPS practice of assigning HCPCS codes that describe a 
pharmacy supply or dispensing fee to status indicator ``B'' (Codes that 
are not recognized by OPPS when submitted on an outpatient hospital 
Part B bill type (12x and 13x); Not paid under OPPS), such as HCPCS 
code Q0512 (Pharmacy supply fee for oral anti-cancer, oral anti-emetic 
or immunosuppressive drug(s); for a subsequent prescription in a 30-day 
period) and HCPCS code Q0513 (Pharmacy dispensing fee for inhalation 
drug(s); per 30 days).
    Comment: Several commenters were supportive of CMS's proposed 
payment policies and encouraged CMS to use its authority to pay for 
PrEP for HIV drugs and services as additional preventive services.
    Response: We thank commenters for their support. The final decision 
memorandum for the NCD was issued and was effective on September 30, 
2024 [https://www.cms.gov/medicare-coverage-database/view/ncacal-decision-memo.aspx?proposed=N&ncaid=310&fromTracking=Y&]. For the 
interim period of September 30, 2024, until December 31, 2024, before 
the DCAPS payment policy being finalized in this rule is effective, CMS 
will pay for PrEP for HIV drugs under the OPPS in a manner that closely 
aligns with how payment is currently made for drugs under the OPPS, 
which is generally based off of the ASP methodology. However, beginning 
January 1, 2025, as discussed in more detail below, we are finalizing a 
payment approach for determining a payment limit for DCAPS drugs. As 
PrEP for HIV is a DCAPS drug, payment will be made in accordance with 
the finalized payment approach.
    Comment: Several commenters supported CMS's proposal to use ASP 
plus 6 percent as the basis of payment; however, they recommended CMS 
revise the proposed payment approach specifically for PrEP for HIV, or 
in some cases DCAPS payment in general, in situations in which ASP data 
is unavailable. For example, commenters recommended in situations in 
which ASP is unavailable, CMS should base payment on WAC plus 3 or 6 
percent, rather than NADAC or FSS pricing. There were concerns from 
commenters that NADAC or FSS pricing were inadequate payment 
methodologies and could lead to underpayments that would discourage 
utilization.
    Response: We continue to believe that NADAC and FSS pricing are 
appropriate payment methodologies to determine a payment limit under 
the OPPS for DCAPS drugs in instances in which ASP data is not 
available. In the CY 2020 PFS final rule (84 FR 62655), we stated that 
we believe NADAC survey data on invoice prices provides the closest 
pricing metric to ASP-based payment limits that is available. FSS data 
is one of the few existing options for drug pricing that includes a 
wide variety of drug formulations, which is why CMS chose it as an 
additional alternative for drugs covered as additional preventive 
services. Thus, our proposal explained that ASP, NADAC, and FSS are all 
drug pricing options that aim to estimate the accurate acquisition cost 
of a drug, rather than WAC, which is a list price.

[[Page 94299]]

Therefore, we believe WAC should be the payment methodology used under 
the OPPS only if ASP, NADAC, or FSS pricing are not available, as 
invoice pricing is not currently an option for determining a payment 
limit for a drug under the OPPS, unlike under the PFS.
    Comment: A few commenters stated Medicare should ensure adequate 
payment for these services in a way that takes into account the site of 
service, since, in their view, hospital outpatient departments are more 
likely to care for patients who are more medically and socially complex 
than those cared for in physicians' offices. These commenters 
recommended that CMS calculate the payment for PrEP for HIV services 
furnished in an HOPD in the same manner as it does for other OPPS 
services, and not at the PFS rate.
    Response: We thank commenters for their feedback. We continue to 
believe that the additional preventive services discussed in this 
section generally should have resource costs that align between care 
settings, such as the HOPD and the physician's office. Accordingly, we 
are adopting a similar payment approach for the drugs covered as 
additional preventive services as under the fee schedule for DCAPS 
drugs in the physician office setting.
    For the PrEP for HIV counseling services performed by hospital 
staff, specifically HCPCS code G0013, we are finalizing our proposal to 
assign this service to a clinical APC with a payment rate that 
approximates the payment rate in the physician office setting, 
consistent with our belief that the resource costs would be similar 
across different settings of care. Based on updated data available for 
this final rule, as well as the expected physician office setting 
payment rate, this corresponds to an APC assignment of APC 5821 (Level 
1 Health and Behavior Services) for HCPCS G0013. We will continue to 
monitor the appropriateness of these APC assignments.
    We note that for the administration of the drug; however, we are 
finalizing our proposed assignment of HCPCS code G0012 (Injection of 
pre-exposure prophylaxis (prep) drug for hiv prevention, under skin or 
into muscle), which may be used to describe the injection of a PrEP 
drug for HIV prevention, to APC 5692 (Level 2 Drug Administration) 
based on the OPPS specific crosswalk to HCPCS code 96372 (Therapeutic, 
prophylactic, or diagnostic injection (specify substance or drug); 
subcutaneous or intramuscular) based on the anticipated similarity in 
resource use to other codes assigned to this APC. Since we have an 
existing crosswalk code under the OPPS on which to base payment for 
HCPCS code G0012, we believe it is appropriate to finalize the 
assignment of that code to APC 5692, rather than the PFS payment rate.
    Comment: Several commenters shared concerns or support for the 
Proposed NCD for Pre-Exposure Prophylaxis (PrEP) for Human 
Immunodeficiency Virus (HIV) Infection Prevention, published on July 
12, 2023, as the NCD was not yet finalized as of the end of the comment 
period for the CY 2025 PFS proposed rule on September 9, 2024. This 
included concerns regarding unintended consequences of NCD 
finalization, such as having the same drugs covered under Medicare Part 
B or Part D depending on the indication in which they are used, which a 
commenter believed would be administratively burdensome. There were 
also concerns regarding pharmacists being unable to enroll as 
prescribers under Medicare Part B. The commenters also included support 
for certain payment methodologies for Medicare to adopt in the interim 
period after the NCD was finalized, but before this rule takes effect 
on January 1, 2025. Commenters also expressed concerns regarding 
Medicare Advantage Utilization Management controls being used for 
products potentially covered under the NCD.
    Response: We thank commenters for their feedback; however, we note 
comments related to the proposed and final coverage decision are out of 
scope for purposes of our proposed payment policies. Additionally, as 
the proposed and finalized policies in this rule are for payment for 
DCAPS drugs, including PrEP for HIV drugs, beginning January 1, 2025, 
comments regarding the interim payment rate for PrEP for HIV are 
outside the scope of this rulemaking. The public comment period on the 
proposed NCD for PrEP for HIV coverage under Medicare Part B was from 
January 12, 2023, to February 11, 2023. The final NCD was released on 
September 30, 2024, and is available at https://www.cms.gov/medicare-coverage-database/view/ncacal-decision-memo.aspx?proposed=N&ncaid=310&fromTracking=Y&. We direct interested 
parties to https://www.cms.gov/medicare/coverage/prep for more 
information on the final NCD and the transition of PrEP for HIV 
coverage and payment from Part D to Part B. This CMS PrEP web page 
contains and/or will contain additional guidance on implementation of 
PreP for HIV coverage under Part B, including coding and billing 
information, payments for PrEP for HIV for the period of September 30-
December 31, 2024, and the implementation of the payment approach for 
DCAPS drugs, including PreP for HIV drugs, effective January 1, 2025.
    Comment: A commenter strongly opposed use of FSS pricing to pay for 
PrEP for HIV drugs, but asked that we confirm that we will utilize the 
Other Government Agency (OGA) FSS price if we proceed with finalizing 
the use of the FSS price in cases where ASP and NADAC pricing data are 
not available. The commenter believed basing payment on the OGA FSS 
price would better support patient access to PrEP for HIV drugs 
compared to the Big 4 FSS price (the Department of Veterans Affairs 
(VA), DoD, the Public Health Service, and the Coast Guard), which the 
commenter stated reflects substantial statutory discounts that do not 
apply to Medicare Part B providers and they stated this could lead to 
significant under-payment for PrEP for HIV drugs.
    Response: We confirm that the FSS pricing data used will be the OGA 
prices.
    As previously described, the NCD was finalized on September 30th, 
2024. On that date Medicare began coverage and payment for PrEP for HIV 
and associated services. The payment assignments for the interim period 
(that is, September 30, 2024, to December 31, 2024) are in Table 143.
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    After consideration of the public comments we received, we are 
finalizing our proposal with slight modifications. For CY 2025, we are 
finalizing our proposal to pay for PrEP for HIV drugs and related 
services as additional preventive services under the OPPS. That is, we 
are finalizing our proposal that PrEP for HIV will be paid in 
accordance with the payment approach we are finalizing for all DCAPS 
drugs. We are finalizing the APC assignments in Table 144 generally 
consistent with our proposal.
    We are finalizing some modifications to our proposed policies. When 
using NADAC pricing to determine a payment rate, and the drug is 
available in generic and brand formulations, we proposed all NDCs will 
be averaged together to determine the payment amount. Similarly, when 
using the FSS to determine a payment rate, we proposed that we would 
calculate the average price per billing unit (as described in the 
billing and payment code for the drug) for all NDCs listed for a drug.
    In this final rule, to maintain consistency with the PFS finalized 
policy and comments received, we are amending our proposal, to finalize 
a policy to treat brand and generic drugs in a similar manner to the 
description in the Medicare Claims Processing Manual, Chapter 17, 
sections 20.1.3 and 20.4. That is, when calculating the price for 
multiple-source DCAPS drugs using NADAC or FSS pricing, we will use the 
lesser price of: (1) The median of all generic forms of the drug; or 
(2) The lowest brand name product.
    Additionally, after consideration of public comments, we are 
finalizing the following payment approach for drugs covered as 
additional preventive services and paid under the OPPS, and note the 
actual rates used for payment will be published on the CMS website and 
updated quarterly:
     If ASP data is available for the DCAPS drug, the payment 
limit will be determined based on the methodology under section 
1847A(b) of the Act (usually 106 percent of ASP);
     If ASP data is not available, the payment limit will be 
calculated using NADAC prices for the drug;
     If ASP data and NADAC prices are not available, the 
payment limit will be calculated using the FSS prices for the drug; and
     If ASP data, NADAC prices, and FSS prices are not 
available, payment will be WAC plus 6 percent, or 3 percent if in an 
initial sales period, consistent with payment for separately payable 
drugs paid under the OPPS. Because invoice pricing is not currently 
available in the OPPS, if ASP, NADAC, and FSS pricing are not available 
for a particular drug covered as an additional preventive service, we 
will use WAC plus 6 percent, or 3 percent if in an initial sales 
period.
    However, as discussed in section V.B.2.d. (Invoice Drug Pricing for 
CY 2026) of this final rule with comment period, we are finalizing a 
policy to begin to price certain drugs based on their invoices starting 
in CY 2026. As such, we are making a conforming change such that, 
starting in CY 2026, if ASP data, NADAC prices, and FSS prices are not 
available, the payment rate would be based on the invoice price. For CY 
2025 only, if ASP data, NADAC prices, and FSS prices are not available, 
payment will be based on WAC plus 6 percent, or 3 percent of in an 
initial sales period. We note this may result in different approaches 
to setting a payment rate between the OPPS and PFS if ASP, NADAC, and 
FSS pricing are not available, but we believe it is appropriate because 
invoice pricing is not currently an option under the OPPS and this 
pricing metric should only apply to a small subset of DCAPS drugs, 
until one of the other pricing metrics becomes available. As mentioned 
in CMS's responses to comments above, we are clarifying that the FSS 
price is the ``other government agencies'' price.
    Finally, in the CY 2025 OPPS/ASC proposed rule, we proposed that if 
covered as an additional preventive service, we would assign all HCPCS

[[Page 94302]]

codes describing pharmacy supplying fees for PrEP for HIV to an OPPS 
status indicator of ``B''. We stated this follows the longstanding OPPS 
practice of assigning HCPCS codes that describe a pharmacy supply or 
dispensing fee to status indicator ``B'' (Codes that are not recognized 
by OPPS when submitted on an outpatient hospital Part B bill type (12x 
and 13x); Not paid under OPPS), such as HCPCS code Q0512 (Pharmacy 
supply fee for oral anti-cancer, oral anti-emetic or immunosuppressive 
drug(s); for a subsequent prescription in a 30-day period) and HCPCS 
code Q0513 (Pharmacy dispensing fee for inhalation drug(s); per 30 
days). While our longstanding OPPS practice has been to assign all 
HCPCS codes describing pharmacy supplying or dispensing fees to an OPPS 
status indicator of ``B'' indicating that the code is not payable under 
the OPPS, we believe assignment of these HCPCS codes describing 
pharmacy supplying or dispensing fees would be most accurately assigned 
to a status indicator of ``M'' (Items and Services Not Billable to the 
MAC; Not paid under OPPS), which also indicates that the codes are not 
paid under the OPPS. Status indicator ``M'' codes are not billable to 
the MAC. We believe status indicator ``M'' more clearly articulates 
that these codes are not billable to the MAC by hospitals and 
pharmacies should bill these HCPCS codes to their appropriate MAC. 
Whereas, status indicator ``B'' states the code is not recognized by 
OPPS, while that is true, we believe the definition for status 
indicator ``M'' is more comprehensive and better instructs proper 
billing as it is communicating to all hospitals that these codes are 
not billable to their MAC, rather than just not recognized by the OPPS. 
Therefore, we are finalizing this technical refinement to assign HCPCS 
code Q0521 (Pharmacy supplying fee for hiv pre-exposure prophylaxis fda 
approved prescription) to status indicator ``M.'' We note, HCPCS code 
Q0521 replaces HCPCS codes Q0516, Q0517, Q0518, Q0519, and Q0520 
starting January 1, 2025.
    To maintain consistency with regard to the use of status indicators 
under the OPPS, we are also applying this technical refinement and 
assigning a status indicator of ``M'' to other pharmacy supplying and 
dispensing HCPCS codes. This is consistent with our discussion and 
intent in the CY 2025 OPPS/ASC proposed rule, where it was discussed 
that pharmacy supplying and dispensing codes, such as HCPCS codes Q0512 
(Pharmacy supply fee for oral anti-cancer, oral anti-emetic or 
immunosuppressive drug(s); for a subsequent prescription in a 30-day 
period) and HCPCS code Q0513 (Pharmacy dispensing fee for inhalation 
drug(s); per 30 days) were historically assigned to a non-payable 
status indicator. The pharmacy supplying and dispensing codes that we 
are assigning to a status indicator of ``M'' for CY 2025 include: Q0510 
(Pharmacy supply fee for initial immunosuppressive drug(s), first month 
following transplant); Q0511 (Pharmacy supply fee for oral anti-cancer, 
oral anti-emetic or immunosuppressive drug(s); for the first 
prescription in a 30-day period); Q0512 (Pharmacy supply fee for oral 
anti-cancer, oral anti-emetic or immunosuppressive drug(s); for a 
subsequent prescription in a 30-day period); Q0513 (Pharmacy dispensing 
fee for inhalation drug(s); per 30 days); Q0514 (Pharmacy dispensing 
fee for inhalation drug(s); per 90 days). As described in the preceding 
paragraph, we believe status indicator ``M'' more clearly articulates 
that these codes are not billable to the MAC by hospitals and 
pharmacies should bill these HCPCS codes to their appropriate MAC. 
Whereas, status indicator ``B'' states the code is not recognized by 
OPPS, while that is true, we believe the definition for status 
indicator ``M'' is more comprehensive and better instructs proper 
billing as it is communicating to all hospitals that these codes are 
not billable to their MAC, rather than just not recognized by the OPPS. 
Similarly, as we previously summarized, we are not paying for PrEP for 
HIV counseling, described by HCPCS code G0011, performed by physicians 
under the OPPS as this is a physician-only service. Therefore, 
following the same logic as just discussed for the pharmacy supplying 
and dispensing codes, we are also finalizing assignment of this code to 
a status indicator of ``M'' to better instruct proper billing.
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BILLING CODE 4120-01-C
    Final definitions of status indicators for CY 2025 can be found in 
Addendum D1 to this final rule with comment period. Additionally, final 
CY 2025 APC payment rates can be found in Addenda A and B. Addenda to 
this final rule with comment period can be found on the CMS OPPS web 
page.
    Corresponding with the finalization of this policy, we are adding 
conforming regulation text changes by adding new paragraph (j) to Sec.  
419.41. This new paragraph details the payment amounts for drugs 
covered as additional preventive services under the OPPS and includes 
the finalized payment methodology hierarchy as described in this 
section.

G. Payment Policy for Devices in Category B Investigational Device 
Exemption (IDE) Clinical Trials Policy and Drugs/Devices With a 
Medicare Coverage With Evidence Development (CED) Designation

    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72027), and as authorized by section 1833(w) of the Act, we finalized a 
policy to make a single blended payment for devices and services in 
Category B IDE studies, in order to preserve the scientific validity of 
these studies by avoiding differences in Medicare payment methods that 
would otherwise reveal the group (treatment or control) to which a 
patient has been assigned. Specifically, we codified our process of 
utilizing a single packaged payment for Category B IDE studies, 
including the cost of the device and routine care items and services, 
in the regulation text for payment to hospitals in a new Sec.  419.47. 
We provided in new Sec.  419.47(a) and (b) that CMS will create a new 
HCPCS code, or revise an existing HCPCS code, to describe a Category B 
IDE study, which will include both the treatment and control arms, 
related device(s) of the study, as well as routine care items and 
services, as specified under 42 CFR 405.201, when CMS determines that 
the Medicare coverage IDE study criteria at Sec.  405.212 are met, and 
a new or revised code is necessary to preserve the scientific validity 
of the IDE study, such as by preventing the unblinding of the study.
    We finalized that the single blended payment rate would be 
dependent on the specific trial protocol and would account for the 
frequency with which the investigational device is used compared to the 
control where the investigational device is not used. For example, in a 
study for which CMS determines the Medicare coverage IDE study criteria 
in Sec.  405.212 are met and where there is a 1:1 assignment of the 
device to control (no device), Medicare's payment rate would 
prospectively average the payment for the device with the zero payment 
for the control in a 1:1 ratio. Furthermore, costs for routine care 
items and services in the study, as specified under Sec.  405.201, 
would be included in the single blended payment (87 FR 72026 through 
72027).
    Since implementing this policy, we have heard from interested 
parties that our regulation at Sec.  419.47(a) and (b) excluded 
clinical trials for which there is no control arm. We appreciate the 
input. Category B IDE studies with no control arm would be paid 
normally because an alternative payment methodology would not be 
necessary to preserve their scientific validity. Our policy at Sec.  
419.47 applies only to IDE studies with a control arm and where a 
payment adjustment is necessary to preserve the scientific validity of 
such a study. The rule was not intended to suggest that CMS will not 
pay for Category B IDEs with no control arm, provided the studies meet 
the coverage criteria. In those circumstances, Medicare payments would 
be made using the usual Medicare payment methodologies.
    In many instances, requests for coding and payment for devices in 
Category B IDE studies are submitted through our New Technology APC 
application process and include the submission of cost information. 
However, we have encountered difficulties determining accurate payment 
rates for Category B IDE studies in the absence of New Technology APC 
applications, such as

[[Page 94305]]

when coding for Category B IDE studies is developed through the CPT 
Editorial Panel process. We encourage interested parties to use the New 
Technology APC application process, where applicable, to submit cost 
information to CMS. Absent information on the resource costs associated 
with the services and devices in a Category B IDE study, we may assign 
a SI of ``E2'' to indicate an item, code or service for which pricing 
information and claims data are not available, and, therefore, the 
item, code or service is not paid by Medicare when submitted by an 
outpatient claim.
    For CY 2025, we proposed to utilize a payment methodology similar 
to the one developed for Category B IDE clinical trials for drugs and 
devices covered under a national coverage determination (NCD) that uses 
the Coverage with Evidence Development (CED) paradigm when a payment 
adjustment is necessary to preserve the scientific validity of such a 
study. Specifically, we proposed to use our authority at section 
1833(w) of the Act to develop alternative methods of payment under 
Medicare Part B for drugs and devices being studied in clinical trials 
under a CED NCD. These CED NCDs will be listed on the CMS CED 
website.\179\
---------------------------------------------------------------------------

    \179\ https://www.cms.gov/medicare/coverage/evidence.
---------------------------------------------------------------------------

    Similar to our policy on devices in Category B IDE trials, for 
devices under a CED NCD, we proposed to make a single blended payment 
rate that would be dependent on the specific trial protocol and would 
account for the frequency with which the investigational device is used 
compared to the control where the investigational device is not used. 
For example, in a study for which there is a 1:1 assignment of the 
device to control (no device), Medicare's payment rate would 
prospectively average the payment for the device with the zero payment 
for the control in a 1:1 ratio.
    As previously described, when necessary to preserve the scientific 
validity of the study, we proposed to make payment using an adjusted 
payment level representing the frequency with which the study drug and 
placebo, or comparator drug, is furnished. A placebo, or comparator 
drug, could represent what a beneficiary would typically receive in 
order to serve as a comparator to assess the effectiveness, or 
therapeutic benefit, of the study drug. These adjusted payments would 
protect the scientific validity of the trial by avoiding differences in 
Medicare payment methods that could otherwise invalidate the scientific 
validity of the trial, such as by revealing the group (treatment or 
control) to which a patient has been assigned. We proposed to base the 
payment amount for the study drug, or active comparator drug, on the 
ASP methodology, that is ASP plus 6 percent if ASP data is available. 
If ASP data is not available, then we proposed to pay the wholesale 
acquisition cost (WAC). During an initial sales period, we proposed to 
base the payment on WAC plus 3 percent, otherwise, we proposed to base 
payment on WAC plus 6 percent. If WAC is not available, then we 
proposed to pay 95 percent of average wholesale price (AWP). This 
payment hierarchy is consistent with CMS payment for non-passthrough 
separately payable drugs in the OPPS as discussed in section V.B. of 
the CY 2025 OPPS/ASC proposed rule.
    These payment amounts would be used to calculate the adjusted 
payment level representing the frequency with which the study drug and 
placebo, or comparator drug, is furnished. For purposes of setting this 
adjusted payment level, we proposed to use a zero dollar amount for a 
placebo or comparator. A new, or revised, HCPCS code would be created 
for the drug and placebo or comparator in the CED study. We proposed 
that we would assign this HCPCS code to its own APC reflecting the 
payment amount determined appropriate based on available pricing 
information and the frequency with which the study drug and placebo, or 
comparator drug, is used.
    For example, as most drugs are currently paid per dosage unit, such 
as per 1 mg, a payment rate, potentially priced per 1 mg of drug, 
placebo, or active comparator, might be based on the average sales 
price methodology for the drug averaged with a zero-dollar payment for 
the placebo, or the applicable payment rate of the comparator drug. A 
single averaged payment would be made regardless of whether 1 mg of 
study drug, 1 mg of placebo, or 1 mg of comparator drug is used. If the 
trial is a 1:1 (treatment: placebo) then the payment rate would be the 
same for every trial participant and would represent half of the total 
payment for the drug. In a simplified example, if the ASP plus 6 
percent payment rate for Drug X was $1 per 1 mg then in this example, 
the payment rate for the blended code of Drug X and placebo would be 
$0.50 per 1 mg. If a beneficiary received 100 mg of the study drug, 
then a $50 payment would be made. If a beneficiary received 100 mg of 
the placebo, then a $50 payment would be made. The same HCPCS code 
would be billed in both the study drug and placebo examples. The same 
payment methodology would apply if the study design was 1:2 (treatment: 
placebos, which equals payment at \1/3\ the cost of the study drug) or 
1:3 (treatment: placebos, which equals payment at \1/4\ the cost of the 
study drug).
    In situations where there are multi-arm, or single-arm, cross over 
trials where participants receive placebo, or sham, for the first half 
of the trial and then the study drug for the second half of the trial, 
the payment would be reflective of this, and set in the same manner as 
a 1:1 trial, since half of the time the beneficiary would receive the 
placebo and the other half they would receive the study drug. No matter 
the trial design, CMS payment would be reflective of the expected 
frequency with which the study treatment, control, active comparator, 
or placebo is provided. We noted that we proposed to assign payment 
rates based on an adjusted payment level representing the frequency 
with which the study drug and placebo, or comparator drug, is projected 
to be furnished for the trial as a whole, and not necessarily the exact 
frequency with which the study drug and placebo, or comparator drug, is 
furnished to a particular hospital enrolled as a clinical trial site. 
Clinical trial sponsors should work with CMS to ensure timely 
establishment of payment and coding for drugs being studied under a CED 
designation requiring an adjusted level of payment.
    While the items and services furnished as placebo controls may not 
be considered reasonable and necessary under section 1862(a)(1)(A) of 
the Act because they have no health benefit, these items and services 
can be necessary in order to conduct a scientifically valid clinical 
study. As such, these items can be covered under section 1862(a)(1)(E) 
of the Act when furnished in the context of a qualifying clinical 
study.\180\
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    \180\ Coverage with Evidence Development: Guidance Document. 
August 7, 2024. https://www.cms.gov/medicare-coverage-database/view/medicare-coverage-document.aspx?mcdid=38.
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    CMS may cover and pay for routine costs of an approved clinical 
trial in both the treatment arm and the control (standard of care or 
placebo). Routine costs include all items and services that are 
otherwise generally available to Medicare beneficiaries (i.e., there 
exists a benefit category for the item or service, coverage is not 
statutorily excluded for the item or service, and there is not a 
national non-coverage decision for the item or service) that are 
provided in either the experimental or the control

[[Page 94306]]

arms of a clinical trial. Although CMS may cover and pay for routine 
costs of an CED approved clinical trial in both the treatment arm and 
the control (standard of care or placebo), there may be circumstances, 
such as single arm studies, where no unique coding or unique payment 
would be required to preserve the scientific validity of such a study 
created for routine costs associated with clinical trials. Similarly, 
if the routine costs are the exact same between different arms of a 
trial, and routine billing and payment of those routine costs would not 
unblind a study, then no unique coding or payment would be required for 
those costs. There would be no need to include these routine costs in 
the HCPCS code assigned to a blended payment rate. If covered, these 
routine costs would be paid according to existing coding and Medicare 
payment mechanisms. Under the proposal, an alternate method of payment 
would be established only when necessary to maintain the scientific 
validity of the trial, such as to prevent the billing and payment of 
routine costs from unblinding the trial. These determinations would be 
made based on the clinical trial protocol communicated to CMS by the 
clinical trial sponsor, before CMS would establish an appropriate code 
with an adjusted payment level for routine costs for CED trials. CMS's 
determination in CED trials would differ from our policy regarding 
devices and procedures in Category B IDE trials, where the provision of 
an investigational device usually requires a combination of procedures 
or services to implant, or administer, the device to a patient. In 
contrast, the infusion of a drug is typically a more straightforward 
process, and associated routine costs may not be provided at the same 
time that the drug is administered, making it impractical to create a 
single code to describe the study drug and all associated routine 
costs.
    Finally, we wanted to be sure there are no other instances where 
Medicare payment methodologies might interfere with the scientific 
validity of a trial. We sought comment on these possible alternative 
scenarios, such as Medicare payment interfering with clinical trial 
recruitment in such a way that could compromise the scientific 
integrity of a clinical trial and would consider adjustments to our 
payment policy for devices in Category B IDE clinical trials and 
devices/drugs in clinical trials with a CED designation in future 
rulemaking.
    We proposed to codify our coding and payment policy to Category B 
IDE clinical trials with control arms through revisions to Sec.  
419.47(a) to specify that these are placebo control arms. We also 
proposed to codify our proposed process for developing coding and 
payment for devices/drugs in CED-designated clinical trials by adding 
new paragraphs (c) and (d) to Sec.  419.47. Specifically, we proposed 
to provide in new Sec.  419.47(c) that CMS would create a new HCPCS 
code, or revise an existing HCPCS code, to describe a device/drug 
studied in a clinical trial with the Medicare CED designation, which 
would include the study device/drug and control arm, when CMS 
determines it is necessary to establish a CED designation for a device/
drug subsequent to a CED NCD. Additionally, in new Sec.  419.47(d) we 
proposed that when we create a new HCPCS code or revise an existing 
HCPCS code under proposed paragraph (c), we would make a single payment 
for the HCPCS code that includes payment for the investigational 
device/drug and any control.
    Comment: Several commenters were not supportive of our proposal 
because they believed the single blended payment rate would lower 
payments and disincentivize provider participation in clinical trials 
for drugs and devices with a CED designation. One commenter stated that 
the practical application of this policy would reduce the pool of 
eligible providers to those participating in settings such as academic 
medical centers and facilities that are already performing a high 
volume of procedures. The commenter further explained that if clinical 
trial sites were limited to academic medical centers and other 
facilities performing a high volume of procedures, the commenter 
believed that communities of color and rural communities would 
disproportionally face access issues, due to the use of the CED 
paradigm.
    Response: We appreciate the commenters' input and will continue to 
consider the implications of a single blended payment rate to hospital 
outpatient departments for drugs and devices in clinical trials covered 
under an NCD with a CED designation, including the access and health 
equity impacts.
    Comment: A comment signed by 18 organizations explained that it was 
unethical to require patients to participate in a study so that they 
might get access to a drug that is already FDA approved. Another 
commenter believed it was unethical for patients to pay for a placebo 
when there is an FDA approved treatment available.
    Response: We appreciate the input and are sympathetic to the 
commenters' concerns. Although we appreciate the viewpoint of 
commenters expressing concern for assigning a CED designation to FDA 
approved drugs, we note that the comments are out of scope because they 
do not relate to the proposed payment methodology for CED drugs and 
devices. With regard to the comment stating that it was unethical for 
patients enrolled in clinical trials to pay for a placebo, we need 
additional time to consider the ethical implications of requiring a 20 
percent coinsurance for all study participants, as proposed, including 
those that do not receive the CED drug or device. We welcome public 
engagement and comments on this final rule with comment period 
regarding the implications of requiring a coinsurance payment for 
beneficiaries participating in trials for CED drugs and devices, as 
well as the relevant statutory authorities that may allow for an 
adjustment of the coinsurance amount for beneficiaries participating in 
clinical trials for CED drugs and devices. We will continue to consider 
the ethical implications as part of future policymaking on payments for 
clinical trials.
    Comment: Several commenters did not support CMS applying CED 
designation to drugs and biologics that are already approved by the FDA 
because they believe it would impede beneficiary access to medicines 
that FDA has already determined to be safe and effective. Two 
commenters stated that our proposed policy seemed to indicate that more 
FDA-approved drugs and biologics will be covered by Medicare under the 
CED pathway in the future. Commenters urged CMS to exercise caution, 
maintain very limited use of CED for Part B drugs, and not use CED to 
conduct control arm studies or to prevent access to FDA approved 
treatments.
    Response: We appreciate hearing the public comments and concerns 
about the potential coverage of drugs and biologicals in future CED 
trials. However, these comments are outside the scope of our proposed 
rule because they relate to the coverage pathway for certain drugs and 
devices rather than the proposed payment methodology for CED drugs and 
devices. Because the comments relate to coverage decisions that are 
entirely separate from the proposed payment methodology for CED drugs 
and devices, we did not consider the comments submitted for this final 
rule with comment period. We refer readers to the ``Coverage with 
Evidence Development: Guidance Document'' issued on August 7, 2024, for 
more

[[Page 94307]]

information on CMS's policy for making NCDs using the CED 
paradigm.\181\
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    \181\ https://www.cms.gov/medicare-coverage-database/view/medicare-coverage-document.aspx?mcdid=38.
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    Comment: We received several comments, including from a drug 
manufacturer, supporting our proposal for both CED drugs and devices. 
Commenters stated that they believed it was necessary for CMS to 
finalize this policy to preserve the scientific integrity of future 
trials. One commenter explained that the policy's emphasis on 
scientific validity outweighed the small chance of lower payment for 
trial sites that perform more placebo or sham services versus 
intervention services. A couple of commenters supported our proposal 
and requested additional billing and coding guidance for trial sites, 
as well as timely, transparent, and efficient implementation of the 
policy.
    Response: We thank the commenters for their support. While we agree 
that the proposed payment methodology for CED drugs and devices may 
have the effect of preserving the scientific integrity of CED trials, 
other commenters raised concerns regarding the impact of the proposed 
policy on provider payments, study enrollment, and beneficiary 
coinsurance amounts for study enrollees, that need to be further 
considered prior to finalizing a payment policy. Because we are not 
finalizing the proposed rule at this time, we will consider the 
comments if we undertake future rulemaking.
    After consideration of the public comments we received, we are not 
finalizing our proposal to use our authority at section 1833(w) of the 
Act to develop alternative methods of payment under Medicare Part B for 
drugs and devices being studied in clinical trials under a CED NCD at 
this time. We believe that there are broader policy implications to our 
proposal that require further consideration prior to finalizing a 
payment policy for CED drugs and devices. For example, we need 
additional time to consider the ethical implications of requiring a 
coinsurance payment for all beneficiaries participating in a clinical 
trial for a CED drug or device, including those that do not receive the 
investigational treatment. We also need additional time to consider the 
potential impacts of a single blended payment rate on clinical trial 
enrollment for drugs and devices in CED trials. We will carefully 
consider the issues raised in the public comments received in 
developing a payment policy for CED drugs and devices for future 
rulemaking.
    Accordingly, we are not revising the regulation text at Sec.  
419.47 as proposed to include a payment methodology for CED drugs and 
devices. We are finalizing our proposal to codify our coding and 
payment policy for Category B IDE clinical trials with control arms 
through revisions to Sec.  419.47(a) to specify that our policy applies 
only to IDE studies with a control arm and where a payment adjustment 
is necessary to preserve the scientific validity of such a study.

XI. CY 2025 OPPS Payment Status and Comment Indicators

A. CY 2025 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 whether 
particular OPPS policies apply to the code.
    For CY 2025 and subsequent years, we proposed to create two new 
status indicators, ``K1'' and ``H1.'' We proposed these two new status 
indicators to identify the products that qualify for separate payment 
under our new payment policy for non-opioid post-surgical pain 
management drugs, biologicals, and devices, as authorized by section 
4135 of the Consolidated Appropriations Act, 2023. This policy is 
discussed further in section XIII.E of this final rule. The final 
definitions and payment status of status indicators ``K1'' and ``H1'' 
can be found in Table 145.
[GRAPHIC] [TIFF OMITTED] TR27NO24.193

    For CY 2025 and subsequent years, we proposed to modify the 
definition of status indicator ``K'' to remove the word ``therapeutic'' 
from the phrase ``therapeutic radiopharmaceuticals'' to indicate that 
both diagnostic and therapeutic radiopharmaceuticals may be assigned to 
status indicator ``K'' in accordance with our policy proposal in 
section II.A.3.a. of this final rule. The final definition and payment 
status of status indicator ``K'' can be found in Table 146.

[[Page 94308]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.194

    We solicited public comments on the proposed definitions of the 
OPPS payment status indicators for 2025. We did not propose to make any 
other changes to the existing definitions of status indicators that 
were listed in Addendum D1 to this final rule with comment period, 
which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.
    Comment: Commenters were supportive of our proposed creation of 
status indicators ``K1'' and ``H1'' to identify the products that 
qualify for separate payment under our new payment policy for non-
opioid post-surgical pain management drugs, biologicals, and devices, 
as authorized by section 4135 of the Consolidated Appropriations Act, 
2023.
    Response: We thank the commenters for their support.
    Comment: We did not receive any specific comments regarding our 
proposal to revise status indicator ``K'' to remove the word 
``therapeutic'' from the phrase ``therapeutic radiopharmaceuticals'' to 
indicate that both diagnostic and therapeutic radiopharmaceuticals may 
be assigned to status indicator ``K'' in accordance with our policy 
proposal in section II.A.3.a. of the CY 2025 OPPS/ASC proposed rule (89 
FR 59427 through 59433). However, commenters were generally supportive 
of our proposals to pay separately for qualifying diagnostic 
radiopharmaceuticals as discussed in section II.A.3.a. of this final 
rule with comment period.
    Response: We thank the commenters for their support.
    After consideration of the public comments received on our proposal 
related to the definitions of the status indicators ``K1,'' ``H1,'' and 
``K,'' we are finalizing our proposal without modification.
    Additionally, in order to conform with the policy being finalized 
in section X.F. of this final rule with comment period, we are revising 
status indicator ``A'' to list HCPCS code J0799 (FDA approved 
prescription drug, only for use as HIV pre-exposure prophylaxis (not 
for use as treatment of HIV), not otherwise classified) in addition to 
HCPCS code C9399 (Unclassified drugs or biologicals) as the finalized 
policy treats the two unlisted drug related codes in a similar manner. 
Therefore, the definition for status indicator ``A'' will now read: 
``Unclassified drugs and biologicals reportable under HCPCS code C9399 
and not otherwise classified FDA-approved prescription drugs for HIV 
PrEP reported under HCPCS code J0799.''
    We are also finalizing additional policies that exclude certain 
items or services from C-APC packaging, impacting the definitions of 
status indicators for comprehensive-APCs, as described in section 
II.A.2.b. We are revising the ``J1'' and ``J2'' descriptors to refer to 
the most recent OPPS Addendum J for a list of the C-APC exclusions 
rather than listing them all in the status indicator definition. 
Therefore, status indicator ``J1'' will be revised to: ``Paid under 
OPPS; all covered Part B services on the claim are packaged with the 
primary `J1' service for the claim, except the Comprehensive APC 
payment policy exclusions found in the most recent Addendum J.'' 
Similarly, status indicator ``J2'' will be revised to: ``(1) 
Comprehensive APC payment based on OPPS comprehensive-specific payment 
criteria. Payment for all covered Part B services on the claim is 
packaged into a single payment for specific combinations of services, 
except the Comprehensive APC payment policy exclusions found in the 
most recent Addendum J.''
    The complete list of CY 2025 payment status indicators and their 
definitions is displayed in Addendum D1 to this final rule with comment 
period, which is available on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    The CY 2025 payment status indicator assignments for APCs and HCPCS 
codes are shown in Addendum A and Addendum B, respectively, to this 
final rule with comment period, which are available on the CMS website 
at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.

B. CY 2025 Comment Indicator Definitions

    We proposed to use four comment indicators for the CY 2025 OPPS. 
These comment indicators, ``CH,'' ``NC,'' ``NI,'' and ``NP,'' are in 
effect for CY 2024; and we proposed to continue their use in CY 2025. 
The proposed CY 2025 OPPS comment indicators are as follows:
     ``CH''--Active HCPCS code in current and next calendar 
year, status indicator and/or APC assignment has changed; or active 
HCPCS code that will be discontinued at the end of the current calendar 
year.
     ``NC''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year, as compared to current calendar year for which we 
requested comments in the proposed rule; final APC assignment; comments 
will not be accepted on the final APC assignment for the new code.
     ``NI''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year, as compared to current calendar year, interim APC 
assignment; comments will be accepted on the interim APC assignment for 
the new code.
     ``NP''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year, as compared to current calendar year, proposed APC 
assignment; comments will be accepted on the proposed APC assignment 
for the new code.
    The definitions of the OPPS comment indicators for CY 2025 are 
listed in Addendum D2 to this final rule with comment period, which is 
available on

[[Page 94309]]

the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices.
    We solicited public comments on our proposed definitions of the 
OPPS comment indicators for 2025.
    We did not receive any public comments on our proposal and 
therefore, we are finalizing those definitions without modification for 
CY 2025.

XII. MedPAC Recommendations

    The Medicare Payment Advisory Commission (MedPAC) was established 
under section 1805 of the Act in large part to advise the U.S. Congress 
on issues affecting the Medicare program. As required under the 
statute, MedPAC submits reports to the Congress no later than March and 
June of each year that present its Medicare payment policy 
recommendations. The March report typically provides discussion of 
Medicare payment policy across different payment systems and the June 
report typically discusses selected Medicare issues. We are including 
this section to make stakeholders aware of certain MedPAC 
recommendations for the OPPS and ASC payment systems as discussed in 
its March 2024 report.

A. OPPS Payment Rates Update

    The March 2024 MedPAC ``Report to the Congress: Medicare Payment 
Policy,'' recommended that Congress update Medicare OPPS payment rates 
by the amount specified in current law plus 1.5 percent. We refer 
readers to the March 2024 report for a complete discussion of this 
recommendation.\182\ We appreciate MedPAC's recommendation and, as 
discussed further in section II.B of this final rule with comment 
period, we proposed to increase the OPPS payment rates by the amount 
specified in current law. Comments received from MedPAC on other OPPS 
policies are discussed in the applicable sections of this final rule 
with comment period.
---------------------------------------------------------------------------

    \182\ Medicare Payment Advisory Committee. March 2024 Report to 
the Congress. Chapter 3: Hospital inpatient and outpatient services, 
p.49. Available at: https://www.medpac.gov.
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B. Medicare Safety Net Index

    In the March 2024 MedPAC ``Report to the Congress: Medicare Payment 
Policy,'' MedPAC stated that their recommended update to IPPS and OPPS 
payment rates of current law plus 1.5 percent may not be sufficient to 
ensure the financial viability of some Medicare safety-net hospitals 
with a poor payer mix. MedPAC recommends redistributing the current 
Medicare safety-net payments (disproportionate share hospital and 
uncompensated care payments) using the MedPAC-developed Medicare 
Safety-Net Index (MSNI) for hospitals. In addition, MedPAC recommends 
adding $4 billion to this MSNI pool of funds to help maintain the 
financial viability of Medicare safety-net hospitals and recommended to 
the Congress transitional approaches for a MSNI policy.
    As discussed in the FY 2025 IPPS/LTCH PPS final rule with comment 
period (89 FR 70045), we look forward to working with Congress on these 
matters. In the FY 2024 IPPS/LTCH PPS proposed rule, we sought comments 
on the challenges faced by safety-net hospitals and potential 
approaches to help safety net hospitals meet those challenges. These 
comments will inform and guide our future rulemaking and other actions 
in this area.

C. ASC Cost Data

    In the March 2024 MedPAC ``Report to the Congress: Medicare Payment 
Policy,'' MedPAC reiterated its longstanding recommendation that 
Congress require ASCs to report cost data to enable the Commission to 
examine the growth of ASCs' costs over time and analyze Medicare 
payments relative to the costs of efficient providers. MedPAC suggested 
that such cost data would enable policymakers to establish payment 
rates that accurately reflect ASC costs and are also necessary to 
determine whether an existing Medicare market basket is an appropriate 
proxy for ASC costs or whether an ASC-specific market basket should be 
developed, stating both the CPI-U and hospital market basket update 
likely do not reflect an ASC's cost structure. MedPAC contended that it 
is feasible for small facilities, such as ASCs, to provide cost 
information since other small facilities, such as home health agencies, 
hospices, and rural health clinics, currently furnish cost data to CMS. 
Further, ASCs in Pennsylvania submit cost and revenue data annually to 
a state agency to estimate margins for those ASCs, and that, as 
businesses, ASCs keep records of their costs for filing taxes and other 
purposes.\183\
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    \183\ Medicare Payment Advisory Committee. March 2024 Report to 
the Congress. Chapter 10: Ambulatory surgical center services: 
Status report, p.297. Available at: https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_MedPAC_Report_To_Congress_SEC.pdf.
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    While we recognize that the submission of cost data could place 
additional administrative burden on most ASCs, and we did not propose 
any cost reporting requirements for ASCs in the CY 2025 OPPS/ASC 
proposed rule, as in previous years, we sought public comment on 
methods that would mitigate the burden of reporting costs on ASCs while 
also collecting enough data to reliably use such data in the 
determination of ASC costs. Such cost data would be beneficial in 
establishing an ASC-specific market basket for updating payment rates 
under the ASC payment system.
    Comment: A trade group representing ASCs suggested that a starting 
point on reporting ASC costs could be an effort to identify and 
calculate expense categories as a percentage of total expenses to help 
determine the appropriate weights and price proxies for the ASC 
setting. Further, the commenter stated that cost variability can differ 
greatly based on specialty, facility size, geographic location, and 
capital equipment of the facility. One commenter recommended that any 
such cost data collection should be used to inform a market basket 
index that is applied to both HOPDs and ASCs to ensure payments are 
aligned over time.
    Response: We appreciate the commenters' thoughtful responses. We 
will take these comments into consideration in future rulemaking.
    Comments received from MedPAC for other ASC payment system policies 
are discussed in the applicable sections of this final rule with 
comment period.

XIII. Updates to the Ambulatory Surgical Center (ASC) Payment System

A. Background, Legislative History, Statutory Authority, and Prior 
Rulemaking for the ASC Payment System

    For a detailed discussion of the legislative history and statutory 
authority related to payments to ASCs under Medicare, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 
32292). For a discussion of prior rulemaking on the ASC payment system, 
we refer readers to the CYs 2012 to 2024 OPPS/ASC final rules with 
comment period (76 FR 74378 through 74379; 77 FR 68434 through 68467; 
78 FR 75064 through 75090; 79 FR 66915 through 66940; 80 FR 70474 
through 70502; 81 FR 79732 through 79753; 82 FR 59401 through 59424; 83 
FR 59028 through 59080; 84 FR 61370 through 61410; 85 FR 86121 through 
86179; 86 FR 63761 through 63815; 87 FR 72054 through 72096; and 88 FR 
81900 through 81961).

[[Page 94310]]

B. ASC Treatment of New and Revised Codes

1. Background on Process for New and Revised HCPCS Codes
    We update the lists 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 systems (Sec.  416.173; 72 FR 42535). We base ASC 
payment and policies for most covered surgical procedures, drugs, 
biologicals, and certain other covered ancillary services on the OPPS 
payment policies and we use quarterly change requests (CRs) to update 
services paid for under the OPPS. We also provide quarterly update CRs 
for ASC covered surgical procedures and covered ancillary services 
throughout the year (January, April, July, and October). We release new 
and revised Level II HCPCS codes and recognize the release of new and 
revised CPT codes by the American Medical Association (AMA) and make 
these codes effective (that is, the codes are recognized on Medicare 
claims) via these ASC quarterly update CRs. We recognize the release of 
new and revised Category III CPT codes in the July and January CRs. 
These updates implement newly created and revised Level II HCPCS and 
Category III CPT codes for ASC payments and update the payment rates 
for separately paid drugs and biologicals based on the most recently 
submitted ASP data. New and revised Category I CPT codes, except 
vaccine codes, are released only once a year, and are implemented only 
through the January quarterly CR update. New and revised Category I CPT 
vaccine codes are released twice a year and are implemented through the 
January and July quarterly CR updates. We refer readers to Table 41 in 
the CY 2012 OPPS/ASC proposed rule for an example of how this process 
is used to update HCPCS and CPT codes, which we finalized in the CY 
2012 OPPS/ASC final rule with comment period (76 FR 42291; 76 FR 74380 
through 74384).
    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, new codes, and 
codes with revised descriptors, to identify any that we believe meet 
the criteria for designation as ASC covered surgical procedures or 
covered ancillary services. Updating the lists of ASC covered surgical 
procedures and covered ancillary services, as well as their payment 
rates, in association with the annual OPPS rulemaking cycle, is 
particularly important because the OPPS relative payment weights and, 
in some cases, payment rates, are used as the basis for the payment of 
many covered surgical procedures and covered ancillary services under 
the revised ASC payment system. This joint update process ensures that 
the ASC updates occur in a regular, predictable, and timely manner.
    Payment for ASC procedures, services, and items are generally based 
on medical billing codes, specifically, HCPCS codes, that are reported 
on ASC claims. The HCPCS is divided into two principal subsystems, 
referred to as Level I and Level II. Level I is comprised of CPT 
(Current Procedural Terminology) codes, a numeric and alphanumeric 
coding system maintained by the AMA, and includes Category I, II, and 
III CPT codes. Level II of the HCPCS, which is maintained by CMS, is a 
standardized coding system that is used primarily to identify products, 
supplies, and services not included in the CPT codes. Together, Level I 
and II HCPCS codes are used to report procedures, services, items, and 
supplies under the ASC payment system. Specifically, we recognize the 
following codes on ASC claims:
     Category I CPT codes, which describe surgical procedures, 
diagnostic and therapeutic services, and vaccine codes;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes (also known as alpha-numeric codes), 
which are used primarily to identify drugs, devices, supplies, 
temporary procedures, and services not described by CPT codes.
    We finalized a policy in the August 2, 2007 final rule (72 FR 42533 
through 42535) to evaluate each year all new and revised Category I and 
Category III CPT codes and Level II HCPCS codes that describe surgical 
procedures, and to make preliminary determinations during the annual 
OPPS/ASC rulemaking process regarding whether or not they meet the 
criteria for payment in the ASC setting as covered surgical procedures 
and, if so, whether or not they are office-based procedures. In 
addition, we identify new and revised codes as ASC covered ancillary 
services based upon the final payment policies of the revised ASC 
payment system. In prior rulemakings, we refer to this process as 
recognizing new codes. However, this process has always involved the 
recognition of new and revised codes. We consider revised codes to be 
new when they have substantial revision to their code descriptors that 
necessitate a change in the current ASC payment indicator. To clarify, 
we refer to these codes as new and revised in this CY 2025 OPPS/ASC 
final rule.
    We have separated our discussion below based on when the codes are 
released and whether we propose to solicit public comments in the 
proposed rule (and respond to those comments in this final rule with 
comment period) or whether we will be soliciting public comments in 
this CY 2025 OPPS/ASC final rule with comment period (and responding to 
those comments in the CY 2026 OPPS/ASC final rule with comment period).
2. April 2024 HCPCS Codes Proposed Rule Comment Solicitation
    For the April 2024 update, there were no new CPT codes; however, 
there were several new Level II HCPCS codes. In the April 2024 ASC 
quarterly update (Transmittal 12559, dated March 28, 2024, CR 13577), 
we added several new Level II HCPCS codes to the list of covered 
ancillary services. Table 147 (New Level II HCPCS Codes for Ancillary 
Services Effective April 1, 2024) of the CY 2025 OPPS/ASC proposed rule 
(89 FR 59408), displayed the new Level II HCPCS codes that were 
implemented April 1, 2024. These new codes that were effective April 1, 
2024, were assigned to comment indicator ``NP'' in Addendum BB to the 
proposed rule to indicate that the codes were assigned to an interim 
APC assignment and that comments would be accepted on their interim APC 
assignments. In addition, we note that the entire ASC addenda, which 
consist of the addenda listed below, are available via the internet on 
the CMS website, specifically, at https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices:
     ASC Addendum AA: ASC Covered Surgical Procedures 
(Including Surgical Procedures for Which Payment is Packaged).
     ASC Addendum BB: ASC Covered Ancillary Services Integral 
to Covered Surgical Procedures (Including Ancillary Services for Which 
Payment is Packaged).
     ASC Addendum DD1: ASC Payment Indicators (PI).
     ASC Addendum DD2: ASC Comment Indicators (CI).
     ASC Addendum EE: Surgical Procedures to be Excluded from 
Payment in ASCs
     ASC Addendum FF: ASC Device Offset Percentages.
     Addendum O: Long Descriptors for New Category I CPT Codes, 
Category III

[[Page 94311]]

CPT Codes, C-codes, and G-Codes Effective January 1, 2025.
    We invited public comments on the proposed payment indicators for 
the new HCPCS codes that were recognized as ASC covered ancillary 
services in April 2024 through the quarterly update CRs, as listed in 
Table 147 (New Level II HCPCS Codes for Ancillary Services Effective 
April 1, 2024). The new codes that were effective April 1, 2024, were 
assigned to comment indicator ``NP'' in ASC Addendum BB to the CY 2025 
OPPS/ASC proposed rule to indicate that the codes are assigned to 
interim payment indicators and comments would be accepted on their 
interim assignments. We proposed to finalize the payment indicators in 
this CY 2025 OPPS/ASC final rule with comment period. We did not 
receive any comments on the proposed ASC payment indicator assignments 
for the new Level II HCPCS codes implemented in April 2024 and are 
finalizing the proposed ASC payment indicator assignments for these 
codes.
    We note that several of the temporary drug HCPCS C-codes have been 
replaced with permanent drug HCPCS J-codes. Their replacement codes are 
also listed in Table 147. In addition, although in prior years we 
included the final ASC payment indicators in the coding tables in the 
preamble, because we include the same information in the ASC addenda, 
we have not included them in Table 147. Therefore, readers are advised 
to refer to the ASC addenda for the final ASC payment indicators and 
payment rates for all codes reported under the ASC payment system. The 
list of ASC payment indicators and definitions used under the ASC 
payment system can be found in the ASC addenda. We note that the ASC 
addenda (AA, BB, DD1, DD2, EE, and FF) are available via the internet 
on the CMS website.
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3. July 2024 HCPCS Codes Proposed Rule Comment Solicitation
    In the July 2024 ASC quarterly update (Transmittal 12673, Change 
Request 13656, dated June 13, 2024), we added several separately 
payable CPT and Level II HCPCS codes to the list of covered surgical 
procedures and covered ancillary services. Table 76 (New HCPCS Codes 
for Covered Surgical Procedures and Covered Ancillary Services 
Effective July 1, 2024) of the CY 2025 OPPS/ASC proposed rule (89 FR 
59409), displayed the new HCPCS codes that are effective July 1, 2024. 
We invited public comments on the proposed payment indicators for these 
Level II HCPCS codes, and indicated that the proposed comment 
indicators, payment indicators, and payment rates for these codes were 
listed in Addendum AA and Addendum BB of the proposed rule. These new 
codes that were effective July 1, 2024, were assigned to comment 
indicator ``NP'' in ASC Addendum AA and Addendum BB to the CY 2025 
OPPS/ASC proposed rule to indicate that the codes were assigned to 
interim payment indicators and comments would be accepted on their 
interim

[[Page 94313]]

assignments. We further stated that we proposed to finalize the payment 
indicators in this CY 2025 OPPS/ASC final rule with comment period. We 
note that several of the temporary drug HCPCS C-codes have been 
replaced with HCPCS J-codes. Their replacement codes are also listed in 
Table 148. In addition, in prior years we included the final ASC 
payment indicators in the coding preamble tables, however, because the 
same information can be found in Addendum AA and Addendum BB, we are no 
longer including them in Table 148. Therefore, readers are advised to 
refer to the ASC addenda for the final ASC payment indicators and 
payment rates for all codes reported under the ASC payment system.
    We did not receive any comments on the proposed ASC payment 
indicator assignments for the new Level II HCPCS codes that were added 
to the list of covered surgical procedures and ancillary services 
implemented in July 2024. Therefore, we are finalizing the proposed ASC 
payment indicator assignments for the codes.
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[[Page 94315]]

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4. October 2024 HCPCS Codes Final Rule Comment Solicitation
    For CY 2025, consistent with our established policy, we proposed in 
the CY 2025 OPPS/ASC proposed rule (89 FR 59410) that the Level II 
HCPCS codes that will be effective October 1, 2024, would be flagged 
with comment indicator ``NI'' in Addendum BB to the CY 2025 OPPS/ASC 
final rule with comment period to indicate that we have assigned the 
codes an interim ASC payment status for CY 2025. In the October 2024 
ASC quarterly update (Transmittal 12824, Change Request 13800, dated 
September 5, 2024), we added several separately payable Level II HCPCS 
codes to the list of covered surgical procedures and covered ancillary 
services. Table 149 below lists the codes that were effective October 
1, 2024. We are inviting public comments on this final rule with 
comment period on the interim payment indicators, which would be 
finalized in the CY 2026 OPPS/ASC final rule with comment period. We 
note these codes will be subject to comment in the CY 2026 OPPS/ASC 
proposed rule with comment period, which would be finalized in the CY 
2026 OPPS/ASC final rule with comment period.
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5. January 2025 HCPCS Codes
a. New Level II HCPCS Codes Final Rule Comment Solicitation
    As has been our practice in the past, we incorporate those new 
Level II HCPCS codes that are effective January 1 in the final rule 
with comment period, thereby updating the ASC payment system for the 
calendar year. We note that unlike the CPT codes that are effective 
January 1 and are included in the OPPS/ASC proposed rules, and except 
for the G-codes listed in Addendum O to the CY 2025 OPPS/ASC proposed 
rule, most Level II HCPCS codes are not released until sometime around 
November to be effective January 1. Because these codes are not 
available until November, we are unable to include them in the OPPS/ASC 
proposed rule; however, the codes are flagged with comment indicator 
``NI'' in ASC Addendum AA and Addendum BB to this final rule with 
comment period to indicate that we are assigning them an interim 
payment status, which is subject to public comment. Therefore, as we 
stated in the CY 2025 OPPS/ASC proposed rule, these Level II HCPCS 
codes that will be effective January 1, 2025, are included in this 
final rule with comment period and will also be released to the public 
through in the January 2025 ASC Update CR and the CMS HCPCS website. We 
are inviting public comments in this final rule with comment period on 
the payment indicator assignments, which would be finalized in the CY 
2026 OPPS/ASC final rule with comment period. Similar to the codes 
effective October 1, 2024, these new Level II HCPCS codes that will be 
effective January 1, 2025, will be subject to comment in the CY 2026 
OPPS/ASC proposed rule, which would

[[Page 94316]]

be finalized in the CY 2026 OPPS/ASC final rule with comment period.
b. New CY 2025 CPT Codes Proposed Rule Comment Solicitation
    For the CY 2025 ASC update, we received the CPT codes that will be 
effective January 1, 2025, from the AMA in time to be included in the 
CY 2025 OPPS/ASC proposed rule. The new, revised, and deleted CPT codes 
can be found in ASC Addendum AA and Addendum BB to the CY 2024 OPPS/ASC 
proposed rule, which are available via the internet on the CMS website. 
We note that the new and revised CPT codes are assigned to comment 
indicator ``NP'' in ASC Addendum AA and Addendum BB of the CY 2025 
OPPS/ASC proposed rule to indicate that the code is new for the next 
calendar year, or the code is an existing code with substantial 
revision to its code descriptor in the next calendar year as compared 
to the current calendar year with a proposed payment indicator 
assignment. We stated that we would accept comments and finalize the 
payment indicators in this CY 2025 OPPS/ASC final rule with comment 
period. Further, we remind readers that the CPT code descriptors that 
appeared in Addendum AA and Addendum BB are short descriptors and do 
not describe the complete procedure, service, or item described by the 
CPT code. Therefore, we included the 5-digit placeholder codes and 
their long descriptors for the new CY 2025 CPT codes in Addendum O to 
the CY 2025 OPPS/ASC proposed rule so that the public could comment on 
our proposed payment indicator assignments. The 5-digit placeholder 
codes were listed in Addendum O to the CY 2025 OPPS/ASC proposed rule, 
specifically under the column labeled ``CY 2025 OPPS/ASC Proposed Rule 
5-Digit Placeholder Code.'' We also stated that we would include the 
final CPT code numbers in this CY 2025 OPPS/ASC final rule with comment 
period.
    We did not receive any comments on the proposed ASC payment 
indicators for the new CPT codes effective January 1, 2025, so we are 
finalizing these codes as proposed.
    Finally, in Table 150, we summarize our process for updating codes 
through our ASC quarterly update CRs, seeking public comments, and 
finalizing the treatment of these new codes under the ASC payment 
system.
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6. ASC Payment and Comment Indicators
a. Background
    In addition to the payment indicators that we introduced in the 
August 2, 2007 ASC final rule, we created final comment indicators for 
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66855). We created Addendum DD1 to define ASC payment 
indicators that we use in Addenda AA and BB to provide payment 
information regarding covered surgical procedures and covered ancillary 
services, respectively, under the revised ASC payment system. The ASC 
payment indicators in Addendum DD1 are intended to capture policy-
relevant characteristics of HCPCS

[[Page 94317]]

codes that may receive packaged or separate payment in ASCs, such as 
whether they were on the ASC CPL prior to CY 2008; payment designation, 
such as device-intensive or office-based, and the corresponding ASC 
payment methodology; and their classification as separately payable 
ancillary services, including radiology services, brachytherapy 
sources, OPPS pass-through devices, corneal tissue acquisition 
services, drugs or biologicals, or NTIOLs.
    We also created Addendum DD2 that lists the ASC comment indicators. 
The ASC comment indicators included 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'' also is assigned to 
existing codes with substantial revisions to their descriptors such 
that we consider them to be describing new services, and the interim 
payment indicator assigned is subject to comment, as discussed in the 
CY 2010 OPPS/ASC final rule with comment period (74 FR 60622).
    The comment indicator ``NP'' is used in the OPPS/ASC proposed rule 
to indicate new codes for the next calendar year for which the proposed 
payment indicator assigned is subject to comment. The comment indicator 
``NP'' also is assigned to existing codes with substantial revisions to 
their descriptors, such that we consider them to be describing new 
services, and the proposed payment indicator assigned is subject to 
comment, as discussed in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70497).
    The ``CH'' comment indicator is used in Addenda AA and BB to the 
proposed rule (these addenda are available via the internet on the CMS 
website) to indicate that the payment indicator assignment has changed 
for an active HCPCS code in the current year and the next calendar 
year, for example, if an active HCPCS code is newly recognized as 
payable in ASCs or an active HCPCS code is discontinued at the end of 
the current calendar year. The ``CH'' comment indicators that are 
published in the final rule are provided to alert readers that a change 
has been made from one calendar year to the next, but do not indicate 
that the change is subject to comment.
    In the CY 2021 OPPS/ASC final rule with comment period, we 
finalized the addition of ASC payment indicator ``K5''--Items, Codes, 
and Services for which pricing information and claims data are not 
available. No payment made.--to ASC Addendum DD1 (which is available 
via the internet on the CMS website) to indicate those services and 
procedures that CMS anticipates will become payable when claims data or 
payment information becomes available.
    In CY 2024 OPPS/ASC final rule with comment period, we finalized 
the addition of two ASC payment indicators, ``D1''--``Ancillary dental 
service/item; no separate payment made'' and ``D2''--``Non office-based 
dental procedure added in CY 2024 or later'', for new dental codes for 
CY 2024 and subsequent calendar years to indicate potentially payable 
dental services and procedures in the ASC setting (88 FR 81907). We 
added these two codes to Addendum DD1 (which is available via the 
internet on the CMS website).
b. Final ASC Payment and Comment Indicators for CY 2025
    For CY 2025, we proposed new and revised Category I and III CPT 
codes as well as new and revised Level II HCPCS codes. Proposed 
Category I and III CPT codes that are new and revised for CY 2025 and 
any new and existing Level II HCPCS codes with substantial revisions to 
the code descriptors for CY 2025, compared to the CY 2024 descriptors, 
are included in ASC Addenda AA and BB to the CY 2025 OPPS/ASC proposed 
rule and labeled with comment indicator ``NP'' to indicate that these 
CPT and Level II HCPCS codes are open for comment as part of the CY 
2025 OPPS/ASC proposed rule.
    We proposed to modify the descriptor of ASC payment indicator 
``L6''--``New Technology Intraocular Lens (NTIOL); special payment'' to 
``Special payment; New Technology Intraocular Lens (NTIOL) or 
qualifying non-opioid devices'', to account for non-opioid devices paid 
for under the ASC payment system pursuant to section 4135 of the CAA, 
2023. More information about this non-opioid policy can be found in 
section XIII.E of this final rule with comment period.
    We refer readers to Addenda DD1 and DD2 of this final rule with 
comment period (these addenda are available via the internet on the CMS 
website) for the complete list of ASC payment and comment indicators 
proposed for the CY 2025 update.
    We did not receive any public comments on our proposal and 
therefore, we are finalizing our proposal to modify the descriptor of 
ASC payment indicator ``L6''--``New Technology Intraocular Lens 
(NTIOL); special payment'' to ``Special payment; New Technology 
Intraocular Lens (NTIOL) or qualifying non-opioid devices'', to account 
for non-opioid devices paid for under the ASC payment system pursuant 
to section 4135 of the CAA, 2023.

C. Payment Policies Under the ASC Payment System

1. Final ASC Payment for Covered Surgical Procedures
a. Background
    Our ASC payment policies for covered surgical procedures under the 
revised ASC payment system are described in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66828 through 66831). Under our 
established policy, we use the ASC standard ratesetting methodology of 
multiplying the ASC relative payment weight for the procedure by the 
ASC conversion factor for that same year to calculate the national 
unadjusted payment rates for procedures with payment indicators ``G2'' 
and ``A2.'' Payment indicator ``A2'' was developed to identify 
procedures that were included on the list of ASC covered surgical 
procedures in CY 2007 and, therefore, were subject to transitional 
payment prior to CY 2011. Although the 4-year transitional period has 
ended and payment indicator ``A2'' is no longer required to identify 
surgical procedures subject to transitional payment, we have retained 
payment indicator ``A2'' because it is used to identify procedures that 
are exempted from the application of the office-based designation.
    Payment rates for office-based procedures (payment indicators 
``P2,'' ``P3,'' and ``R2'') are the lower of the PFS nonfacility PE 
RVU-based amount or the amount calculated using the ASC standard rate 
setting methodology for the procedure. As detailed in section 
XIII.C.3.b of this final rule with comment period, we update the 
payment amounts for office-based procedures (payment indicators ``P2,'' 
``P3,'' and ``R2'') using the most recent available MPFS and OPPS data. 
We compare the estimated current year rate for each of the office-based 
procedures, calculated according to the ASC standard rate setting 
methodology, to the PFS nonfacility PE RVU-based amount to determine 
which is lower and, therefore, would be the current year payment rate 
for the procedure under our final policy for the revised ASC payment 
system (Sec.  416.171(d)).

[[Page 94318]]

    The rate calculation established for device-intensive procedures 
(payment indicator ``J8'') is structured so only the service (non-
device) portion of the rate is subject to the ASC conversion factor. We 
update the payment rates for device-intensive procedures to incorporate 
the most recent device offset percentages calculated under the ASC 
standard ratesetting methodology, as discussed in section XIII.C.4 of 
this final rule with comment period.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75081), we finalized our proposal to calculate the CY 2014 payment 
rates for ASC covered surgical procedures according to our established 
methodologies, with the exception of device removal procedures. For CY 
2014, we finalized a policy to conditionally package payment for device 
removal procedures under the OPPS. Under the OPPS, a conditionally 
packaged procedure (status indicators ``Q1'' and ``Q2'') describes a 
HCPCS code where the payment is packaged when it is provided with a 
significant procedure but is separately paid when the service appears 
on the claim without a significant procedure. Because ASC services 
always include a covered surgical procedure, HCPCS codes that are 
conditionally packaged under the OPPS are always packaged (payment 
indicator ``N1'') under the ASC payment system. Under the OPPS, device 
removal procedures are conditionally packaged and, therefore, would be 
packaged under the ASC payment system. There is no Medicare payment 
made when a device removal procedure is performed in an ASC without 
another surgical procedure included on the claim; therefore, no 
Medicare payment would be made if a device was removed but not 
replaced. To ensure that the ASC payment system provides separate 
payment for surgical procedures that only involve device removal--
conditionally packaged in the OPPS (status indicator ``Q2'')--we have 
continued to provide separate payment since CY 2014 and assign the 
current ASC payment indicators associated with these procedures.
b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2025
    We proposed to update ASC payment rates for CY 2025 and subsequent 
years using the established rate calculation methodologies under Sec.  
416.171 and using our definition of device-intensive procedures, as 
discussed in section XIII.C.4 of this final rule with comment period. 
As the proposed OPPS relative payment weights are generally based on 
geometric mean costs, we proposed that the ASC payment system will 
generally use the geometric mean cost to determine proposed relative 
payment weights under the ASC standard methodology. We proposed to 
continue to use the amount calculated under the ASC standard 
ratesetting methodology for procedures assigned payment indicators 
``A2'' and ``G2.''
    We proposed to calculate payment rates for office-based procedures 
(payment indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive 
procedures (payment indicator ``J8'') according to our established 
policies and to identify device-intensive procedures using the 
methodology discussed in section XIII.C.4 of this final rule with 
comment period. Therefore, we proposed to update the payment amount for 
the service portion (the non-device portion) of the device-intensive 
procedures using the standard ASC ratesetting methodology and the 
payment amount for the device portion based on the proposed CY 2025 
device offset percentages that have been calculated using the standard 
OPPS APC ratesetting methodology. We proposed that payment for office-
based procedures would be at the lesser of the proposed CY 2025 MPFS 
nonfacility PE RVU-based amount or the proposed CY 2025 ASC payment 
amount calculated according to the ASC standard ratesetting 
methodology.
    As we did for CYs 2014 through 2024, for CY 2025, we proposed to 
continue our policy for device removal procedures, such that device 
removal procedures that are conditionally packaged in the OPPS (status 
indicators ``Q1'' and ``Q2'') will be assigned the current ASC payment 
indicators associated with those procedures and will continue to be 
paid separately under the ASC payment system.
    Comment: One commenter expressed concern about the lack of a cap on 
beneficiary coinsurance in the ASC setting while there is a statutory 
cap on beneficiary coinsurance when a procedure is performed in the 
HOPD setting. The commenter believes the lack of such a cap poses a 
financial challenge for beneficiaries, particularly with respect to 
transitional pass-through devices and higher-cost procedures that are 
device intensive, because in such cases, the coinsurance could be 
higher in the ASC setting than in the HOPD setting.
    Response: We thank the commenter for its input but note that 
comments related to statutory changes are out of scope for this final 
rule.
    After consideration of the public comments we received, we are 
finalizing our proposed policies without modification to calculate the 
CY 2025 payment rates for ASC covered surgical procedures according to 
our established rate calculation methodologies under Sec.  416.171 and 
our device-intensive methodology as discussed in section XIII.C.1.b. of 
this CY 2025 OPPS/ASC final rule with comment period. For covered 
office-based surgical procedures, the payment rate is the lesser of the 
final CY 2025 MPFS nonfacility PE RVU-based amount or the CY 2025 ASC 
payment amount calculated according to the ASC standard ratesetting 
methodology. The final payment indicators and rates set forth in this 
final rule with comment period are based on a comparison using the PFS 
PE RVUs and the conversion factor effective January 1, 2025.
c. Final Payment for ASC Add-On Procedures Eligible for Complexity 
Adjustments Under the OPPS
    In this section, we discuss the policy to provide increased payment 
under the ASC payment system for combinations of certain ``J1'' service 
codes and add-on procedure codes that are eligible for a complexity 
adjustment under the OPPS.
(1) OPPS C-APC Complexity Adjustment Policy
    Under the OPPS, complexity adjustments are utilized to provide 
increased payment for certain comprehensive services. As discussed in 
section II.A.2.b of this final rule with comment period, we apply a 
complexity adjustment by promoting qualifying paired ``J1'' service 
code combinations or paired code combinations of ``J1'' services and 
add-on codes from the originating Comprehensive APC (C-APC) (the C-APC 
to which the designated primary service is first assigned) to the next 
higher paying C-APC in the same clinical family of C-APCs. A ``J1'' 
status indicator refers to a hospital outpatient service paid through a 
C-APC. We package payment for all add-on codes, which are codes that 
describe a procedure or service always performed in addition to a 
primary service or procedure, into the payment for the C-APC. However, 
certain combinations of primary service codes and add-on codes may 
qualify for a complexity adjustment.
    We apply complexity adjustments when the paired code combination 
represents a complex, costly form or version of the primary service 
when the frequency and cost thresholds are met. The frequency threshold 
is met when there are 25 or more claims reporting the code combination, 
and the cost threshold is met when there is a violation of the 2 times 
rule, as specified in section 1833(t)(2) of the Act and

[[Page 94319]]

described in section III.A.2.b of this final rule with comment period, 
in the originating C-APC. These paired code combinations that meet the 
frequency and cost threshold criteria represent those that exhibit 
materially greater resource requirements than the primary service. 
After designating a single primary service for a claim, we evaluate 
that service in combination with each of the other procedure codes 
reported on the claim that are either assigned to status indicator 
``J1'' or add-on codes to determine if there are paired code 
combinations that meet the complexity adjustment criteria. Once we have 
determined that a particular combination of ``J1'' services, or 
combinations of a ``J1'' service and add-on code, 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 previously, we promote the claim to 
the next higher cost C-APC within the clinical family unless the 
primary service is already assigned to the highest cost APC within the 
C-APC clinical family or assigned to the only C-APC in a clinical 
family. We do not create new C-APCs with a comprehensive geometric mean 
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any claim including a 
code combination for services assigned to a C-APC would be the highest 
paying C-APC in the clinical family (79 FR 66802).
    As previously stated, we package payment for add-on codes into the 
C-APC payment rate. If any add-on code reported in conjunction with the 
``J1'' primary service code does not qualify for a complexity 
adjustment, payment for the add-on service continues to be packaged 
into the payment for the primary service and the primary service code 
reported with the add-on code is not reassigned to the next higher cost 
C-APC. We list the final complexity adjustments for ``J1'' and add-on 
code combinations for CY 2025, along with all of the other final 
complexity adjustments, in Addendum J to this final rule with comment 
period (which is available via the internet on the CMS website at 
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices).
(2) CY 2025 ASC Special Payment Policy for OPPS Complexity-Adjusted C-
APCs
    For CY 2025, we proposed to continue the special payment policy and 
methodology for OPPS complexity-adjusted C-APCs that was finalized in 
the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078 
through 72080).
    For those ASC complexity adjustment codes for which we have claims 
data, we proposed to use the claims data to calculate the code 
combination utilization and estimated payments for the ASC payment 
system budget neutrality calculations for CY 2025. The ASC complexity 
adjustment budget neutrality calculations are discussed further in 
section XIII.H.2.a of this final rule with comment period. The full 
list of the proposed ASC complexity adjustment codes for CY 2025 can be 
found in the CY 2025 proposed ASC addenda and the supplemental policy 
file, which also includes both the existing ASC complexity adjustment 
codes and proposed additions and was published on the CMS website at 
https://www.cms.gov/medicare/medicare-fee-for-service-payment/ascpayment/asc-regulations-and-notices. Since the complexity adjustment 
assignments change each year under the OPPS, the proposed list of ASC 
complexity adjustment codes eligible for the proposed payment policy 
changed slightly from the previous year.
    Comment: A few commenters noted that there was a decline in the 
number of ASC complexity adjustment codes for the CY 2025 OPPS/ASC 
proposed rule compared to years prior. The commenters noted that there 
were 55 ASC complexity adjustment codes in 2023, 47 ASC complexity 
adjustment codes in 2024, and only 45 ASC proposed complexity 
adjustment codes for CY 2025. Other commenters recommended specific ASC 
complexity adjustment codes we did not propose.
    Several commenters were concerned with how the device portion for 
ASC complexity adjustment codes are determined. Commenters believed we 
were potentially missing large device costs associated with the 
packaged add-on procedure that could only be realized if the device 
offset percentage of the ASC complexity adjustment code was calculated 
from the subset of ``J1'' primary service and add-on code claim 
combinations.
    Response: Since the number of OPPS complexity adjustments fluctuate 
on a year-to-year basis, the number of ASC complexity adjustment codes 
will also fluctuate each calendar year. For this CY 2025 OPPS/ASC final 
rule with comment period, we are finalizing 49 ASC complexity 
adjustment codes, which is an increase from the 47 ASC complexity 
adjustment codes for CY 2024. Additionally, we rely on the complexity 
adjustment criteria under the OPPS, as described in section II.A.2.b. 
of this final rule with comment period, for determining eligible ASC 
complexity adjustment codes under the ASC payment system and do not 
accept specific code combination recommendations, such as those 
recommended by commenters, if they do not meet these criteria.
    With respect to the commenters' concerns regarding the device 
portion of ASC complexity adjustment codes, we believe the current 
methodology of assigning the device portion from the primary ``J1'' 
procedure to the ASC complexity adjustment code is the most 
appropriate. As shown in Addendum J (which can be found on the CMS 
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices), the evaluation subset 
for a ``J1'' and add-on code combination is often less than 100 claims 
and can be significantly less than the total number of claims for that 
primary ``J1'' procedure used for ratesetting. We are concerned that 
using such a small subset of a procedure's available claims for 
determining the device portion of a device-intensive ASC complexity 
adjustment code would introduce unnecessary volatility. We believe that 
assigning a device portion for a device-intensive ASC complexity 
adjustment code based on the device portion of the primary ``J1'' 
procedure accurately reflects the device costs of the primary ``J1'' 
procedure--since the device costs associated with the add-on code are 
already packaged into the cost of the primary procedure--and provides a 
more stable payment rate by using the greater number of claims that are 
available from the primary ``J1'' procedure, as opposed to the subset 
of claims with a ``J1'' and add-on code combination. However, we 
appreciate the commenters' recommendation and may take this comment 
into consideration in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing the ASC special payment policy for OPPS complexity-adjusted 
C-APCs, as proposed. The final ASC complexity adjustment codes, based 
on the most recent data available for this CY 2025 OPPS/ASC final rule 
with comment period, can be found on the CMS website at: https://
www.cms.gov/medicare/payment/prospective-

[[Page 94320]]

payment-systems/ambulatory-surgical-center-asc/annual-policy-files. 
Existing ASC complexity adjustment codes that do not meet our criteria 
for separate payment for CY 2025 because the code combination is not 
eligible for a complexity adjustment under the OPPS for CY 2025 will be 
non-payable and assigned a status indicator of ``B5''--``Alternative 
code may be available; no payment made''--for CY 2025. Additionally, 
proposed ASC complexity adjustment codes that met our criteria based on 
data available for the CY 2025 OPPS/ASC proposed rule but do not meet 
our criteria based on claims data available for this final rule with 
comment period will be deleted and assigned a payment indicator of 
``D5''--``Deleted/discontinued code; no payment made''.
d. Final Low Volume APCs and Limit on ASC Payment Rates for Procedures 
Assigned to Low Volume APCs
    As stated in section XIII.D.1.b of the CY 2025 OPPS/ASC proposed 
rule, the ASC payment system generally uses OPPS geometric mean costs 
under the standard methodology to determine proposed relative payment 
weights under the standard ASC ratesetting methodology.
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63743 
through 63747), we adopted a universal Low Volume APC policy for CY 
2022 and subsequent calendar years. Under our policy, we expanded the 
low volume adjustment policy that is applied to procedures assigned to 
New Technology APCs to also apply to clinical and brachytherapy APCs. 
Specifically, a clinical APC or brachytherapy APC with fewer than 100 
claims per year would be designated as a Low Volume APC. For items or 
services assigned to a Low Volume APC, we use up to 4 years of claims 
data to establish a payment rate for the APC as we currently do for low 
volume services assigned to New Technology APCs. The payment rate for a 
Low Volume APC or a low volume New Technology procedure would be based 
on the highest of the median cost, arithmetic mean cost, or geometric 
mean cost calculated using multiple years of claims data.
    Based on claims data available for the CY 2025 OPPS/ASC proposed 
rule, we proposed to designate six brachytherapy APCs and four clinical 
APCs as Low Volume APCs under the ASC payment system (89 FR 59414). The 
four clinical APCs and six brachytherapy APCs met our criteria of 
having fewer than 100 single claims in the relevant claims year (CY 
2023 for the CY 2025 OPPS/ASC proposed rule) and therefore, we proposed 
that they would be subject to our universal Low Volume APC policy and 
the APC cost metric would be based on the greater of the median cost, 
arithmetic mean cost, or geometric mean cost using up to 4 years of 
claims data. Nine of the ten APCs were designated as low volume APCs in 
CY 2024. Based on data for the CY 2025 OPPS/ASC proposed rule, APC 2645 
(Brachytx, non-stranded, hold-198) met our criteria to be designated a 
low volume APC; and we proposed to designate it as such for CY 2025.
    Comment: Commenters supported our proposal to assign the ten APCs 
as Low Volume APCs.
    Response: We thank the commenters for their support. Based on 
claims data available for this final rule with comment period, we are 
finalizing our proposal to designate the 4 clinical APCs and 6 
brachytherapy APCs shown in Table 151 as Low Volume APCs under the ASC 
payment system, because they continue to meet our criteria of having 
fewer than 100 single claims in the relevant claims year (2023). Table 
151 includes the CY 2023 claims available for ratesetting for each of 
the APCs we are finalizing to be designated as Low Volume APCs for CY 
2025. The cost statistics for our Low Volume APCs, such as the median, 
arithmetic mean, and geometric mean cost are available for download 
with this final rule with comment period on the CMS website. We refer 
readers to our website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices; click on the relevant regulation to download 
the Low Volume APC cost statistics under the standard (ASC) ratesetting 
methodology in the ``Downloads'' section of the web page.
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[[Page 94321]]

2. Payment for Covered Ancillary Services
a. Background
    Our payment policies under the ASC payment system for covered 
ancillary services generally vary according to the particular type of 
service and its payment policy under the OPPS. Our overall policy 
provides separate ASC payment for certain ancillary items and services 
integrally related to the provision of ASC covered surgical procedures 
that are paid separately under the OPPS and provides packaged ASC 
payment for other ancillary items and services that are packaged or 
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'') 
under the OPPS.
    In the CY 2013 OPPS/ASC rulemaking (77 FR 45169 and 77 FR 68457 
through 68458), we further clarified our policy regarding the payment 
indicator assignment for procedures that are conditionally packaged in 
the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a 
conditionally packaged procedure 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 generally packaged (payment indictor ``N1'') under the ASC payment 
system (except for device removal procedures, as discussed in the CY 
2022 OPPS/ASC proposed rule (86 FR 42083)). Thus, our policy generally 
aligns ASC payment bundles with those under the OPPS (72 FR 42495). In 
all cases, in order for ancillary items and services also to be paid, 
the ancillary items and services must be provided integral to the 
performance of ASC covered surgical procedures for which the ASC bills 
Medicare.
    Our ASC payment policies generally provide separate payment for 
drugs and biologicals that are separately paid under the OPPS at the 
OPPS rates and package payment for drugs and biologicals for which 
payment is packaged under the OPPS. However, as discussed in the CY 
2022 OPPS/ASC final rule with comment period, for CY 2022, we finalized 
a policy to unpackage and pay separately at ASP plus 6 percent for the 
cost of non-opioid pain management drugs and biologicals that function 
as a supply when used in a surgical procedure as determined by CMS 
under Sec.  416.174 (86 FR 63483).
    We generally pay for separately payable radiology services at the 
lower of the PFS nonfacility PE RVU-based (or technical component) 
amount or the rate calculated according to the ASC standard ratesetting 
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators 
for all nuclear medicine procedures (defined as CPT codes in the range 
of 78000 through 78999) that are designated as radiology services that 
are paid separately when provided integral to a surgical procedure on 
the ASC list are set to ``Z2'' so that payment is made based on the ASC 
standard ratesetting methodology rather than the MPFS nonfacility PE 
RVU amount (``Z3''), regardless of which is lower (Sec.  
416.171(d)(1)).
    Similarly, we also finalized our policy to set the payment 
indicator to ``Z2'' for radiology services that use contrast agents so 
that payment for these procedures will be based on the OPPS relative 
payment weight using the ASC standard ratesetting methodology and, 
therefore, will include the cost for the contrast agent (Sec.  
416.171(d)(2)).
    ASC payment policy for brachytherapy sources mirrors the payment 
policy under the OPPS. ASCs are paid for brachytherapy sources provided 
integral to ASC covered surgical procedures at prospective rates 
adopted under the OPPS or, if OPPS rates are unavailable, at 
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs 
have been paid for brachytherapy sources provided integral to ASC 
covered surgical procedures at prospective rates adopted under the 
OPPS.
    Our ASC policies also provide separate payment for: (1) certain 
items and services that CMS designates as contractor-priced, including, 
but not limited to, the procurement of corneal tissue; and (2) certain 
implantable items that have pass-through payment status under the OPPS. 
These categories do not have prospectively established ASC payment 
rates according to ASC payment system policies (72 FR 42502 and 42508 
through 42509; Sec.  416.164(b)). Under the ASC payment system, we have 
designated corneal tissue acquisition and hepatitis B vaccines as 
contractor-priced. Corneal tissue acquisition is contractor-priced 
based on the invoiced costs for acquiring the corneal tissue for 
transplantation. Hepatitis B vaccines are contractor-priced based on 
invoiced costs for the vaccine.
    Devices that are eligible for pass-through payment under the OPPS 
are separately paid under the ASC payment system and are contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for 
the surgical procedure associated with the pass-through device is made 
according to our standard methodology for the ASC payment system, based 
on only the service (non-device) portion of the procedure's OPPS 
relative payment weight if the APC weight for the procedure includes 
other packaged device costs. We also refer to this methodology as 
applying a ``device offset'' to the ASC payment for the associated 
surgical procedure. This ensures that duplicate payment is not provided 
for any portion of an implanted device with OPPS pass-through payment 
status.
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66933 
through 66934), we finalized that, beginning in CY 2015, certain 
diagnostic tests within the medicine range of CPT codes for which 
separate payment is allowed under the OPPS are covered ancillary 
services when they are integral to an ASC covered surgical procedure. 
We finalized that diagnostic tests within the medicine range of CPT 
codes include all Category I CPT codes in the medicine range 
established by CPT, from 90000 to 99999, and Category III CPT codes and 
Level II HCPCS codes that describe diagnostic tests that crosswalk or 
are clinically similar to procedures in the medicine range established 
by CPT. In the CY 2015 OPPS/ASC final rule with comment period, we also 
finalized our policy to pay for these tests at the lower of the PFS 
nonfacility PE RVU-based (or technical component) amount or the rate 
calculated according to the ASC standard ratesetting methodology (79 FR 
66933 through 66934). We finalized that the diagnostic tests for which 
the payment is based on the ASC standard ratesetting methodology be 
assigned to payment indicator ``Z2'' and revised the definition of 
payment indicator ``Z2'' to include a reference to diagnostic services 
and those for which the payment is based on the PFS nonfacility PE RVU-
based amount be assigned payment indicator ``Z3,'' and revised the 
definition of payment indicator ``Z3'' to include a reference to 
diagnostic services.
b. Final Payment for Covered Ancillary Services for CY 2025
    We proposed 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 2025 OPPS and ASC

[[Page 94322]]

payment rates and subsequent years' payment rates. We also proposed to 
continue to set the CY 2025 ASC payment rates and subsequent years' 
payment rates for brachytherapy sources and separately payable drugs 
and biologicals equal to the OPPS payment rates for CY 2025 and 
subsequent years' payment rates.
    Covered ancillary services and their final payment indicators for 
CY 2025 are listed in Addendum BB of this final rule with comment 
period (which is available via the internet on the CMS website). For 
those covered ancillary services where the payment rate is the lower of 
the rate under the ASC standard rate setting methodology and the PFS 
final rates (similar to our office-based payment policy), the final 
payment indicators and rates set forth in this final rule are based on 
a comparison using the final PFS rates effective January 1, 2025. For a 
discussion of the PFS rates, we refer readers to the CY 2025 PFS 
proposed rule.
    Comment: One commenter stated that there is currently no CMS-level 
guidance on how MACs should establish separate payment under the ASC 
payment system for devices that are eligible for pass-through payment 
under the OPPS. The commenter recommends that CMS specify that payment 
should be at least equal to the device cost as reported by the ASC in 
box 19 on the ASC claim form.
    Response: As previously discussed, devices that are eligible for 
pass-through payment under the OPPS may be separately paid under the 
ASC payment system and are contractor-priced. Currently, MACs have been 
instructed to pay for such devices in the ASC setting based on invoice 
or cost of the approved transitional pass-through device category. 
While we understand that many products with different price points may 
use the same approved transitional pass-through device category, we 
rely on the MACs to efficiently process these claims such that ASCs can 
be reimbursed in a timely manner for the services provided and that 
reimbursement for these pass-through devices is justified with 
supporting documentation. Therefore, we do not believe it would be 
appropriate to require MACs to provide payment based on the figure 
reported in box 19 of the ASC claim form. We believe the current 
guidance provided in Chapter 14, section 50 of the Medicare Claims 
Processing Manual (Pub. 100-04) is sufficient.
    After consideration of the public comments we received, we are 
finalizing our proposal 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 final CY 2025 
OPPS and ASC payment rates and subsequent years' payment rates.
    We did not receive any public comments on and are also finalizing 
without modification our proposal to continue to set the CY 2025 ASC 
payment rates and subsequent years' payment rates for brachytherapy 
sources and separately payable drugs and biologicals equal to the OPPS 
payment rates for CY 2025 and subsequent years' payment rates.
3. Covered Surgical Procedures Designated as Office-Based Procedures
a. 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 Covered Procedures List (CPL) in CY 2008 or later years that we 
determine are furnished 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 final 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 CPL beginning in CY 2008 that we 
determined were office-based were identified in Addendum AA to that 
final rule with payment indicator ``P2'' (Office-based surgical 
procedure added to ASC list in CY 2008 or later with MPFS nonfacility 
PE RVUs; payment based on OPPS relative payment weight); ``P3'' 
(Office-based surgical procedures added to ASC list in CY 2008 or later 
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE 
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in 
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on 
OPPS relative payment weight), depending on whether we estimated the 
procedure would be paid according to the ASC standard ratesetting 
methodology based on its OPPS relative payment weight or at the MPFS 
nonfacility PE RVU-based amount.
    Consistent with our final policy to annually review and update the 
ASC CPL to include all covered surgical procedures eligible for payment 
in ASCs, each year we identify covered surgical procedures as either 
temporarily office-based (these are new procedure codes with little or 
no utilization data that we have determined are clinically similar to 
other procedures that are permanently office-based), permanently 
office-based, or nonoffice-based, after taking into account updated 
volume and utilization data.
b. CY 2025 Final Office-Based Procedures
    In developing the CY 2025 OPPS/ASC proposed rule, we followed our 
policy to annually review and update the covered surgical procedures 
for which ASC payment is made and to identify new procedures that may 
be appropriate for ASC payment, including their potential designation 
as office-based. Historically, we also review the most recent claims 
volume and utilization data (CY 2023 claims) and the clinical 
characteristics for all covered surgical procedures that are currently 
assigned a payment indicator in CY 2024 of ``G2'' (Non office-based 
surgical procedure added in CY 2008 or later; payment based on OPPS 
relative payment weight) as well as for those procedures assigned one 
of the temporary office-based payment indicators, specifically ``P2,'' 
``P3,'' or ``R2'' in the CY 2023 OPPS/ASC final rule with comment 
period (86 FR 63769 through 63773).
    Our review of the CY 2023 volume and utilization data of covered 
surgical procedures currently assigned a payment indicator of ``G2'' 
(Non office-based surgical procedure added in CY 2008 or later; payment 
based on OPPS relative payment weight) resulted in the identification 
of two surgical procedures that we believed met the criteria for 
designation as permanently office-based. The data indicated that these 
procedures are performed more than 50 percent of the time in 
physicians' offices, and the services are of a level of complexity 
consistent with other procedures performed routinely in physicians' 
offices. The CPT codes that we proposed to permanently designate as 
office-based for CY 2025 were CPT code 0447T (Removal of implantable 
interstitial glucose sensor from subcutaneous pocket via incision) and 
CPT code 21127 (Augmentation, mandibular body or angle; with bone 
graft, onlay or interpositional (includes obtaining autograft)) and are 
listed in Table 79 of the CY 2025 OPPS/ASC proposed rule (89 FR 59416) 
with the associated payment indicators.
    As discussed in the August 2, 2007 ASC final rule (72 FR 42533 
through 42535), we finalized our policy to

[[Page 94323]]

designate certain new surgical procedures as temporarily office-based 
until adequate claims data are available to assess their predominant 
sites of service, whereupon if we confirm their office-based nature, 
the procedures are permanently assigned to the list of office-based 
procedures. In the absence of claims data, we use other available 
information, including our clinical advisors' judgment, predecessor CPT 
and Level II HCPCS codes, information submitted by representatives of 
specialty societies and professional associations, and information 
submitted by commenters during the public comment period.
    We reviewed CY 2023 volume and utilization data for nine surgical 
procedures designated as temporarily office-based in the CY 2023 OPPS/
ASC final rule with comment period and temporarily assigned one of the 
office-based payment indicators, specifically ``P2,'' ``P3,'' or 
``R2.'' In Table 122 of the CY 2024 OPPS/ASC final rule with comment 
period, we finalized assigning temporary office-based designations to 
seven surgical procedures for CY 2024 (88 FR 81919). In Table 80 of the 
CY 2025 OPPS/ASC proposed rule (89 FR 59417), we showed the surgical 
procedure we proposed to no longer designate as temporarily office-
based. This surgical procedure is CPT code 67516 (Suprachoroidal space 
injection of pharmacologic agent (separate procedure)) which we 
proposed to permanently designate as office-based.
    We did not receive any public comments on our proposed permanent 
office-based designations and therefore, we are finalizing our proposal 
to designate the procedures in Table 152 as permanently office-based 
beginning in CY 2025.
[GRAPHIC] [TIFF OMITTED] TR27NO24.200

    In Table 81 of the CY 2025 OPPS/ASC proposed rule (89 FR 59418), we 
showed the nine surgical procedures, both new and existing, we proposed 
to designate as temporarily office-based for CY 2025. For CY 2025, we 
proposed to designate three new CY 2025 CPT codes for ASC covered 
surgical procedures as temporarily office-based--CPT codes 0910T 
(placeholder code XX34T) (Removal of integrated neurostimulation 
system, vagus nerve), 15013 (placeholder code 15XX3) (Preparation of 
skin cell suspension autograft, requiring enzymatic processing, manual 
mechanical disaggregation of skin cells, and filtration; first 25 sq cm 
or less of harvested skin), and 53866 (placeholder code 5XX06) 
(Catheterization with removal of temporary device for ischemic 
remodeling (i.e., pressure necrosis) of bladder neck and prostate). 
After reviewing the clinical characteristics, utilization, and volume 
of related procedure codes, we determined that CPT code 0910T is most 
similar to 0588T, which is temporarily designated as an office-based 
surgical procedure. Additionally, CPT code 15013 is most similar to CPT 
code 11310 (Shaving of epidermal or dermal lesion, single lesion, face, 
ears, eyelids, nose, lips, mucous membrane; lesion diameter 0.5 cm or 
less), which is designated as an office-based surgical procedure. 
Lastly, CPT code 53866 is most similar to CPT code 51705 (Change of 
bladder tube) which is also designated as an office-based surgical 
procedure. We also proposed to continue to designate six existing 
procedures as temporarily office-based for CY 2025 since we did not 
have adequate claims data to remove the temporary designation.
    Comment: One commenter recommended that we do not finalize our 
office-based designation for CPT code 15013 and reassign CPT code 15013 
from ``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) to ``J8'' (Device-intensive procedure; paid at 
adjusted rate).
    Response: We are not accepting this recommendation. We do not 
believe this procedure meets our requirements of a device-intensive 
procedure as described in section XIII.C.4. of this final rule with 
comment period because it does not use an insertable or implantable 
single-use device.
    After consideration of the public comments we received, we are 
finalizing our proposal with modification. We are not finalizing our 
proposed temporary office-based designation to CPT code 0910T 
(placeholder code XX34T) (Removal of

[[Page 94324]]

integrated neurostimulation system, vagus nerve). As discussed in 
section III.E of this final rule with comment period, since the vagal 
nerve neurostimulation system has not yet received FDA approval, we are 
finalizing an OPPS status indicator ``E1'' to indicate that the code is 
not payable by Medicare when submitted on outpatient claims (any 
outpatient bill type). Therefore, for the ASC payment system, we are 
finalizing a payment indicator of ``Y5''--``Nonsurgical procedure/item 
not valid for Medicare purposes because of coverage, regulation and/or 
statute; no payment made'' for CY 2025.
    Further, we are also not finalizing our temporary office-based 
designation of CPT code 65785 (Implantation of intrastromal corneal 
ring segments) as this code meets our criteria to be designated as 
device-intensive for CY 2025 and we are finalizing that designation for 
this CPT code. While we are finalizing the payment indicators to the 
other new and existing procedures which are designated as temporary 
office-based shown in Table 153, we are also modifying our proposal 
with the addition of three newly created surgical procedure codes: 
HCPCS codes C8002 (Preparation of skin cell suspension autograft, 
automated, including all enzymatic processing and device components (do 
not report with manual suspension preparation)), G0564 (Creation of 
subcutaneous pocket with insertion of 365 day implantable interstitial 
glucose sensor, including system activation and patient training), and 
G0565 (Removal of implantable interstitial glucose sensor with creation 
of subcutaneous pocket at different anatomic site and insertion of new 
365 day implantable sensor, including system activation). We believe 
HCPCS C8002 is most similar to CPT code 15013 (Preparation of skin cell 
suspension autograft, requiring enzymatic processing, manual mechanical 
disaggregation of skin cells, and filtration; first 25 sq cm or less of 
harvested skin), a CPT code to which we are also finalizing a temporary 
office-based designation for CY 2025. Additionally, we believe HCPCS 
codes G0564 and G0565 are most similar to CPT codes 0446T (Creation of 
subcutaneous pocket with insertion of implantable interstitial glucose 
sensor, including system activation and patient training) and 0448T 
(Removal of implantable interstitial glucose sensor with creation of 
subcutaneous pocket at different anatomic site and insertion of new 
implantable sensor, including system activation), respectively. Both of 
these CPT codes are designated as office-based procedures; therefore, 
we are assigning a temporary office-based designation to HCPCS codes 
G0564 and G0545 as well. The procedures for which the final office-
based designation for CY 2025 is temporary are also indicated by an 
asterisk in Addendum AA to this final rule with comment period (which 
is available via the internet on the CMS website at https://
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-
Regulations-and-Notices).
BILLING CODE 4120-01-P

[[Page 94325]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.201

[[Page 94326]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.202

BILLING CODE 4120-01-C
4. Device-Intensive ASC Covered Surgical Procedures
a. Background
    We refer readers to the CY 2019 OPPS/ASC final rule with comment 
period (83 FR 59040 through 59041), for a summary of our existing 
policies regarding ASC covered surgical procedures that are designated 
as device-intensive.
b. CY 2025 Final Device Intensive Procedures
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59040 
through 59043), for CY 2019, we modified our criteria for device-
intensive procedures to better capture costs for procedures with 
significant device costs. We adopted a policy to allow procedures that 
involve surgically inserted or implanted, high-cost, single-use devices 
to qualify as device-intensive procedures. In addition, we modified our 
criteria to lower the device offset percentage threshold from 40 
percent to 30 percent. The device offset percentage is the percentage 
of device costs within a procedure's total costs. Specifically, for CY 
2019 and subsequent years, we adopted a policy that device-intensive 
procedures would be subject to the following criteria:
     All procedures must involve implantable or insertable 
devices assigned a CPT or HCPCS code;
     The required devices (including single-use devices) must 
be surgically inserted or implanted; and
     The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost. 
Corresponding to this change in the cost criterion, we adopted a policy 
that the default device offset for new codes that describe procedures 
that involve the implantation of medical devices will be 31 percent 
beginning in CY 2019. For new codes describing procedures that are 
payable when furnished in an ASC and involve the implantation of a 
medical device, we adopted a policy that the default device offset 
would be applied in the same manner as the policy we adopted in section 
IV.B.2 of the CY 2019 OPPS/ASC final rule with comment period (83 FR 
58944 through 58948). We amended Sec.  416.171(b)(2) of the regulations 
to reflect these new device criteria.
    In addition, as also adopted in section IV.B.2 of the CY 2019 OPPS/
ASC final rule with comment period, to further align the device-
intensive policy with the criteria used for device pass-through status, 
we specified, for CY 2019 and subsequent years, that for purposes of 
satisfying the device-intensive criteria, a device-intensive procedure 
must involve a device that:
     Has received FDA marketing authorization, has received an 
FDA investigational device exemption (IDE)

[[Page 94327]]

and has been classified as a Category B device by FDA in accordance 
with 42 CFR 405.203 through 405.207 and 405.211 through 405.215, or 
meets another appropriate FDA exemption from premarket review;
     Is an integral part of the service furnished;
     Is used for one patient only;
     Comes in contact with human tissue;
     Is surgically implanted or inserted (either permanently or 
temporarily); and
     Is not any of the following:
    ++ Equipment, an instrument, apparatus, implement, or item of this 
type for which depreciation and financing expenses are recovered as 
depreciable assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or
    ++ A material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, scalpel, or clip, other 
than a radiological site marker).
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 63773 
through 63775), we modified our approach to assigning device-intensive 
status to surgical procedures under the ASC payment system. First, we 
adopted a policy of assigning device-intensive status to procedures 
that involve surgically inserted or implanted, high-cost, single-use 
devices if their device offset percentage exceeds 30 percent under the 
ASC standard ratesetting methodology, even if the procedure is not 
designated as device-intensive under the OPPS. Second, we adopted a 
policy that if a procedure is assigned device-intensive status under 
the OPPS, but has a device offset percentage below the device-intensive 
threshold under the standard ASC ratesetting methodology, the procedure 
will be assigned device-intensive status under the ASC payment system 
with a default device offset percentage of 31 percent. The policies 
were adopted to provide consistency between the OPPS and ASC payment 
system and provide a more appropriate payment rate for surgical 
procedures with significant device costs under the ASC payment system.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 72078 
through 72080), we finalized our policy to create certain C-codes, or 
ASC complexity adjustment codes that describe certain combinations of a 
primary covered surgical procedure as well as a packaged (payment 
indicator = ``N1'') procedure that are otherwise eligible for a 
complexity adjustment under the OPPS (as listed in Addendum J). Each 
ASC complexity adjustment code's APC assignment is based on its 
corresponding OPPS complexity adjustment code's APC assignment. In the 
CY 2023 OPPS/ASC final rule with comment period, we stated our belief 
that it would be appropriate for these ASC complexity adjustment codes 
to qualify for device-intensive status under the ASC payment system if 
the primary procedure of the code was also designated as device-
intensive. Under our current policy, the ASC complexity adjustment code 
retains the device portion of the primary procedure (also called the 
``device offset amount'') and not the device offset percentage. 
Therefore, for device-intensive ASC complexity adjustment codes, we set 
the device portion of the combined procedure equal to the device 
portion of the primary procedure and calculate the device offset 
percentage by dividing the device portion by the ASC complexity 
adjustment code's APC payment rate. Further, we apply our standard ASC 
payment system ratesetting methodology to the non-device portion of the 
ASC complexity adjustment code's APC payment rate; that is, we multiply 
the OPPS relative weight by the ASC budget neutrality adjustment and 
the ASC conversion factor and sum that amount with the device portion 
to calculate the ASC payment rate.
    As discussed in section IV.B of the CY 2025 OPPS/ASC proposed rule, 
the purpose of applying the default device offset percentage to new 
codes that describe procedures that implant or insert devices is to 
ensure access in the ASC setting for new procedures until claims data 
become available. Our ratesetting methodology sets the ASC device 
offset amount constant at the OPPS device offset amount. Device offset 
amounts under the OPPS and ASC Payment System are the device offset 
percentages of a procedure multiplied by the OPPS or ASC Payment System 
payment rate, respectively, for that procedure. While the ASC 
ratesetting methodology relies on the ASC conversion factor and the 
scaled OPPS APC relative weights to construct ASC payment rates, for 
device-intensive procedures, the device offset percentage of the 
procedure relies on the higher OPPS conversion factor while the non 
device portion relies on the lower ASC conversion factor. For non 
device-intensive procedures for which the payment is based on OPPS 
relative payment weight, one hundred percent of the procedure's payment 
rate relies on the ASC conversion factor. Therefore, the greater the 
device offset percentage under the ASC Payment System, the greater the 
ASC payment rate.
    Device offset percentages, which represent the device cost portion 
of a procedure's total cost, are determined using the most recent 
claims data for that procedure. For newer procedures that describe 
procedures which implant or insert single-use devices that meet our 
definition of a device and for which the device costs are estimated to 
be greater than 30 percent of the total procedure cost and lack claims 
data, we have relied on several policies to determine an appropriate 
device offset percentage until such claims data becomes available. 
First, if the new procedure has claims data from a predecessor code, as 
described by CPT coding guidance, we rely on claims data from the 
predecessor code in assigning the device offset percentage for the new 
HCPCS code (88 FR 81919 through 81922). Second, in limited instances 
where a new device-intensive procedure does not have a predecessor code 
as defined by CPT, but describes a procedure that was previously 
described by an existing code, we may use clinical discretion to 
identify HCPCS codes that are clinically related or similar to the new 
HCPCS code but are not officially recognized as a predecessor code by 
CPT, and use the claims data of the clinically related or similar 
code(s) for purposes of determining whether to use the device offset 
percentage of the clinically related or similar code(s) or to apply the 
default device offset to the new HCPCS code (83 FR 58946). Clinically 
related and similar procedures for purposes of this policy are 
procedures that have few or no clinical differences and use the same 
device(s). If the new device-intensive procedure does not have claims 
data from a predecessor code or a clinically similar code that uses the 
same device, we have assigned a default device offset percentage of 31 
percent. While we do allow for additional information in our 
consideration of a higher offset percentage than the default device 
offset, our payment policies under both the OPPS and ASC Payment System 
are meant to encourage efficiencies and promote savings to the Medicare 
program and we believe relying on claims data rather than external 
pricing data helps put downward pressure on changes in medical device 
prices. Therefore, it would be extremely rare that the appropriate 
determination of a device offset percentage would rely on pricing data 
or invoices from a device manufacturer rather than the default device 
offset percentage.
    However, we are aware that there may be certain situations where 
newer

[[Page 94328]]

device-intensive procedures lack claims data from a predecessor code 
and a clinically similar code that uses the same device, but the 
default device offset percentage would not adequately reflect the 
existing device portion of the procedure's costs when compared to the 
cost of similar devices. The difference in the default device portion 
and the potential device cost could possibly limit access to newer, 
more complex, device-intensive procedures in the ASC setting if the 
cost of the new device does indeed reflect a cost equivalent to that of 
the similar existing devices. As HOPDs and ASCs perform new procedures 
with significant device costs, we believe it is appropriate to modify 
our default device offset methodology to pay HOPDs and ASCs more 
appropriately when we lack claims data for these newer procedures. 
Therefore, we proposed to modify our default device offset percentage 
for new device-intensive procedures. Specifically, for all new covered 
surgical HCPCS codes that describe procedures which implant or insert 
single-use devices that meet our definition of a device and for which 
the device costs are estimated to be greater than 30 percent of the 
total procedure cost and lack claims data, we would apply a default 
device offset percentage that is the greater of: 31 percent or the 
device offset percentage of the APC to which the procedure has been 
assigned. We proposed this methodological change for both the OPPS and 
ASC Payment System for CY 2025 and subsequent calendar years.
    We still believe that a HCPCS code-level device offset is, in most 
cases, a more accurate representation of a procedure's device cost than 
an APC-wide average device offset based on the average device offset of 
all the procedures assigned to an APC. However, because newer device-
intensive procedures lack claims data and therefore a HCPCS code-level 
device offset may not be possible, we believe the APC-wide average 
device offset percentage is, in most cases, a better reflection of the 
estimated device costs of the procedure than a default 31 percent 
offset. Additionally, there can be instances where the typical device 
costs of procedures in an APC can be significantly greater than the 31 
percent default device offset. For these reasons, we propose to modify 
our methodology for determining the device offset percentage for new 
procedures that describe the implantation or insertion of a single-use 
device that meet our definition of a device and for which the device 
cost is projected to be greater than 30 percent of the total procedure 
cost that do not yet have associated claims data to apply a device 
offset percentage that is the greater of 31 percent or the device 
offset percentage of the APC to which the procedure has been assigned. 
The proposal would apply to new device-intensive procedures assigned to 
clinical APCs and would not apply to new procedures assigned to New 
Technology APCs.
    Under our proposal, we would continue to first rely on the 
associated claims data for the new HCPCS code or any predecessor code, 
as described by CPT coding guidance, for the new HCPCS code. If there 
is no claims data from the new HCPCS or any predecessor code, we may 
continue to use clinical discretion to identify HCPCS codes that are 
clinically related or similar to the new HCPCS code but are not 
officially recognized as a predecessor code by CPT, and to use the 
claims data of the clinically related or similar code(s) for purposes 
of determining a device offset percentage to the new HCPCS code (83 FR 
58946). Clinically related and similar procedures for purposes of this 
policy are procedures that have few or no clinical differences and use 
the same devices. For new device-intensive procedures that describe the 
implantation or insertion of a single-use device that meet our 
definition of a device and for which the device cost is significant, 
projected to be greater than 30 percent of the total procedure cost, 
and lack claims data, we would then rely on our proposed device offset 
policy and apply the greater of 31 percent or the device offset 
percentage of the APC to which the procedure has been assigned.
    We solicited comments on our proposed changes to our default device 
offset policy for CY 2025 and subsequent calendar years under the OPPS 
and ASC payment system. The listing of proposed payment indicators for 
covered surgical procedures as well as their respective proposed device 
offset percentages and device offset amounts, which incorporates our 
proposed changes to the default device offset policy, can be found in 
Addendum FF to the proposed rule (which is available via the internet 
on the CMS website).
    Comment: Commenters strongly supported our proposed change to our 
default device offset policy for CY 2025 and subsequent years under the 
ASC payment system.
    Response: We thank the commenters for their support. After 
consideration of the public comments we received, we are finalizing our 
proposal without modification to apply the greater of the APC-wide 
device offset percentage or 31 percent for new HCPCS codes that do not 
have claims data or any predecessor code as described by CPT coding 
guidance.
    Comment: Many commenters recommended that we assign device-
intensive status to HCPCS code C9757 (Laminotomy (hemilaminectomy), 
with decompression of nerve root(s), including partial facetectomy, 
foraminotomy and excision of herniated intervertebral disc, and repair 
of annular defect with implantation of bone anchored annular closure 
device, including annular defect measurement, alignment and sizing 
assessment, and image guidance; 1 interspace, lumbar) and CPT codes 
52284 (Cystourethroscopy, with mechanical urethral dilation and 
urethral therapeutic drug delivery by drug-coated balloon catheter for 
urethral stricture or stenosis, male, including fluoroscopy, when 
performed) and 30469 (Repair of nasal valve collapse with low energy, 
temperature-controlled (i.e., radiofrequency) subcutaneous/submucosal 
remodeling) under the ASC payment system. The commenters argued that 
the proposed ASC payment rate would not adequately reimburse for the 
cost of the devices that are used during the procedures.
    Response: As we discussed in section IV.B. of this final rule with 
comment period, out of concern for hospital nonreporting of device 
costs for procedures that require devices, we are finalizing a 
modification to our device edits policy which reinstates device edits 
for device-intensive procedures created on or after January 1, 2017. 
Additionally, such device edits will be permanent and will apply 
regardless of the procedure's device offset percentage. In conjunction 
with the modification to our device edits policy for CY 2025, for 
determining device offset percentages for procedures subject to our 
device edits policy for CY 2025 that cannot bypass such edit by 
reporting modifier ``CG'', we are relying only on claims from hospitals 
that reported a device code for determining device offset percentages 
under the OPPS and ASC payment systems. Based on our revised 
methodology for this CY 2025 OPPS/ASC final rule with comment period, 
the device offset percentages for HCPCS code C9757 and CPT codes 30469 
and 52284 exceed our device-intensive threshold. Therefore, we are 
assigning such procedures device-intensive status under the ASC payment 
system for CY 2025.
    Comment: One commenter recommended that we assign device-intensive 
status to CPT codes 0686T

[[Page 94329]]

(Histotripsy (ie, non-thermal ablation via acoustic energy delivery) of 
malignant hepatocellular tissue, including image guidance) and 0888T 
(Histotripsy (ie, non-thermal ablation via acoustic energy delivery) of 
malignant renal tissue, including imaging guidance). While the 
commenter states the procedure is not invasive, the commenter argues 
the procedure does require a disposable product.
    Response: We are not accepting this recommendation as this 
procedure does not meet our requirements for a device-intensive 
assignment. As previously discussed, among other requirements, a 
device-intensive procedure must involve a device that is surgically 
implanted or inserted (either permanently or temporarily).
    Comment: One commenter recommended that we assign CPT code 58356 
(Endometrial cryoablation with ultrasonic guidance, including 
endometrial curettage, when performed) device-intensive status, or, at 
the least, to revise the payment indicator to ``A2''--Surgical 
procedure on ASC list in CY 2007; payment based on OPPS relative 
payment weight.
    Response: We are not accepting this recommendation. CPT code 58356 
does not have a device offset percentage that exceeds our device-
intensive threshold. Additionally, CPT code 58356 has been designated 
as permanently office-based surgical procedure since CY 2010.
    Comment: One commenter recommended that we use device cost data 
from CPT code 64590 (Insertion or replacement of peripheral, sacral, or 
gastric neurostimulator pulse generator or receiver, requiring pocket 
creation and connection between electrode array and pulse generator or 
receiver) to determine the device offset percentage for CPT code 0786T 
(Insertion or replacement of percutaneous electrode array, sacral, with 
integrated neurostimulator, including imaging guidance, when 
performed). The commenter argues the predecessor code for 0786T is CPT 
code 64590.
    Response: After further review of the CPT coding guidance 
associated with the neurostimulator codes that were created for CY 
2024, we believe applicable predecessor codes for CPT code 0786T could 
include both CPT code 64590 and CPT code 64561 (Percutaneous 
implantation of neurostimulator electrode array; sacral nerve 
(transforaminal placement) including image guidance, if performed). 
However, as discussed in section III.E of this final rule with comment 
period, we inadvertently listed the integrated sacral nerve stimulation 
system associated with CPT code 0786T as receiving FDA-approval. 
However, it is still pending FDA approval and therefore, we are 
finalizing an OPPS status indicator of ``E1'' until FDA approval has 
been received. Therefore, for the ASC payment system, we are not 
accepting the commenter's recommendation and we are finalizing a 
payment indicator of ``Y5''--``Nonsurgical procedure/item not valid for 
Medicare purposes because of coverage, regulation and/or statute; no 
payment made'' for CY 2025.
    Comment: One commenter recommended that we use the device cost data 
from HCPCS code C9769 (Cystourethroscopy, with insertion of temporary 
prostatic implant/stent with fixation/anchor and incisional struts) to 
determine the device offset percentage for CPT code 53865 
(Cystourethroscopy with insertion of temporary device for ischemic 
remodeling (ie, pressure necrosis) of bladder neck and prostate) 
(placeholder CPT code 5XX05). The commenter argues the predecessor code 
for CPT code 53865 is HCPCS code C9769.
    Response: After further review of the CPT coding guidance 
associated with newly created CPT code 53865, we agree that the 
predecessor code for CPT code 53865 includes HCPCS code C9769 as well 
as unlisted procedures. Therefore, we are accepting the commenter's 
recommendation and assigning a device offset percentage for CPT code 
53865 based on its predecessor code HCPCS code C9769.
    Comment: One commenter supported the device offset percentage for 
HCPCS code C9781 (Arthroscopy, shoulder, surgical; with implantation of 
subacromial spacer (e.g., balloon), includes debridement (e.g., limited 
or extensive), subacromial decompression, acromioplasty, and biceps 
tenodesis when performed) while another commenter recommended that we 
not reduce the device offset percentage from 64.4% to 61.5% under the 
ASC payment system.
    Response: We appreciate the commenters' feedback and are relying on 
available claims data for this final rule with comment period in our 
determination of device-intensive status and device offset percentages 
under the ASC payment system. For final CY 2025 device offset 
percentages based on claims data for this final rule with comment 
period, we refer readers to Addendum FF of this final rule with comment 
period.
    Comment: One commenter recommended we reevaluate the device portion 
and device-intensive status for the following CPT codes:
     36563 (Insertion of tunneled centrally inserted central 
venous access device with subcutaneous pump);
     36568 (Insertion of peripherally inserted central venous 
catheter (picc), without subcutaneous port or pump, without imaging 
guidance; younger than 5 years of age);
     36570 (Insertion of peripherally inserted central venous 
access device, with subcutaneous port; younger than 5 years of age);
     36578 (Replacement, catheter only, of central venous 
access device, with subcutaneous port or pump, central or peripheral 
insertion site); and
     36595 (Mechanical removal of pericatheter obstructive 
material (e.g, fibrin sheath) from central venous device via separate 
venous access).
    The commenter expressed their concerned with the magnitude of the 
payment reduction with CPT code 36595, a permanently office-based 
surgical procedure, experiencing a proposed 78.3 percent reduction from 
CY 2024 as a result of losing device-intensive status and a proposed 
payment rate based on the proposed CY 2025 PFS rate.
    Response: Based on claims data available for this final rule with 
comment period, CPT codes 36563, 36568, 36570, and 36595 do not have 
device offset percentages that exceed the device-intensive threshold of 
greater than 30 percent. Therefore, we are not assigning device-
intensive status to these procedures for CY 2025. However, the device 
offset percentage for CPT code 36578 exceeds our device-intensive 
threshold of 30 percent. Therefore, we are maintaining the CY 2024 
device-intensive designation of CPT code 36578 for CY 2025.
    Regarding the proposed payment rate for CPT code 36595, we believe 
the stakeholder brings up an important issue regarding the volatility 
in our payment rates for surgical procedures that are permanently 
designated as office-based but contain device costs that fluctuate 
above and below our threshold for device-intensive status. In previous 
rulemaking, we have stated that office-based surgical procedures that 
meet our requirements for device-intensive status will be assigned 
device-intensive status rather than office-based status for the 
applicable calendar year. However, since this procedure has been 
assigned office-based status and, based on the most recent claims data 
available, does not have significant device costs, we believe 
reassigning the procedure its office-based status for CY 2025 is 
appropriate. While we believe the number of office-based procedures 
that may gain or lose device-intensive status

[[Page 94330]]

each year is very low, we will monitor payment fluctuations for these 
procedures going forward and may address these concerns in future 
rulemaking.
    Comment: Many commenters supported the proposed device offset 
percentages for the following procedures:
     CPT code 0671T (Insertion of anterior segment aqueous 
drainage device into the trabecular meshwork, without external 
reservoir, and without concomitant cataract removal, one or more);
     CPT code 0816T (Open insertion or replacement of 
integrated neurostimulation system for bladder dysfunction including 
electrode(s) (e.g., array or leadless), and pulse generator or 
receiver, including analysis, programming, and imaging guidance, when 
performed, posterior tibial nerve; subcutaneous);
     CPT code 0817T (Open insertion or replacement of 
integrated neurostimulation system for bladder dysfunction including 
electrode(s) (e.g., array or leadless), and pulse generator or 
receiver, including analysis, programming, and imaging guidance, when 
performed, posterior tibial nerve; subfascial);
     CPT code 31242 (Nasal/sinus endoscopy, surgical; with 
destruction by radiofrequency ablation, posterior nasal nerve);
     CPT code 31298 (Nasal/sinus endoscopy, surgical, with 
dilation (e.g., balloon dilation); frontal and sphenoid sinus ostia);
     CPT code 66174 (Transluminal dilation of aqueous outflow 
canal (e.g., canaloplasty); without retention of device or stent);
     CPT code 66989 (Extracapsular cataract removal with 
insertion of intraocular lens prosthesis (1-stage procedure), manual or 
mechanical technique (e.g., irrigation and aspiration or 
phacoemulsification), complex, requiring devices or techniques not 
generally used in routine cataract surgery (e.g., iris expansion 
device, suture support for intraocular lens, or primary posterior 
capsulorrhexis) or performed on patients in the amblyogenic 
developmental stage; with insertion of intraocular (e.g., trabecular 
meshwork, supraciliary, suprachoroidal) anterior segment aqueous 
drainage device, without extraocular reservoir, internal approach, one 
or more); and
     CPT code 66991 (Extracapsular cataract removal with 
insertion of intraocular lens prosthesis (1 stage procedure), manual or 
mechanical technique (e.g., irrigation and aspiration or 
phacoemulsification); with insertion of intraocular (e.g., trabecular 
meshwork, supraciliary, suprachoroidal) anterior segment aqueous 
drainage device, without extraocular reservoir, internal approach, one 
or more).
    Response: We appreciate the commenters' support of the proposed 
device offset percentages. For these CPT codes, we are finalizing 
device offset percentages based on claims data available for this final 
rule with comment period. CPT codes that were designated as device-
intensive based on claims data available for the proposed rule may or 
may not be designated as device-intensive based on claims data 
available for this final rule with comment period.
    For final CY 2025 device offset percentages based on claims data 
for this final rule with comment period, we refer readers to Addendum 
FF of this final rule with comment period.
c. Adjustment to ASC Payments for No Cost/Full Credit and Partial 
Credit Devices
    Our ASC payment policy for costly devices implanted or inserted in 
ASCs at no cost/full credit or partial credit is set forth in Sec.  
416.179 of our regulations and is consistent with the OPPS policy that 
was in effect until CY 2014. We refer readers to the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66845 through 66848) for a full 
discussion of the ASC payment adjustment policy for no cost/full credit 
and partial credit devices. ASC payment is reduced 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.
    Effective CY 2014, under the OPPS, we finalized our proposal to 
reduce OPPS payment for applicable APCs by the full or partial credit a 
provider receives for a 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 the CY 2014 OPPS/ASC 
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 amount of the actual 
credit received when furnishing a specified device at full or partial 
credit. Therefore, under the ASC payment system, we finalized our 
proposal for CY 2014 to continue to reduce ASC payments by 100 percent 
or 50 percent of the device offset amount when an ASC furnishes a 
device without cost or with full or partial credit, respectively.
    Under current ASC policy, all ASC device-intensive covered surgical 
procedures are subject to the no cost/full credit and partial credit 
device adjustment policy. Specifically, when a device-intensive 
procedure is performed to implant or insert a device that is furnished 
at no cost or with full credit from the manufacturer, the ASC appends 
the HCPCS ``FB'' modifier on the line in the claim with the procedure 
to implant or insert the device. The contractor reduces payment to the 
ASC by the device offset amount that we estimate represents the cost of 
the device when the necessary device is furnished without cost or with 
full credit to the ASC. We continue to believe that the reduction of 
ASC payment in these circumstances is necessary to pay appropriately 
for the covered surgical procedure furnished by the ASC.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 
through 59044) we adopted a policy to reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was 
provided at no cost or with full credit if the credit to the ASC is 50 
percent or more (but less than 100 percent) of the cost of the new 
device. The ASC will append the HCPCS ``FC'' modifier to the HCPCS code 
for the device-intensive surgical procedure when the facility receives 
a partial credit of 50 percent or more (but less than 100 percent) of 
the cost of a device. To report that the ASC received a partial credit 
of 50 percent or more (but less than 100 percent) of the cost of a new 
device, ASCs have the option of either: (1) submitting the claim for 
the device-intensive 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 or insertion 
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

[[Page 94331]]

credit is 50 percent or more (but less than 100 percent) of the cost of 
the device. Beneficiary coinsurance would be based on the reduced 
payment amount. As finalized in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66926), to ensure our policy covers any situation 
involving a device-intensive procedure where an ASC may receive a 
device at no cost or receive full credit or partial credit for the 
device, we apply our ``FB''/``FC'' modifier policy to all device-
intensive procedures.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59043 
through 59044) we stated we would reduce the payment for a device-
intensive procedure for which the ASC receives partial credit by one-
half of the device offset amount that would be applied if a device was 
provided at no cost or with full credit, if the credit to the ASC is 50 
percent or more (but less than 100 percent) of the cost of the device. 
In the CY 2020 OPPS/ASC final rule with comment period, we finalized 
continuing our existing policies for CY 2020. We note that we 
inadvertently omitted language that this policy would apply not just in 
CY 2019 but also in subsequent calendar years. We intended to apply 
this policy in CY 2019 and subsequent calendar years. Therefore, we 
finalized our proposal to apply our policy for partial credits 
specified in the CY 2019 OPPS/ASC final rule with comment period (83 FR 
59043 through 59044) in CY 2022 and subsequent calendar years (86 FR 
63775 through 63776). Specifically, for CY 2022 and subsequent calendar 
years, we would reduce the payment for a device-intensive procedure for 
which the ASC receives partial credit by one-half of the device offset 
amount that would be applied if a device was provided at no cost or 
with full credit, if the credit to the ASC is 50 percent or more (but 
less than 100 percent) of the cost of the device. To report that the 
ASC received a partial credit of 50 percent or more (but less than 100 
percent) of the cost of a device, ASCs have the option of either: (1) 
submitting the claim for the device intensive 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 or insertion procedure until a determination is made by 
the manufacturer on the partial credit and submitting the claim with 
the ``FC'' modifier appended to the implantation procedure HCPCS code 
if the partial credit is 50 percent or more (but less than 100 percent) 
of the cost of the device. Beneficiary coinsurance would be based on 
the reduced payment amount.
    We did not receive any comments on our policies related to no cost/
full credit or partial credit devices, and we are finalizing the 
continuation of our existing policies for CY 2025 without modification.
5. Requirement in the Physician Fee Schedule CY 2025 Proposed Rule for 
HOPDs and ASCs To Report Discarded Amounts of Certain Single-Dose or 
Single-Use Package Drugs
    Section 90004 of the Infrastructure Investment and Jobs Act (Pub. 
L. 117-9, November 15, 2021) (``the Infrastructure Act'') amended 
section 1847A of the Act to re-designate subsection (h) as subsection 
(i) and insert a new subsection (h), which requires manufacturers to 
provide a refund to CMS for certain discarded amounts from a refundable 
single-dose container or single-use package drug.
    The CY 2025 PFS proposed rule included proposals related to the 
discarded drug refund policy, including proposals that may impact 
hospital outpatient departments (HOPDs) and ambulatory surgical centers 
(ASCs). Similar to our CY 2023 and CY 2024 notice in the OPPS/ASC 
proposed rules (87 FR 71988 and 88 FR 49760), we included a notice in 
the CY 2025 proposed rule (89 FR 59421) to ensure interested parties 
were aware of these proposals and knew to refer to the CY 2025 
Physician Fee Schedule proposed rule for a full description of the 
proposed policy. Interested parties were asked to submit comments on 
any proposals to implement section 90004 of the Infrastructure Act to 
the CY 2025 PFS proposed rule. We stated that public comments on these 
proposals would be addressed in the CY 2025 PFS final rule with comment 
period. We note that this same notice appeared in section V.B.6 of the 
CY 2025 OPPS/ASC proposed rule (89 FR 59370).
    Please see a full description of the finalized policy in section 
V.B.6 of this CY 2025 OPPS/ASC final rule with comment period.

D. Additions to ASC Covered Surgical Procedures and Covered Ancillary 
Services Lists

1. Additions to the List of ASC Covered Surgical Procedures
    Section 1833(i)(1) of the Act requires us, in part, to specify, in 
consultation with appropriate medical organizations, surgical 
procedures that are appropriately performed on an inpatient basis in a 
hospital but that can also be safely performed in an ASC, a CAH, or an 
HOPD, and to review and update the list of ASC covered surgical 
procedures at least every 2 years. We evaluate the ASC covered 
procedures list (ASC CPL) each year to determine whether procedures 
should be added to or removed from the list, and changes to the list 
are often made in response to specific concerns raised by stakeholders.
    Under our regulations at Sec. Sec.  416.2 and 416.166, covered 
surgical procedures furnished on or after January 1, 2022, are surgical 
procedures that meet the general standards specified in Sec.  
416.166(b) and are not excluded under the general exclusion criteria 
specified in Sec.  416.166(c). Specifically, under Sec.  416.166(b), 
the general standards provide that covered surgical procedures are 
surgical procedures specified by the Secretary and published in the 
Federal Register and/or via the internet on the CMS website that are 
separately paid under the OPPS, that would not be expected to pose a 
significant safety risk to a Medicare beneficiary when performed in an 
ASC, and for which standard medical practice dictates that the 
beneficiary would not typically be expected to require active medical 
monitoring and care at midnight following the procedure.
    Section 416.166(c) sets out the general exclusion criteria used 
under the ASC payment system to evaluate the safety of procedures for 
performance in an ASC. The general exclusion criteria provide that 
covered surgical procedures do not include those surgical procedures 
that: (1) generally result in extensive blood loss; (2) require major 
or prolonged invasion of body cavities; (3) directly involve major 
blood vessels; (4) are generally emergent or life-threatening in 
nature; (5) commonly require systemic thrombolytic therapy; (6) are 
designated as requiring inpatient care under Sec.  419.22(n); (7) can 
only be reported using a CPT unlisted surgical procedure code; or (8) 
are otherwise excluded under Sec.  411.15.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59029 
through 59030), we defined a surgical procedure under the ASC payment 
system as any procedure described within the range of Category I CPT 
codes that the CPT Editorial Panel of the AMA defines as ``surgery'' 
(CPT codes 10000 through 69999) (72 FR 42476), as well as procedures 
that are described by Level II HCPCS codes or by Category I CPT codes 
or by Category III CPT codes that directly crosswalk or are clinically

[[Page 94332]]

similar to procedures in the CPT surgical range that we determined met 
the general standards established in previous years for addition to the 
ASC CPL.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized adding several dental surgical procedures to the ASC CPL that 
met our regulatory criteria at Sec. Sec.  416.166. We noted that there 
are statutory and regulatory limitations regarding Medicare coverage 
and payment for dental services. Section 1862(a)(12) of the Act 
generally precludes Medicare Part A or Part B payment for services in 
connection with the care, treatment, filling, removal, or replacement 
of teeth or structures directly supporting teeth (collectively referred 
to in this section as ``dental services''). The regulation at Sec.  
411.15(i) similarly prohibits payment for dental services. In the CY 
2023 PFS final rule (87 FR 69663), we explained that there are certain 
instances where dental services are so integral to other medically 
necessary services that they are not in connection with dental services 
within the meaning of section 1862(a)(12) of the Act. Rather, such 
dental services are inextricably linked to, and substantially related 
to the clinical success of, other covered services (hereafter in this 
section, ``inextricably linked''). To provide greater clarity to 
current policies, the CY 2023 PFS final rule finalized: (1) a 
clarification of our interpretation of section 1862(a)(12) of the Act 
to permit payment for dental services that are inextricably linked to 
other covered services; (2) clarification and codification of certain 
longstanding Medicare FFS payment policies for dental services that are 
inextricably linked to other covered services; (3) that, beginning for 
CY 2023, Medicare Parts A and B payment can be made for certain dental 
services inextricably linked to Medicare-covered organ transplant, 
cardiac valve replacement, or valvuloplasty procedures; and, (4) 
beginning for CY 2024, that Medicare Parts A and B payment can be made 
for certain dental services inextricably linked to Medicare-covered 
services for treatment of head and neck cancers (87 FR 69670 through 
69671).
    For the ASC setting, services must meet all applicable Medicare 
conditions for coverage and payment to be paid by Medicare, including 
those as specified under the CY 2023 PFS final rule (87 FR 69687 
through 69688) and Sec.  411.15(i)(3). Medicare payment may be made in 
the ASC setting for dental services for which payment may be made under 
Medicare Part B, paid under the OPPS, and that meet the ASC CPL 
criteria. The fact that a drug, device, procedure, or service is 
assigned a HCPCS code and a payment rate under the ASC payment system 
indicates only how the product, procedure, or service may be paid if 
covered by the program. MACs will be involved in the final decision 
regarding whether a drug, device, procedure, or other service meets all 
program requirements and conditions for coverage and payment. 
Therefore, even if a code describing a dental service has an associated 
payment rate on the ASC CPL, Medicare will only make payment for the 
service if it meets applicable requirements. We also clarify that 
adding dental procedures to the ASC CPL does not serve as a coverage 
determination for dental services under general anesthesia. We direct 
readers to the CY 2025 PFS proposed rule for additional discussion of 
Medicare coverage and payment for dental services.
    For a detailed discussion of the history of our policies for adding 
surgical procedures to the ASC CPL, we refer readers to the CY 2021 
through CY 2024 OPPS/ASC final rules with comment period (85 FR 86143 
through 86145; 86 FR 63777 through 63805; 87 FR 72068 through 72076; 
and 88 FR 81923 through 81945).
2. Final Changes to the List of ASC Covered Surgical Procedures for CY 
2025
    Our current policy, which includes consideration of the general 
standards and exclusion criteria we have historically used to determine 
whether a surgical procedure should be added to the ASC CPL, is 
intended to ensure that surgical procedures added to the ASC CPL can be 
performed safely in the ASC setting on the typical Medicare 
beneficiary.
    As part of our evaluation process to add procedures to the CPL, we 
assess potential procedures against the specific list of ASC CPL 
criteria at Sec.  416.166. We also examine clinical data on these 
procedures from multiple sites of services, review literature and 
experiential data, and analyze claims data trends to ensure that these 
procedures meet all our criteria and are not expected to pose a 
significant risk to beneficiary safety when performed in an ASC. For CY 
2025, we also reviewed supporting evidence received in the pre-proposed 
rule nominations process to inform our procedure evaluations. Based 
upon this review, we proposed to update the ASC CPL by adding 20 
medical and dental surgical procedures to the list for CY 2025.
    After reviewing the clinical characteristics of these twenty 
procedures and consulting with stakeholders and multiple clinical 
advisors, we determined that these procedures are separately paid under 
the OPPS, would not be expected to pose a significant risk to 
beneficiary safety when performed in an ASC, and would not be expected 
to require active medical monitoring and care of the beneficiary at 
midnight following the procedure. These procedures are surgical or 
surgery-like, clinically similar to procedures in the CPT surgical 
range that we determined met the general standards for addition to the 
ASC CPL. These procedures are not excluded from being included on the 
ASC CPL because they do not generally result in extensive blood loss, 
require major or prolonged invasion of body cavities, commonly require 
systemic thrombolytic therapy, or directly involve major blood vessels; 
are not generally emergent or life-threatening in nature or designated 
as requiring inpatient care; or can only be reported using a CPT 
unlisted surgical procedure code or are otherwise excluded under 
Medicare. Therefore, we believed these procedures may all be 
appropriately performed in an ASC and proposed to include them on the 
ASC CPL for CY 2025.
    We continue to focus on maximizing patient access to care by adding 
procedures to the ASC CPL when appropriate. While expanding the ASC CPL 
offers benefits, such as preserving the capacity of hospitals to treat 
more acute patients and promoting site neutrality, we also believe that 
any additions to the CPL should be added in a carefully calibrated 
fashion to ensure that the procedure is safe to be performed in the ASC 
setting. We encourage interested parties to submit procedure 
recommendations to be added to the ASC CPL, particularly if there is 
evidence that these procedures meet our criteria and can be safely 
performed in the ASC setting. We expect to continue to gradually expand 
the ASC CPL, as medical practice and technology continue to evolve and 
advance in future years.
    Comment: Multiple commenters supported the proposed addition of 20 
procedures, including 16 dental procedures, to the ASC CPL for CY 2025.
    Response: We thank the commenters for their support.
    Comment: A few commenters provided feedback on different approaches 
for CMS to consider when approaching the ASC CPL. These commenters felt 
there was a lack of transparency in the pre-proposed rule 
recommendation process and requested

[[Page 94333]]

that CMS provide the full list of recommended procedures and rationales 
for all procedures recommended by the public, even if CMS did not 
propose to add those procedures to the ASC CPL. Additionally, one 
commenter requested greater clarification on the definition of the 
``typical Medicare beneficiary.''
    Response: We thank the commenters for their input and will consider 
it for future rulemaking. As part of our evaluation process, we assess 
recommended procedures against the specific list of ASC CPL criteria at 
42 CFR 416.166, examining clinical data on these procedures from 
multiple sites of services, reviewing the literature and experiential 
data provided in public comments, and examining claims volume to ensure 
that procedures are not expected to pose a significant risk to 
beneficiary safety when performed in an ASC.
    While we have not historically published pre-proposed rule 
recommendations for which we did not propose any changes, we do address 
and publish a list of all codes that are recommended during the public 
comment period in the OPPS/ASC final rule. Additionally, in the CY 2022 
OPPS/ASC final rule, we provided additional context on the typical 
Medicare beneficiary, whose health status is representative of the 
broader Medicare population, and we believe this information is 
sufficient to understand the typical Medicare beneficiary terminology 
without additional clarification at this time (86 FR 63777-63779).
    Comment: One commenter requested that CMS not finalize its proposal 
to add two leadless pacemaker procedures, CPT codes 0795T 
(Transcatheter insertion of permanent dual-chamber leadless pacemaker, 
including imaging guidance (e.g., fluoroscopy, venous ultrasound, right 
atrial angiography, right ventriculography, femoral venography) and 
device evaluation (e.g., interrogation or programming), when performed; 
complete system (i.e., right atrial and right ventricular pacemaker 
components)) and 0801T (Transcatheter removal and replacement of 
permanent dual-chamber leadless pacemaker, including imaging guidance 
(e.g., fluoroscopy, venous ultrasound, right atrial angiography, right 
ventriculography, femoral venography) and device evaluation (e.g., 
interrogation or programming), when performed; dual-chamber system 
(i.e., right atrial and right ventricular pacemaker components)), 
citing previous CMS guidance that excludes contractors from paying 
claims for leadless pacemakers when the service is provided in the ASC 
setting.
    Response: We thank the commenter for their feedback. As of January 
18, 2017, CMS covers leadless pacemakers through Coverage with Evidence 
Development (CED) when procedures are performed in CMS-approved CED 
studies and are provided in one of the following places of service: 
Indian Health Service Provider Based Facility, Inpatient Hospital, On 
Campus-Outpatient Hospital, and Military Treatment Facility (Medicare 
Claims Processing Manual (Pub. L. 100-04), Chapter 32, Section 
380.1.1). We agree with the commenter that ASCs are excluded from 
payment for leadless pacemaker procedures under this policy, therefore, 
we are not finalizing our proposal to add CPT codes 0795T and 0801T to 
the ASC CPL.
    Comment: Most commenters on this policy recommended specific codes 
to be added to the ASC CPL including arthrodesis, cardiac ablations, 
echocardiography, electrophysiological studies, vascular injections, 
and electroconvulsive therapy. We received 74 procedure recommendations 
for the CPL, listed in Table 155, below.
    Response: We thank commenters for their recommendations. We 
individually assessed each of the recommended procedures, evaluating 
clinical data on these procedures from multiple sites of service, 
reviewing the literature and experiential data provided in public 
comments, and examining claims volume to determine whether these 
procedures meet each of the regulatory criteria at 42 CFR 416.166.
    Based on our review of the clinical characteristics of the 
procedures and their similarity to other procedures that are currently 
on the ASC CPL, we believe that 3 procedures (CDT codes D7320, D7321, 
and D7471) out of the 74 procedure recommendations we received can be 
safely performed in the ASC setting and meet the general standards and 
exclusion criteria for the ASC CPL as set forth in 42 CFR 416.166(b) 
and (c), respectively. We agree with the commenter who provided support 
and evidence stating that these procedures can be safely performed in 
an ASC setting. We will continue to monitor clinical data on these 
services in the ASC setting and address any new trends in future 
rulemaking. These procedures, listed in Table 155 below, are:
     D7320 (Alveoloplasty not in conjunction with extractions--
four or more teeth or tooth spaces, per quadrant).
     D7321 (Alveoloplasty not in conjunction with extractions--
one to three teeth or tooth spaces, per quadrant).
     D7471 (Removal of lateral exostosis (maxilla or 
mandible)).
    Below, we explain our rationale for not including the 71 
recommended procedures, organized by category.
     1 anesthesia code for total knee arthroplasty. Payment for 
anesthesia services is packaged into the ASC payment for covered 
surgical procedures.
     2 integumentary system, including placement of breast 
localization devices. These codes are already on the ASC CPL as 
packaged procedures. We believe this placement is appropriate, given 
that these procedures are performed with a primary procedure.
     18 cardiovascular codes, including cardiac ablations, 
cardioversion, electrophysiological studies and procedures, and 
echocardiography. Many of these codes have associated inpatient 
admissions, where the beneficiary requires active medical monitoring 
and care at midnight following the procedure. The cardioversion and 
echocardiography codes are non-surgical procedures, which means they 
would not qualify for addition to the ASC CPL, and most of the 
ancillary codes are not integral to a covered surgical procedure on the 
ASC CPL.
     2 musculoskeletal code, which are arthrodesis procedures. 
While these procedures have some claims volume in the outpatient 
setting, the claims also showed multiple post-operative inpatient days, 
indicating that the beneficiary would require active monitoring and 
care past midnight following the procedure. These procedures can also 
involve prolonged invasion of body cavities. In addition, we 
acknowledge the findings of studies that commenters provided related to 
these procedures. However, the studies we received had significant 
limitations including selection bias and an absence of age groups 
representative of the Medicare population.
     1 psychiatry code for electroconvulsive therapy. As this 
procedure is non-surgical, it would not qualify as a separately payable 
surgical procedure on the ASC CPL.
     18 radiology codes, including aortography, angiography, 
venography, and transvascular biopsy. Most of these codes are currently 
on the covered ancillary services list. As they are non-surgical, they 
would not qualify as separately payable surgical procedures on the ASC 
CPL.
     29 vascular codes, including catheter placements. Nearly 
all the catheter placement codes recommended

[[Page 94334]]

are already on the ASC CPL as packaged procedures. We believe this 
placement is appropriate, given that these procedures are performed 
with a primary service. The remaining vascular codes related to 
revascularization directly involve major blood vessels and there are 
concerns for potential extensive blood loss.
    Given these considerations, we believe that these 71 codes do not 
meet the criteria for inclusion on the ASC CPL due to the following 
factors: likelihood of inpatient admissions, the need for multiple-day 
stays past midnight, safety risks posed to the typical beneficiary 
without active postoperative monitoring, involvement of major blood 
vessels, prolonged invasion of a body cavity, or are non-surgical.
    Therefore, in this CY 2025 OPPS/ASC final rule with comment period, 
we are finalizing our proposal, with modification, to add 21 
procedures, including 19 dental procedures, to the ASC CPL. These 
procedures are listed below in Table 154 of this CY 2025 OPPS/ASC final 
rule with comment period.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TR27NO24.203

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[GRAPHIC] [TIFF OMITTED] TR27NO24.204

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[GRAPHIC] [TIFF OMITTED] TR27NO24.205

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[GRAPHIC] [TIFF OMITTED] TR27NO24.206

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[GRAPHIC] [TIFF OMITTED] TR27NO24.207

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[GRAPHIC] [TIFF OMITTED] TR27NO24.208

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[GRAPHIC] [TIFF OMITTED] TR27NO24.209

BILLING CODE 4120-01-C
3. Covered Ancillary Services
    Covered ancillary services are specified in Sec.  416.164(b) and, 
as stated previously, are eligible for separate ASC payment. As 
provided at Sec.  416.164(b), we make separate ASC payments for 
ancillary items and services when they are provided integral to ASC 
covered surgical procedures that include the following: (1) 
brachytherapy sources; (2) certain implantable items that have pass-
through payment status under the OPPS; (3) certain items and services 
that we designate as contractor-priced, including, but not limited to, 
procurement of corneal tissue; (4) certain drugs and biologicals for 
which separate payment is allowed under the OPPS; (5) certain radiology 
services for which separate payment is allowed under the OPPS; and (6) 
non-opioid pain management drugs that function as a supply when used in 
a surgical procedure. 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.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59062 
through 59063), consistent with the established ASC payment system 
policy (72 FR 42497), we finalized the policy to update the ASC list of 
covered ancillary services to reflect the payment status for the 
services under the OPPS and to continue this reconciliation of packaged 
status for subsequent calendar years. As discussed in prior rulemaking, 
maintaining consistency with the OPPS may result in changes to ASC 
payment indicators for some covered ancillary services. For example, if 
a covered ancillary service was separately paid under the ASC payment 
system in CY 2024, but will be packaged under the CY 2025 OPPS, we 
would also package the ancillary service under the ASC payment system 
for CY 2025 to maintain consistency with the OPPS. Comment indicator 
``CH'' is used in Addendum BB (which is available via the internet on 
the CMS website) to indicate covered ancillary services for which we 
proposed a change in the ASC payment indicator to reflect a proposed 
change in the OPPS treatment of the service for CY 2025.
    In the CY 2022 OPPS/ASC final rule with comment period, we 
finalized our proposal to revise 42 CFR 416.164(b)(6) to include, as 
ancillary items that are integral to a covered surgical procedure and 
for which separate payment is allowed, non-opioid pain management drugs 
and biologicals that function as a supply when used in a surgical 
procedure as determined by CMS (86 FR 63490).
    New CPT and HCPCS codes for covered ancillary services for CY 2025 
can be found in section XIII.B of this final rule with comment period. 
All ASC covered ancillary services and their final payment indicators 
for CY 2025 are also included in Addendum BB to this final rule with 
comment period (which is available via the internet on the CMS 
website).
    Comment: We received one comment requesting CMS not finalize its 
proposal to add HCPCS code C1605 to the list of covered ancillary 
services, due to CMS's policy that excludes contractors from paying 
claims for leadless pacemakers when the service is provided in the ASC 
setting.
    Response: We thank the commenter for their feedback. As discussed 
in section XIII.D.2 above, procedures for leadless pacemakers are not 
covered when provided in the ASC setting (Medicare Claims Processing 
Manual (Pub. L. 100-04), Chapter 32, section 380.1.1). Therefore, we 
agree with the commenter and are not finalizing our proposal to add 
HCPCS code C1605 to the list of covered ancillary services.
    Comment: We received several comments from physician societies 
requesting that CMS not finalize its proposal to add CPT code 93355

[[Page 94342]]

(Echocardiography, transesophageal (tee) for guidance of a 
transcatheter intracardiac or great vessel(s) structural 
intervention(s) (e.g., tavr, transcatheter pulmonary valve replacement, 
mitral valve repair, paravalvular regurgitation repair, left atrial 
appendage occlusion/closure, ventricular septal defect closure) (peri-
and intra-procedural), real-time image acquisition and documentation, 
guidance with quantitative measurements, probe manipulation, 
interpretation, and report, including diagnostic transesophageal 
echocardiography and, when performed, administration of ultrasound 
contrast, doppler, color flow, and 3d) to the covered ancillary 
procedures list. The commenters expressed safety concerns with adding 
CPT code 93355 to the covered ancillary services list, as the primary 
procedures that would be billed with this service are not performed in 
ASCs, with some of the procedures also being on the inpatient only 
list.
    Response: We thank the commenters for their input. After further 
review, we agree with the commenters that the majority of primary 
procedures associated with CPT code 93355 are not on the ASC CPL and/or 
are performed in the inpatient setting. Therefore, we are not 
finalizing our proposal to add 93355 to the covered ancillary services 
list.
Claims Processing Limitations for Covered Ancillary Procedures 
Performed With G0330
    We finalized adding HCPCS code G0330 (Facility services for dental 
rehabilitation procedure(s) performed on a patient who requires 
monitored anesthesia (e.g., general, intravenous sedation (monitored 
anesthesia care) and use of an operating room)) to the ASC CPL in the 
CY 2024 OPPS/ASC final rule (88 FR 81924). In ASC Addendum BB, there is 
a specific and definitive list of covered ancillary dental services 
with payment indicator of ``D1,'' indicating an ancillary dental 
service or item with no separate payment made. In the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81945 and 81946), we finalized 
that code G0330 could only be billed when accompanied by a covered 
ancillary procedure that has the payment indicator of ``D1.'' 
Performance of at least one of these covered ancillary services is 
integral to each of the surgical procedures that correspond to G0330. 
This limitation ensures that only covered ancillary services we 
evaluated for safety in the ASC setting could be performed with code 
G0330.
    While HCPCS code G0330 must be billed with a covered ancillary 
procedure with a payment indicator of ``D1,'' these covered ancillary 
procedures with a payment indicator of ``D1'' can be billed with 
surgical procedures other than G0330. When billed with procedures other 
than code G0330, these ancillary procedures would be packaged in 
accordance with our policy for covered ancillary procedures. 
Additionally, other than HCPCS code G0330, procedures assigned to 
payment indicator ``D2'', indicating non office-based dental procedure 
added in CY 2024 or later, are not required to be billed with a covered 
ancillary procedure assigned to payment indicator ``D1'' to receive 
payment for the procedure.
    The fact that a drug, device, procedure, or service is assigned a 
HCPCS code and a payment rate under the ASC payment system indicates 
only how the product, procedure, or service may be paid if covered by 
the program. MACs will be involved in the final decision regarding 
whether a drug, device, procedure, or other service meets all program 
requirements and conditions for coverage and payment. Therefore, even 
if a code describing a dental service has an associated payment rate on 
the ASC CPL, Medicare will only make payment for the service if it 
meets applicable requirements.
    Comment: One commenter requested that CMS remove the requirement 
that HCPCS code G0330 must be billed along with a covered but non-
payable dental ancillary service. The commenters stated that dental 
rehabilitation meet the regulatory requirements for inclusion on the 
ASC CPL.
    Response: We thank the commenters for their input. The claims 
processing limitations around code G0330, for example, the requirement 
that code G0330 must be billed with a covered dental ancillary 
procedure with payment indicator ``D1,'' in the ASC setting, allows us 
to ensure that only covered ancillary services we have evaluated for 
safety in the ASC setting can be performed with code G0330.
    After consideration of the public comments we received, we are 
finalizing this policy as proposed.

E. ASC Payment Policy for Non-Opioid Post-Surgery Pain Management 
Drugs, Biologicals, and Devices

1. Background on OPPS/ASC Non-Opioid Pain Management Packaging Policies
    On October 24, 2018, the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment for Patients and Communities 
(SUPPORT) Act (Pub. L. 115-271) was enacted. Section 1833(t)(22)(A)(i) 
of the Act, as added by section 6082(a) of the SUPPORT Act, states that 
the Secretary must review payments under the OPPS for opioids and 
evidence based non-opioid alternatives for pain management (including 
drugs and devices, nerve blocks, surgical injections, and 
neuromodulation) with a goal of ensuring that there are not financial 
incentives to use opioids instead of non-opioid alternatives. As part 
of this review, under section 1833(t)(22)(A)(iii) of the Act, the 
Secretary must consider the extent to which revisions to such payments 
(such as the creation of additional groups of covered outpatient 
department (OPD) services to separately classify those procedures that 
utilize opioids and non-opioid alternatives for pain management) would 
reduce the payment incentives for using opioids instead of non-opioid 
alternatives for pain management. In conducting this review and 
considering any revisions, the Secretary must focus on covered OPD 
services (or groups of services) assigned to C-APCs, APCs that include 
surgical services, or services determined by the Secretary that 
generally involve treatment for pain management. If the Secretary 
identifies revisions to payments pursuant to section 
1833(t)(22)(A)(iii) of the Act, section 1833(t)(22)(C) of the Act 
requires the Secretary to, as determined appropriate, begin making 
revisions for services furnished on or after January 1, 2020. Revisions 
under this paragraph are required to be treated as adjustments for 
purposes of paragraph (9)(B) of the Act, which requires any adjustments 
to be made in a budget neutral manner. Section 1833(i)(8) of the Act, 
as added by section 6082(b) of the SUPPORT Act, requires the Secretary 
to conduct a similar type of review as required for the OPPS and to 
make revisions to the ASC payment system in an appropriate manner, as 
determined by the Secretary.
    For a detailed discussion of rulemaking on non-opioid alternatives 
prior to CY 2020, we refer readers to the CYs 2018 and 2019 OPPS/ASC 
final rules with comment period (82 FR 59345; 83 FR 58855 through 
58860).
    For the CY 2020 OPPS/ASC proposed rule (84 FR 39423 through 39427), 
as required by section 1833(t)(22)(A)(i) of the Act, we reviewed 
payments under the OPPS for opioids and evidence- based non-opioid 
alternatives for pain management (including drugs and devices, nerve 
blocks, surgical injections, and neuromodulation) with a goal of 
ensuring that there are not financial incentives to use opioids

[[Page 94343]]

instead of non-opioid alternatives. For the CY 2020 OPPS/ASC proposed 
rule (84 FR 39423 through 39427), we proposed to continue our policy to 
pay separately at ASP plus 6 percent for non-opioid pain management 
drugs that function as surgical supplies in the performance of surgical 
procedures when they are furnished in the ASC setting and to continue 
to package payment for non-opioid pain management drugs that function 
as surgical supplies in the performance of surgical procedures in the 
hospital outpatient department setting.
    In the CY 2020 OPPS/ASC final rule with comment period (84 FR 61173 
through 61180), after reviewing data from stakeholders and Medicare 
claims data, we did not find compelling evidence to suggest that 
revisions to our OPPS payment policies for non-opioid pain management 
alternatives were necessary for CY 2020. We finalized our proposal to 
continue to unpackage and pay separately at ASP plus 6 percent for non-
opioid pain management drugs that function as surgical supplies when 
furnished in the ASC setting for CY 2020. Under this policy, for CY 
2020, the only drug that qualified for separate payment in the ASC 
setting as a non- opioid pain management drug that functions as a 
surgical supply was Exparel.
    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 85896 
through 85899), we continued the policy to pay separately at ASP plus 6 
percent for non-opioid pain management drugs that function as surgical 
supplies in the performance of surgical procedures when they were 
furnished in the ASC setting and to continue to package payment for 
non-opioid pain management drugs that function as surgical supplies in 
the performance of surgical procedures in the hospital outpatient 
department setting for CY 2021. For CY 2021, only Exparel and Omidria 
met the criteria as non-opioid pain management drugs that function as 
surgical supplies in the ASC setting and received separate payment 
under the ASC payment system.
    In the CY 2022 OPPS/ASC final rule with comment period (86 FR 
63483), we finalized a policy to unpackage and pay separately at ASP 
plus 6 percent for non-opioid pain management drugs that function as 
surgical supplies when they are furnished in the ASC setting, are FDA-
approved, have an FDA-approved indication for pain management or as an 
analgesic, and have a per-day cost above the OPPS/ASC drug packaging 
threshold; and we finalized our proposed regulation text changes at 42 
CFR 416.164(a)(4) and (b)(6), 416.171(b)(1), and 416.174 as proposed.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72089), we determined that five products were eligible for separate 
payment in the ASC setting under our final policy for CY 2022. We noted 
that future products, or products not discussed in that rulemaking that 
may be eligible for separate payment under this policy, would be 
evaluated in future rulemaking (86 FR 63496). In the CY 2023 final rule 
with comment period, we finalized that five drugs would receive 
separate payment in the ASC setting for CY 2023 under the policy for 
non-opioid pain management drugs and biologicals that function as 
surgical supplies (86 FR 63496).
    In the CY 2023 OPPS/ASC final rule with comment period, we 
finalized a clarification of our policy by codifying the two additional 
criteria for separate payment for non-opioid pain management drugs and 
biologicals that function as surgical supplies in the regulatory text 
at Sec.  416.174 as a technical change. First, we finalized at new 
Sec.  416.174(a)(3) that non-opioid pain management drugs or 
biologicals that function as a supply in a surgical procedure are 
eligible for separate payment if the drug or biological does not have 
transitional pass-through payment status under Sec.  419.64. In the 
case where a drug or biological otherwise meets the requirements under 
Sec.  416.174 and has transitional pass-through payment status that 
will expire during the calendar year, the drug or biological would 
qualify for separate payment under Sec.  416.174 during such calendar 
year on the first day of the next calendar year quarter after its pass-
through status expires. Second, we finalized that new Sec.  
416.174(a)(4) would reflect that the drug or biological must not 
already be separately payable in the OPPS or ASC payment system under a 
policy other than the one specified in Sec.  416.174.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
finalized four drugs as eligible to receive separate payment as a non-
opioid pain management drug that functions as a supply in a surgical 
procedure under the ASC payment system and which met the criteria at 
Sec.  416.174(a) for CY 2024.

F. Final CY 2025 Non-Opioid Policy for Pain Relief Under the OPPS and 
ASC Payment System

1. Background on Access to Non-Opioid Treatments for Pain Relief
    The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328), 
was signed into law on December 29, 2022. Section 4135(a) and (b) of 
the CAA, 2023, titled Access to Non-Opioid Treatments for Pain Relief, 
amended section 1833(t)(16) and section 1833(i) of the Social Security 
Act, respectively, to provide for temporary additional payments for 
non-opioid treatments for pain relief (as that term is defined in 
section 1833(t)(16)(G)(i) of the Act). In particular, section 
1833(t)(16)(G) provides that with respect to a non-opioid treatment for 
pain relief furnished on or after January 1, 2025, and before January 
1, 2028, the Secretary shall not package payment for the non-opioid 
treatment for pain relief into payment for a covered OPD service (or 
group of services) and shall make an additional payment for the non-
opioid treatment for pain relief as specified in clause (ii) of that 
section. Clauses (ii) and (iii) of section 1833(t)(16)(G) of the Act 
provide for the amount of additional payment and set a limitation on 
that amount.
    Paragraph (10) of section 1833(i) of the Act cross-references the 
OPPS provisions about the additional payment amount and payment 
limitation for non-opioid treatments for pain relief and applies them 
to payment under the ASC payment system. In particular, subparagraph 
(A) of paragraph (10) of section 1833(i) of the Act, as added by 
section 4135(b) of the CAA, 2023, provides that in the case of surgical 
services furnished on or after January 1, 2025, and before January 1, 
2028, additional payments shall be made under the ASC payment system 
for non-opioid treatments for pain relief in the same amount provided 
in clause (ii) and subject to the limitation in clause (iii) of section 
1833(t)(16)(G) of the Act for the OPPS. Subparagraph (B) of section 
1833(i)(10) of the Act provides that a drug or biological that meets 
the requirements of 42 CFR 416.174 and is a non-opioid treatment for 
pain relief shall also receive additional payment in the amount 
provided in clause (ii) and subject to the limitation in clause (iii) 
of section 1833(t)(16)(G) of the Act.
    Additional payments are required to begin on January 1, 2025. The 
statute directs CMS to provide ``additional payment'', and for purposes 
of the proposal, we interpret this language to be equivalent to 
``separate payment,'' since CMS provides an additional payment by 
unpackaging the product and then making a separate payment. ``Separate 
payment'' is the more commonly used terminology in the OPPS rule and 
likely more familiar to readers. To avoid confusion, we will be using 
``separate payment'' throughout the rest of this section, which we

[[Page 94344]]

believe to be synonymous with ``additional payment.''
    Our CY 2025 proposals to implement the amendments to sections 
1833(t)(16) and section 1833(i) of the Act required by section 4135 of 
the CAA, 2023 are discussed below, followed by a summary of comments, 
our responses to those comments, and our finalized policy for CY 2025.
2. Final CY 2025 Non-Opioid Policy Implementation of Section 4135 of 
the CAA, 2023
a. Statutory Authority for OPPS/ASC Non-Opioid Policy
    Prior to CY 2025, the statutory authority for the ASC non-opioid 
policy has been section 1833(i)(8) of the Act, as added by section 
6082(b) of the SUPPORT Act. Section 1833(i)(8) of the Act refers to 
paragraph (t)(22), which states that the Secretary shall conduct a 
similar type of review as the one required for the OPPS for opioids and 
evidence based non-opioid alternatives for pain management (including 
drugs and devices, nerve blocks, surgical injections, and 
neuromodulation) with a goal of ensuring that there are not financial 
incentives to use opioids instead of non-opioid alternatives and make 
such revisions as the Secretary determines appropriate. As discussed in 
the previous section, CMS's policy for CY 2024 is to provide separate 
payment in the ASC setting for certain qualifying non-opioid pain 
management drugs that function as a supply in a surgical procedure.
    As noted previously, section 4135 of the CAA, 2023, provides for 
temporary separate payments for certain non-opioid treatments for pain 
relief in both the hospital outpatient department and ambulatory 
surgical center settings from January 1, 2025, through December 31, 
2027. Specifically, these separate payments are for qualifying drugs, 
biologicals, and devices that, among other requirements, have their 
payment packaged into payment for a covered OPD service (or group of 
services). Pursuant to section 1833(t)(2)(E) of the Act, the temporary 
separate payments must be made in a budget neutral manner.
(1) Drugs and Biologicals Subject to the ASC Non-Opioid Policy (42 CFR 
416.174)
    Section 1833(i)(10)(B), titled ``Transition,'' provides that a drug 
or biological that meets the requirements of the regulation at 42 CFR 
416.174, the current ASC non-opioid policy, and also meets the 
definition of a non-opioid treatment for pain relief at section 
1833(t)(16)(G)(iv) shall receive separate payments under section 4135 
of the CAA, 2023, subject to the payment limitation. In light of this 
requirement, we proposed that drugs and biologicals that meet the 
definition of a non-opioid treatment for pain relief for purposes of 
section 4135 that are currently subject to the ASC policy for non-
opioid treatments authorized by section 6082 of the SUPPORT Act, would 
instead receive separate payments, subject to the limitation, for the 
duration of the payment period for section 4135. These drugs and 
biologicals are described in the discussions that follow.
    Comment: Commenters were generally supportive of CMS paying for 
drugs paid under the ASC non-opioid treatment policy authorized by 
section 6082 of the SUPPORT Act under the policy authorized by section 
4135 of the CAA, 2023. Commenters recommended that CMS ensure payment 
did not decrease, to the extent possible, when the transition between 
policies occurs. Finally, commenters were looking ahead and recommended 
that CMS begin to assess its authority for continuing a policy for the 
payment of non-opioid treatments for pain relief, starting in CY 2028 
and beyond. Some commenters recommended CMS assess their waiver 
authority and look to extend the policy in a non-budget neutral manner.
    Response: We thank commenters for their support. As described in 
the following sections, we must comply with the requirements of the 
statute in our policy implementation. We will continue to monitor the 
effects of our payment policies, explore our authorities, and consider 
what policies may be appropriate in future rulemaking.
    Based on the comments received, we are finalizing our proposal that 
drugs and biologicals that meet the definition of a non-opioid 
treatment for pain relief for purposes of section 4135 that are 
currently subject to the ASC policy for non-opioid treatments 
authorized by section 6082 of the SUPPORT Act, would instead receive 
separate payments, subject to the payment limitation, for the duration 
of the payment period for section 4135.
(2) Definition of Non-Opioid Treatment for Pain Relief
    Section 1833(t)(16)(G)(iv) of the Act defines a non-opioid 
treatment for pain relief. In order for a drug or biological product to 
qualify as a non-opioid treatment for pain relief, pursuant to section 
1833(t)(16)(G)(iv)(I), the product must have ``a label indication 
approved by the Food and Drug Administration to reduce postoperative 
pain, or produce postsurgical or regional analgesia, without acting 
upon the body's opioid receptors.'' In order for a medical device to 
qualify as a non-opioid treatment for pain relief, pursuant to section 
1833(t)(16)(G)(iv)(II)(bb), the medical devices must be ``used to 
deliver a therapy to reduce postoperative pain, or produce post-
surgical or regional analgesia.'' This subparagraph also defines such a 
device as having ``an application under section 515 of the Federal 
Food, Drug, and Cosmetic Act that has been approved with respect to the 
device, been cleared for market under section 510(k) of such Act, or is 
exempt from the requirements of section 510(k) of such Act pursuant to 
subsection (l) or (m) or section 510 of such Act or section 520(g) of 
such Act'' and ``demonstrated the ability to replace, reduce, or avoid 
intraoperative or postoperative opioid use or the quantity of opioids 
prescribed in a clinical trial or through data published in a peer-
reviewed journal.''
    Comment: Commenters were very supportive of CMS using the exact 
language in the statue in the definition of a non-opioid treatment for 
pain relief. Commenters recommended CMS codify this definition.
    Response: We thank commenters for their support.
    Comment: One commenter recommended CMS adopt a definition that 
allows for the combined use of devices and drugs together, rather than 
just the individual components, for the purposes of separate payment 
for a non-opioid treatment for pain relief.
    Response: We thank the commenter for their suggestion. Section 4135 
does not contemplate a situation where a combination of products may 
qualify. However, if the individual components, either a drug, 
biological, or device, meet the statutory criteria, it would qualify 
for separate payment under this provision.
    Comment: A couple commenters recommended that CMS include orally 
self-administered drugs as potentially qualifying drugs for separate 
payment under this policy. One comment requested CMS affirm that self-
administered non-opioid pain relievers will qualify for separate 
payment and requested CMS affirm that such drugs that function as a 
supply when used in conjunction with a surgical procedure qualify for 
separate payment under the proposed policy. Similarly, one drug 
manufacturer of an investigational oral drug product recommended that 
self -administered non-opioid treatments for pain relief should qualify 
for separate payment in certain circumstances. For their specific 
product, they stated that

[[Page 94345]]

they anticipated if the drug is FDA-approved, providers may administer 
the oral product to beneficiaries before or after a surgical procedure. 
This commenter stated that the statute makes no distinction between the 
method of administration of the qualifying drug and that current OPPS 
regulations indicate that, in certain circumstances, drugs that may be 
considered usually self-administered by the patient may be paid when 
they function as supplies.
    Response: We thank the commenters for raising these concerns 
through their comments. We believe it is premature to evaluate a 
product that is not FDA-approved for inclusion in this policy, as FDA 
approval is a requirement for drugs and biological products. We will 
evaluate all products, including newly FDA-approved products, to 
determine whether they meet the criteria in the statute and the 
regulations at 42 CFR 419.43(k).
(3) Evidence Requirement for Medical Devices
    For CY 2025, to determine whether a medical device fulfills the 
statutory requirement that it has demonstrated the ability to replace, 
reduce, or avoid intraoperative or postoperative opioid use or the 
quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal, we proposed to review all data 
submitted during the public comment period to determine if the device 
demonstrates the ability to replace, reduce, or avoid intraoperative or 
postoperative opioid use or the quantity of opioids. We encouraged 
interested parties submitting non-opioid device recommendations for CY 
2025 to also submit any relevant literature that demonstrates that the 
named medical device replaces, reduces, or avoids opioid use per this 
statutory provision with their public comments. We proposed that CMS 
would review any literature submitted and determine whether it meets 
this evidence criterion. We did not require that commenters submit any 
data or literature with their device recommendations. If there was no 
data or literature submitted for a medical device, or if the materials 
submitted do not demonstrate any ability of the medical device to 
replace, reduce, or avoid opioids, the medical device will not meet 
this evidence criterion and will therefore not qualify for separate 
payment under section 4135.
    Comment: Most commenters recommended that CMS evaluate any 
literature submitted and not implement additional or burdensome 
requirements for peer reviewed literature. For example, one commenter 
stated that given the unique challenges of testing new non-opioid pain 
treatments, they believed the need for evidence must be balanced 
against the costs and time involved in collecting the data and how this 
process could delay the availability of novel technologies to treat 
unmet clinical needs. This commenter asked CMS to confirm that well-
designed prospective, retrospective, and real-world evidence clinical 
trials that are published in peer-reviewed journals provide a means of 
satisfying the requirement for medical devices.
    Response: We are adhering to the statutory language of the Act and 
are requiring that a medical device has demonstrated the ability to 
replace, reduce, or avoid intraoperative or postoperative opioid use or 
the quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal. To the extent that literature 
submitted by interested parties satisfies that requirement, the medical 
device would qualify for separate payment. We cannot say with certainty 
that a specific study design would always or would never satisfy this 
criterion.
    After consideration of the public comments we received, we are 
finalizing our proposal that we will review all data submitted during 
the public comment period to determine if the device demonstrates the 
ability to replace, reduce, or avoid intraoperative or postoperative 
opioid use or the quantity of opioids.
b. Non-Opioid Product Indications
(1) FDA-Approved Indications for Drugs and Biologicals
    Section 1833(t)(16)(G)(iv)(I) of the Act specifies that to meet the 
definition of a non-opioid treatment for pain relief and to be eligible 
for separate payment, a drug or biological product must have a label 
indication approved by the Food and Drug Administration to reduce 
postoperative pain, or produce postsurgical or regional analgesia, 
without acting upon the body's opioid receptors.
    Given these statutory requirements, we proposed only to approve 
separate payment for drug or biological products with an FDA-approved 
indication that closely aligns with the statutorily required indication 
language to reduce post-operative pain or produce post-surgical or 
regional analgesia for CY 2025. We noted that products with an 
indication that does not meet the statutory requirement would not 
qualify. Table 84 from the CY 2025 OPPS/ASC proposed rule (89 FR 
59431), and Table 156 in this final rule with comment period, includes 
citations to the indications of the drugs and biologicals proposed to 
have met the statutory requirements and qualify for separate payment in 
the CY 2025 OPPS/ASC proposed rule.
    Comment: The majority of commenters supported CMS using the 
language in the Act as the basis for determining whether a drug or 
biologic had the appropriate FDA-approved indication, in order to 
qualify for separate payment under this policy. A few commenters 
indicated that the specific indication requirements for drugs and 
biologicals was an intentional choice, as Congress did not require a 
specific labeled indication for medical devices.
    Response: We thank commenters for their feedback and support.
    Comment: Some commenters recommended CMS interpret more broadly the 
statutory language requiring drugs and biologicals to have an FDA-
approved indication to reduce postoperative pain, or produce 
postsurgical or regional analgesia, without acting upon the body's 
opioid receptors. For example, one commenter recommended CMS consider 
drugs that are used off-label for post-surgical pain, meaning a drug 
that does not have an FDA-approved indication for reducing post-
operative pain, but is used for that purpose, based on existing 
evidence. One example provided was the drug Dexycu, which the commenter 
states reduces post-operative inflammation, and therefore pain, 
following cataract surgery. Another commenter provided the example of 
IV acetaminophen and stated that the product has been used in pain 
management but is not specifically indicated in FDA-approved labeling 
for post-surgical pain management. These commenters contend that these 
products have been used off-label in pain management for decades and 
they are concerned that the statute inappropriately excludes those 
types of products from qualifying for separate payment. They also 
recommend CMS address the packaging of these products, by exempting 
non-opioid drugs and regional anesthesia procedures to manage pain in a 
surgical procedure from comprehensive APC (C-APC) packaging policies.
    The manufacturer of a similar product, Caldolor, an intravenous 
formulation of ibuprofen, which has a general acute pain indication for 
the management of mild to moderate pain and the management of moderate 
to severe pain as an adjunct to opioid analgesics, also made similar 
recommendations. This commenter

[[Page 94346]]

stated this product is similar to several other non-opioid pain 
management products listed in the proposed rule, such as ketorolac 
tromethamine injection. This commenter cited FDA guidance where a 
product may be granted a general acute pain indication when supported 
by at least two clinical trials, each in a different pain population. 
This commenter believed that their more general pain indication should 
satisfy the statutory requirement that a qualifying drug or biological 
must have a label indication approved by the Food and Drug 
Administration to reduce postoperative pain, or produce postsurgical or 
regional analgesia, without acting upon the body's opioid receptors. 
They do not believe that the statute requires that the FDA-approved 
indication expressly refer to use for postoperative or postsurgical 
pain. They noted that their product was studied in a post-surgical 
population. Additionally, this commenter does not believe there is 
evidence that Congress intended section 4135 to exclude a non-opioid 
product that has a general pain indication or only include a product if 
the indication statement expressly refers to use for postoperative or 
postsurgical pain (for example, by stating that a product is used 
usually in a postoperative setting).
    Response: Congress specifically included language requiring that 
drugs or biologicals have ``a label indication approved by the Food and 
Drug Administration to reduce postoperative pain, or produce 
postsurgical or regional analgesia, without acting upon the body's 
opioid receptors.'' We also note that many patients who receive 
services paid under the OPPS and ASC payment system are often in a 
post-surgical environment, given the nature of the procedure typically 
performed in an ASC or HOPD.
    As there is no mention of post-operative or post-surgical use in 
the FDA-approved indications for the products Caldolor,\184\ 
Dexycu,\185\ or Ofirmev \186\ (IV acetaminophen), we do not believe 
these products meet the statutory criteria and therefore do not qualify 
for separate payment under this policy. Additionally, we do not believe 
other modifications to longstanding OPPS payment policies are warranted 
at this time to provide separate payment for these products. We note 
that all other drug products proposed and finalized for separate 
payment have an FDA indication for reduction of postoperative pain, or 
production of postsurgical or regional analgesia, without acting upon 
the body's opioid receptors. This includes a similar product, 
intravenous ketorolac, that was mentioned in one comment letter, which 
is indicated for the short-term management of moderately severe acute 
pain that requires analgesia at the opioid level, usually in the 
postoperative setting.\187\ We do not believe that products mentioned 
by commenters that lack an FDA-approved indication to reduce 
postoperative pain, or produce postsurgical or regional analgesia, 
without acting upon the body's opioid receptors meet the statutory 
requirement. We also note that those products that do meet the 
statutory requirements will be exempt from C-APC packaging. We are not 
finalizing any additional changes to our C-APC policy at this time, as 
we continue to believe that generally the C-APC packaging policy 
maintains the important packaging principles of the OPPS.
---------------------------------------------------------------------------

    \184\ Caldolor. FDA Package Insert. May 2023. https://www.accessdata.fda.gov/drugsatfda_docs/label/2023/022348s024lbl.pdf.
    \185\ Dexycu. FDA Package Insert. June 2020. https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/208912s002lbl.pdf.
    \186\ Ofirmev. FDA Package Insert. April 2018. https://www.accessdata.fda.gov/drugsatfda_docs/label/2018/022450s011lbl.pdf.
    \187\ Ketorolac tromethamine Injection. FDA Package Insert. May 
2014. https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/074802s038lbl.pdf.
---------------------------------------------------------------------------

    After a consideration of comments received, we are finalizing our 
proposal without modification, to only approve separate payment for 
drug or biological products with an FDA-approved indication to reduce 
post-operative pain or produce post-surgical or regional analgesia. 
Products such as those with only a general pain indication will not 
qualify.
(2) Indications for Medical Devices
    With respect to medical devices, section 1833(t)(16)(G)(iv)(II) of 
the Act specifies that such a device must be used to deliver a therapy 
to reduce postoperative pain or produce post-surgical or regional 
analgesia to qualify for separate payment under section 4135. It also 
must have an application approved under section 515 of the Federal 
Food, Drug, and Cosmetic Act (FDCA), have been cleared for market under 
section 510(k) of the FDCA, or be exempt from the requirements of 
section 510(k) of the FDCA pursuant to section 510(l) or (m) or 520(g) 
of the FDCA. For CY 2025, for medical devices, we proposed to only 
approve medical devices with an indication that specifies that the 
device is used to deliver a therapy to reduce postoperative pain or 
produce post-surgical or regional analgesia and which also have FDA 
approval, market clearance, or an appropriate exemption from the 
requirements of section 510(k).
    Comment: Commenters recommended CMS adhere closely to the statutory 
language when creating its policy. Several commenters recommended CMS 
clarify their proposal and the regulation text at 42 CFR 
419.83(k)(2)(i) through (iv). Specifically, commenters were concerned 
that CMS was deviating from the statute and requiring an additional 
FDA-approved indication for use for medical devices that was not in 
statute. Commenters believed that CMS should not require medical 
devices to have an indication that specifies that the device is used to 
deliver a therapy to reduce postoperative pain or produce post-surgical 
or regional analgesia. Commenters believed Congress had clear and 
distinct intentions regarding the statutory criteria for medical 
devices compared to drugs and biologicals and chose not to subject 
medical devices to the same indications for use standard that applies 
to drugs and biologicals.
    Response: We thank commenters for raising this issue and requesting 
clarification from CMS. We acknowledge the proposed rule may not have 
been sufficiently clear regarding the FDA-approved indications for 
medical devices. However, we confirm that while medical devices must be 
used to deliver a therapy to reduce postoperative pain, or produce 
postsurgical or regional analgesia, they are not required by statute to 
have specific language to this effect in a FDA-approved indication. 
Rather, the medical device must have an application approved under 
section 515 of the Federal Food, Drug, and Cosmetic Act (FDCA), have 
been cleared for market under section 510(k) of the FDCA, or be exempt 
from the requirements of section 510(k) of the FDCA pursuant to section 
510(l) or (m) or 520(g) of the FDCA. We note that the regulation text 
that we proposed, and are finalizing without modification at 42 CFR 
419.43(k)(2)(i) through (iv), does not require a specific FDA-approved 
indication for medical devices. However, one way to show that a medical 
device is used to deliver a therapy to reduce postoperative pain, or 
produce postsurgical or regional analgesia, could be through language 
indicating that in an FDA-approved indication.
    After consideration of the public comments we received, we are 
finalizing without modification our proposal that a device must be used 
to deliver a therapy to reduce postoperative pain or produce post-

[[Page 94347]]

surgical or regional analgesia to qualify for separate payment under 
section 4135 for CY 2025. It also must have an application approved 
under section 515 of the Federal Food, Drug, and Cosmetic Act (FDCA), 
have been cleared for market under section 510(k) of the FDCA, or be 
exempt from the requirements of section 510(k) of the FDCA pursuant to 
section 510(l) or (m) or 520(g) of the FDCA. This is consistent with 
the regulation text that we are finalizing without modification at 42 
CFR 419.43(k)(2)(i) through (iv). We are clarifying that medical 
devices are not required to have specific language in their FDA 
approved indication to have a specific FDA-approved indication like 
drugs and biologicals. However, one way to show that a medical device 
is used to deliver a therapy to reduce postoperative pain, or produce 
postsurgical or regional analgesia, could be through language 
indicating that it has an FDA-approved indication for one or more of 
those uses.
c. Amount of Payment
    Section 1833(t)(16)(G)(ii)(I) of the Act provides that, for a non-
opioid treatment for pain relief that is a drug or biological product, 
the amount of separate payment is the amount of payment for such 
product determined under section 1847A of the Act that exceeds the 
portion of the otherwise applicable Medicare OPD fee schedule that the 
Secretary determines is associated with the drug or biological, subject 
to a limitation, as described in the next section. Section 
1833(t)(16)(G)(ii)(II) of the Act provides that, for a non-opioid 
treatment for pain relief that is a medical device, the amount of 
separate payment is the amount of the hospital's charges for the 
device, adjusted to cost, that exceeds the portion of the otherwise 
applicable Medicare OPD fee schedule that the Secretary determines is 
associated with the device, subject to a limitation, as described in 
the next section. As the language in section 1833(t)(16)(G)(ii)(II) of 
the Act is very similar to the transitional pass-through language at 
section 1833(t)(6)(D)(i) and (ii) of the Act, we proposed implementing 
a similar payment methodology for non-opioid products. A payment offset 
is the amount reflecting the portion of the non-opioid product in the 
procedure payment rate.
    We proposed to assign a payment offset of zero dollars for the 
qualifying drugs, biologicals, and devices for CY 2025. A zero offset 
means that we would not offset or remove the amount that the non-opioid 
product represents from the procedure payment rate when setting payment 
rates. We proposed this would apply for CY 2025 for all non-opioid 
drugs, biologicals, and devices that qualify for separate payment. We 
proposed a zero dollar offset for the initial year of the policy as 
some of these products are new products or newly separately paid in the 
OPPS setting and their costs may not be fully reflected yet in the cost 
of procedures in which they may be used. Therefore, the separate 
payment for a drug or biological will be determined by subtracting from 
the amount calculated using the methodology outlined in section 1847A 
of the Act the portion of the otherwise applicable Medicare OPD fee 
schedule associated with the drug or biological, which as previously 
discussed, we proposed to be zero dollars for CY 2025. For the amount 
of payment for a medical device, the separate payment amount will be 
determined by subtracting from the hospital's charges for the device, 
adjusted to cost, the portion of the otherwise applicable Medicare OPD 
fee schedule amount associated with the medical device, which as 
previously discussed, we proposed to be zero dollars for CY 2025. These 
separate payment amounts will all be subject to the payment limitation, 
described in the subsequent section.
    Section 1833(i)(10) of the Act establishes the same separate 
payment for the ASC setting as for hospital outpatient departments, as 
described in section 1833(t)(16)(G)(ii) of the Act. Both separate 
payments are subject to the limitation in section 1833(t)(16)(G)(iii) 
of the Act, which specifies that the separate payment amount shall not 
exceed the estimated average of 18 percent of the OPD fee schedule 
amount for the OPD service (or group of services) with which the non-
opioid treatment for pain relief is furnished. Our final implementation 
of this payment limitation is discussed in further detail below. Given 
this statutory requirement, we proposed to pay the same separate 
payment amount for qualifying non-opioid products in both the HOPD and 
ASC settings.
    As the statute requires separate payment for these non-opioid 
treatments for pain relief, these products cannot be packaged into the 
procedure payment. Under our current threshold packaging policy, if the 
estimated per day cost for a drug or biological is less than or equal 
to the applicable OPPS drug packaging threshold, we package payment for 
the drug or biological into the payment for the associated procedure. 
Similarly, under our comprehensive APC (C-APC) policy, we package all 
payments for services integral, ancillary, supportive, dependent, and 
adjunctive to the primary service into a single payment for the primary 
comprehensive service. For CY 2025, we proposed that non-opioid 
treatments for pain relief would not be subject to the threshold 
packaging policy in section V.B.1.a. of the CY 2025 OPPS/ASC proposed 
rule (89 FR 59363) and would also be separately paid when used during a 
comprehensive APC (C-APC) procedure in the HOPD setting. For more 
information on the drug packaging threshold, see section V.B.1.a of 
this final rule with comment period, and section II.A.b of this final 
rule with comment period for further information on C-APC packaging.
    Comment: Most commenters strongly agreed with our proposals to 
provide separate payment for qualifying products. Commenters agreed 
that it was appropriate to assign a zero dollar offset for the initial 
year, CY 2025. Some commenters recommended CMS continue to assign a 
zero dollar offset for the duration of the 3-year separate payment 
policy.
    Response: We thank commenters for their support. We will evaluate 
the need to continue to assign a zero dollar offset for future years in 
future rulemaking.
    Comment: Some commenters recommended specific payment and payment 
limitation amounts be assigned for payment for certain medical devices.
    Response: We note that the statute requires the additional payment 
for qualifying medical devices to be based on the hospital's charges 
for the device, adjusted to cost; therefore, we do not find it 
appropriate to assign a specific payment amount for a qualifying 
medical device.
    Comment: A small number of commenters did not agree with our 
proposal to pay separately and unpackage qualifying non-opioid 
treatments for pain relief. Specifically, one commenter upheld the 
value and importance of the OPPS packaging policies, though they 
recognized that the agency was required to implement the statute and 
believed our proposed implementation was reasonable. Another commenter 
cautioned over-incentivizing non-opioid products, noting that opioids 
used with appropriate prescribing oversight and medical supervision 
remain an effective tool for pain.
    Response: We thank commenters for their input.
    After consideration of the public comments we received, we are 
finalizing our policy as proposed for CY 2025. Specifically, we are 
finalizing that the separate payment amount for a drug

[[Page 94348]]

or biological will be determined by subtracting from the amount 
calculated using the methodology outlined in section 1847A of the Act 
the portion of the otherwise applicable Medicare OPD fee schedule 
associated with the drug or biological, which we are finalizing to be 
zero dollars for CY 2025. For the amount of payment for a medical 
device, the separate payment amount will be determined by subtracting 
from the hospital's charges for the device, adjusted to cost, the 
portion of the otherwise applicable Medicare OPD fee schedule amount 
associated with the medical device, which we are finalizing to be zero 
dollars for CY 2025. Additionally, qualifying non-opioid treatments for 
pain relief will not be subject to the drug threshold packaging policy, 
described in section V.B.1.a. of this final rule with comment period, 
and will also be separately paid when used during a comprehensive APC 
(C-APC) procedure in the HOPD setting.
d. Payment Limitation
    Section 1833(t)(16)(G)(iii) of the Act states that the separate 
payment amount specified in clause (ii), (which is described in the 
previous section) shall not exceed the estimated average of 18 percent 
of the OPD fee schedule amount for the OPD service (or group of 
services) with which the non-opioid treatment for pain relief is 
furnished, as determined by the Secretary.
    For the non-opioid products that are currently billed under the 
OPPS, we conducted a claims analysis of CY 2023 OPPS claims, which are 
the claims available for CY 2025 rulemaking, and found that 
approximately 90 percent of the utilization, on average, for these non-
opioid products is focused in the top five most frequently performed 
services for each product. Given this, we believed that using the top 
five services would provide a representative estimate for purposes of 
the payment limitation. As illustrated in Table 85 in the CY 2025 OPPS/
ASC proposed rule (89 FR 59432), we proposed to use the top five 
services by volume associated with a drug, biological, or medical 
device, to determine the volume-weighted payment rate per claim and the 
18 percent payment limitation specified by statute, based on the most 
recent claims data available for CY 2025. This payment limitation 
approach was also generally consistent with the comments received in 
response to the comment solicitation in the CY 2024 OPPS/ASC proposed 
rule (88 FR 49767 through 49769). For example, in response to the CY 
2024 comment solicitation, several commenters supported CMS 
establishing a payment limitation for each non-opioid treatment item, 
based on a volume-weighted OPPS payment rate for the top five services 
that package the item into their payment rate.
    We proposed to apply the 18 percent payment limitation per date of 
service billed, rather than per HCPCS dosage unit. This is due to the 
fact that there are typically multiple HCPCS dosage units, also called 
billing units, of each drug or biological billed per claim. Thus, the 
total units of a drug billed on a date of service is more reflective of 
the cost of the drug in that encounter. The amount of drug or 
biological used during an encounter, represented by a date of service 
for purposes of the proposal, will impact whether the separate payment 
for the drug or biological exceeds the payment limitation required by 
statute. Meaning, the same drug or biological may or may not be subject 
to the payment limitation, depending on the amount of drug used. For 
example, a drug is paid $1 per 1 mg (per billing unit) and has a 
payment limitation set at $100, based on 18 percent of the volume 
weighted average of the payment of the top 5 services associated with 
the use of the drug. If 50 mg (50 billing units) of this drug were to 
be billed during one patient encounter or one date of service, then $50 
would be paid. The payment limitation would not apply as the payment 
for the drug did not exceed the payment limitation of $100. If 200 mg 
(200 billing units) of that same drug were to be billed during one 
patient encounter or one date of service, then the $200 payment would 
be limited to $100. In this case, the payment limitation would apply as 
the payment for the drug exceeded the payment limitation of $100. We 
proposed to apply this payment limitation to the date of service billed 
as the payment limitation applies to the total amount of separate 
payment, rather than the HCPCS dosage unit payment, which may only 
represent a small fraction of the total amount of payment.
    For CY 2025, we proposed to create new status indicators for non-
opioid drugs and devices to implement this payment limitation. Under 
the OPPS, non-opioid drugs and biologicals under this policy would be 
assigned a status indicator of ``K1''--Non-Opioid Drugs and Biologicals 
For Post-Surgical Pain Relief, while non-opioid devices would be 
assigned a status indicator of ``H1''--Non-opioid Medical Devices For 
Post-Surgical Pain Relief. Further discussion of the proposed new 
status indicators can be found in section X1.A of the CY 2025 OPPS/ASC 
proposed rule (89 FR 59404).
    As discussed in section XIII.B.6.b. of the CY 2025 OPPS/ASC 
proposed rule (89 FR 59412), we proposed to modify the descriptor of 
ASC payment indicator ``L6''--``New Technology Intraocular Lens 
(NTIOL); special payment'' to ``Special payment; New Technology 
Intraocular Lens (NTIOL) or qualifying non-opioid devices'' and 
proposed to assign qualifying non-opioid medical devices to this 
payment indicator to operationalize payment of these devices. We 
proposed to assign qualifying drugs and biologicals to existing payment 
indicator ``K2''--Drugs, biologicals, and radiopharmaceuticals paid 
separately when provided integral to a surgical procedure on ASC list; 
payment based on OPPS rate.
    We welcomed public comment on the methodology used to determine the 
payment limitation.
    Comment: Most commenters agreed with CMS's rationale and 
methodology that using a volume weighted average of the top five 
procedures based on available claims data and applied per date of 
service was a reasonable approach in order to implement the 18 percent 
payment limitation requirement.
    Response: We thank commenters for their support.
    Comment: Commenters were supportive of utilizing new OPPS status 
indicators ``H1'' and ``K1'' as well as existing ASC payment indicators 
``L6'' and ``K2'' in order to operationalize payment for qualifying 
products.
    Response: We thank commenters for their support.
    Comment: A few commenters recommended CMS modify its proposed 
payment limitation approach. For example, one commenter recommended CMS 
explore its discretion to provide higher payment limitations, such as 
by using the top 10 procedures by volume to determine a payment 
limitation. It believed this would increase the payment limitation for 
its product, Dextenza, as evidenced by independent analysis provided 
with its comment.
    Response: We appreciate the feedback, information, and analysis 
provided by commenters. Based on our analysis, the vast majority of the 
utilization of a product occurs within the top 5 procedures in which it 
is used. For example, for the drug Dextenza, approximately 96 percent 
of the product's utilization is concentrated in the top five 
procedures. This is also supported by the data presented in the comment 
letter. We are concerned that using the top ten procedures would 
include unlikely procedures in the calculation of the payment 
limitation, which may inappropriately skew the

[[Page 94349]]

payment limitation. Additionally, given the overall support for using 
the top 5 procedures we are finalizing that methodology.
    Comment: Many commenters recommended CMS update the data it used 
for its payment limitation calculation in the final rule. Many 
commenters supported CMS identifying the services with which a product 
would be expected to be furnished and would typically be packaged 
absent this policy. However, they did not believe that the procedures 
listed in CY 2025 OPPS/ASC proposed rule Table 85 were primary 
procedures. Commenters recommended that CMS use updated data for CY 
2025 and only include primary procedures as the basis for calculating 
the payment limitation. Commenters also recommended CMS not use 
procedures described by unlisted codes in the payment limitation 
calculation. They also recommended CMS use Revenue Center Payment 
Method Indicators to filter the data for primary procedures only, 
including those HCPCS codes with a Revenue Center Payment Method 
Indicator of ``1'' and excluding those HCPCS codes with a Revenue 
Center Payment Method Indicator value of ``9''.
    Response: We thank commenters for their feedback and review of our 
proposed methodology. Our intent is to only use primary procedures with 
which the qualifying non-opioid treatment for pain relief drug or 
device would typically be packaged. We acknowledge that in the proposed 
rule, some non-primary procedures were inadvertently included because 
they were among the most common procedures furnished with the non-
opioid treatment for pain relief by volume; however, payment for the 
non-opioid treatment for pain relief was not always packaged into those 
common procedures. Therefore, consistent with the intent of our 
proposal and the comments received, we have updated the payment 
limitations accordingly with the most recent data available for this 
final rule and have excluded any procedures with which the payment for 
the non-opioid treatment was not packaged.
    Using the updated final rule data and excluding non-primary 
procedures, the HCPCS codes identified are the primary procedure codes 
with which each non-opioid treatment for pain relief had its payment 
packaged. None of these updated top five procedures based on volume 
were unlisted HCPCS codes, so we are not using unlisted HCPCS codes to 
determine the payment limitation. We are using the CY 2025 OPPS/ASC 
proposed rule procedure payment rates to determine the payment 
limitations because we believe they are the best proxy for determining 
the estimated payment limitations for each product. The proposed rule 
procedure payment rates were the most recently available data at the 
time of calculation, and we expect those rates to be relatively 
unchanged from the final rule rates. We refer commenters to Table 157 
to see the final list of primary procedures for CY 2025.
    Comment: A few commenters asked for clarification regarding the 
payment limitation. For example, one commenter noted the payment 
limitation may pose challenges for use of medical devices under this 
policy, as the underlying procedures are also likely to be device 
intensive. Commenters also requested greater clarity regarding which 
top five services will be selected for the payment calculation process, 
including whether device offset costs will be included in those 
procedures. For ASC payments, it is also unclear whether the zero 
percent device offset would result in the payment being deflated by the 
ASC scaler, and therefore result in a lower ASC payment for procedures 
using these technologies. The commenter stated that this is 
particularly important because many non-opioid pain treatment devices 
are used in the ASC setting, and the decreased ASC payments may result 
in unintended consequences around use of these technologies.
    Response: Section 1833(t)(16)(G)(ii) requires that we provide 
temporary additional payment for non-opioid drugs, biologicals, and 
medical devices, subject to a payment limitation for which the drug, 
biological, or medical device cost exceeds the portion of the OPPS APC 
payment rate that is associated with that drug, biological, or medical 
device. As we discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 
59429) we proposed to assign a payment offset of zero dollars for 
qualifying drugs, biologicals, and devices for CY 2025. A zero offset 
means that we would not offset or remove the amount that the non-opioid 
product represents from the procedure payment rate when setting payment 
rates.
    We believe it is appropriate to finalize a zero dollar offset for 
the initial year of the policy as some of these procedures are new 
products or newly separately paid in the OPPS or ASC settings. For the 
payment limit determination, the top five services by volume into which 
a qualifying non-opioid treatment for pain relief has its payment 
packaged will be used to determine the volume-weighted 18 percent 
payment limitation. The existing device portions of device-intensive 
procedures do not contain cost and utilization data for qualifying 
separately payable non-opioid devices, nor can we currently identify 
other device costs associated with these medical devices. We anticipate 
we would only have cost and utilization data from claims of non-opioid 
medical devices or device costs associated with non-opioid medical 
devices when CY 2025 data becomes available. Because this data is not 
yet available, we believe it is appropriate to finalize a zero dollar 
offset for CY 2025.
    Payment rates and the payment limitation for non-opioid drugs, 
biologicals, and medical devices are not affected by the ASC weight 
scalar. However, section 1833(i)(10)(A) of the Act requires that the 
temporary additional payments for non-opioid drugs, biologicals, and 
medical devices be provided in a budget neutral manner. Therefore, the 
ASC weight scalar calculation incorporates current and prospective ASC 
expenditures related to non-opioid treatments. Increases in prospective 
expenditures related to these non-opioid treatments will decrease the 
ASC weight scalar, which is applied to the payment rates for surgical 
procedures and ancillary procedures paid based on the OPPS relative 
weights and the non-device portion of device-intensive procedures. As 
discussed in section XIII.H.2. of this final rule with comment period, 
we project a decrease in prospective expenditures since the non-opioid 
drugs and biologicals are currently separately payable under the ASC 
payment system without payment limitation, and because we are unable to 
estimate prospective utilization and expenditures for the non-opioid 
medical devices for CY 2025.
    After consideration of the public comments we received, we are 
finalizing our policy to base the 18 percent payment limitation on the 
volume weighted average of the CY 2025 payment rates of the top five 
primary procedures by volume into which a non-opioid treatment for pain 
relief would have their payment packaged, absent this policy. We are 
finalizing that we will apply the 18 percent payment limitation per 
date of service billed. We have updated the payment limitations for 
each qualifying product for CY 2025 with the 2023 claims data available 
for this final rule and discuss each in the following sections for each 
specific product. We are also finalizing our policy to create new OPPS 
status indicators for non-opioid drugs and devices to implement this 
payment limitation for CY 2025.

[[Page 94350]]

e. Payment Limitation With No Claims Data
    For drugs, biologicals, and devices with no claims data, such as 
for newly FDA-approved and marketed products or products that did not 
previously have their own product-specific HCPCS code by which to track 
payment and utilization data, we solicited comment on the best approach 
for determining a payment limitation, as required by section 
1833(t)(16)(G)(iii) of the Act. As discussed in the CY 2024 OPPS/ASC 
final rule with comment period (88 FR 81953), we proposed CMS could 
utilize the services with which a product would be expected to be 
furnished and would typically be packaged absent this policy, based on 
expected clinical use patterns. Determining the service, or group of 
services, to use to calculate the payment limitation could be 
accomplished through engagement with interested parties and a review by 
CMS Medical Officers and clinical staff. Absent engagement from 
interested parties, we proposed CMS could determine the service, or 
group of services, to use to calculate the payment limitation based on 
expected clinical use patterns. CMS could then adjust the services that 
are used to calculate the payment limitation as claims data becomes 
available in subsequent years. We welcomed comments on how to set a 
payment limitation for a product for which we do not have claims data 
on which to base a payment limitation. The proposed product was 
described by placeholder HCPCS code C98X4 (ON-Q Pump). We solicited 
comment on the top five procedures performed with this product, and the 
HCPCS code that describes the procedure, in order to calculate a volume 
weighted payment limitation for this device for CY 2025.
    We noted that we may update the payment limitation amount in future 
rulemaking as we gather additional claims data on the utilization of 
and payment for this product.
    Comment: The manufacturer of the ON-Q Pump responded to our comment 
solicitation on the procedures to use as the basis for the payment 
limitation for this product, given the absence specific claims data 
associated with that device. The commenter provided the top 5 primary 
procedures with which HCPCS code A4306 (Disposable drug delivery 
system, flow rate of less than 50 ml per hour) was packaged and 
recommended CMS use these top five procedures to set the payment 
limitation for this product. However, they noted that HCPCS code A4306 
is only a proxy for their product, as this HCPCS code is not specific 
to the ON-Q pump system, and they also believe that many HOPDs and ASCs 
are likely not to report the code currently due to the C-APC packaging 
policy.
    Response: We thank the commenter for this information. We have 
reviewed the commenter's recommended codes and agree with the 
recommendations because they align with the procedures into which HCPCS 
code A4306 is currently packaged in our claims data. We also agree that 
HCPCS code A4306 is a reasonable proxy for the utilization of the ON-Q 
pump, absent a product specific code with claims data. We note also 
that there is no available claims data for code C98X4, the proposed 
placeholder code for the ON-Q pump system, so we are unable to identify 
procedures with which this code is packaged. Based on our review, we 
will use the HCPCS codes recommended by the commenter, as shown in 
Table 157 at the end of this section, as the basis for the calculation 
of the payment limitation for the ON-Q pump system for CY 2025 and will 
use the utilization data provided by the commenter for HCPCS code 
A4306.
    Comment: Commenters supported CMS's proposed methodology for 
determining the procedures used to calculate a new product's specific 
payment limitation when there is no claims data and encouraged 
engagement with manufacturers and the use of manufacturer-specific 
data. Commenters provided specific procedure codes and data supporting 
the likely use of their products in the HOPD and ASC settings.
    Response: We thank commenters for their support. The specific 
recommendations made by commenters and our assessment of each of those 
recommendations are explained in the following section f. Qualifying 
Products.
    After consideration of the public comments we received, we are 
finalizing a policy where CMS will utilize the services with which a 
product would be expected to be furnished and would typically be 
packaged absent this policy, to calculate the payment limitation based 
on expected clinical use patterns for CY 2025. CMS will determine the 
service, or group of services, to use to calculate the payment 
limitation through engagement with interested parties and a review by 
CMS Medical Officers and clinical staff during annual rulemaking. In 
the absence of engagement from interested parties, we will determine 
clinically appropriate procedures with which we would expect the drug 
or device to be frequently used in order to determine the payment 
limitation, including review of FDA approval materials, procedures 
identified in literature available to CMS, and other relevant 
materials. We will consider this topic further in future rulemaking if 
needed.
f. Qualifying Products
    The following table, Table 156, lists the non-opioid alternatives 
of which we were aware and that we proposed would receive separate 
payment as a non-opioid pain management drug or device under section 
4135 criteria for CY 2025.
    As discussed in the CY 2025 OPPS/ASC proposed rule (89 FR 59427 
through 59433), in general, CMS routinely receives comments from 
readers of the proposed rule with detailed rationales as to why and how 
they believe a particular drug, biological, medical device, or other 
item or service should be paid. As such, we solicited comment on 
whether there are any additional drugs, biologicals, or medical devices 
that meet the statutory requirements outlined in section 1833(t)(16)(G) 
and 1833(i)(10).
    As discussed previously in this section, there are specific 
requirements with respect to FDA approval that must be met in order for 
the product to qualify for separate payment. For medical devices, the 
statute also requires that the device has demonstrated the ability to 
replace, reduce, or avoid intraoperative or postoperative opioid use or 
the quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal. Interested parties that believe 
that a product not addressed in the proposed rule meets the statutory 
requirements were encouraged to submit information during the comment 
period that indicated that such product meets the statutory eligibility 
requirements. We stated that if CMS determines that such product(s) do 
in fact meet the statutory eligibility requirements, we would finalize 
separate payment for that product in the CY 2025 OPPS/ASC final rule 
with comment period. We stated that for drugs and biological products 
not addressed in the proposed rule, if no comment is submitted that 
outlines how that drug or biological meets the statutory criteria, then 
CMS would not finalize separate payment for such product for CY 2025. 
Additionally, we stated that for medical devices not addressed in the 
proposed rule, unless a comment was submitted that both outlines how 
that device meets the statutory criteria and included literature that 
demonstrates that the device has the ability to replace, reduce, or 
avoid intraoperative or postoperative opioid use or the quantity of 
opioids prescribed in a clinical trial or through data published in a 
peer-reviewed journal,

[[Page 94351]]

then CMS would not finalize separate payment for such device for CY 
2025.
---------------------------------------------------------------------------

    \188\ Exparel. FDA Package Insert. November 2023. https://www.accessdata.fda.gov/drugsatfda_docs/label/2023/022496s051lbl.pdf.
    \189\ Omidria. FDA Package Insert. December 2017. https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/205388s006lbl.pdf.
    \190\ Dextenza. FDA Package Insert. October 2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/208742s007lbl.pdf.
    \191\ Xaracoll. FDA Package Insert. August 2020. https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/209511s000lbl.pdf.
    \192\ Zynrelef. FDA Package Insert. January 2024. https://www.accessdata.fda.gov/drugsatfda_docs/label/2024/211988s013lbl.pdf.
    \193\ Ketorolac tromethamine Injection. FDA Package Insert. May 
2014. https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/074802s038lbl.pdf.
    \194\ On-Q Pump. FDA 510K. February 2019. https://www.accessdata.fda.gov/cdrh_docs/pdf18/K181360.pdf.
    \195\ Ding DY, Manoli A 3rd, Galos DK, Jain S, Tejwani NC. 
Continuous Popliteal Sciatic Nerve Block Versus Single Injection 
Nerve Block for Ankle Fracture Surgery: A Prospective Randomized 
Comparative Trial. J Orthop Trauma. 2015;29(9):393-398. https://pubmed.ncbi.nlm.nih.gov/2616525.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR27NO24.210

BILLING CODE 4120-01-C
    Comment: Commenters were supportive of our proposals on the 
qualifying products in Table 156 for CY 2025 and they recommended that 
we finalize those products for separate payment for CY 2025.
    Response: We thank the commenters for their support, and we are 
finalizing those products for separate payment, with updates to their 
product specific payment limitations as listed in Table 157.
    Comment: The manufacturer of the medical device, ON-Q pump, 
recommended that CMS include the brand name ``ON-Q Pain Relief System'' 
in the HCPCS code descriptor to help decrease the probability that non-
qualifying elastomeric infusion pumps would be reported by HOPDs and 
ASCs. Additionally, this commenter recommended that CMS include in the 
descriptor ``non-opioid anesthetic'' so that hospitals and ASCs may 
also include charges for the drug used with the medical device.
    Response: We thank the commenter for their feedback on our 
proposals. We agree that the C-code descriptor should include the brand 
of product for better tracking purposes and the descriptors should 
ensure only products meeting the statutory criteria qualify for 
separate payment under this provision use the specific HCPCS code. 
Therefore, we are updating the HCPCS code descriptor accordingly for 
HCPCS code C98X4, replaced by HCPCS code C9804, to include the brand of 
the device. However, we do not agree that ``non-opioid anesthetic'' 
should be included in the descriptor, as the anesthetic is a separate 
therapeutic agent that has its own FDA approval.
    Several commenters suggested additional non-opioid products that 
they believed qualified for separate payment under this provision. We 
have summarized these comments and provided our responses in the 
following sections.

[[Page 94352]]

SPRINT Peripheral Nerve Stimulator System (PNS)
    Comment: The SPRINT PNS System was suggested by commenters as an 
alternative to opioids. Commenters stated that this device provides a 
temporary, minimally invasive solution that utilizes electrical 
stimulation to target peripheral nerves, offering significant pain 
relief while avoiding the risks associated with opioid medications. 
Commenters provided that this product is FDA cleared \196\ and has 
supporting literature.\197\ The manufacturer also provided the 5 
procedure HCPCS codes with which they believed the SPRINT PNS device 
would most likely be used for post-operative pain management.
---------------------------------------------------------------------------

    \196\ FDA Approval Letter, July 31, 2018. https://www.accessdata.fda.gov/cdrh_docs/pdf18/K181422.pdf.
    \197\ Ilfeld BM, Plunkett A, Vijjeswarapu AM, Hackworth R, 
Dhanjal S, Turan A, Cohen SP, Eisenach JC, Griffith S, Hanling S, 
Sessler DI, Mascha EJ, Yang D, Boggs JW, Wongsarnpigoon A, Gelfand H 
Percutaneous, Peripheral Nerve Stimulation (Neuromodulation) for 
Postoperative Pain: A Randomized, Sham-controlled Pilot Study, 
Anesthesiology, April 2021.
---------------------------------------------------------------------------

    Response: Based on comments received, we believe that this medical 
device is used to deliver a therapy to reduce postoperative pain or 
produce post-surgical or regional analgesia. We confirmed that this 
product is FDA cleared \198\ and has supporting literature 
demonstrating the ability to replace, reduce, or avoid intraoperative 
or postoperative opioid use or the quantity of opioids prescribed in a 
clinical trial or through data published in a peer-reviewed 
journal.\199\ The medical device does not currently receive 
transitional passthrough status and we believe it would have payment 
that is otherwise packaged into a payment for a covered OPD service, 
absent this policy.
---------------------------------------------------------------------------

    \198\ FDA Approval Letter, July 31, 2018. https://www.accessdata.fda.gov/cdrh_docs/pdf18/K181422.pdf.
    \199\ Ilfeld BM, Plunkett A, Vijjeswarapu AM, Hackworth R, 
Dhanjal S, Turan A, Cohen SP, Eisenach JC, Griffith S, Hanling S, 
Sessler DI, Mascha EJ, Yang D, Boggs JW, Wongsarnpigoon A, Gelfand H 
Percutaneous, Peripheral Nerve Stimulation (Neuromodulation) for 
Postoperative Pain: A Randomized, Sham-controlled Pilot Study, 
Anesthesiology, April 2021.
---------------------------------------------------------------------------

    Therefore, we believe that the SPRINT PNS System meets the 
statutory requirements and are finalizing that it will be paid 
separately under this provision. We agree that the top 5 procedures 
described in the comment letter are reasonable to base the payment 
limitation on and we will assume an equal utilization of the device 
with these 5 procedures for the payment limitation calculation, as 
shown in Table 157 at the end of this section. We note that in the 
absence of utilization data for the top 5 procedures, we believe it is 
reasonable to assume an equal utilization for purposes of calculating 
the payment limitation until claims data are available. Please see 
Table 157 for the payment limitation calculation and the new C-code 
used to describe the device.
IceMan Motorized Cold Therapy Device
    Comment: Commenters recommended CMS evaluate and approve motorized 
cold therapy devices, such as the IceMan, manufactured by Enovis, under 
our non-opioid treatment for pain relief separate payment policy. They 
noted that the device is used to reduce pain after surgery. 
Additionally, they stated that the IceMan product is recognized by FDA 
as a Class 2, 510(k)-exempt device (product category ``ILO'') 
200 201 202 and has supporting 
literature.203 204 205 The manufacturer stated that the key 
studies provided on the use of continuous cold therapy include cold 
therapy delivered by the IceMan device.
---------------------------------------------------------------------------

    \200\ See FDA Product Classification, Product Code ILO, https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpcd/classification.cfm?id=5437 (identifying ILO devices as Class 2, 
510(k) exempt devices, described further at 21 CFR 890.5720); see 
also FDA 510(k) Premarket Notification, K955057 (Mar. 8, 1996), 
https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPMN/pmn.cfm?ID=K955057 (recognizing motorized cold therapy devices used 
for the ``application of ice after surgery or injury to reduce 
swelling and pain'').
    \201\ FDA, Product Code Database, ``ILO'', https://
www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPCD/
classification.cfm?ID=5437; see also 21 CFR 890.5720.
    \202\ https://www.accessdata.fda.gov/cdrh_docs/pdf/K955057.pdf.
    \203\ Jones CA et al. Opioid-sparing pain management protocol 
after shoulder arthroplasty results in less opioid consumption and 
higher satisfaction: a prospective, randomized controlled trial. J 
Shoulder Elbow Surg. 2022 Oct;31(10):2057-2065. doi: 10.1016/
j.jse.2022.05.029. Epub 2022 Jul 5. PMID: 35803549.
    \204\ Barber FA, McGuire DA, Click S. Continuous-flow cold 
therapy for outpatient anterior cruciate ligament reconstruction. 
Arthroscopy. 1998 Mar;14(2):130-5. doi: 10.1016/s0749-8063(98)70030-
1. PMID: 9531122.
    \205\ P.B. Wyatt et al., The Role of Cryotherapy After Total 
Knee Arthroplasty: A Systematic Review, The Journal of Arthroplasty, 
Volume 38, 2023, Pages 950-956.
---------------------------------------------------------------------------

    The manufacturer also requested that CMS establish a new C-code to 
report use of their device and assign that code to status indicator 
``H1,'' and they provided 5 HCPCS codes with which they requested CMS 
establish the payment limitation. These HCPCS codes are 27447 
(Arthroplasty, knee, condyle and plateau; medial and lateral 
compartments with or without patella resurfacing (total knee 
arthroplasty)), 29888 (Arthroscopically aided anterior cruciate 
ligament repair/augmentation or reconstruction), 23472 (Arthroplasty, 
glenohumeral joint; total shoulder (glenoid and proximal humeral 
replacement (e.g., total shoulder))), 23470 (Arthroplasty, glenohumeral 
joint; hemiarthroplasty), and 23410 (Repair of ruptured 
musculotendinous cuff (e.g., rotator cuff) open; acute). The 
manufacturer recommended CMS establish a payment limit based on the 
Medicare payment rate for APC 5114.
    Response: Based on the comments received, we believe that the 
Iceman medical device is used to deliver a therapy to reduce 
postoperative pain or produce post-surgical or regional analgesia. We 
confirmed that this product is exempt from 510(k) premarket clearance 
by the FDA. However, the supporting literature does not demonstrate 
that the IceMan device specifically has the ability to replace, reduce, 
or avoid intraoperative or postoperative opioid use or the quantity of 
opioids prescribed in a clinical trial or through data published in a 
peer-reviewed journal. The studies provided only broadly reference 
continuous cold therapy devices. We believe that the device 
demonstrating the ability to reduce, replace, or avoid opioid use in a 
clinical trial or peer-reviewed journal must be the same device as the 
one being studied in order to qualify for separate payment under 
section 4135. Therefore, we believe that the IceMan Motorized Cold 
Therapy Device does not meet the statutory requirements and are not 
finalizing separate payment for it under this provision.
CryoCuff Motorized Cold Therapy Device
    Comment: Commenters recommended CMS evaluate and approve motorized 
cold therapy devices, such as the CryoCuff, manufactured by Enovis, 
under our non-opioid treatment for pain relief separate payment policy. 
They noted that the CryoCuff device is used to reduce pain after 
surgery. Additionally, they stated that the CryoCuff product is 
recognized by FDA as a Class 2, 510(k)-exempt devices

[[Page 94353]]

(product category ``ILO'') 206 207 208 and has supporting 
literature.209 210 211 The manufacturer stated that the key 
studies provided on the use of continuous cold therapy include cold 
therapy delivered by the Cryocuff device.
---------------------------------------------------------------------------

    \206\ See FDA Product Classification, Product Code ILO, https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpcd/classification.cfm?id=5437 (identifying ILO devices as Class 2, 
510(k) exempt devices, described further at 21 CFR 890.5720); see 
also FDA 510(k) Premarket Notification, K955057 (Mar. 8, 1996), 
https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPMN/pmn.cfm?ID=K955057 (recognizing motorized cold therapy devices used 
for the ``application of ice after surgery or injury to reduce 
swelling and pain'').
    \207\ FDA, Product Code Database, ``ILO,'' https://
www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPCD/
classification.cfm?ID=5437; see also 21 CFR 890.5720.
    \208\ https://www.accessdata.fda.gov/cdrh_docs/pdf/K955057.pdf.
    \209\ Jones CA et al. Opioid-sparing pain management protocol 
after shoulder arthroplasty results in less opioid consumption and 
higher satisfaction: a prospective, randomized controlled trial. J 
Shoulder Elbow Surg. 2022 Oct;31(10):2057-2065. doi: 10.1016/
j.jse.2022.05.029. Epub 2022 Jul 5. PMID: 35803549.
    \210\ Barber FA, McGuire DA, Click S. Continuous-flow cold 
therapy for outpatient anterior cruciate ligament reconstruction. 
Arthroscopy. 1998 Mar;14(2):130-5. doi: 10.1016/s0749-8063(98)70030-
1. PMID: 9531122.
    \211\ P.B. Wyatt et al., The Role of Cryotherapy After Total 
Knee Arthroplasty: A Systematic Review, The Journal of Arthroplasty, 
Volume 38, 2023, Pages 950-956.
---------------------------------------------------------------------------

    The manufacturer also requested that CMS establish a new C-code to 
report use of their device and assign that code to status indicator 
``H1,'' and they provided 5 HCPCS codes with which they requested CMS 
establish the payment limitation. These HCPCS codes are 27447 
(Arthroplasty, knee, condyle and plateau; medial and lateral 
compartments with or without patella resurfacing (total knee 
arthroplasty)), 29888 (Arthroscopically aided anterior cruciate 
ligament repair/augmentation or reconstruction), 23472 (Arthroplasty, 
glenohumeral joint; total shoulder (glenoid and proximal humeral 
replacement (e.g. total shoulder))), 23470 (Arthroplasty, glenohumeral 
joint; hemiarthroplasty), and 23410 (Repair of ruptured 
musculotendinous cuff (e.g., rotator cuff) open; acute). The 
manufacturer recommended CMS establish a payment limit based on the 
Medicare payment rate for APC 5114.
    Response: Based on comments received, we believe that the CryoCuff 
medical device is used to deliver a therapy to reduce postoperative 
pain or produce post-surgical or regional analgesia. We confirmed that 
this product is exempt from 510(k) premarket clearance by the FDA. 
However, the supporting literature does not demonstrate that the 
CryoCuff device specifically has the ability to replace, reduce, or 
avoid intraoperative or postoperative opioid use or the quantity of 
opioids prescribed in a clinical trial or through data published in a 
peer-reviewed journal. The studies provided only broadly reference 
continuous cold therapy devices. We believe that the device 
demonstrating the ability to reduce, replace, or avoid opioid use in a 
clinical trial or peer-reviewed journal must be the same device as the 
one being studied in order to qualify for separate payment under 
section 4135.
    Therefore, we believe that the CryoCuff Motorized Cold Therapy 
Device does not meet the statutory requirements and are not finalizing 
separate payment for it under this provision.
ThermaZone Thermal Therapy Device
    Comment: Commenters recommended CMS evaluate and approve thermal 
therapy devices, such as the ThermaZone manufactured by Innovative 
Medical Equipment, under our non-opioid treatment for pain relief 
separate payment policy. They noted that the device is used to reduce 
pain after surgery. Additionally, they stated that the product is 
recognized by the FDA as a Class II, 510(k)-exempt device under Product 
Code ``ILO'' (Pack, hot or cold, water circulating) and Regulation 
Number 890.5720 and has supporting 
literature.212 213 214 215 Data from an unpublished 
retrospective cohort study was also provided. The manufacturer stated 
that numerous studies were published in peer-reviewed journals that 
show that continuous cold therapy devices can replace and reduce 
opioids prescribed in the post-surgical setting, which applies to 
thermal therapy delivered by the ThermaZone device. The manufacturer 
also provided the top 5 procedures for which the ThermaZone is 
typically used, weighted by use, and calculated an approximate payment 
limitation of $1,924.72 based on the HPCCS codes 27447 (Arthroplasty, 
knee, condyle and plateau; medial and lateral compartments with or 
without patella resurfacing (total knee arthroplasty)), 27130 
(Arthroplasty, acetabular and proximal femoral prosthetic replacement 
(total hip arthroplasty), with or without autograft or allograft), 
29888 (Arthroscopically aided anterior cruciate ligament repair/
augmentation or reconstruction), 23472 (Arthroplasty, glenohumeral 
joint; total shoulder (glenoid and proximal humeral replacement (e.g., 
total shoulder))), and 23410 (Repair of ruptured musculotendinous cuff 
(e.g., rotator cuff) open; acute)). The manufacturer of the device 
stated that the device is different from traditional motorized cold 
therapy devices in that it uses ice-less technology, offers heating and 
cooling technologies and provides precise temperature control for a 
variety of temperature settings among other benefits in the commenter's 
view. Many users of the ThermaZone device commented on the success they 
had with the device alleviating their pain and reducing their opioid 
use.
---------------------------------------------------------------------------

    \212\ Jones CA, Throckmorton TW, Murphy J, Eason RR, Joyce M, 
Bernholt DL, Azar FM, Brolin TJ. Opioid-sparing pain management 
protocol after shoulder arthroplasty results in less opioid 
consumption and higher satisfaction: a prospective, randomized 
controlled trial. J Shoulder Elbow Surg. 2022 Oct;31(10):2057-2065. 
doi: 10.1016/j.jse.2022.05.029. Epub 2022 Jul 5. PMID: 35803549.
    \213\ Barber FA, McGuire DA, Click S. Continuous-flow cold 
therapy for outpatient anterior cruciate ligament reconstruction. 
Arthroscopy. 1998 Mar;14(2):130-5. doi: 10.1016/s0749-8063(98)70030-
1. PMID: 9531122.
    \214\ Muaddi H, Lillie E, Silva S, Cross JL, Ladha K, Choi S, 
Mocon A, Karanicolas P. The Effect of Cryotherapy Application on 
Postoperative Pain: A Systematic Review and Meta-analysis. Ann Surg. 
2023 Feb 1;277(2):e257-e265. doi: 10.1097/SLA.0000000000004987. Epub 
2023 Jan 10. PMID: 34856580.
    \215\ Wyatt PB, Nelson CT, Cyrus JW, Goldman AH, Patel NK. The 
Role of Cryotherapy After Total Knee Arthroplasty: A Systematic 
Review. J Arthroplasty. 2023 May;38(5):950-956. doi: 10.1016/
j.arth.2022.12.004. Epub 2022 Dec 8. PMID: 36496048.
---------------------------------------------------------------------------

    Response: Based on comments received, we believe that the 
ThermaZone medical device is used to deliver a therapy to reduce 
postoperative pain or produce post-surgical or regional analgesia. We 
confirmed that this product is recognized by the FDA as a Class II, 
510(k)-exempt device. However, the supporting literature does not 
demonstrate that the ThermaZone device specifically has the ability to 
replace, reduce, or avoid intraoperative or postoperative opioid use or 
the quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal. The studies provided only broadly 
reference continuous cold therapy devices. We believe that the device 
demonstrating the ability to reduce, replace, or avoid opioid use in a 
clinical trial or peer-reviewed journal must be the same device as the 
one being studied in order to qualify for separate payment under 
section 4135. Therefore, we do not believe that the ThermaZone Device 
meets the statutory requirements and are not finalizing separate 
payment for it under this provision.
Cyro Nerve Block Therapy (CryoNB)
    Comment: Commenters suggested Cryo Nerve Block Therapy (CryoNB) as 
an alternative to opioids. Atricure, the manufacturer, stated that this 
therapy is

[[Page 94354]]

used for postoperative pain management for patients who undergo certain 
cardiac, thoracic, and other surgical procedures and is administered 
through cryoablation probes. The manufacturer stated that this device 
allows a surgeon to ablate nerve tips near the primary surgery incision 
site to block the sensory nerve from propagating a pain signal after 
surgery. Commenters provided that this product is FDA cleared with a 
510(k) clearance (K182565,\216\ K200697,\217\ and K233170 \218\) and 
has supporting literature.219 220 221 222 The manufacturer 
also provided the 5 procedure HCPCS codes with which they believed the 
CryoNB device would most likely be used for post-operative pain 
management. The manufacturer also stated that the device does not 
receive transitional pass-through payment and currently payment is 
packaged within the covered hospital outpatient department service. The 
manufacturer also recommended that CMS establish unique C-codes for 
each of their commercial products and a G-code to describe the 
additional intraoperative time required.
---------------------------------------------------------------------------

    \216\ https://www.accessdata.fda.gov/cdrh_docs/pdf18/K182565.pdf.
    \217\ https://www.accessdata.fda.gov/cdrh_docs/pdf20/K200697.pdf.
    \218\ https://www.accessdata.fda.gov/cdrh_docs/pdf23/K233170.pdf.
    \219\ O'Connor LA, Dua A, Orhurhu V, Hoepp LM, Quinn CC. Opioid 
Requirements After Intercostal Cryoanalgesia in Thoracic Surgery. J 
Surg Res. 2022; 274:232-241.
    \220\ Maxwell CM, Weksler B, Houda J, Fernando HC. Intercostal 
Cryoablation During Video-Assisted Lung Resection Can Decrease 
Postoperative Opioid Use. Innovations 2023 18(4):352-356.
    \221\ Jaroszewski DE, Bostoros P, Farina JM, Botros MM, Aly MR, 
Peterson M, Lackey J, Pulivarthi KV, Smith B, Craner R, Stearns JD. 
Evolution of Pain Control for Adult Pectus Excavatum Repair. Ann 
Thorac Surg. 2024;117(4):829-837.
    \222\ Graves CE, Moyer J, Zobel MJ, Mora R, Smith D, O'Day M, 
Padilla BE. Intraoperative intercostal nerve cryoablation during the 
Nuss procedure reduces length of stay and opioid requirement: A 
randomized clinical trial. J Pediatric Surg. 2019 Nov;54(11):2250-
2256.
---------------------------------------------------------------------------

    Response: Based on comments received, we believe that the CryoNB 
medical device is used to deliver a therapy to reduce postoperative 
pain or produce post-surgical or regional analgesia. We confirmed that 
this product is FDA cleared and has supporting literature demonstrating 
the ability to replace, reduce, or avoid intraoperative or 
postoperative opioid use or the quantity of opioids prescribed in a 
clinical trial or through data published in a peer-reviewed journal. 
The medical device is not currently receiving transitional passthrough 
status and we believe it would have payment that is otherwise packaged 
into a payment for a covered OPD service.
    Therefore, we believe that the CryoNB System meets the statutory 
requirements and should be paid separately under this provision. We 
agree that the top 5 procedures described in the comment letter are 
reasonable to base the payment limitation on and will assume an equal 
utilization of the device with these 5 procedures for the payment 
limitation calculation. In the absence of utilization data for the top 
5 procedures, we believe it is reasonable to assume an equal 
utilization for purposes of calculating the payment limitation until 
claims data are available. Please see Table 157 for the payment 
limitation calculation and new C-code to describe the device. Section 
4135 of the CAA, 2023 statute does not address separate payment for the 
services associated with the provision of a medical device, and 
therefore we are not creating a G-code to describe the additional 
intraoperative time required at this time.
ambIT Electronic Pain Control System
    Comment: The ambIT Electronic Pain Control System, a medical device 
manufactured by Avanos, was suggested by commenters as an alternative 
to opioids. Commenters stated that this system provides a similar 
benefit as the ON-Q pump, as it is a battery powered pump that delivers 
a local non-opioid anesthetic to a patient's surgical site or nerves to 
provide target pain relief while avoid systemic effects. Commenters 
clarified that this version of the pump is disposable. Commenters 
provided that this product is FDA cleared under a 510(k) \223\ and has 
supporting literature.\224\ The manufacturer also provided the 5 
procedure HCPCS codes in which they believed the ambIT device would 
most likely be used for post-operative pain management. The 
manufacturer also stated that the product does not currently have pass-
through payment status and currently would have its payment packaged 
into the payment for a covered OPD service. The manufacturer also 
provided suggested descriptor language for the creation of a product 
specific C-code.
---------------------------------------------------------------------------

    \223\ FDA 510(k) Clearance K052221; obtained in 2005 by and 
issued to Sorenson Medical, Inc., which was later acquired by Summit 
Medical Products, Inc. Avanos acquired substantially all assets of 
Summit Medical Products, including this FDA 510(k) Clearance 
K052221, in 2019.
    \224\ Morkos M, DeLeon A, Koeckert M, Gray Z, Liao K, Pan W, 
Tolpin DA. The Use of Unilateral Erector Spinae Plane Block in 
Minimally Invasive Cardiac Surgery. J Cardiothorac Vasc Anesth. 2023 
Mar;37(3):432-436.
---------------------------------------------------------------------------

    Response: Based on comments received, we believe that the ambIT 
medical device is used to deliver a therapy to reduce postoperative 
pain or produce post-surgical or regional analgesia. We confirmed that 
this product is FDA cleared and has supporting literature demonstrating 
the ability to replace, reduce, or avoid intraoperative or 
postoperative opioid use or the quantity of opioids prescribed in a 
clinical trial or through data published in a peer-reviewed journal. 
The medical device is not currently receiving transitional passthrough 
status and we believe would have payment that is otherwise packaged 
into a payment for a covered OPD service.
    Therefore, we believe that the ambIT System meets the statutory 
requirements and should be paid separately under this provision. We 
agree that the top 5 procedures described in the comment letter are 
reasonable to base the payment limitation. Please see Table 157 for the 
payment limitation calculation and new C-code to describe the device.
SimplFusor Elastomeric Pump
    Comment: Commenters recommended CMS consider SimplFusor, a device 
manufactured by Baxter, as an effective alternative to opioids. 
Commenters stated that this device is functionally equivalent to and 
interchangeable with the ON-Q elastomeric pump; therefore, the 
SimplFusor pump should also qualify. Commenters provided that this 
product is FDA cleared through a 510(k) (K151650). The commenter stated 
that the SimplFusor device has not specifically been studied, but that 
literature, specifically the literature on the ON-Q pump, demonstrates 
that the use of elastomeric infusion pumps to deliver pain management 
therapies reduces post-operative pain and opioid use. The manufacturer 
stated that the product is not on pass-through status and would usually 
have its cost packaged into the APC associated with its use.
    Response: Based on the comments received, we believe that the 
SimplFusor medical device is used to deliver a therapy to reduce 
postoperative pain or produce post-surgical or regional analgesia. We 
confirmed that this product is FDA cleared. The medical device is not 
currently receiving transitional passthrough status and we believe 
would have payment that is otherwise packaged into a payment for a 
covered OPD service.
    However, this product does not have literature supporting that its 
specific use reduced opioid use. We acknowledge that commenters 
provided FDA documentation that their device is substantially 
equivalent to a device that

[[Page 94355]]

does demonstrate the ability to replace, reduce, or avoid 
intraoperative or postoperative opioid use or the quantity of opioids 
prescribed in a clinical trial or through data published in a peer-
reviewed journal. We believe that the device demonstrating the ability 
to reduce, replace, or avoid opioid use in a clinical trial or peer-
reviewed journal must be the same device as the one being studied in 
order to qualify for separate payment under section 4135. Therefore, we 
believe that the SimplFusor System does not meet the statutory 
requirements and are not finalizing separate payment for it under this 
provision.
Iovera System
    Comment: The Iovera System manufacturer, Pacira Biosciences, Inc., 
suggested that this medical device should qualify for separate payment 
under this provision. The manufacturer stated that this device is used 
to apply freezing cold to the peripheral nervous system for the 
treatment of pain, referred to as cyroneurolysis or cryoanalgesia. 
Commenters provided that this product is used to deliver a therapy to 
reduce postoperative pain, or produce post-surgical or reginal 
analgesia, is FDA cleared under a 510(k) \225\ and has supporting 
literature.226 227 228 229 The manufacturer also provided 
two HCPCS codes in which the device would have its payment packaged.
---------------------------------------------------------------------------

    \225\ FDA 510(k) No. K220656, available at https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpmn/pmn.cfm?ID=K220656.
    \226\ Urban JA, Dolesh K, Martin E. A Multimodal Pain Management 
Protocol Including Preoperative Cryoneurolysis for Total Knee 
Arthroplasty to Reduce Pain, Opioid Consumption, and Length of Stay. 
Arthroplast Today. 2021 Jul 12;10:87-92. doi: 10.1016/
j.artd.2021.06.008. PMID: 34286056; PMCID: PMC8280475.
    \227\ Mihalko WM, Kerkhof AL, Ford MC, Crockarell JR, Harkess 
JW, Guyton JL. Cryoneurolysis before Total Knee Arthroplasty in 
Patients With Severe Osteoarthritis for Reduction of Postoperative 
Pain and Opioid Use in a SingleCenter Randomized Controlled Trial. J 
Arthroplasty. 2021 May;36(5):1590-1598. doi: 10.1016/
j.arth.2020.11.013. Epub 2020 Nov 14. PMID: 33279353.
    \228\ Ilfeld BM, Finneran JJ, Swisher MW, Said ET, Gabriel RA, 
Sztain JF, Khatibi B, Armani A, Trescot A, Donohue MC, Schaar A, 
Wallace AM. Preoperative Ultrasound-guided Percutaneous 
Cryoneurolysis for the Treatment of Pain after Mastectomy: A 
Randomized, Participant- and Observer-masked, Sham-controlled Study. 
Anesthesiology. 2022 Nov 1;137(5):529-542. doi: 10.1097/
ALN.0000000000004334. PMID: 35929983.
    \229\ Dasa V, Lensing G, Parsons M, Harris J, Volaufova J, Bliss 
R. Percutaneous freezing of sensory nerves prior to total knee 
arthroplasty. Knee. 2016 Jun;23(3):523-8. doi: 10.1016/
j.knee.2016.01.011. Epub 2016 Feb 10. PMID: 26875052.
---------------------------------------------------------------------------

    Response: Based on comments received, we believe that the Iovera 
medical device is used to deliver a therapy to reduce postoperative 
pain or produce post-surgical or regional analgesia. We confirmed that 
this product is FDA cleared and has supporting literature demonstrating 
the ability to replace, reduce, or avoid intraoperative or 
postoperative opioid use or the quantity of opioids prescribed in a 
clinical trial or through data published in a peer-reviewed journal. 
The medical device is not currently receiving transitional passthrough 
status and we believe would have payment that is otherwise packaged 
into a payment for a covered OPD service.
    Therefore, we believe that the Iovera System meets the statutory 
requirements and should be paid separately under this provision. The 
manufacturer only provided two procedures in which the device is used, 
and we agree with those two procedures are likely the most common 
procedures in which the device is used, given the clinical nature of 
the device. Therefore, for this product only, we are only using these 
top 2 procedures as the basis for calculating the payment limitation 
for the device. We will assume an equal utilization of the device with 
these 2 procedures for the payment limitation calculation as shown in 
Table 157 at the end of this section. In the absence of utilization 
data for the top 2 procedures, we believe it is reasonable to assume an 
equal utilization for purposes of calculating the payment limitation 
until claims data are available. Please see Table 157 for the payment 
limitation calculation and new C-code to describe the device.
Additional Non-Qualifying Products
    Comment: Commenters suggested additional products for CMS to 
consider under this policy. One example is the MAKO System, an FDA-
cleared medical device used in hip and knee joint procedures to enable 
a more predictable implant placement to plan surgical experience. The 
system is intended to assist the surgeon in providing software-defined 
spatial boundaries for orientation and reference information to 
anatomical structures during orthopedic procedures. Another example is 
the PMD-200, which is a device that uses a finger probe to measure 
physiological signals that are elevated during surgical stimulation, 
and then a machine learning algorithm uses these variables to provide a 
clinician a continuous numerical value for pain to assist the clinician 
with opioid dosing.
    Response: We appreciate these comments, but we do not believe these 
medical devices need to be evaluated under this policy because they are 
not directly delivering pain management therapies. The statute 
specifies that any device under this policy should deliver a therapy to 
reduce postoperative pain or produce postsurgical or regional 
analgesia. Both the MAKO and the PMD-200 function as supplemental tools 
that can assist the clinician, such as robotic assistance or machine 
learning assistance, in assessing the patient and planning treatment. 
However, the devices themselves are not medical devices that are used 
to deliver a therapy to reduce postoperative pain or produce 
postsurgical or regional analgesia. As these devices do not meet the 
basic definitions to be considered under this policy, we are not 
evaluating them further against the qualifying criteria.
    Comment: Commenters also recommended other products to CMS but did 
not provide any supporting documentation or information on the 
products.
    Response: For those products suggested by commenters that did not 
provide supplemental information, we are unable to fully evaluate the 
product against the statutory criteria for inclusion in this policy and 
therefore are not finalizing separate payment for any of these 
products. The final list of qualifying products can be found in Table 
158.
BILLING CODE 4120-01-P

[[Page 94356]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.211

[[Page 94357]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.212

[[Page 94358]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.213

     
---------------------------------------------------------------------------

    \230\ Exparel. FDA Package Insert. November 2023. https://www.accessdata.fda.gov/drugsatfda_docs/label/2023/022496s051lbl.pdf.
    \231\ Omidria. FDA Package Insert. December 2017. https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/205388s006lbl.pdf.
    \232\ Payment for HCPCS Code 68841, is discussed in section 
III.E.6. of this final rule with comment period.
    \233\ Dextenza. FDA Package Insert. October 2021. https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/208742s007lbl.pdf.
    \234\ Xaracoll. FDA Package Insert. August 2020. https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/209511s000lbl.pdf.
    \235\ Zynrelef. FDA Package Insert. January 2024. https://www.accessdata.fda.gov/drugsatfda_docs/label/2024/211988s013lbl.pdf.

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[[Page 94359]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.214

     
---------------------------------------------------------------------------

    \236\ Ketorolac tromethamine Injection. FDA Package Insert. May 
2014. https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/074802s038lbl.pdf.
    \237\ On-Q Pump. FDA 510K. February 2019. https://www.accessdata.fda.gov/cdrh_docs/pdf18/K181360.pdf.
    \238\ Ding DY, Manoli A 3rd, Galos DK, Jain S, Tejwani NC. 
Continuous Popliteal Sciatic Nerve Block Versus Single Injection 
Nerve Block for Ankle Fracture Surgery: A Prospective Randomized 
Comparative Trial. J Orthop Trauma. 2015;29(9):393-398. https://pubmed.ncbi.nlm.nih.gov/2616525.
    \239\ FDA Approval Letter, July 31, 2018. https://www.accessdata.fda.gov/cdrh_docs/pdf18/K181422.pdf.
    \240\ Ilfeld BM, Plunkett A, Vijjeswarapu AM, Hackworth R, 
Dhanjal S, Turan A, Cohen SP, Eisenach JC, Griffith S, Hanling S, 
Sessler DI, Mascha EJ, Yang D, Boggs JW, Wongsarnpigoon A, Gelfand H 
Percutaneous, Peripheral Nerve Stimulation (Neuromodulation) for 
Postoperative Pain: A Randomized, Sham-controlled Pilot Study, 
Anesthesiology, April 2021.
    \241\ https://www.accessdata.fda.gov/cdrh_docs/pdf18/K182565.pdf.
    \242\ https://www.accessdata.fda.gov/cdrh_docs/pdf20/K200697.pdf.
    \243\ https://www.accessdata.fda.gov/cdrh_docs/pdf23/K233170.pdf.
    \244\ O'Connor LA, Dua A, Orhurhu V, Hoepp LM, Quinn CC. Opioid 
Requirements After Intercostal Cryoanalgesia in Thoracic Surgery. J 
Surg Res. 2022; 274:232-241.
    \245\ Maxwell CM, Weksler B, Houda J, Fernando HC. Intercostal 
Cryoablation During Video-Assisted Lung Resection Can Decrease 
Postoperative Opioid Use. Innovations 2023 18(4):352-356.
    \246\ Jaroszewski DE, Bostoros P, Farina JM, Botros MM, Aly MR, 
Peterson M, Lackey J, Pulivarthi KV, Smith B, Craner R, Stearns JD. 
Evolution of Pain Control for Adult Pectus Excavatum Repair. Ann 
Thorac Surg. 2024;117(4):829-837.
    \247\ Graves CE, Moyer J, Zobel MJ, Mora R, Smith D, O'Day M, 
Padilla BE. Intraoperative intercostal nerve cryoablation during the 
Nuss procedure reduces length of stay and opioid requirement: A 
randomized clinical trial. J Pediatric Surg. 2019 Nov;54(11):2250-
2256.

---------------------------------------------------------------------------

[[Page 94360]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.215

     
---------------------------------------------------------------------------

    \248\ FDA 510(k) Clearance K052221; obtained in 2005 by and 
issued to Sorenson Medical, Inc., which was later acquired by Summit 
Medical Products, Inc. Avanos acquired substantially all assets of 
Summit Medical Products, including this FDA 510(k) Clearance 
K052221, in 2019.
    \249\ Morkos M, DeLeon A, Koeckert M, Gray Z, Liao K, Pan W, 
Tolpin DA. The Use of Unilateral Erector Spinae Plane Block in 
Minimally Invasive Cardiac Surgery. J Cardiothorac Vasc Anesth. 2023 
Mar;37(3):432-436.
    \250\ FDA 510(k) No. K220656, available at https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpmn/pmn.cfm?ID=K220656.
    \251\ Urban JA, Dolesh K, Martin E. A Multimodal Pain Management 
Protocol Including Preoperative Cryoneurolysis for Total Knee 
Arthroplasty to Reduce Pain, Opioid Consumption, and Length of Stay. 
Arthroplast Today. 2021 Jul 12;10:87-92. doi: 10.1016/
j.artd.2021.06.008. PMID: 34286056; PMCID: PMC8280475.
    \252\ Mihalko WM, Kerkhof AL, Ford MC, Crockarell JR, Harkess 
JW, Guyton JL. Cryoneurolysis before Total Knee Arthroplasty in 
Patients With Severe Osteoarthritis for Reduction of Postoperative 
Pain and Opioid Use in a SingleCenter Randomized Controlled Trial. J 
Arthroplasty. 2021 May;36(5):1590-1598. doi: 10.1016/
j.arth.2020.11.013. Epub 2020 Nov 14. PMID: 33279353.
    \253\ Ilfeld BM, Finneran JJ, Swisher MW, Said ET, Gabriel RA, 
Sztain JF, Khatibi B, Armani A, Trescot A, Donohue MC, Schaar A, 
Wallace AM. Preoperative Ultrasound-guided Percutaneous 
Cryoneurolysis for the Treatment of Pain after Mastectomy: A 
Randomized, Participant- and Observer-masked, Sham-controlled Study. 
Anesthesiology. 2022 Nov 1;137(5):529-542. doi: 10.1097/
ALN.0000000000004334. PMID: 35929983.
    \254\ Dasa V, Lensing G, Parsons M, Harris J, Volaufova J, Bliss 
R. Percutaneous freezing of sensory nerves prior to total knee 
arthroplasty. Knee. 2016 Jun;23(3):523-8. doi: 10.1016/
j.knee.2016.01.011. Epub 2016 Feb 10. PMID: 26875052.
---------------------------------------------------------------------------

BILLING CODE 4120-01-C
    The implementation of section 4135 of the CAA, 2023, which 
establishes the eligibility criteria for temporary additional payments 
for certain non-opioid treatments for pain relief, has been finalized 
in this section. We note that the HCPCS codes describing the qualifying 
devices and drugs in Table 158 have been placed on the ASC covered 
ancillary procedures list. While we acknowledge HCPCS code A4306 
(Disposable drug delivery system, flow rate of less than 50 ml per 
hour) was previously discussed as a code that could describe a general 
category of medical pumps in which the ON-Q pump system could have been 
categorized, it did not previously appear on the ASC covered ancillary 
procedures list. However, we also note that Medicare Administrative 
Contractors (MACs) determine whether a drug, device, procedure, or 
other service meets all program requirements and conditions for 
coverage and payment. HOPDs and ASC only receive payment for qualifying 
drugs, biologicals, and medical devices when the appropriate MAC 
determines that the service meets the relevant conditions for coverage 
and payment. As we have consistently stated in past OPPS/ASC final 
rules (see, e.g., 87 FR 71879 and 88 FR 81660 through 81661), the fact 
that a drug, device, procedure or service is assigned a HCPCS code and 
a payment rate under the OPPS does not imply coverage by the Medicare 
program, but indicates only how the product, procedure, or service may 
be paid if covered by the program (see, e.g., Pub 100-04 Medicare 
Claims Processing, Transmittal 11937).
    We proposed revisions to 42 CFR 416.174 for the ASC payment system 
and Sec.  419.43 for the OPPS to codify these policies. Specifically, 
we proposed revisions to Sec.  419.174(a) to establish the eligibility 
for non-opioid pain management drugs and biologicals, and by adding 
modifications to paragraphs (a)(1) through (3) to outline drug and 
biological FDA approval requirements, the exclusion of drugs and 
biologicals with pass-through status, and the requirement that the drug 
or biological has payment that is packaged. We proposed new Sec.  
419.174(b) to establish the eligibility for non-opioid pain management 
medical devices, which includes new paragraphs (b)(1) through (4). 
These new paragraphs describe medical device FDA requirements, medical 
device clinical trial or peer-reviewed journal requirements, the 
exclusion of medical devices with pass-through status, and the 
requirement that the medical device has payment that is packaged. New 
paragraph (c) describes the payment amounts for qualifying drugs and 
biologicals in paragraph (c)(1) and medical devices in paragraph 
(c)(2), as well as the payment limitation for drugs, biologicals, and 
medical devices in paragraph (c)(3). Similarly, we also propose new 
Sec.  419.43(k), which contains payment for non-opioid pain management 
drugs and biologicals. Specifically, new paragraph (k)(1) outlines the 
eligibility for separate payment for non-opioid pain management drugs 
and biologicals, with new paragraphs outlining (i) the drug or 
biological's required FDA status, (ii) the drug or biological's pass-
through status, and (iii) the drug or biological's packaged status.
    We also proposed to add new Sec.  419.43(k)(2), which contains 
payment for non-opioid pain management medical devices. Specifically, 
new paragraph (k)(2) outlines the eligibility for separate payment for 
non-opioid pain management medical devices, with new paragraphs 
outlining (i) the medical device's required FDA status, (ii) the 
medical device clinical trial or peer-reviewed journal requirements, 
(iii) the medical device's pass-through status, and (iv) the medical 
device's packaged status. New Sec.  419.43(k)(3) describes the separate 
payment amount for qualifying non-opioid treatments for pain relief. 
Specifically, paragraph

[[Page 94361]]

(k)(3)(i) sets the separate payment amount for a qualifying drug or 
biological, paragraph (k)(3)(ii) sets the separate payment amount for a 
qualifying medical device, and paragraph (k)(3)(iii) sets the payment 
limitation for drugs, biologicals, and medical devices.
    We did not receive any public comments on the proposed regulation 
text and are finalizing as proposed with slight changes to one 
provision. In particular, we are clarifying the description of the 
payment limitation at Sec. Sec.  416.174(c)(3) and 419.43(k)(3)(iii) to 
state that the volume weighted average for the payment limitation will 
be based on the most frequent 5 OPD primary procedures into which a 
non-opioid treatment for pain relief would be packaged. We believe the 
``packaged'' language is more accurate and consistent with our proposed 
policy than the previous language ``furnished with.'' As previously 
discussed, for the payment limitation calculation, non-primary 
procedures will not be included in the top five procedures list, even 
if they are the most common procedures furnished with that non-opioid 
treatment for pain relief by volume. Therefore, we are modifying the 
proposed regulatory text to specifically state that the payment 
limitation will be based on the most frequent five OPD primary 
procedures into which payment for the non-opioid treatment for pain 
relief is packaged. Except for this modification, we are finalizing the 
regulation text as proposed. Additionally, we are revising Sec.  
416.164(a)(4) to remove ``with the exception of non-opioid pain 
management drugs and biologicals that function as a supply when used in 
a surgical procedure as determined by CMS under Sec.  416.174,'' as 
these drugs will be separately payable in both the OPPS and ASC under 
this finalized policy. Similarly, we are revising Sec.  416.164(b)(6) 
to read ``Non-opioid pain management drugs, biologicals, and medical 
devices as determined by CMS under Sec.  416.174,'' as now qualifying 
medical devices will be on the ASC covered ancillary services list 
under this finalized policy.

G. New Technology Intraocular Lenses (NTIOLs)

    New Technology Intraocular Lenses (NTIOLs) are intraocular lenses 
that replace a patient's natural lens that has been removed in cataract 
surgery and that also meet the requirements listed in Sec.  416.195.
1. NTIOL Application Cycle
    Our process for reviewing applications to establish new classes of 
NTIOLs is as follows:
     Applicants submit their NTIOL requests for review to CMS 
by the annual deadline which is announced in the annual OPPS/ASC final 
rule with comment period. For a request to be considered complete, we 
require submission of the information requested in the guidance 
document titled ``Application Process and Information Requirements for 
Requests for a New Class of New Technology Intraocular Lenses (NTIOLs) 
or Inclusion of an IOL in an Existing NTIOL Class'' posted on the CMS 
website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/new-technology-intraocular-lenses-ntiols.
     We announce annually, in the proposed rule updating the 
ASC and OPPS payment rates for the following calendar year, a list of 
all requests to establish new NTIOL classes accepted for review during 
the calendar year in which the proposal is published. In accordance 
with section 141(b)(3) of Public Law 103-432 and our regulations at 
Sec.  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 with comment period updating the ASC and 
OPPS payment rates for the following calendar year, we--
    ++ Provide a list of determinations made as a result of our review 
of all new NTIOL class requests and public comments.
    ++ When a new NTIOL class is created, identify the predominant 
characteristic of NTIOLs in that class that sets them apart from other 
IOLs (including those previously approved as members of other expired 
or active NTIOL classes) and that is associated with an improved 
clinical outcome.
    ++ Set the date of implementation of a payment adjustment in the 
case of approval of an IOL as a member of a new NTIOL class 
prospectively as of 30 days after publication of the ASC payment update 
final rule, consistent with the statutory requirement.
    ++ Announce the deadline for submitting requests for review of an 
application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2025
    We did not receive any requests for review to establish a new NTIOL 
class for CY 2025 by March 1, 2024, the due date published in the CY 
2024 OPPS/ASC final rule with comment period (88 FR 81956).
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 did not propose to revise the payment adjustment amount for CY 2025.
    Comment: Commenters recommended that we increase the NTIOL payment 
adjustment. Commenters noted that the payment adjustment has not been 
adjusted since CY 1999 and has significantly lagged the overall 
inflation rate and does not reflect the technological advancements to 
support continued innovation. Some commenters recommended that we 
establish the NTIOL payment adjustment at $91.04 while others 
recommended we establish the payment adjustment at $94.63 and that we 
increase such payment adjustment annually.
    Response: We responded to this comment in last year's final rule 
with comment period. We refer readers to the CY 2024 OPPS/ASC final 
rule with comment period for our response on an increase to the NTIOL 
$50 per lens payment adjustment (88 FR 81955 through 81956).
4. Announcement of CY 2026 Deadline for Submitting Requests for CMS 
Review of Applications for a New Class of NTIOLs
    In accordance with 42 CFR 416.185(a) of our regulations, CMS 
announces that in order to be considered for payment effective 
beginning in CY 2025, requests for review of applications for a new 
class of new technology IOLs must be received by 5 p.m. Eastern 
Standard Time, on March 1, 2025. Send requests via email to 
[email protected] or by mail to ASC/NTIOL, Division of 
Outpatient Care, Mailstop C4-05-17, Centers for Medicare and Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. To be 
considered, requests for NTIOL reviews must include information 
requested on the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/new-technology-intraocular-lenses-ntiols.

[[Page 94362]]

H. Calculation of the ASC Payment Rates and the ASC Conversion Factor

1. Background
    In the August 2, 2007, ASC final rule (72 FR 42493), we established 
our policy to base ASC relative payment weights and payment rates under 
the revised ASC payment system on APC groups and the OPPS relative 
payment weights. Consistent with that policy and the requirement at 
section 1833(i)(2)(D)(ii) of the Act that the revised payment system be 
implemented so that it would be budget neutral, the initial ASC 
conversion factor (CY 2008) was calculated so that estimated total 
Medicare payments under the revised ASC payment system in the first 
year would be budget neutral to estimated total Medicare payments under 
the prior (CY 2007) ASC payment system (the ASC conversion factor is 
multiplied by the relative payment weights calculated for many ASC 
services in order to establish payment rates). That is, application of 
the ASC conversion factor was designed to result in aggregate Medicare 
expenditures under the revised ASC payment system in CY 2008 being 
equal to aggregate Medicare expenditures that would have occurred in CY 
2008 in the absence of the revised system, taking into consideration 
the cap on ASC payments in CY 2007, as required under section 
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the 
system budget neutral in subsequent calendar years (72 FR 42532 through 
42533; Sec.  416.171(e)).
    We note that we consider the term ``expenditures'' in the context 
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of 
the Act to mean expenditures from the Medicare Part B Trust Fund. We do 
not consider expenditures to include beneficiary coinsurance and 
copayments. This distinction was important for the CY 2008 ASC budget 
neutrality model that considered payments across the OPPS, ASC, and 
MPFS payment systems. However, because coinsurance is almost always 20 
percent for ASC services, this interpretation of expenditures has 
minimal impact for subsequent budget neutrality adjustments calculated 
within the revised ASC payment system.
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 
through 66858), we set out a step-by-step illustration of the final 
budget neutrality adjustment calculation based on the methodology 
finalized in the August 2, 2007, ASC final rule (72 FR 42521 through 
42531) and as applied to updated data available for the CY 2008 OPPS/
ASC final rule with comment period. The application of that methodology 
to the data available for the CY 2008 OPPS/ASC final rule with comment 
period resulted in a budget neutrality adjustment of 0.65.
    For CY 2008, we adopted the OPPS relative payment weights as the 
ASC relative payment weights for most services and, consistent with the 
final policy, we calculated the CY 2008 ASC payment rates by 
multiplying the ASC relative payment weights by the final CY 2008 ASC 
conversion factor of $41.401. For covered office-based surgical 
procedures, covered ancillary radiology services (excluding covered 
ancillary radiology services involving certain nuclear medicine 
procedures or involving the use of contrast agents, as discussed in 
section XIII.D.2 of the CY 2023 OPPS/ASC proposed rule (87 FR 44715 
through 44716)), and certain diagnostic tests within the medicine range 
that are covered ancillary services, the established policy is to set 
the payment rate at the lower of the MPFS unadjusted nonfacility PE 
RVU-based amount or the amount calculated using the ASC standard 
ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66841 through 66843), we also 
adopted alternative ratesetting methodologies for specific types of 
services (for example, device-intensive procedures).
    As discussed in the August 2, 2007 ASC final rule (72 FR 42517 
through 42518) and as codified at Sec.  416.172(c) of the regulations, 
the revised ASC payment system accounts for geographic wage variation 
when calculating individual ASC payments by applying the pre-floor and 
pre-reclassified IPPS hospital wage indexes to the labor-related share, 
which is 50 percent of the ASC payment amount based on a GAO report of 
ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted 
for geographic wage variation in labor costs when calculating 
individual ASC payments by applying the pre-floor and pre-reclassified 
hospital wage index values that CMS calculates for payment under the 
IPPS, using updated Core Based Statistical Areas (CBSAs) issued by OMB 
in June 2003.
    The reclassification provision in section 1886(d)(10) of the Act is 
specific to acute care hospitals. We believe that using the most 
recently available pre-floor and pre-reclassified IPPS hospital wage 
indexes result in the most appropriate adjustment to the labor portion 
of ASC costs. We continue to believe that the pre-floor, pre-
reclassified hospital wage indexes, which are updated yearly and are 
used by several other Medicare payment systems, appropriately account 
for geographic variation in labor costs for ASCs (89 FR 23424). 
Therefore, the wage index for an ASC is the pre-floor and pre-
reclassified hospital wage index for the fiscal year under the IPPS of 
the CBSA that maps to the CBSA where the ASC is located.
    On July 21, 2023, OMB issued OMB Bulletin No. 23-01, 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 July 16, 2021, in the Federal 
Register (86 FR 37770) and 2020 Census Bureau data. (A copy of this 
bulletin may be obtained at: https://www.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.pdf.) The pre-floor pre-reclassified 
IPPS hospital wage indexes for CY 2024 do not reflect OMB's new area 
delineations and, because the ASC wage indexes are the pre-floor and 
pre-reclassified IPPS hospital wages indexes, the CY 2024 ASC wage 
indexes do not reflect the most recent OMB changes. As discussed in the 
FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36139 through 36150), we 
proposed to use the new CBSAs delineations issued by OMB in OMB 
Bulletin 23-01 for the IPPS hospital wage index beginning in CY 2025. 
Therefore, because the ASC wage indexes for the calendar year are the 
pre-floor and pre-reclassified IPPS hospital wage indexes for the 
fiscal year, we proposed to incorporate the new OMB delineations into 
CY 2025 ASC wage indexes. We believe that using the revised 
delineations based on OMB Bulletin No. 23-01 will increase the 
integrity of the ASC wage index system by creating a more accurate 
representation of current geographic variations in wage levels.
    In adopting the revised CBSA delineations from the 2010 Census data 
which were issued by OMB on July 15, 2015, through OMB Bulletin No. 15-
01, for ASCs in counties that would see a decline in their ASC wage 
index for CY 2015, we adopted a blended wage index of 50 percent of the 
CY 2014 wage index value and 50 percent of the CY 2015 wage index value 
(79 FR 66937). However, we note that other Medicare payment systems 
incorporate a policy of capping year-to-year wage index decreases for 
each facility at 5 percent of the previous year's wage index value (89 
FR 23431 through 23433). We believe such a policy would also be 
appropriate for the ASC payment system as we transition to the CBSA

[[Page 94363]]

delineations based on the 2020 Census data. As discussed in the IPPS/
LTCH FY 2025 proposed rule, the 5-percent cap mitigates any large 
negative impacts of adopting the new delineations and prevents large 
year-to-year declines in wage index values as a means to reduce 
volatility (89 FR 36150). Therefore, for CY 2025, we proposed to 
incorporate the new OMB delineations into the CY 2025 ASC wage indexes 
and propose to apply a 5-percent cap on wage index decreases at the 
county level (or county-equivalent level) and the ASC wage index of 
that county would apply to all ASCs physically located in that county. 
We note that this 5-percent cap is applied in a budget neutral manner. 
The 5-percent cap reduces the wage index scalar for a calendar year 
which, in turn, will reduce the ASC conversion factor and the payment 
rates for covered ASC services in counties that are not affected by the 
5-percent cap on wage index decreases. Further, we solicited comments 
on whether we should extend this policy after CY 2025 and permanently 
adopt a budget-neutral 5-percent cap on year-to-year wage index 
decreases.
    Comment: Commenters supported our proposal to implement a 5-percent 
cap on year-to-year wage index decreases. However, two commenters 
requested that we should apply the OPPS geographic reclassifications 
and wage index floor policies to further align payment between the ASC 
payment system and the OPPS.
    Response: As previously discussed in this section, the 
reclassification provision in section 1886(d)(10) of the Act is 
specific to acute care hospitals. We believe that using the most 
recently available pre-floor and pre-reclassified IPPS hospital wage 
indexes result in the most appropriate adjustment to the labor portion 
of ASC costs.
    After consideration of the public comments we received, we are 
finalizing our proposal to implement a 5-percent cap on wage index 
decrease for CY 2025.
    The final CY 2025 ASC wage indexes fully reflect the OMB labor 
market area delineations (including the revisions to the OMB labor 
market delineations discussed previously, as set forth in OMB Bulletin 
No. 23-01) including replacing the eight counties with the county-
equivalent planning regions of Connecticut. We note that, in certain 
instances, there might be urban or rural areas for which there is no 
IPPS hospital that has wage index data that could be used to set the 
wage index for that area. 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, our 
policy has been to 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 apply 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. For 
example, for CY 2025, we are applying a proxy wage index based on this 
methodology to ASCs located in CBSA 25980 (Hinesville, GA) and in CBSA 
35 (Rural North Dakota).
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2025 and Future 
Years
    We update the ASC relative payment weights each year using the 
national OPPS relative payment weights (and PFS 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). The OPPS relative payment weights 
are scaled to maintain budget neutrality for the OPPS. We then scale 
the OPPS relative payment weights again to establish the ASC relative 
payment weights. To accomplish this, we hold estimated total ASC 
payment levels constant between calendar years for purposes of 
maintaining budget neutrality in the ASC payment system. That is, we 
apply the weight scalar to ensure that projected expenditures from the 
updated ASC payment weights in the ASC payment system are equal to what 
would be the current expenditures based on the scaled ASC payment 
weights. In this way, we ensure budget neutrality and that the only 
changes to total payments to ASCs result from increases or decreases in 
the ASC payment update factor.
    As discussed in section II.A.1.a of this final rule with comment 
period, we are using the CY 2023 claims data to be consistent with the 
OPPS claims data for the proposed rule. Consistent with our established 
policy, we proposed to scale the CY 2025 relative payment weights for 
ASCs according to the following method. Holding ASC utilization, the 
ASC conversion factor, and the mix of services constant from CY 2023, 
we proposed to compare the estimated total payment using the CY 2024 
ASC relative payment weights with the estimated total payment using the 
CY 2025 ASC relative payment weights to take into account the changes 
in the OPPS relative payment weights between CY 2024 and CY 2025.
    In consideration of our policy to provide a higher ASC payment rate 
with ASC complexity adjustment codes for certain primary procedures 
when performed with add-on packaged services, we incorporated estimated 
total spending and estimated utilization for these codes in our budget 
neutrality calculation for CYs 2023 and 2024. We estimated in the CY 
2023 OPPS/ASC final rule with comment period (87 FR 72094) that the 
impact on CY 2023 estimated total payments from our finalized CY 2023 
ASC complexity adjustment codes would be $5 million in spending and we 
finalized our proposal to incorporate this $5 million in estimated CY 
2023 total payments for the budget neutrality calculation. Based on CY 
2023 utilization data, we estimated that the actual amount of spending 
on the new CY 2023 ASC complexity adjustment codes for CY 2023 was $24 
million. We estimated that there will not be an additional increase in 
ASC spending related to our proposed ASC complexity adjustment codes 
for CY 2025.
    Additionally, as discussed in section XIII.E of the CY 2025 OPPS/
ASC proposed rule, section 4135(a) and (b) of the CAA, 2023, titled 
``Access to Non-Opioid Treatments for Pain Relief,'' amended section 
1833(t)(16) and section 1833(i) of the Act, respectively, to provides 
for temporary separate payments for non-opioid treatments for pain 
relief. As discussed in further detail in section XIII.E of the CY 2025 
OPPS/ASC proposed rule, for qualifying nonopioid products, we proposed 
to apply an 18 percent payment limitation on the volume weighted 
payment average of the top 5 services associated with the use of the 
qualifying non-opioid product. In CY 2024, four of these qualifying 
nonopioid products are separately payable without the 18 percent 
payment limitation--HCPCS Codes C9089 (Bupivacaine implant, 1 mg), 
C9290 (Inj, bupivacaine liposome), J1096 (Dexametha opth insert 0.1 
mg), and J1097 (Phenylep ketorolac opth soln). Therefore, to maintain 
budget neutrality, we estimated the total anticipated reduction as a 
result of the 18 percent payment limitation required by section 4135 of 
the CAA, 2023. Using CY 2023 utilization for these four drugs and CY 
2024 ASC payment rates, we anticipated that the 18 percent payment 
limitation will reduce CY 2025 ASC expenditures by approximately $9 
million. Therefore, we proposed to

[[Page 94364]]

reduce estimated CY 2025 total payments by $9 million in our weight 
scalar calculation as a result of section 4135 of the CAA, 2023.
    We proposed to use the ratio of estimated CY 2024 to estimate CY 
2025 total payments (the weight scalar) to scale the ASC relative 
payment weights for CY 2025. The proposed CY 2025 ASC weight scalar was 
0.876. We note that we have historically displayed this figure rounded 
to the nearest ten thousandth; however, we believe this level of 
specificity is unnecessarily burdensome for an ASC payment system that 
is less than one-tenth the size of the OPPS (in which the weight scalar 
is rounded to the nearest ten-thousandth). An ASC weight scalar rounded 
to the nearest ten thousandth is highly sensitive to spending changes 
and can require the costly reissuance of new ASC payment rates from 
only very minor payment rate changes within the ASC Payment System, 
such as a revised PFS conversion factor as a result of Congressional 
action. Therefore, for CY 2025 and subsequent calendar years, we 
proposed to set the ASC weight scalar rounded to the nearest 
thousandth. Consistent with historical practice, we proposed to scale, 
using this method, the ASC relative payment weights of covered surgical 
procedures, covered ancillary radiology services, and certain 
diagnostic tests within the medicine range of CPT codes, which are 
covered ancillary services for which the ASC payment rates are based on 
OPPS relative payment weights.
    We proposed that we would not scale ASC payment for separately 
payable covered ancillary services that have a predetermined national 
payment amount (that is, their national ASC payment amounts are not 
based on OPPS relative payment weights), such as drugs and biologicals 
that are separately paid or services that are contractor-priced or paid 
at reasonable cost in ASCs. Any service with a predetermined national 
payment amount would be included in the ASC budget neutrality 
comparison, but scaling of the ASC relative payment weights would not 
apply to those services. The ASC payment weights for those services 
without predetermined national payment amounts (that is, those services 
with national payment amounts that would be based on OPPS relative 
payment weights) would be scaled to eliminate any difference in the 
total payment between the current year and the update year.
    For any given year's ratesetting, we typically use the most recent 
full calendar year of claims data to model budget neutrality 
adjustments. We proposed to use the CY 2023 claims data to model our 
budget neutrality adjustment for CY 2025.
    Comment: Many commenters reiterated a longstanding recommendation 
that we discontinue our budget neutrality adjustment under the ASC 
payment system. The commenters believe this to be antiquated and 
preventing the migration of procedures from the more expensive hospital 
setting to the ASC setting. Commenters noted that the OPPS relative 
weights used for the ASC payment system have already been scaled for 
budget neutrality under the OPPS. They argued the budget neutrality 
adjustment under the ASC payment system could be combined with the OPPS 
budget neutrality adjustment thereby establishing a single OPPS and ASC 
weight scalar. One commenter requested more transparency in the ASC 
weight scalar calculation and the driving factors behind the change in 
the scalar.
    Response: We are not accepting the commenters' recommendation to 
discontinue applying the ASC weight scalar. As we have stated in past 
rulemaking (82 FR 59421), applying the ASC weight scalar ensures that 
the ASC payment system remains budget neutral. We apply the ASC weight 
scalar to scaled OPPS relative weights to ensure that current Medicare 
payments under the ASC payment system do not increase as a result of 
newer data to determine the cost relativity between surgical 
procedures. The scaled prospective OPPS relative weights that are used 
to determine scaled prospective ASC relative weights have not, as 
commenters suggest, been adjusted to achieve budget neutrality within 
the ASC payment system prior to the application of the ASC weight 
scalar. We also note that no stakeholder presented empirical evidence 
that the budget neutrality adjustment under the ASC payment system has 
impacted beneficiary access to surgical procedures in the ASC setting.
    In regard to the commenter's request for more transparency in the 
ASC weight scalar calculation, we are unclear what additional 
information is needed. We provide Limited Data Set files on the CMS 
website such that the public can use the same data the agency used in 
determining the ASC weight scalar for this final rule with comment 
period and we describe our budget neutrality adjustment process in this 
section of the final rule with comment period. However, to better 
assist the public in understanding changes in the ASC weight scalar, we 
have provided more context and information in the paragraph below 
regarding the impact of CY 2025 changes in our inputs and how they 
impact the ASC weight scalar. We will continue to provide this 
information in our OPPS/ASC proposed and final rules to enable 
interested parties to better understand the changes in the ASC weight 
scalar.
    After consideration of the public comments we received, we are 
finalizing our proposal to use the ratio of CY 2024 to CY 2025 total 
payments (the weight scalar) to scale the ASC relative payment weights 
for CY 2025. We estimate that there will not be an additional increase 
in ASC spending related to our final ASC complexity adjustment codes 
for CY 2025. Based on the revised payment limitations from data 
available for this final rule with comment period, we estimate the 
implementation of section 4135 of the CAA, 2023 to decrease ASC 
spending by $5.5 million for CY 2025 as a result of the payment 
limitation to currently separately payable drugs qualifying nonopioid 
products. Therefore, we reduced estimated CY 2025 total payments by 
$5.5 million in our weight scalar calculation. We will monitor the 
utilization and will adjust our payments to maintain budget neutrality 
accordingly, if appropriate, through future rulemaking.
    The final CY 2025 ASC weight scalar is 0.872. The final CY 2025 ASC 
weight scalar represents a 1.9 percent decrease from the final CY 2024 
ASC weight scalar of 0.8889. We estimate that increases in the scaled 
OPPS relative weights as a result of relatively greater increases in 
the geometric mean cost of commonly-performed surgical procedures are 
the most significant factor causing the decline in the ASC weight 
scalar.
    Consistent with historical practice, we are finalizing our proposal 
to scale the ASC relative payment weights of covered surgical 
procedures, covered ancillary radiology services, and certain 
diagnostic tests within the medicine range of CPT codes, which are 
covered ancillary services for which the ASC payment rates are based on 
OPPS relative payment weights. Additionally, we do not anticipate any 
budgetary impact related to our final list of ASC complexity adjustment 
codes for CY 2025.
b. Updating the ASC Conversion Factor
    Under the OPPS, we typically apply a budget neutrality adjustment 
for provider-level changes, most notably a change in the wage index 
values for the upcoming year, to the conversion factor. Consistent with 
our final ASC payment policy, for the CY 2017 ASC payment

[[Page 94365]]

system and subsequent years, in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79751 through 79753), we finalized our policy to 
calculate and apply a budget neutrality adjustment to the ASC 
conversion factor for supplier-level changes in wage index values for 
the upcoming year, just as the OPPS wage index budget neutrality 
adjustment is calculated and applied to the OPPS conversion factor.
    For CY 2025, we calculated the proposed adjustment for the ASC 
payment system by using the most recent CY 2023 claims data available 
and estimating the difference in total payment that would be created by 
introducing the proposed CY 2025 ASC wage indexes. Specifically, 
holding CY 2023 ASC utilization, service-mix, and the proposed CY 2025 
national payment rates after application of the weight scalar constant, 
we calculated the total adjusted payment using the CY 2024 ASC wage 
indexes and the total adjusted payment using the proposed CY 2025 ASC 
wage indexes which included our proposed 5-percent cap on wage index 
declines. 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 2024 ASC wage indexes to the total 
adjusted payment calculated with the proposed CY 2025 ASC wage indexes 
and applied the resulting ratio of 0.9958 (the proposed CY 2025 ASC 
wage index budget neutrality adjustment) to the CY 2024 ASC conversion 
factor to calculate the proposed CY 2025 ASC conversion factor.
    Section 1833(i)(2)(D)(v) of the Act requires that the ASC 
conversion factor be reduced by a productivity adjustment in each 
calendar year. Section 1886(b)(3)(B)(xi)(II) of the 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). We finalized the methodology for calculating the 
productivity adjustment in the CY 2011 PFS final rule with comment 
period (75 FR 73394 through 73396) and revised it in the CY 2012 PFS 
final rule with comment period (76 FR 73300 through 73301) and the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70500 through 
70501). The proposed productivity adjustment for CY 2025 was projected 
to be 0.4 percentage point, as published in the FY 2025 IPPS/LTCH PPS 
proposed rule (89 FR 36204) based on IGI's 2023 fourth quarter 
forecast.
    Section 1833(i)(2)(C)(i) of the Act requires that, if the Secretary 
has not updated amounts established under the revised ASC payment 
system in a calendar year, the payment amounts shall be increased by 
the percentage increase in the Consumer Price Index for all urban 
consumers (CPI-U), U.S. city average, as estimated by the Secretary for 
the 12-month period ending with the midpoint of the year involved. The 
statute does not mandate the adoption of any particular update 
mechanism, but it requires the payment amounts to be increased by the 
CPI-U in the absence of any update. Because the Secretary updates the 
ASC payment amounts annually, we adopted a policy, which we codified at 
Sec.  416.171(a)(2)(ii)), to update the ASC conversion factor using the 
CPI-U for CY 2010 and subsequent calendar years.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075 
through 59080), we finalized a policy to apply the productivity-
adjusted hospital market basket update to ASC payment system rates for 
an interim period of 5 years (CY 2019 through CY 2023), during which we 
would assess whether there is a migration of the performance of 
procedures from the hospital setting to the ASC setting as a result of 
the use of a productivity-adjusted hospital market basket update, as 
well as whether there are any unintended consequences, such as less 
than expected migration of the performance of procedures from the 
hospital setting to the ASC setting. The most recent available full 
year of claims data to assess the expected migration applying the 
productivity-adjusted hospital market basket update during the interim 
period would fall within the period from CY 2019 through CY 2022. 
However, the impact of the COVID-19 PHE on health care utilization, in 
particular in CY 2020, was tremendously profound, particularly for 
elective surgeries, because many beneficiaries avoided healthcare 
settings, when possible, to avoid possible infection from the SARS-CoV-
2 virus. As a result, it is nearly impossible to disentangle the 
effects from the COVID-19 PHE in our analysis of whether the higher 
update factor for the ASC payment system caused increased migration to 
the ASC setting. To analyze whether procedures migrated from the 
hospital setting to the ASC setting, we need to use claims data from a 
period during which the COVID-19 PHE had less of an impact on health 
care utilization. Therefore, for CY 2024, we finalized our proposal to 
extend the 5-year interim period an additional 2 years, that is, 
through CY 2024 and CY 2025. We believed hospital outpatient and ASC 
utilization data from CYs 2023 and 2024 will enable us to more 
accurately analyze whether the application of the productivity-adjusted 
hospital market basket update to the ASC payment system had an effect 
on the migration of services from the hospital setting to the ASC 
setting. We revised our regulations at 42 CFR 416.171(a)(2)(iii) and 
(iv), which establish the annual update to the ASC conversion factor, 
to reflect this 2-year extension. We also revised our regulations at 
Sec.  416.171(a)(2)(vi) and (vii), which establish the 2.0 percentage 
point reduction for ASCs that fail to meet the standards for reporting 
ASC quality measures, and Sec.  416.171(a)(2)(viii)(B) and (C), which 
establish the productivity adjustment, to reflect this 2-year 
extension.
    For CY 2025, we proposed to utilize the proposed hospital market 
basket percentage increase of 3.0 percent reduced by the proposed 
productivity adjustment of 0.4 percentage point, resulting in a 
proposed productivity-adjusted hospital market basket update of 2.6 
percent for ASCs meeting the quality reporting requirements. Therefore, 
we proposed to apply a proposed 2.6 percent productivity-adjusted 
hospital market basket update factor to the CY 2024 ASC conversion 
factor for ASCs meeting the quality reporting requirements to determine 
the CY 2025 ASC payment amounts. The ASCQR Program affected payment 
rates beginning in CY 2014 and, under this program, there is a 2.0 
percentage points reduction to the productivity-adjusted hospital 
market basket update factor for ASCs that fail to meet the ASCQR 
Program requirements. We refer readers to section XIV.E of the CY 2019 
OPPS/ASC final rule with comment period (83 FR 59138 through 59139) and 
section XIV.E of this final rule with comment period for a detailed 
discussion of our policies regarding payment reduction for ASCs that 
fail to meet ASCQR Program requirements. We proposed to utilize the 
proposed inpatient hospital market basket percentage increase of 3.0 
percent reduced by 2.0 percentage points for ASCs that do not meet the 
quality reporting requirements and then reduced by the proposed 0.4 
percentage point productivity adjustment. Therefore, we proposed to 
apply a 0.6 percent productivity-adjusted hospital market basket update 
factor to the CY 2024 ASC conversion factor for ASCs not meeting the 
quality reporting requirements. We also proposed that if more recent 
data are subsequently available (for example, a more recent estimate of 
the inpatient hospital market

[[Page 94366]]

basket percentage increase or productivity adjustment), we would use 
such data, if appropriate, to determine the CY 2025 ASC update for the 
CY 2025 OPPS/ASC final rule with comment period.
    For CY 2025, we proposed to adjust the CY 2024 ASC conversion 
factor ($53.514) by the proposed wage index budget neutrality factor of 
0.9958 in addition to the proposed productivity-adjusted hospital 
market basket update of 2.6 percent discussed previously, which results 
in a proposed CY 2025 ASC conversion factor of $54.675 (a 2.2 percent 
increase) for ASCs meeting the quality reporting requirements. For ASCs 
not meeting the quality reporting requirements, we proposed to adjust 
the CY 2024 ASC conversion factor ($53.514) by the proposed wage index 
budget neutrality factor of 0.9958 in addition to the proposed quality 
reporting/productivity-adjusted hospital market basket update of 0.2 
percent discussed previously, which resulted in a proposed CY 2025 ASC 
conversion factor of $53.609 for ASCs not meeting the quality reporting 
requirements.
    Comment: Many commenters supported our proposal to increase the ASC 
conversion factor by the productivity-adjusted hospital market basket 
update and recommended that we continue applying the same updated 
factor for both the OPPS and ASC payment system in subsequent years to 
align both payment systems and mitigate growing payment disparities 
between ASCs and HOPDs. Some commenters argued that the proposed 
payment rate update was insufficient when compared to the broader 
increases in healthcare costs. However, one commenter representing 
hospitals opposed our proposal and recommended that the agency collect 
ASC costs such that it can develop an appropriate update factor for 
ASCs.
    Response: We appreciate the commenters' support. In the CY 2023 
OPPS/ASC final rule with comment period (87 FR 72094 through 72096), we 
finalized our proposal to increase the ASC conversion factor by the 
productivity-adjusted hospital market basket update for CYs 2024 and 
2025. In the CY 2025 OPPS/ASC proposed rule (89 FR 59436 through 
59437), we proposed to continue this policy and increase the proposed 
ASC conversion factor by the productivity-adjusted hospital market 
basket update for CY 2025. We intend to address commenters' 
recommendations regarding the most applicable and appropriate update 
factor for the ASC payment system in our CY 2026 OPPS/ASC proposed 
rule. As discussed in section XII.C of this final rule with comment 
period, we appreciate the thoughtful comments and responses regarding 
our solicitation on methods that would mitigate the burden of reporting 
costs on ASCs while also collecting enough data to reliably use in the 
determination of ASC costs. We will take these comments into 
consideration or future rulemaking.
    With respect to commenter's concern that the hospital market basket 
update would insufficiently increase ASC payments, as discussed in 
section II.B of this final rule with comment period, section 
1833(t)(3)(C)(iv) of the Act requires the OPPS OPD fee schedule 
increase factor for a year to equal the IPPS market basket percentage 
increase factor (hospital market basket update) applicable under 
section 1886(b)(3)(B)(iii) to hospital discharges in the fiscal year 
ending in such year. Accordingly, we are unable to adopt a final OPPS 
OPD fee schedule increase factor different than the hospital market 
basket update finalized in the FY 2025 IPPS/LTCH PPS final rule.
    After consideration of the public comments we received, for CY 
2025, we are finalizing using the hospital market basket update of 3.4 
percent reduced by the productivity adjustment of 0.5 percentage point, 
resulting in a productivity-adjusted hospital market basket update 
factor of 2.9 percent for ASCs meeting the quality reporting 
requirements. Therefore, we apply a 2.9 percent productivity-adjusted 
hospital market basket update to the CY 2024 ASC conversion factor for 
ASCs meeting the quality reporting requirements to determine the C Y 
2025 ASC payments. We are finalizing the hospital market basket update 
of 3.4 percent reduced by 2.0 percentage points for ASCs that do not 
meet the quality reporting requirements and then reduced by the 
productivity adjustment of 0.5 percentage point. Therefore, we apply a 
0.9 percent productivity-adjusted hospital market basket update factor 
to the CY 2024 ASC conversion factor for ASCs not meeting the quality 
reporting requirements.
    For CY 2025, we are adjusting the CY 2024 ASC conversion factor 
($53.514) by a wage index budget neutrality factor of 0.9969 in 
addition to the productivity-adjusted hospital market basket update of 
2.9 percent, discussed above, which results in a final CY 2025 ASC 
conversion factor of $54.895 for ASCs meeting quality reporting 
requirements. For ASCs not meeting quality reporting requirements, we 
are adjusting the CY 2024 ASC conversion factor ($53.514) by the wage 
index budget neutrality factor of 0.9969 in addition to the reduced 
productivity-adjusted hospital market basket update of 0.9 percent, 
discussed above, which results in a final CY 2025 ASC conversion factor 
of $53.828 for ASCs not meeting the quality reporting requirements.
3. Display of the Final CY 2025 ASC Payment Rates
    Addenda AA and BB to this final with comment period (which are 
available on the CMS website) display the final ASC payment rates for 
CY 2025 for covered surgical procedures and covered ancillary services, 
respectively. The final payment rates included in Addenda AA and BB to 
this final rule with comment period 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 
final CY 2025 payment rates. Specifically, in Addendum AA, a ``Y'' in 
the column titled ``To be Subject to Multiple Procedure Discounting'' 
indicates that the surgical procedure would be subject to the multiple 
procedure payment reduction policy. As discussed in the CY 2008 OPPS/
ASC final rule with comment period (72 FR 66829 through 66830), most 
covered surgical procedures are subject to a 50 percent reduction in 
the ASC payment for the lower-paying procedure when more than one 
procedure is performed in a single operative session.
    The values displayed in the column titled ``Final CY 2025 Payment 
Weight'' are the final relative payment weights for each of the listed 
services for CY 2025. The final relative payment weights for all 
covered surgical procedures and covered ancillary services where the 
ASC payment rates are based on OPPS relative payment weights were 
scaled for budget neutrality. Therefore, scaling was not applied to the 
device portion of the device-intensive procedures; services that are 
paid at the MPFS nonfacility PE RVU-based amount; separately payable 
covered ancillary services that have a predetermined national payment 
amount, such as drugs and biologicals and brachytherapy sources that 
are separately paid under the OPPS; or services that are contractor-
priced or paid at reasonable cost in ASCs. This includes separate 
payment for non-opioid pain management drugs.
    To derive the final CY 2025 payment rate displayed in the ``Final 
CY 2025 Payment Rate'' column, each ASC payment weight in the ``Final 
CY 2025

[[Page 94367]]

Payment Weight'' column was multiplied by the final CY 2025 conversion 
factor. The conversion factor includes a budget neutrality adjustment 
for changes in the wage index values and the annual update as reduced 
by the productivity adjustment. The final CY 2025 ASC conversion factor 
uses the final CY 2025 productivity-adjusted hospital market basket 
update factor of 2.9 percent (which is equal to the inpatient hospital 
market basket update of 3.4 percent reduced by the productivity 
adjustment of 0.5 percentage point).
    In Addendum BB, there are no relative payment weights displayed in 
the ``Final CY 2025 Payment Weight'' column for items and services with 
predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``Final CY 2025 Payment'' column displays 
the final CY 2025 national unadjusted ASC payment rates for all items 
and services. The final CY 2025 ASC payment rates listed in Addendum BB 
for separately payable drugs and biologicals are based on the most 
recently available data used for payment in physicians' offices.
    For CY 2021, we finalized adding a new column to ASC Addendum BB 
titled ``Drug Pass-Through Expiration during Calendar Year'' where we 
flag through the use of an asterisk each drug for which pass-through 
payment is expiring during the calendar year (that is, on a date other 
than December 31st).
    Addendum EE to this final rule with comment period provides the 
HCPCS codes and short descriptors for surgical procedures that are to 
be excluded from payment in ASCs for CY 2025.
    Addendum FF to this final rule with comment period displays the 
OPPS payment rate (based on the standard ratesetting methodology), the 
APC device offset percentage, the device offset percentage for 
determining device-intensive status (based on the standard ratesetting 
methodology), and the device portion of the ASC payment rate for CY 
2025 for covered surgical procedures.

XIV. Cross-Program Measures for the Hospital Outpatient Quality 
Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), 
and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs

A. Background

    We refer readers to sections XV, XVI, and XVII of this final rule 
with comment period for program specific background information, 
including the statutory authorities and previously finalized and newly 
finalized measure sets, for the Hospital Outpatient Quality Reporting 
(OQR), Rural Emergency Hospital Quality Reporting (REHQR), and 
Ambulatory Surgical Center Quality Reporting (ASCQR) Programs, 
respectively.

B. CMS Commitment To Advancing Health Equity Using Quality Measurement

    We are committed to advancing health equity and improving health 
outcomes through our quality reporting programs. The CMS Framework for 
Health Equity acknowledges that ``addressing health and healthcare 
disparities and achieving health equity should underpin efforts to 
focus attention and drive action on our nation's top health 
priorities.'' CMS defines health equity as ``the attainment of the 
highest level of health for all people, where everyone has a fair and 
just opportunity to attain their optimal health regardless of race, 
ethnicity, disability, sexual orientation, gender identity, 
socioeconomic status, geography, preferred language, or other factors 
that affect access to care and health outcomes.'' \255\
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    \255\ Centers for Medicare & Medicaid Services. (2022). CMS 
Framework for Health Equity 2022-2032. Available at: https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
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    Significant and persistent disparities in healthcare outcomes exist 
in the United States (U.S.). Belonging to a racial or ethnic minority 
group, living with a disability, being a member of the lesbian, gay, 
bisexual, transgender, and queer (LGBTQ+) community, living in a rural 
area, or being near or below the poverty level are often associated 
with worse health outcomes.256 257 258 Health disparities 
manifest primarily as worse health outcomes in populations where access 
to care is inequitable.259 260 Such differences persist 
across geography and healthcare settings irrespective of improvements 
in quality of care over time. 261 262 Inequities in the 
social determinants of health affecting these groups are interrelated 
and influence a wide range of health and quality of life outcomes and 
risks.\263\
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    \256\ Polyakova M, Udalova V, Kocks G, Genadek K, Finlay K, 
Finkelstein AN. (2021). Racial Disparities in Excess All-Cause 
Mortality During The Early COVID-19 Pandemic Varied Substantially 
Across States. Health Affairs, 40(2), 307-316. https://doi.org/10.1377/hlthaff.2020.02142.
    \257\ Rural Health Research Gateway. (2018). Rural Communities: 
Age, Income, and Health Status. Rural Health Research Recap. 
Available at: https://www.ruralhealthresearch.org/assets/2200-8536/rural-communities-age-income-health-status-recap.pdf.
    \258\ Heslin KC, Hall JE. (2021). Sexual Orientation Disparities 
in Risk Factors for Adverse COVID-19-Related Outcomes, by Race/
Ethnicity--Behavioral Risk Factor Surveillance System, United 
States, 2017-2019. MMWR Morbidity Mortality Weekly Report, 70(5), 
149. http://dx.doi.org/10.15585/mmwr.mm7005a1.
    \259\ The Physicians Foundation. (2020). Survey of America's 
Patients, Part Three. Available at: https://physiciansfoundation.org/wp-content/uploads/2020/10/2020-Physicians-Foundation-Survey-Part3.pdf.
    \260\ Office of the Assistant Secretary for Planning and 
Evaluation. (2020). Report to Congress: Social Risk Factors and 
Performance Under Medicare's Value-Based Purchasing Program (Second 
of Two Reports). Available at: https://aspe.hhs.gov/pdf-report/second-impact-report-to-congress.
    \261\ Ibid.
    \262\ Khullar D, Schpero WL, Bond AM, Qian Y, Casalino LP. 
(2020). Association Between Patient Social Risk and Physician 
Performance Scores in the First Year of the Merit-based Incentive 
Payment System. JAMA, 324(10), 975-983. https://jamanetwork.com/journals/jama/fullarticle/2770410.
    \263\ Office of Disease Prevention and Health Promotion. (2021). 
Healthy People 2020: Disparities. Available at: https://wayback.archive-it.org/5774/20220414003754/https://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities.
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    Inequities related to the social determinants of health may affect 
health-related social needs (HRSNs). HRSNs are individual-level, 
adverse social conditions that negatively impact an individual's health 
or healthcare and are associated with worse health outcomes and 
increased healthcare utilization.\264\ While HRSNs account for 50 to 70 
percent of health outcomes, the mechanisms by which this connection 
emerges are complex and multifaceted.265 266 Growing 
evidence demonstrates that specific HRSNs are directly associated with 
patient health outcomes as well as healthcare utilization, costs, and 
performance in quality-based payment programs.267 268 The 
persistent interactions among individuals' HRSNs, medical providers' 
practices and behaviors, and community resources significantly impact

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healthcare access, quality, and costs, as described in the CMS Equity 
Plan for Improving Quality in Medicare.269 270 Assessment of 
HRSNs is an essential mechanism for capturing the interaction between 
social, community, and environmental factors associated with health 
status and health outcomes.271 272 Studies indicate that 
healthcare facility leadership can positively influence culture for 
better quality, patient outcomes, and experience of 
care.273 274 275
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    \264\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \265\ Kaiser Family Foundation. (2021). Racial and Ethnic Health 
Inequities and Medicare. Available at: https://www.kff.org/medicare/report/racial-and-ethnic-health-inequities-and-medicare/.
    \266\ The Physicians Foundation. (2021). Viewpoints: Social 
Determinants of Health. Available at: https://physiciansfoundation.org/wp-content/uploads/2019/08/The-Physicians-Foundation-SDOH-Viewpoints.pdf.
    \267\ Zhang Y, Li J, Yu J, Braun RT, Casalino LP. (2021), Social 
Determinants of Health and Geographic Variation in Medicare per 
Beneficiary Spending. JAMA Network Open, 4(6), e2113212. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2780864.
    \268\ Khullar D, Schpero WL, Bond AM, Qian Y, Casalino LP 
(2020). Association Between Patient Social Risk and Physician 
Performance Scores in the First Year of the Merit-based Incentive 
Payment System. JAMA, 324(10), 975-983. https://doi.org/10.1001/jama.2020.13129.
    \269\ Centers for Medicare & Medicaid Services. (2021). Paving 
the Way to Equity: A Progress Report. Available at: https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf.
    \270\ Centers for Medicare & Medicaid Services Office of 
Minority Health. (2021). The CMS Equity Plan for Improving Quality 
in Medicare. 2015-2021. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/OMH_Dwnld-CMSEquityPlanforMedicare_090615.pdf.
    \271\ Alley DE, Asomugha CN, Conway PH, Sanghavi DM. (2016). 
Accountable Health Communities--Addressing Social Needs through 
Medicare and Medicaid. New England Journal of Medicine, 374(1), 8-
11. Available at: https://www.nejm.org/doi/10.1056/NEJMp1512532.
    \272\ Centers for Disease Control and Prevention. (July 2020). 
CDC COVID-19 Response Health Equity Strategy: Accelerating Progress 
Towards Reducing COVID-19 Disparities and Achieving Health Equity. 
Available at: https://www.cdc.gov/covid/media/pdfs/2024/07/CDC_COVID-19HealthEquityStrategy_English.pdf.
    \273\ We use the term ``healthcare facility'' to refer to 
hospital outpatient departments (HOPDs), rural emergency hospitals 
(REHs), and ambulatory surgical centers (ASCs) collectively.
    \274\ Smith SA, Yount N, Sorra J. (2017). Exploring 
Relationships Between Hospital Patient Safety Culture and Consumer 
Reports Safety Scores. BMC Health Services Research, 17(1), 143. 
https://doi.org/10.1186/s12913-017-2078-6.
    \275\ Bradley EH, Brewster AL, McNatt Z, et al. (2018). How 
Guiding Coalitions Promote Positive Culture Change in Hospitals: A 
Longitudinal Mixed Methods Interventional Study. BMJ Quality & 
Safety, 27(3), 218-225. https://qualitysafety.bmj.com/content/27/3/218.
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    We are committed to supporting healthcare facility leadership in 
building a culture of equity that focuses on eliminating health 
disparities to provide patients with high quality healthcare through 
the collection and public reporting of health equity focused measures, 
including in outpatient care settings.\276\
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    \276\ Smith SA, Yount N, Sorra J. (2017). Exploring 
Relationships Between Hospital Patient Safety Culture and Consumer 
Reports Safety Scores. BMC Health Services Research, 17(1), 143. 
https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-017-2078-6.
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    Health equity quality measurement supports the Meaningful Measures 
2.0 goal to ``Leverage Quality Measures to Promote Equity and Close 
Gaps in Care'' as well as the objective to ``commit to a patient-
centered approach in quality measure and value-based incentives 
programs.'' Additionally, under the CMS National Quality Strategy, 
adoption of health equity quality measures would support addressing the 
quality priority to ``advance health equity and whole-person care'' by 
employing a uniform approach for gathering, reporting, and analyzing 
health equity data across CMS quality programs.\277\
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    \277\ Centers for Medicare & Medicaid Services. (2024). CMS 
National Quality Strategy. Centers for Medicare and Medicaid 
Services. Available at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
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    1. Adoption of the Hospital Commitment to Health Equity (HCHE) 
Measure for the Hospital Outpatient Quality Reporting (OQR) and Rural 
Emergency Hospital Quality Reporting (REHQR) Programs and the Facility 
Commitment to Health Equity (FCHE) Measure for the Ambulatory Surgical 
Center Quality Reporting (ASCQR) Program Beginning with the CY 2025 
Reporting Period/CY 2027 Payment Determination or Program 
Determination.\278\
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    \278\ We use the phrase ``payment determination'' for the 
Hospital OQR and ASCQR Programs to represent our assessment of 
whether the 2-percentage point reduction in payment for failing to 
meet program requirements is warranted. We use the phrase ``program 
determination'' for the REHQR Program to represent our assessment of 
compliance with program requirements for an applicable year because 
the REHQR Program does not include an associated payment adjustment.
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a. Background
    Strong and committed leadership from healthcare facility management 
is essential in shifting organizational culture to reduce health 
disparities and reach health equity goals.\279\ The Agency for 
Healthcare Research and Quality and the Joint Commission identified 
that healthcare facility leadership plays an important role in 
promoting a culture of quality and safety.280 281 The 
Institute of Healthcare Improvement's research shows that health equity 
must be a priority championed by leadership teams to improve both 
patient access to needed healthcare services and outcomes among 
disadvantaged populations.\282\ Based upon these findings, we believe 
that healthcare facility leadership is instrumental in setting 
specific, measurable, attainable, realistic, and time-based (SMART) 
goals to assess progress towards achieving equity priorities and 
ensuring high-quality care is equally accessible to all individuals.
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    \279\ Bradley EH, Brewster AL, McNatt Z, Linnander EL, Cherlin 
E, Fosburgh H, Ting HH, Curry LA.(2018). How Guiding Coalitions 
Promote Positive Culture Change in Hospitals: A Longitudinal Mixed 
Methods Interventional Study. BMJ Quality & Safety, 27(3), 218-225. 
https://pubmed.ncbi.nlm.nih.gov/29101290/.
    \280\ Agency for Healthcare Research and Quality. (September 
2019). Leadership Role in Improving Patient Safety. Patient Safety 
Network. Available at: https://psnet.ahrq.gov/primer/leadership-role-improving-safety.
    \281\ Joint Commission on Accreditation of Healthcare 
Organizations. (June 2021). The essential role of leadership in 
developing a safety of culture. Sentinel Event Alert. (57), 1-8. 
https://www.jointcommission.org/-/media/tjc/newsletters/sea-57-safety-culture-and-leadership-final3.pdf.
    \282\ Mate KS, Wyatt R. (2017). Health Equity Must Be a 
Strategic Priority. NEJM Catalyst. Available at: https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0556.
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    In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25592 and 25593), 
we sought public comment on potential future efforts to address health 
equity in the Hospital Inpatient Quality Reporting (IQR) Program, 
particularly the inclusion of a structural measure to assess the degree 
of hospital leadership commitment to collecting and monitoring health 
equity performance data. We specifically sought feedback on (1) 
conceptual and measurement priorities to facilitate organizational 
efforts to improve health equity; and (2) an appropriate measure 
regarding organizational commitment to health equity and accessibility 
for individuals with intellectual and developmental disabilities. In 
response, we received support for the development and implementation of 
a health equity structural measure. We also received comments 
expressing concerns about such a health equity structural measure. We 
refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR 45414 
through 45416) for summaries of the comments we received related to 
this solicitation.
    We considered this feedback with the intent that future health 
equity measures would align across the Medicare quality reporting 
programs, including the Hospital OQR, REHQR, and ASCQR Programs, to 
ensure equitable care across both inpatient and outpatient settings to 
the greatest extent possible within facilities and hospitals 
participating in Medicare. In addition, we believe that measuring 
leadership commitment to health equity should not be limited to the 
inpatient hospital setting but should cover the continuum of care as 
patients seek and receive care at various care settings.
    We initially developed the HCHE and FCHE measures for use in the 
Hospital IQR and Inpatient Psychiatric Facility Quality Reporting 
(IPFQR) Programs, respectively, with the expectation of expansion into 
other Medicare quality reporting programs. The HCHE and FCHE measures 
are attestation-based structural measures that assess hospitals' and 
facilities' commitment to

[[Page 94369]]

health equity across the following five domains adapted from the CMS 
Office of Minority Health's (OMH) ``Building an Organizational Response 
to Health Disparities'' framework: equity as a strategic priority, data 
calculation, data analysis, quality improvement, and leadership 
engagement.\283\ These measures are intended to encourage hospitals and 
facilities to analyze their data to understand how factors, including 
race, ethnicity, and the social determinants of health can contribute 
to the delivery of more equitable care.\284\
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    \283\ Centers for Medicare & Medicaid Services. (2021). Building 
an Organizational Response to Health Disparities [Fact Sheet]. U.S. 
Department of Health and Human Services. Available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Health-Disparities-Guide.pdf.
    \284\ We note that the term ``hospital'' includes HOPDs and REHs 
for the purposes of this measure.
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    We believe these domains provide actionable focus areas for the 
assessment of healthcare facility leadership commitment because they 
are foundational to incentivizing hospitals and facilities to collect 
and utilize data to identify critical equity gaps, implement plans to 
address those gaps, and ensure that resources are dedicated toward 
healthcare equity initiatives. We also believe these measures support 
hospitals and facilities in quality improvement, promote efficient and 
effective use of resources, and leverage available data.
    Adoption of these measures in the Hospital OQR, REHQR, and ASCQR 
Programs would support our efforts to align measures across CMS quality 
reporting programs, including the Hospital IQR Program (87 FR 49191 
through 49201), IPFQR Program (88 FR 51100 through 51107), PPS-Exempt 
Cancer Hospital Quality Reporting (PCHQR) Program (88 FR 59204 through 
59210), and End-Stage Renal Disease Quality Incentive Program (ESRD 
QIP) (88 FR 76437 through 76446). We believe that alignment across the 
quality reporting programs is important to ensure that health equity, 
which impacts patients regardless of where they receive their care, is 
addressed in every healthcare delivery setting. Adopting these measures 
across quality reporting programs would incentivize quality reporting 
entities to collect and utilize data to identify critical equity gaps, 
implement plans to address said gaps, and ensure that resources are 
dedicated toward addressing health equity initiatives.
b. Overview of the Measures
    The HCHE and FCHE measures assess a hospital's or facility's 
commitment to health equity by using equity-focused organizational 
domains aimed at advancing health equity for all patients, including 
but not limited to those in racial and ethnic minority groups, people 
with disabilities, members of the LGBTQ+ community, individuals with 
limited English proficiency, rural populations, religious minorities, 
and people facing socioeconomic challenges. Table 159 and Table 160 
describe the five attestation domains and their elements for the HCHE 
and FCHE measures, respectively.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TR27NO24.216

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[GRAPHIC] [TIFF OMITTED] TR27NO24.217

BILLING CODE 4120-01-C
    The HCHE measure is currently used in the Hospital IQR and PCHQR 
Programs. As further discussed below, we proposed to adopt the HCHE 
measure for the Hospital OQR and REHQR Programs. The FCHE measure is 
currently used in the IPFQR Program and ESRD QIP. As further discussed 
below, we proposed to adopt the FCHE measure for the ASCQR Program.
    We note that there are two measure specification variations between 
the HCHE and FCHE measures, as reflected in Tables 159 and 160. First, 
Table 159 references hospitals (such as HOPDs and REHs) in connection 
with HCHE; Table 160 references facilities (such as ASCs, which are not 
hospitals) in

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connection with FCHE. Second, Domain 2C of the HCHE measure requires 
hospitals to use a certified electronic health record (EHR) technology 
(CEHRT) \285\ in order to attest ``yes''; Domain 2C of the FCHE measure 
requires facilities to use EHR technology, but does not require the use 
of CEHRT, in order to attest ``yes.'' We recognize that ASCs have 
governance structures and operational circumstances that are distinct 
from hospitals. We also recognize that many non-hospital facilities, 
including ASCs, have not adopted CEHRT, but may use some EHR 
technology,\286\ justifying this variation in Domain 2C between the 
HCHE and FCHE measures.\287\
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    \285\ CEHRT refers to the certified health IT requirements 
established by CMS. ONC health IT certification criteria referenced 
in the CEHRT definition can be found at 45 CFR 170.315. Please refer 
to the following for more details on CEHRT requirements: https://www.cms.gov/medicare/regulations-guidance/promoting-interoperability-programs/certified-ehr-technology. Please refer to 
the Measure Calculation section for more details on CEHRT and the 
HCHE Measure.
    \286\ We define the term ``EHR technology'' as ONC's definition 
for Electronic Health Record, ``a real-time patient health record 
with access to evidence-based decision support tools that can be 
used to aid clinicians in decision making. The EHR can automate and 
streamline a clinician's workflow, ensuring that all clinical 
information is communicated. It can also prevent delays in response 
that result in gaps in care. The EHR can also support the collection 
of data for uses other than clinical care, such as billing, quality 
management, outcome reporting, and public health disease 
surveillance and reporting,'' at https://www.healthit.gov/topic/health-it-and-health-information-exchange-basics/glossary.
    \287\ Taira A. (June 2021). ASCA Survey Shows Mixed Usage of EHR 
among ASCs. ASC Focus. Available at: https://www.ascfocus.org/ascfocus/content/articles-content/articles/2021/digital-debut/asca-survey-shows-mixed-usage-of-ehr-among-ascs.
---------------------------------------------------------------------------

c. Pre-Rulemaking Measure Review
    As required under section 1890A of the Act, the Consensus-Based 
Entity (CBE), currently Battelle, established the Partnership for 
Quality Measurement (PQM), comprised of clinicians, patients, measure 
experts, and health information technology specialists, to participate 
in the pre-rulemaking process and the measure endorsement process and 
provide input on the selection of quality and efficiency measures. The 
pre-rulemaking process, which we refer to as the Pre-Rulemaking Measure 
Review (PRMR), includes a review of measures published on the publicly 
available list of Measures Under Consideration (MUC List) by one of 
several committees convened by the PQM for the purpose of providing 
multi-stakeholder input to the Secretary on the selection of quality 
and efficiency measures under consideration for use in certain Medicare 
quality programs, including the Hospital OQR, REHQR, and ASCQR 
Programs. More details regarding the PRMR process may be found in the 
PQM Guidebook of Policies and Procedures for Pre-Rulemaking Measure 
Review and Measure Set Review, including details of the measure review 
processes in Chapter 3.\288\
---------------------------------------------------------------------------

    \288\ Partnership for Quality Measurement. (September 2023). 
Guidebook of Policies and Procedures for Pre-Rulemaking Measure 
Review and Measure Set Review. Available at: https://p4qm.org/sites/default/files/2023-09/Guidebook-of-Policies-and-Procedures-for-Pre-Rulemaking-Measure-Review-%28PRMR%29-and-Measure-Set-Review-%28MSR%29-Final_0.pdf.
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    As part of the PRMR process, the Hospital Recommendation Group 
reviewed and voted on the HCHE and FCHE measures during their meeting 
on January 18 and 19, 2024.289 290 The voting results of the 
HCHE measure for the Hospital OQR and REHQR Programs were ``recommend 
with conditions,'' and the voting results of the FCHE measure were 
``recommended without conditions'' for the ASCQR Program. The 
conditions for the HCHE measure for the Hospital OQR and REHQR Programs 
were: (1) obtaining CBE endorsement; (2) additional specificity around 
attestation requirements; and (3) ongoing data collection for further 
measure testing, particularly with regard to smaller entities.\291\ We 
have taken these conditions into account, as follows, and proposed both 
of these measures for adoption. We discuss CBE endorsement in section 
XIV.B.1.d of this final rule with comment period below.
---------------------------------------------------------------------------

    \289\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \290\ Partnership for Quality Measurement. Pre-Rulemaking 
Measure Review Measures Under Consideration: 2023 Recommendations 
Report. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-2023-MUC-Recommendations-Report-Final.pdf.
    \291\ Ibid.
---------------------------------------------------------------------------

    Regarding the condition to provide additional specificity around 
attestation requirements, we note that these domains were developed 
based on the recommendations from a technical expert panel (TEP) that 
informed our initial selection and development of this measure.\292\ We 
also addressed this concern during the January 18-19, 2024 PRMR meeting 
by sharing that there are accompanying guidance documents available to 
provide information and examples of qualifying activities for the HCHE 
measure (which can also be applied to the FCHE 
measure).293 294
---------------------------------------------------------------------------

    \292\ Centers for Medicare & Medicaid Services. (February 2022). 
Summary of Technical Expert Panel (TEP) Meeting #1, November 16, 
2021: Health Equity Quality Measurement, Hospital Commitment to 
Health Equity Measure. Available at: https://mmshub.cms.gov/sites/default/files/HealthEquityQualityMeasurementTEP1SumReport.pdf.
    \293\ Centers for Medicare & Medicaid Services (January 2024). 
Attestation Guidance for the Hospital Commitment to Health Equity 
Measure (v 1.2). Available at: https://qualitynet.cms.gov/files/659c609eca7fd3001b35edab?filename=AttstGdnceHCHEMeas_v1.2.pdf.
    \294\ Centers for Medicare & Medicaid Services (January 2024). 
Frequently Asked Questions Hospital Commitment to Health Equity, 
HIQR. Available at: https://qualitynet.cms.gov/files/659c60afd4b704001df0af51?filename=FAQ_HCHE_HIQR.pdf.
---------------------------------------------------------------------------

    With respect to the condition related to ongoing data collection 
for further measure testing due to concerns that smaller entities may 
face challenges regarding data collection and analysis, we reiterate 
that HCHE is an attestation measure only in Hospital OQR, a pay-for-
reporting program, and REHQR, a program with no associated payment 
adjustment.\295\ While we acknowledge the limitations in testing 
structural measures, we believe this measure captures useful 
information regarding providers' commitment to promoting health equity 
to inform patient choice. We have therefore considered the Hospital 
Recommendation Group's concerns and determined that they are adequately 
addressed.
---------------------------------------------------------------------------

    \295\ Partnership for Quality Measurement. (2023). 2023 PRMR 
Final MUC Recommendation Spreadsheet. Available at: https://p4qm.org/PRMR.
---------------------------------------------------------------------------

d. CBE Endorsement
    Section 1833 (t)(17)(C)(i) of the Act provides that the Hospital 
OQR Program, to the extent feasible and practicable, shall include 
measures set forth by one or more national consensus building entities 
(not necessarily the CBE). Under section 1833(i)(7)(B) of the Act, this 
requirement at section 1833(t)(17)(C) applies to the ASCQR Program 
except as the Secretary may otherwise provide. For the Hospital OQR 
Program and ASCQR Program, we note that 1833(t)(17) of the Act does not 
require that each measure we adopt for these programs be CBE-endorsed 
(75 FR 72064 and 72065 for the Hospital OQR Program and 76 FR 74494 for 
the ASCQR Program).
    Section 1833(t)(17)(C)(i) of the Act provides that the Hospital OQR 
Program, to the extent feasible and practicable, shall include measures 
set forth by one or more national consensus building entities (not 
necessarily the CBE). Under section 1833(i)(7)(B) of the Act, this 
requirement at section 1833(t)(17)(C) applies to the ASCQR Program 
except as the Secretary may otherwise provide. For the Hospital OQR 
Program and ASCQR Program, we note that section 1833(t)(17) of the Act

[[Page 94373]]

does not require that each measure we adopt for these programs be CBE-
endorsed (75 FR 72064 and 72065 for the Hospital OQR Program and 76 FR 
74494 for the ASCQR Program).
    Section 1833(t)(17)(C)(i) of the Act also requires measures 
developed for the Hospital OQR Program to reflect consensus among 
affected parties. Under section 1833(i)(7)(B) of the Act, this 
requirement also applies to the ASCQR Program except as the Secretary 
may otherwise provide. As we have noted in previous rulemaking, 
consensus among affected parties can be reflected in ways other than 
CBE endorsement, including through the measure development process, 
through broad acceptance and use of the measure(s), and through public 
comment (75 FR 72064 and 72065 for the Hospital OQR Program and 76 FR 
74494 for the ASCQR Program).
    For the REHQR Program, section 1861(kkk)(7)(C)(i) of the Act 
generally requires that quality measures specified by the Secretary for 
the REHQR Program be endorsed by a CBE; however, section 
1861(kkk)(7)(C)(ii) of the Act provides an exception to the general 
CBE-endorsement requirement, stating that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a measure has not been endorsed by the entity with a contract under 
section 1890(a) of the Act, the Secretary may specify a measure that is 
not endorsed as long as due consideration is given to measures that 
have been endorsed or adopted by a consensus organization identified by 
the Secretary. We reviewed CBE-endorsed measures and were unable to 
identify any other CBE-endorsed measures on this topic, and therefore 
we believe the exception in section 1861(kkk)(7)(C)(ii) of the Act 
applies for purposes of this measure for the REHQR Program.
    At this time, we find no other feasible and practicable measures 
set forth by a national consensus building entity on the topic of a 
hospital's or facility's leadership commitment to health equity. While 
we recognize the value of measures undergoing CBE endorsement review 
and prefer to use endorsed measures, there are currently no CBE-
endorsed measures that address hospital or facility commitment to 
health equity. Given the urgency of achieving health equity, it is 
important to implement this measure as soon as possible. As previously 
noted, the HCHE measure was developed based on the consensus of a TEP 
whose recommendations informed the initial selection, development, and 
emphasis of the importance of this measure and subsequently the FCHE 
measure, which, as noted in section XIV.B.1.b of this final rule with 
comment period above, is a similar measure with only two measure 
specification variations to accommodate setting-specific realities with 
regard to CEHRT adoption.\296\ We will consider submitting the HCHE and 
FCHE measures to the CBE for endorsement in the future.
---------------------------------------------------------------------------

    \296\ Centers for Medicare & Medicaid Services. (February 2022). 
Summary of Technical Expert Panel (TEP) Meeting # 1 November 16, 
2021: Health Equity Quality Measurement Hospital Commitment to 
Health Equity Measure. Available at: https://mmshub.cms.gov/sites/default/files/HealthEquityQualityMeasurementTEP1SumReport.pdf.
---------------------------------------------------------------------------

e. Measure Calculation
    The proposed HCHE and FCHE measures each consist of the same five 
attestation-based domains as shown in Table 159 and Table 160 
respectively, subject to variations noted above.
    The numerator of both the HCHE and FCHE measures would capture the 
total number of domains to which the hospital or facility is able to 
attest affirmatively, up to a maximum of five domains. We proposed that 
a hospital or facility would only receive a point for a domain if it 
attested ``yes'' to all the elements within that domain. We would not 
accept an attestation whereby a hospital or facility attests ``yes'' to 
some, but not all, of the elements; in the event a hospital or facility 
would not be able to attest ``yes'' to one or more elements within a 
domain, or the entirety of a domain, they would respond ``no.'' For 
example, for Domain 1, if the hospital or facility's strategic plan 
meets elements (A) and (B), but not (C) and (D) of Domain 1, then the 
hospital or facility would not be able to affirmatively attest ``yes'' 
and would receive zero points for Domain 1.
    The denominator of both the HCHE and FCHE measures would constitute 
a total of five points (that is, one point per domain).
    We also refer readers to the measure specifications, available on 
our QualityNet website.\297\
---------------------------------------------------------------------------

    \297\ Measure specifications are posted at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures2#tab2 for the 
Hospital OQR and REHQR Programs, and https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 for the ASCQR Program and may be moved 
to other pages on QualityNet upon publication of the final rule.
---------------------------------------------------------------------------

    As noted above, Domain 2C of the HCHE measure requires the use of 
CEHRT, while Domain 2C of the FCHE measure requires the use of EHR 
technology, which is not required to be certified by ONC in accordance 
with ONC's requirements. We made this distinction because we recognize 
that many non-hospital facilities, including ASCs, currently have not 
adopted CEHRT and instead use non-certified EHR technology,\298\ while 
a majority of hospitals have adopted CEHRT.\299\ Although REHs are a 
new Medicare provider type, the majority of REH-eligible facilities, as 
noted in the CY 2024 OPPS/ASC final rule (88 FR 82069), have met 
requirements for the reporting of electronic clinical quality measures 
(eCQMs), which require CEHRT, under the Medicare Promoting 
Interoperability Program.
---------------------------------------------------------------------------

    \298\ Taira A. (June 2021). ASCA Survey Shows Mixed Usage of EHR 
among ASCs. ASC Focus. Available at: https://www.ascfocus.org/ascfocus/content/articles-content/articles/2021/digital-debut/asca-survey-shows-mixed-usage-of-ehr-among-ascs.
    \299\ Office of the National Coordinator for Health Information 
Technology. (2023). National Trends in Hospital and Physician 
Adoption of Electronic Health Records. Available at: https://www.healthit.gov/data/quickstats/national-trends-hospital-and-physician-adoption-electronic-health-records.
---------------------------------------------------------------------------

f. Data Submission Requirements
    In the CY 2025 OPPS/ASC proposed rule, we proposed to require 
hospitals, REHs, and ASCs to submit their yes/no attestation responses 
on these structural measures in all three programs by an annual 
deadline using the CMS-designated information system (currently, the 
Hospital Quality Reporting (HQR) system) consistent with the data 
submission requirements of these measures in the Hospital IQR, IPFQR 
and PCHQR Programs. We refer readers to sections XV.E.2.a, XVI.E.3.b, 
and XVII.E.2.a of this final rule with comment period for additional 
details regarding data submission deadlines for web-based measure 
reporting such as the HCHE and FCHE measures for the Hospital OQR, 
REHQR, and ASCQR Programs, respectively.
    We invited public comment on our proposal to adopt the HCHE measure 
for the Hospital OQR Program beginning with the CY 2025 reporting 
period/CY 2027 payment determination, to adopt the HCHE measure for the 
REHQR Program beginning with the CY 2025 reporting period/CY 2027 
program determination, and to adopt the FCHE measure for the ASCQR 
Program beginning with the CY 2025 reporting period/CY 2027 payment 
determination.
    The following comments and responses are applicable to both the 
HCHE and FCHE measures for the Hospital OQR, REHQR, and ASCQR Programs. 
Program-specific comments and responses are addressed subsequently.
    Comment: Many commenters expressed support for our proposal to 
adopt the HCHE and FCHE measures. Many commenters stated that these 
measures will align quality

[[Page 94374]]

measurement across quality reporting programs as well as across 
hospitals and systems. Commenters expressed that this alignment would 
provide important measurable data to reduce health disparities and work 
towards a more equitable healthcare system. A few commenters stated 
that systematic data collection is an important first step hospitals 
must take to identify and work to prevent health inequities. A 
commenter specifically stated that these measures can serve as a 
foundation to address inequities in HIV care and outcomes across 
racial/ethnic minorities, sexual orientation and gender identity, and 
other social factors.
    Response: We thank commenters for their support.
    Comment: Several commenters recommended that CMS include voluntary 
reporting or delay mandatory reporting for these measures to allow 
hospitals and facilities adequate time to expand health equity 
improvement initiatives to the outpatient areas, as well as create the 
appropriate structure for consistent communication and build and deploy 
processes, such as utilizing EHR technology. A few commenters 
recommended phasing in measure domains incrementally to allow hospitals 
and facilities time to familiarize themselves with the measure. 
Commenters also suggested that delaying mandatory reporting would 
provide CMS with more time to work with stakeholders to better define 
each domain, and to continue to evolve and potentially respecify the 
measures to reduce burden on providers.
    Response: We appreciate commenters' concerns about the timing of 
mandatory reporting; however, achieving health equity is a pressing 
issue which deserves serious focus and rapid action. We emphasize that 
this is an annual measure that was proposed for adoption beginning with 
the CY 2025 reporting period/CY 2027 payment or program determination, 
which will allow hospitals, REHs, and ASCs more than a year before the 
submission deadline of May 15, 2026, at which time these healthcare 
facilities would submit attestations regarding the identified domains 
during the CY 2025 reporting period. Hospitals, REHs, and ASCs can 
spend the remainder of CY 2024 and CY 2025 addressing potential 
barriers to positive attestations for the HCHE/FCHE measure before 
December 31, 2025. We additionally consider this measure to be a 
building block for a more comprehensive suite of measures that would 
assess progress in providing high-quality healthcare for all patients 
regardless of social risk factors or demographic characteristics. We 
also reiterate that this is an attestation measure intended to assess 
the capacity and commitments of the HOPD, REH, or ASC in regard to 
health equity and help these healthcare facilities identify potential 
gap areas on this topic to improve quality of care.
    We also note that hospitals that participate in the Hospital IQR 
Program will already have 1 year of experience reporting data on the 
HCHE measure for the FY 2025 payment determination (that is, data 
submitted in FY 2024 representing the FY 2023 performance period) (87 
FR 49191 through 49201). Given the timing of this measure's 
implementation in the Hospital IQR Program, hospitals, REHs, and ASCs 
will have had the opportunity to learn from the experiences of 
hospitals participating in the Hospital IQR Program, including best 
practices for minimally burdensome assessment of performance on the 
required domains. We will monitor measure implementation and data 
reporting as part of standard program and measure review and will 
consider updates to the measure if we identify implementation 
strategies to reduce burden.
    Comment: A few commenters recommended CMS develop an audit function 
to ensure the accuracy of self-reported data and to ensure that a 
facility's or hospital's stated commitments to health equity are being 
implemented in a way that creates meaningful change.
    Response: We understand commenters' concerns regarding the accuracy 
of self-reported data. While we do not have a specific means to 
validate hospital and facility attestation to these measures at this 
time, we have provided an Attestation Guidance document and a FAQ 
document, which clearly define what constitutes an affirmative 
attestation and provide answers to frequently asked questions, for the 
HCHE measure in Hospital IQR Program.300 301 We intend to 
provide specific guidance for the Hospital OQR, REHQR, and ASCQR 
Programs, consistent with the specifications described in Tables 159 
and 160 and requirements being finalized in this section of the final 
rule, in the future. Hospitals, REHs, and ASCs may also refer to the 
measure specifications for additional attestation guidance.\302\
---------------------------------------------------------------------------

    \300\ Centers for Medicare & Medicaid Services (January 2024). 
Attestation Guidance for the Hospital Commitment to Health Equity 
Measure (v 1.2). Available at: https://qualitynet.cms.gov/files/659c609eca7fd3001b35edab?filename=AttstGdnceHCHEMeas_v1.2.pdf.
    \301\ Centers for Medicare & Medicaid Services (January 2024). 
Frequently Asked Questions Hospital Commitment to Health Equity, 
HIQR. Available at: https://qualitynet.cms.gov/files/659c60afd4b704001df0af51?filename=FAQ_HCHE_HIQR.pdf.
    \302\ Measure specifications are posted at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures2#tab2 for the 
Hospital OQR and REHQR Programs, and https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 for the ASCQR Program and may be moved 
to other pages on QualityNet upon publication of the final rule.
---------------------------------------------------------------------------

    Comment: A few commenters recommended that CMS communicate with 
stakeholders to refine its portfolio of health-equity related measures 
while creating a streamlined measure set that is applicable and 
standardized across settings. A commenter recommended collaborating 
with stakeholders toward the development of a measure that is 
meaningful for hospitals as they design interventions to address HRSNs 
in partnership with their communities. Another commenter recommended 
that CMS evaluate the results of these measures in conjunction with 
stakeholder communication before expanding measure requirements.
    Response: We thank the commenters for this feedback. We reiterate 
that stakeholders convened by the PRMR entity previously reviewed the 
HCHE and FCHE measures and provided feedback during the PRMR process. 
We refer readers to section XIV.B.1.c of this final rule with comment 
period for a discussion of the PRMR process. The purpose of the PRMR 
process is to solicit and provide multi-stakeholder input to the 
Secretary on the selection of quality and efficiency measures under 
consideration for use in CMS quality programs, including the Hospital 
OQR, REHQR, and ASCQR Programs. We will continue identifying 
opportunities for collaboration with all stakeholders to align 
assessment of social health drivers across CMS programs. The HCHE and 
FCHE measures are foundational additions to our programs, and we plan 
to identify additional health equity measures for development and 
potential subsequent adoption. We will continue to seek stakeholder 
input through the pre-rulemaking process, as required under section 
1890A of the Act, as well as through notice-and-comment rulemaking, 
before modifying the HCHE and FCHE measures or adding new measures to 
ensure meaningful outcomes.
    Comment: Several commenters recommended strategies to best 
implement the HCHE and FCHE measures. Commenters recommended additional 
factors to include in these measures to make them more meaningful, 
including the collection of demographics other than race and ethnicity 
(such as age, gender, and

[[Page 94375]]

health literacy). A commenter recommended using a community needs 
assessment and implementing regulatory flexibilities to explore 
additional ways to support hospitals in addressing health equity. 
Another commenter recommended that CMS create a plan of action prior to 
measure implementation to meet the equity intention behind these 
measures.
    Several commenters recommended the adoption of quality reporting 
measures to supplement the HCHE and FCHE measures. A commenter 
specifically recommended the adaptation and inclusion of the Age 
Friendly Hospital measure in the outpatient setting, as it is currently 
included in the Hospital IQR measure set.
    Several commenters recommended that CMS consider alternative 
approaches to address health equity. A few commenters recommended that 
CMS further refine or develop alternative measure concepts, while 
incorporating a more holistic view of the hospital or facility, to 
accurately evaluate leadership commitment to health equity. A commenter 
suggested the adoption of measures with numerical results instead of 
yes or no answers. This commenter stated that structural measures do 
not always drive action since they are not linked to direct quality 
outcomes and do not have a sound validation process. The commenter 
further recommended that it would be more impactful for CMS to develop 
new outcome measures related to health equity that drive action and 
measurable change. Another commenter suggested that CMS revisit its 
current definition of ``health equity'' to instead focus on the absence 
of disparities in the processes or outcomes of hospital care, leading 
to a more narrow and actionable definition. Additionally, a commenter 
recommended that CMS explore developing measures using data that CMS 
already collects through claims or could be collected through other 
digital measurement sources.
    Response: We thank commenters for their recommendations. Adoption 
of the HCHE and FCHE measures in the Hospital OQR, REHQR, and ASCQR 
programs would lay the groundwork for a more comprehensive suite of 
measures that would assess progress in providing high-quality 
healthcare for all patients regardless of social risk factors or 
demographic characteristics. We will consider this feedback in future 
rulemaking and measure development.
    Comment: A few commenters expressed concern about hospital and 
facility penalization. A commenter cautioned that these measures 
penalize providers rather than incentivize them to comply with data 
collection and implementation that advances health equity. Another 
commenter recommended sensitivity and a formulaic coefficient when 
evaluating under-resourced facilities to ensure congruency on quality 
performance relative to facilities with more resources. This commenter 
also recommended adjusting programmatic requirements to ensure that 
reporting on quality measures is feasible for all facilities and that 
under-resourced facilities do not face undue difficulty or burdensome 
penalties that could affect access to care for vulnerable populations.
    Response: We acknowledge commenters' concerns regarding resources, 
including increased data collection burden. The benefits of encouraging 
hospital and facility commitment to health equity outweigh the burden 
of attestation under this measure. We will consider the concept of a 
single streamlined health equity measure at the organizational level in 
future rulemaking. We remind commenters that the Hospital OQR and ASCQR 
Programs are pay-for-reporting programs. Participants are only 
penalized for failure to submit required data on quality measures as 
specified; their payments are not affected based on their performance 
on measures. Additionally, the REHQR Program does not include a 
financial incentive or penalty for REHs.
    As described in the CY 2025 OPPS/ASC proposed rule (89 FR 59516, 
59522, 59526), the estimated burden for HOPDs and REHs is 10 minutes 
annually for the HCHE measure, and the estimated burden for ASCs is 10 
minutes annually for the FCHE measure, which is a reasonable 
expectation for quality reporting data submission. Finally, we would 
also like to note that the HCHE and FCHE measures are not meant to 
compare facilities with one another, but rather for facilities to 
identify and address structural gaps within their strategic planning, 
data collection and analysis, quality improvement, and leadership 
engagement.
    Comment: Several commenters opposed to the adoption of the HCHE and 
FCHE measures expressed concern that, without additional requirements 
for facilities to make changes based on identified health equity gaps, 
the HCHE and FCHE measures may only serve as a checklist measure rather 
than incentivizing actionable change at the systemic level. A few 
commenters recommended CMS provide more timely and actionable data to 
hospitals to yield more prompt advancements in safety and quality. 
Another commenter expressed concern that there is no published clinical 
evidence to link hospital measurement of social determinants of health 
to improvements in quality of care or outcomes.
    Response: We thank commenters for their feedback and acknowledge 
their concerns. Hospitals and facilities are responsible for ensuring 
the best outcomes possible for the patients that they serve, including 
identifying potential barriers to optimal health and helping patients 
identify resources to address those barriers. These measures are 
important, foundational measures for improving health equity among 
those that have been disadvantaged or underserved by the healthcare 
system. Adoption of the HCHE and FCHE measures will incentivize 
hospitals and facilities to collect and utilize data across the five 
domains to identify critical equity gaps, implement plans to address 
these gaps, and ensure that resources are dedicated toward addressing 
health equity initiatives, therefore resulting in actionable 
initiatives and change. These measures aim to support hospitals and 
facilities in leveraging available data, pursuing focused quality 
improvement activities, and promoting efficient and effective use of 
resources. Leadership commitment to health equity can foster 
organizational competencies aimed at achieving health equity for the 
facility's patients.
    Regarding the commenter's concern regarding published clinical 
evidence to link hospital measurement of social determinants of health 
to improvements in quality of care or outcomes, as we discussed in 
section XIV.B of the CY 2025 OPPS/ASC proposed rule, there is 
substantial research showing differences in care and experiences among 
these populations (89 FR 59437 and 59438). We also refer readers to 
HHS' Healthy People 2030 Framework's website for social determinants of 
health, which includes literature summaries of the latest research 
related to social determinants of health and how it affects health 
outcomes and health disparities: https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries. 
Although the HCHE and FCHE measures are not clinical measures, they aim 
to improve hospital and facility awareness of the tie between its 
structural practices and patient outcomes, which will lead to improved 
clinical outcomes for patients. Advancing health equity helps foster a 
healthcare system that benefits all and

[[Page 94376]]

the delivery of more equitable care will, in turn, improve patient 
outcomes.\303\
---------------------------------------------------------------------------

    \303\ CMS Framework for Health Equity 2022-2032. (n.d.). https://www.cms.gov/files/document/cms-framework-health-equity-2022.pdf.
---------------------------------------------------------------------------

    We appreciate the commenter's recommendation to provide more timely 
and actionable data to hospitals to yield more prompt advancements in 
safety and quality and will consider this input throughout these 
measures' implementation.
    Comment: A few commenters that did not support adoption of the HCHE 
and FCHE measures expressed concern about the ``one size fits all'' 
approach to implementing these measures and stated that the measures 
are not appropriately tailored to the hospital outpatient, REH, or ASC 
settings.
    Response: We acknowledge that this measure was initially developed 
for the general acute care setting. The inclusion of the HCHE and FCHE 
measures in other care settings, including inpatient hospitals, PPS-
Exempt cancer hospitals, and dialysis facilities, demonstrate broad 
applicability of the measure concept and specifications for different 
healthcare facility types, including in HOPDs, REHs, and ASCs. 
Hospitals and facilities of every type could benefit from these 
commitment to health equity measures, as they serve to incentivize the 
collection and utilization of data across the five domains to identify 
critical equity gaps, implement plans to address these gaps, and ensure 
that resources are dedicated toward addressing health equity 
initiatives, therefore resulting in actionable initiatives and change. 
These measures aim to support hospitals and facilities in leveraging 
available data, pursuing focused quality improvement activities, and 
promoting efficient and effective use of resources. We also reiterate 
the modifications to Domains 2 and 5 of the FCHE measure (compared to 
the HCHE measure), which were constructed to address nuances within 
non-hospital settings. Strong and consistent facility leadership can be 
instrumental in establishing specific, measurable, and attainable goals 
to advance equity priorities and improve care for all patients in any 
care setting, including patients who receive care in HOPDs, REHs, or 
ASCs. Leaders of health services organizations across the healthcare 
system are likely to encounter the same challenges and use the same 
types of strategies to achieve organizational goals related to 
improving health equity within their respective organizations and 
patient populations. We note that health equity is a critical focus 
area for all hospitals and facilities, including those that treat a 
disproportionate share of patients with health disparities. We will 
monitor measure implementation and data reporting as part of standard 
program and measure review and will consider updates to the measure if 
improvements are identified through this process.
    Comment: A few commenters that did not support adoption of the HCHE 
and FCHE measures stated concerns that collecting and publicly 
reporting the attestation domains for assessing organizational-level 
leadership involvement in healthcare equity could be misleading to the 
public and may further underscore disparity without the necessary 
context. This commenter stated that, without a holistic view of 
organizational culture, internal policies, specialties, and community 
demographics, it may not be possible to accurately and fairly evaluate 
organizations under these measures.
    A few commenters further recommended the public display of 
attestations for each element in a domain as well as additional 
language stating what hospitals and facilities are doing to achieve 
health equity. A few commenters recommended that CMS allow for 
``partial credit,'' if hospitals and facilities meet the requirements 
of only a few elements in a specific domain.
    Response: We acknowledge commenters' concern about public reporting 
of this measure and interpretation by the public. Public reporting of 
these measures will provide insightful information to healthcare 
providers and the public on the number of hospitals and facilities 
currently participating in health equity strategic planning, collecting 
data, using these data to identify equity gaps, establishing key 
performance indicators, and reviewing indicators with hospital and 
facility senior leaders. We intend to provide educational materials as 
part of our outreach and public reporting of this measure to ensure 
understanding and interpretation of publicly reported data.
    Regarding commenter request for partial credit, the five domains of 
this measure are actionable focus areas, and assessment of hospital and 
facility leadership commitment to them is foundational. As stated in 
the CY 2025 OPPS/ASC proposed rule, the five domains of this measure 
were adapted from the CMS Office of Minority Health's Building an 
Organizational Response to Health Disparities framework, which focuses 
on data collection, data analysis, culture of equity, and quality 
improvement, and we encourage its use for data analysis to further 
understand the factors we have highlighted (89 FR 59439). All elements 
within each domain are necessary for a hospital or facility to indicate 
that they are committed to advancing health equity for their patients. 
Each domain represents a core principle in a hospital or facility's 
commitment to health equity. Achieving credit for each overarching 
domain, as this data will be publicly displayed by overall score and by 
domain, rather than by element, should be an incentive for each 
hospital or facility to work towards and can be used to track a 
facility or hospital's progress within a particular focus area from 
year to year. We recognize that hospitals, REHs, and ASCs may be unable 
to positively attest to every element and domain in this measure as 
reporting begins. With time, we anticipate hospitals and facilities 
will be able to positively attest to more domains as they continue to 
establish their compliance with each element within each domain. This 
measure will incentivize providers to collect and utilize data to 
identify critical equity gaps, implement plans to address said gaps, 
and ensure that resources are dedicated toward addressing healthcare 
equity initiatives. We encourage providers to analyze their own data to 
understand the many factors that may influence health outcomes, 
including various drivers of health, such as housing stability and food 
security, to deliver more equitable care in their communities and in 
turn improve patient outcomes for all patients.
    Additionally, we note that hospitals and facilities will receive 
credit for the reporting of their measure results regardless of their 
responses to the attestation questions. The Hospital OQR Program and 
the ASCQR Programs are pay-for-reporting programs, and hospitals and 
ASCs are not scored based on their performance on measures. The REHQR 
Program does not include a financial incentive or penalty for REHs.
    The following comment and response section is applicable to only 
the HCHE measure for the Hospital OQR and REHQR Programs.
    Comment: Several commenters that did not support adoption of the 
HCHE measure in the Hospital OQR and REHQR Programs expressed concern 
that the measure has not been endorsed by a consensus-based entity 
(CBE) and that it has not been reviewed or validated specifically for 
the outpatient rural emergency setting.
    Response: While we recognize the value of measures undergoing 
review for potential CBE endorsement, measures of health equity are a 
priority for CMS, and

[[Page 94377]]

it is important to implement this measure as soon as possible.
    For the Hospital OQR Program, we note that section 1833(t)(17) of 
the Act does not require that each measure we adopt is CBE-endorsed, 
but states that the Hospital OQR Program, to the extent feasible and 
practicable, shall include measures set forth by one or more national 
consensus building entities. We reviewed measures endorsed by consensus 
organizations and were unable to identify any other measures on this 
topic endorsed by a consensus organization, so the inclusion of such a 
measure is not feasible or practicable. Section 1833(t)(17)(C)(i) also 
requires measures included in the Hospital OQR Program to reflect 
consensus among affected parties. As we have stated in previous 
rulemaking (75 FR 72064), consensus among affected parties can be 
reflected in ways other than CBE endorsement, including through the 
measure development process, through broad acceptance and use of the 
measure(s), and through public comment. As stated previously, the HCHE 
measure was developed based on the consensus of a TEP whose 
recommendations informed the initial selection, development, and 
emphasis of the importance of this measure and subsequently the FCHE 
measure.\304\ Additionally, these measures have been adopted through 
rulemaking with public comment periods in other care settings, 
including inpatient hospitals, PPS-Exempt cancer hospitals, and 
dialysis facilities, which demonstrate broad applicability and 
acceptability of the measure concept and specifications for different 
healthcare facility types, including in HOPDs, REHs, and ASCs.
---------------------------------------------------------------------------

    \304\ Centers for Medicare & Medicaid Services. (February 2022). 
Summary of Technical Expert Panel (TEP) Meeting # 1 November 16, 
2021: Health Equity Quality Measurement Hospital Commitment to 
Health Equity Measure. Available at: https://mmshub.cms.gov/sites/default/files/HealthEquityQualityMeasurementTEP1SumReport.pdf.
---------------------------------------------------------------------------

    For the REHQR Program, we note that under section 
1861(kkk)(7)(C)(ii) of the Act, the Secretary may specify a measure 
that is not so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary. We reviewed measures endorsed by consensus 
organizations and were unable to identify any other measures on this 
topic endorsed by a consensus organization, and therefore, the 
exception in section 1861(kkk)(7)(C)(ii) of the Act applies.
    Comment: Several commenters expressed concerns regarding 
duplicative reporting of attestations for the HCHE measure in the 
Hospital OQR Program, noting that this measure has already been adopted 
into the Hospital IQR Program. These commenters requested the ability 
to submit one single submission jointly for both programs.
    Response: We appreciate commenter input on mechanisms to reduce 
burden and reporting duplication and will incorporate this input into 
future rulemaking. We acknowledge that the HCHE measure has been 
adopted into the Hospital IQR Program, and the importance of 
prioritizing resources and streamlining hospital-wide system processes 
to promote administrative efficiency. However, because hospital 
inpatient departments and hospital outpatient departments treat 
different patient populations and employ different staff, we are 
requiring that hospitals participating in both the Hospital IQR and 
Hospital OQR Program submit their HCHE measure data separately. We will 
monitor implementation of the HCHE measure and will address any 
modifications in future rulemaking.
    Comment: Another commenter stated that many of the priorities 
included in this measure are currently addressed by hospitals and 
health systems and urged CMS to catalogue what hospitals are already 
doing before establishing new measures or requirements to reduce burden 
and redundancy. A commenter recommended conducting an environmental 
scan, listening sessions, focus groups, and a technical expert panel 
(TEP) to reduce instances of redundant measures.
    Response: We would like to clarify to commenters that we review 
environmental scans, which include a review of current hospital and 
health system activities, and frequently consult with stakeholders 
before adopting measures. We refer readers to section XIV.B.1.c of this 
final rule with comment period for a discussion of PRMR process, which 
holds the purpose of providing multi-stakeholder input to the Secretary 
on the selection of quality and efficiency measures under consideration 
for use in quality reporting programs. We will continue to adhere to 
these practices and will continue to evaluate current practices to 
reduce redundancy.
    Comment: A commenter cited a concern that it will be difficult to 
implement a performance improvement project that can provide meaningful 
change as described in Domain 1, given the patient's limited contact 
with an outpatient department.
    Response: We acknowledge the commenters' concerns. We recognize 
that hospitals are responsible for ensuring the best outcomes possible 
for the patients that they serve, even within short patient 
interactions. Ensuring the best possible outcomes requires treating the 
whole patient, which includes identifying potential barriers to optimal 
health, and helping patients identify resources to address those 
barriers. We encourage hospitals to refer vulnerable patients to 
appropriate resources.
    Comment: A commenter recommended the inclusion of a patient 
experience measure(s) as a means of ensuring quality of care and 
equitable care in the REHQR program. Additionally, specifically related 
to the Hospital OQR Program, a commenter recommended that CMS build 
upon these equity measures with additional equitable care practices 
such as the Health Equity Report Card (HERC), a useful tool for 
hospitals seeking to meet the requirements of the HCHE measure, to 
provide best practice recommendations and ensure accountability for 
health systems.
    Response: We thank these commenters for their recommendations and 
will consider this input in future rulemaking.
    The following comment and response section is applicable to only 
the FCHE measure for the ASCQR Program.
    Comment: Several commenters that did not support adoption of the 
FCHE measure expressed concern about the lack of testing of the FCHE 
measure in the ASC setting, and their belief that this measure will not 
be feasible to implement in ASCs due to differences between ASCs and 
inpatient hospitals. These commenters suggested that this measure not 
be adopted until it has been tested for validity and reliability in the 
ASC setting. A commenter stated that the technical expert panel (TEP) 
which informed the selection and development of the measure did not 
include any ASC representatives. The commenter further stated that the 
TEP only reviewed the hospital version of the measure. The commenter 
mentioned that there is a difference in ASCs' operational 
infrastructure compared to hospitals, stating that ASCs do not have the 
same data collection and analysis capabilities, nor the same 
technological tools as hospitals. The commenter further added that ASCs 
do not have immediate access to subject matter experts in culturally 
sensitive collection of demographic or social determinant of health 
information and do not have the same resources to properly outsource 
patients to local and national resources. Commenters stated their 
concerns about ASCs' lack of long-term relationships with patients, 
inability to follow-up on interventions,

[[Page 94378]]

and limited staff. These commenters added that ASCs do not have the 
same extensive leadership organization as hospitals, which they believe 
will make implementation of this measure difficult for ASCs.
    Response: We acknowledge that this measure was initially developed 
for the general acute care setting. We understand commenter concern 
regarding a lack of input from ASC representatives within the TEP. The 
inclusion of the FCHE measures in other care settings, including 
inpatient psychiatric facilities, PPS-Exempt cancer hospitals, and 
dialysis facilities, demonstrates the broad applicability of the 
measure concept and specifications for different healthcare facility 
types, including ASCs. Healthcare facilities of every type can benefit 
from this measure, as it serves to incentivize facilities to collect 
and utilize data across the five domains to identify critical equity 
gaps, implement plans to address these gaps, and ensure that resources 
are dedicated toward addressing health equity initiatives, therefore 
resulting in actionable initiatives and change. This measure aims to 
support healthcare facilities in leveraging available data, pursuing 
focused quality improvement activities, and promoting efficient and 
effective use of resources, which applies to all settings of care.
    Strong and consistent facility leadership can be instrumental in 
establishing specific, measurable, and attainable goals to advance 
equity priorities and improve care for all patients in any care 
setting, including patients who receive care in ASC facilities. Leaders 
of health services organizations across the healthcare system, 
including both ASCs and acute care hospitals, are likely to encounter 
the same challenges and use the same types of strategies to achieve 
organizational goals related to improving health equity within their 
respective organizations and patient populations.
    Relating to commenter concerns regarding the difference in ASC 
resources, the FCHE measure accounts for differences in EHR technology 
in ASCs as compared to hospital settings, as we are not requiring the 
use of CEHRT. Additionally, if all ASCs have similar issues with 
attesting ``yes'' to specific elements within a domain, that will be 
reflected in public reporting.
    Leadership commitment to health equity in all healthcare 
facilities, including ASCs, is important to addressing health 
disparities. We will monitor measure implementation and data reporting 
as part of standard program and measure review and will consider 
updates to the measure if improvements are identified through this 
process. We have provided an Attestation Guidance document and a FAQ 
document, which clearly define what constitutes an affirmative 
attestation and provide answers to frequently asked questions, for the 
HCHE measure in Hospital IQR Program.305 306 We intend to 
provide specific guidance for the ASCQR Program, consistent with the 
specifications described in Table 160 and requirements being finalized 
in this section of the final rule, in the future. Facilities may also 
refer to the measure specifications for additional attestation 
guidance.\307\
---------------------------------------------------------------------------

    \305\ Centers for Medicare & Medicaid Services (January 2024). 
Attestation Guidance for the Hospital Commitment to Health Equity 
Measure (v 1.2). Available at: https://qualitynet.cms.gov/files/659c609eca7fd3001b35edab?filename=AttstGdnceHCHEMeas_v1.2.pdf.
    \306\ Centers for Medicare & Medicaid Services (January 2024). 
Frequently Asked Questions Hospital Commitment to Health Equity, 
HIQR. Available at: https://qualitynet.cms.gov/files/659c60afd4b704001df0af51?filename=FAQ_HCHE_HIQR.pdf.
    \307\ Measure specifications are posted at: https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 for the ASCQR 
Program and may be moved to other pages on QualityNet upon 
publication of the final rule.
---------------------------------------------------------------------------

    Comment: A few commenters that did not support adoption of the FCHE 
measure stated that this measure is not actionable as it is not linked 
to clinical outcomes and there is not sufficient evidence proving that 
this measure will impact quality of care. A commenter stated that 
evidence of health equity gaps in ASCs has not been clearly conveyed as 
previous analyses performed on ASCQR program's claims-based measures 
did not show racial or socioeconomic disparities.
    Response: We thank commenters for their concerns. ASCs are 
responsible for ensuring the best outcomes possible for the patients 
that they serve, including identifying potential barriers to optimal 
health, and helping patients identify resources to address those 
barriers. This measure is an important foundational measure for 
improving health equity among those that have been disadvantaged or 
underserved by the healthcare system.
    As discussed in section XIV.B of CY 2025 OPPS/ASC proposed rule, 
there is substantial research showing differences in care and 
experiences among these populations (89 FR 59437 and 59438). Regarding 
the commenter's concern about the lack of evidence of equity gaps among 
ASCs, research indicate disparities in access to ASCs and a need for 
more data collection to ensure patient appropriateness and to be able 
to track quality outcomes.308 309 The FCHE measure ensures 
facilities are collecting and evaluating patient data in light of 
demographic considerations and challenges, which is the first step in 
identifying equity gaps at the facility level, justifying its use in 
the ASC setting.
---------------------------------------------------------------------------

    \308\ Witiw, C. D., Wilson, J. R., Fehlings, M. G., & Traynelis, 
V. C. (2020). Ambulatory Surgical Centers: Improving quality of 
operative spine care? Global Spine Journal, 10(1_suppl). https://doi.org/10.1177/2192568219849391.
    \309\ Chatterjee, A., Amen, T. B., & Khormaee, S. (2022b). 
Trends in geographic disparities in access to ambulatory surgery 
centers in New York, 2010 to 2018. JAMA Health Forum, 3(10). https://doi.org/10.1001/jamahealthforum.2022.3608.
---------------------------------------------------------------------------

    Adoption of the FCHE measure will incentivize ASCs to collect and 
utilize data across the five domains to identify critical equity gaps, 
implement plans to address these gaps, and ensure that resources are 
dedicated toward addressing health equity initiatives, therefore 
resulting in actionable initiatives and change. This measure aims to 
support ASCs in leveraging available data, pursuing focused quality 
improvement activities, and promoting efficient and effective use of 
resources. A commitment to health equity by facility leadership can 
foster organizational competencies aimed at achieving health equity for 
the facility's patients. Although the FCHE measure is not a clinical 
measure, the measure aims to improve facility awareness of the tie 
between its structural practices and its patient outcomes, which could 
lead to improved clinical outcomes for patients.
    Comment: A few commenters that did not support adoption of the FCHE 
measure raised concern that this measure is not CBE endorsed.
    Response: While we recognize the value of measures undergoing 
review for potential CBE endorsement, measures of health equity are a 
CMS priority. We reviewed measures endorsed by consensus organizations 
and were unable to identify any other measures on this topic endorsed 
by a consensus organization, so the inclusion of such a measure is not 
feasible or practicable. For the ASCQR Program, under section 
1833(i)(7)(B) of the Act, the requirement that measures be endorsed at 
section 1833(t)(17)(C) of the Act applies to the ASCQR Program except 
as the Secretary may otherwise provide. We note that section 
1833(t)(17) of the Act does not require that each measure we adopt for 
the program is CBE-endorsed (76 FR 74494). Section 1833(t)(17)(C)(i) 
states that the ASCQR Program, to the extent feasible and practicable, 
shall include measures set forth by one or more

[[Page 94379]]

national consensus building entities. Section 1833(t)(17)(C)(i) also 
requires measures included in the ASCQR Program to reflect consensus 
among affected parties. As we have stated in previous rulemaking (76 FR 
74494), consensus among affected parties can be reflected in ways other 
than CBE endorsement, including through the measure development 
process, through broad acceptance and use of the measure(s), and 
through public comment. The FCHE measure achieved the aim of seeking 
consensus among affected parties by garnering stakeholder input during 
measure development. We refer readers to section XIV.B.1.c of this 
final rule with comment period for a discussion of PRMR process, which 
holds the purpose of providing multi-stakeholder input to the Secretary 
on the selection of quality and efficiency measures under consideration 
for use in quality reporting programs.
    Comment: Several commenters that did not support adoption of the 
FCHE measure raised concern that many ASCs do not have an EHR, and 
therefore, would not be able to attest `yes' to Domain 2. The 
commenters stated that EHRs are costly to implement and maintain. A 
commenter stated that a more realistic estimate of ASCs owning and 
operating an EHR is around 20 percent. The commenter further stated 
that ASCs do not have the technology or personnel to develop patient-
level data, stratify this data, identify equity gaps, and produce 
performance dashboards. The commenter stated that most ASCs do not have 
the technological tools and data analysis skills needed to ``identify 
priority populations who experience health disparities'' within the 
communities they serve.
    Response: We acknowledge that some ASCs may face challenges 
adopting EHR technology. We reiterate that the ASCQR Program is a pay-
for-reporting program, not a pay-for-performance program. ASCs that do 
not have EHR technology can attest that they satisfy the other domains, 
as applicable, and receive a score of 0-4 out of 5 without any 
financial penalties. We understand the commenters' concern that the 
public may misinterpret ASCs' reported results as a lack of commitment 
to health equity. To reduce the likelihood of misinterpretation, we 
intend to provide educational materials as part of our outreach and 
public reporting of this measure to ensure understanding and 
appropriate interpretation of publicly reported data.
    We encourage ASCs to allocate resources towards EHR adoption if 
they are able. Adoption of EHR technology within ASCs will lead to more 
positive outcomes, as EHR usage has been shown to have positive impacts 
on care quality, coordination, efficiency, patient care safety, 
documentation accuracy, and cost reduction.\310\ Although initial EHR 
adoption has associated costs, it is expected that, over time, ASCs 
will experience a decrease in financial and operational burden. By 
purchasing an EHR, an ASC will save costs previously spent on 
maintaining and managing patient charts.\311\ EHRs additionally 
decrease duplicative testing and interventions. Furthermore, EHRs 
ensure all required patient information is included in the operative 
note, leading to accurate reimbursements.\312\ We continue to encourage 
ASCs to consider EHR adoption to streamline documentation of patient 
health information, including demographic characteristics and social 
determinants of health, which will support ASCs in collecting and 
utilizing data to identify critical equity gaps, implementing plans to 
address these gaps, and ensuring that resources are dedicated toward 
addressing health equity initiatives.
---------------------------------------------------------------------------

    \310\ Geier, A., & Smith, D. (2019). The role of electronic 
documentation in Ambulatory Surgery Centers. AORN Journal, 109(4), 
444-450. https://doi.org/10.1002/aorn.12636.
    \311\ Ibid.
    \312\ Ibid.
---------------------------------------------------------------------------

    Comment: A few commenters recommended the development of a new 
health equity measure or the adaptation of the FCHE measure to be 
better suited to address the differences between ASCs and hospitals. A 
commenter advocated for a measure to be developed which assesses 
whether an ASC's quality program addresses equitable care and outcomes 
for the surgical services provided at the ASC.
    A commenter stated that the measure must be adapted for small 
facilities to prevent biased scores that favor large facilities with 
greater resources. The commenter recommended that CMS assess current 
capabilities of the ASC industry through an environmental scan before 
additional rulemaking action around this measure. The commenter stated 
that the results of the scan could inform a restructuring of the 
measure and allow for a reasonable time frame for implementation. The 
commenter recommended delaying this measure's implementation by 5 years 
if an environmental scan is not conducted.
    Response: We appreciate commenter recommendations surrounding the 
development of new equity measures tailored to ASC specific needs. We 
reiterate our awareness that this measure was initially developed for 
the general acute care setting. Our environmental assessments indicate 
that there are currently no other existing measures that address 
facility commitment to health equity. Therefore, it is important to 
implement this measure as soon as feasible. We would like to remind 
commenters that this measure addition serves as a foundation for a 
suite of future equity-focused measures. We see inclusion of such 
measures in the ASCQR Program as informing efforts to advance and 
achieve health equity among ASCs by allowing for the recognition and 
tracking of disparities for the population they serve. Our approach to 
developing equity-focused measures is incremental and will evolve over 
time to capture healthcare equity outcomes, as well as align as closely 
as possible with the measure's respective healthcare setting.
    We understand commenter concern regarding the compatibility of the 
FCHE measure with small ASCs. We would like to note that the FCHE 
measure is not meant to compare facilities with one another, but rather 
for facilities to identify structural gaps within their strategic 
planning, data collection and analysis, quality improvement, and 
leadership engagement. We remind facilities that the ASCQR Program is a 
pay-for-reporting program, not a pay-for-performance program. Upon 
reporting this attestation-based measure, ASCs that do not meet all 
domain criteria will not be financially penalized.
    We appreciate the commenter recommendation to use environmental 
scans to inform measure development. We include evidence extracted from 
environmental scans to inform our measure development and will continue 
to incorporate this critical step in our quality measure development 
processes for future measures.
    Comment: Commenters raised concerns that the rule does not explain 
how or if CMS will provide financial or administrative support to 
implement these measures. A commenter recommended that reimbursements 
should be provided for time spent implementing this measure. A 
commenter further recommended that CMS engage with hospitals and 
facilities to better understand the reporting burden of quality 
measures before their finalization. A few commenters raised concern 
that ASCs have a lower reimbursement rate than hospitals, making this 
measure more difficult to implement.
    Response: We have provided an Attestation Guidance document and an 
FAQ document, which clearly define what constitutes an affirmative 
attestation and provide answers to frequently asked questions, for the 
HCHE measure in Hospital IQR

[[Page 94380]]

Program.313 314 We intend to provide specific guidance for 
the ASCQR Program, consistent with the specifications described in 
Table 160 and requirements being finalized in this section of the final 
rule, in the future. ASCs may also refer to the measure specifications 
for additional attestation guidance.\315\
---------------------------------------------------------------------------

    \313\ Centers for Medicare & Medicaid Services (January 2024). 
Attestation Guidance for the Hospital Commitment to Health Equity 
Measure (v 1.2). Available at: https://qualitynet.cms.gov/files/659c609eca7fd3001b35edab?filename=AttstGdnceHCHEMeas_v1.2.pdf.
    \314\ Centers for Medicare & Medicaid Services (January 2024). 
Frequently Asked Questions Hospital Commitment to Health Equity, 
HIQR. Available at: https://qualitynet.cms.gov/files/659c60afd4b704001df0af51?filename=FAQ_HCHE_HIQR.pdf.
    \315\ Measure specifications are posted at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures2#tab2 for the 
Hospital OQR and REHQR Programs, and https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 for the ASCQR Program and may be moved 
to other pages on QualityNet upon publication of the final rule.
---------------------------------------------------------------------------

    We reiterate that the ASCQR program is statutorily limited to 
reduce the ASC fee schedule increase factor by 2-percentage points in 
the event the ASC fails to meet program requirements as established by 
the Secretary (section 1833(i)(7) of the Act). The ASCQR program 
statute does not provide authority for CMS to provide financial 
incentives. Regarding commenters' concern that ASCs have a lower 
reimbursement rate than hospitals, we reiterate that this is an 
attestation-based measure of a facility's commitment to addressing 
health equity. Additionally, medical procedures can cost up to 58 
percent more when performed in an HOPD, rather than an ASC, justifying 
the disparity in Medicare reimbursement rates.\316\ We disagree that 
this attestation measure would be more difficult to implement due to 
differing reimbursement rates.
---------------------------------------------------------------------------

    \316\ Newitt, P. (n.d.). HOPDs vs. ASCS: 10 considerations for 
2024. Becker's ASC Review. https://www.beckersasc.com/asc-coding-billing-and-collections/hopds-vs-ascs-10-considerations-for-2024.html.
---------------------------------------------------------------------------

    Comment: A commenter that did not support adoption of the FCHE 
measure expressed concern that, when this measure was reviewed during 
the 2021-2022 Measures Application Partnership (MAP) process for the 
Hospital IQR Program, the measure received a ``do not support'' 
recommendation, as the group believed there was insufficient evidence 
proving that this measure will influence patient outcomes.
    Response: We understand the commenter's concern. We note that 
during the more recent 2023 MAP process as previously discussed, 78.95 
percent of committee voters recommended the FCHE measure for inclusion 
in the ASCQR Program without conditions.\317\ The committee expressed 
support for a measure that captures commitment to health equity 
consistently across settings.
---------------------------------------------------------------------------

    \317\ PRMR final MUC recommendation spreadsheet. PRMR Final MUC 
Recommendation Spreadsheet [verbar] Partnership for Quality 
Measurement. (n.d.). https://p4qm.org/prmr-final-muc-reco.
---------------------------------------------------------------------------

    Comment: Several commenters that did not support adoption of the 
FCHE measure expressed concern over reporting burden, as this timeline 
coincides with OAS CAHPS and THA/TKA PRO-PM measure compliance. A few 
commenters expressed that there would not be sufficient time to 
implement processes, technology, and training needed to successfully 
report this measure.
    A commenter recommended that CMS weigh the burden of a finalized 
measure with the value it provides. A few commenters suggested delaying 
the implementation of this measure or allowing for voluntary reporting.
    Response: We acknowledge commenters' concerns regarding resources, 
including increased data collection burden; however, achieving health 
equity is an issue which deserves serious focus and rapid action for 
improvement. Therefore, we do not find it appropriate to delay the 
implementation of this measure. The benefits of encouraging ASC 
commitment to health equity outweigh the burden of attestation under 
this measure.
    We understand commenter concerns related to timing of mandatory 
reporting of the FCHE measure. We emphasize that this measure was 
proposed for adoption beginning with the CY 2025 reporting period/CY 
2027 payment or program determination, which will allow ASCs more than 
a year before the submission deadline of May 15, 2026, at which time 
ASCs would submit attestations regarding the identified domains during 
the CY 2025 reporting period. ASCs can spend the remainder of CY 2024 
and CY 2025 establishing processes and addressing potential barriers to 
positive attestations for the FCHE measure before December 31, 2025, 
enabling the possibility to report ``yes'' on each domain by the end of 
CY 2025.
    We note that hospitals participating in the Hospital IQR Program 
will have already reported data on the similar Hospital Commitment to 
Health Equity measure for the FY 2025 payment determination (that is, 
data submitted in FY 2024 representing the FY 2023 performance period) 
(87 FR 49191 through 49201) before required reporting of the Facility 
Commitment to Health Equity measure begins within the ASCQR Program, as 
reporting for this measure would begin with the CY 2027 payment 
determination. Given the timing of this similar measure's 
implementation in the Hospital IQR Program, ASCs will have had the 
opportunity to learn from the experiences of acute care hospitals, 
including best practices for minimally burdensome assessment of 
performance on the required domains.
    We will also monitor measure implementation and data reporting as 
part of standard program and measure review and will consider updates 
to the measure if we identify implementation strategies to reduce 
burden.
    Comment: A few commenters that did not support adoption of the FCHE 
measure expressed concern about potential unintended consequences that 
may result from the adoption of this measure, including a reduction in 
patient safety investments due to funding being instead allocated 
towards FCHE measure reporting.
    Response: We appreciate the commenter's concern and will monitor 
this measure, as we do all ASCQR measures, for any unintended or 
adverse outcomes associated with implementation. The ability of medical 
providers to contextualize a facility's commitment to health equity 
through the five attestation domains is important and could strengthen 
referrals to and partnerships with community-based service providers 
for patients with the most complex needs.
    Comment: A commenter recommended that ASCs should be able to rely 
on the inpatient HCHE measure to meet the ASCQR FCHE reporting 
requirement in cases where hospital-based ASCs have the same leadership 
and board members as the inpatient hospital.
    Response: We appreciate commenter concerns regarding duplicative 
reporting. We would like to note that a sizeable portion of ASCs are 
specialized facilities and may have different health equity goals than 
hospitals.\318\ Therefore, it is important that the FCHE measure is 
reported independently from the HCHE measure.
---------------------------------------------------------------------------

    \318\ ASCA. (September 2024). What is an ASC? Ambulatory Surgery 
Center Association (ASCA). Available at: https://
www.ascassociation.org/asca/about-ascs/surgery-
centers#:~:text=Ambulatory%20surgery%20centers%2C%20or%20ASCs,includi
ng%20diagnostic%20and%20preventive%20procedures.

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[[Page 94381]]

    After consideration of the public comments we received, we are 
finalizing adoption of the HCHE measure for the Hospital OQR Program 
and the REHQR Program as proposed. Additionally, we are finalizing the 
FCHE measure for the ASCQR Program, as proposed.
2. Adoption of the Screening for Social Drivers of Health (SDOH) 
Measure for the Hospital Outpatient Quality Reporting (OQR), Rural 
Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical 
Center Quality Reporting (ASCQR) Programs Beginning with Voluntary 
Reporting for the CY 2025 Reporting Period Followed by Mandatory 
Reporting for the CY 2026 Reporting Period/CY 2028 Payment or Program 
Determination
a. Background
    SDOH is an umbrella term that refers to community-level factors 
that impact health and well-being, while HRSNs are social and economic 
needs that individuals experience that affect their ability to maintain 
their health and well-being.\319\ Consistent screening of patients for 
potential HRSNs helps healthcare facilities identify individuals who 
have historically been underserved by the healthcare system and could 
support ongoing quality improvement initiatives at the population level 
by providing data to stratify patient risk and organizational 
performance to address SDOH.320 321 While widespread 
interest exists in addressing SDOH at community, State, and national 
levels and in supporting HRSNs for patients who experience one or more 
HRSNs, action is inconsistent, with 92 percent of hospitals screening 
for one or more of the five HRSNs listed in Table 161 but only 24 
percent of hospitals screening for all five of these HRSNs.\322\ 
Additionally, pilot studies screening for HRSNs have been conducted in 
the HOPD and ASC settings, with clinicians and staff agreeing that HRSN 
data are important and relevant to collect in these settings to improve 
patient care and communication as well as to connect patients with 
social-related services.323 324 We believe that it is 
essential for healthcare facilities to screen for patient-level HRSN 
data to support the improvement of patient outcomes and their 
identified social needs.
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    \319\ Assistant Secretary for Planning and Evaluation. (November 
2023). Call to Action: Addressing Health-Related Social Needs in 
Communities Across the Nation. Available at: https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.
    \320\ Assistant Secretary for Planning and Evaluation. 
(September 2022). Reflections Accompanying a Report on Addressing 
Social Drivers of Health: Evaluating Area-level Indices. Available 
at: https://aspe.hhs.gov/sites/default/files/documents/474a62378abf941f20b3eaa74ca5721c/Area-level-Indices-ASPE-Reflections.pdf.
    \321\ American Hospital Association. (December 2020). Health 
Equity, Diversity & Inclusion Measures for Hospitals and Health 
System Dashboards. Available at: https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
    \322\ Fraze TK, Brewster AL, Lewis VA, Beidler LB, Murray GF, 
Colla, CH. (2019). Prevalence of Screening for Food Insecurity, 
Housing Instability, Utility Needs, Transportation Needs, and 
Interpersonal Violence by US Physician Practices and Hospitals. JAMA 
Network Open, 2(9), e1911514. https://doi.org/10.1001/jamanetworkopen.2019.11514.
    \323\ Berkowitz RL, Bui L, Shen Z, Pressman A, Moreno M, Brown 
S, Nilon, A Miller-Rosales, Azar KM. (2021). Evaluation of a social 
determinants of health screening questionnaire and workflow pilot 
within an adult ambulatory clinic. BMC Family Practice, 22(1), 256. 
https://doi.org/10.1186/s12875-021-01598-3.
    \324\ Schickedanz A, Hamity C, Rogers A, Sharp AL, Jackson A. 
(2019). Clinician Experiences and Attitudes Regarding Screening for 
Social Determinants of Health in a Large Integrated Health System. 
Medical Care, 57, S197-S201. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6721844/.
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    In 2017, the CMS Center for Medicare and Medicaid Innovation (CMMI) 
launched the Accountable Health Communities (AHC) Model, which tested 
whether systematically identifying and addressing the HRSNs of Medicare 
and Medicaid beneficiaries through screening, referral, and community 
navigation services impacted their health outcomes and related 
healthcare utilization and costs.325 326 Evaluation of the 
AHC Model's standard 10-item AHC Health-Related Social Needs Screening 
Tool (AHC HRSN Screening Tool) found a reduction in emergency 
department (ED) visits among Medicaid and Medicare fee-for-service 
(FFS) beneficiaries.\327\
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    \325\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
    \326\ Centers for Medicare & Medicaid Services. (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model. Available at: https://www.cms.gov/priorities/innovation/innovation-models/ahcm.
    \327\ Centers for Medicare & Medicaid Services. (2023). 
Accountable Health Communities (AHC) Model Evaluation: Second 
Evaluation Report. CMS Innovation Center. Available at: https://www.cms.gov/priorities/innovation/data-and-reports/2023/ahc-second-eval-rpt.
    \328\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
    \329\ Centers for Medicare & Medicaid Services. (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model. Available at: https://innovation.cms.gov/innovation-models/ahcm.
---------------------------------------------------------------------------

    Under the AHC Model, the following five core domains were selected 
to screen for HRSNs among Medicare and Medicaid beneficiaries: (1) food 
insecurity; (2) housing instability; (3) transportation needs; (4) 
utility difficulties; and (5) interpersonal safety. These domains were 
chosen based upon literature review and expert consensus utilizing the 
following criteria: (1) availability of high-quality scientific 
evidence linking a given HRSN to adverse health outcomes and increased 
healthcare utilization, including hospitalizations and associated 
costs; (2) ability for a given HRSN to be screened and identified prior 
to discharge, be addressed by community-based services, and potentially 
improve healthcare outcomes, including reduced readmissions; and (3) 
evidence that a given HRSN is not systematically addressed by 
healthcare providers.\328\ In addition to established evidence of their 
association with health status, risk, and outcomes, these five domains 
were selected for the AHC Model because they can be assessed across the 
broadest spectrum of individuals in a variety of settings.\329\
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
     
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    \330\ Berkowitz SA, Seligman HK, Meigs JB, Basu S. (2018). Food 
Insecurity, Healthcare Utilization, and High Cost: A Longitudinal 
Cohort Study. The American Journal of Managed Care, 24(9), 399-404. 
http://www.ncbi.nlm.nih.gov/pmc/articles/pmc6426124/.
    \331\ Seligman HK, Berkowitz, SA. (2019). Aligning Programs and 
Policies to Support Food Security and Public Health Goals in the 
United States. Annual Review of Public Health, 40(1), 319-337. 
https://www.annualreviews.org/doi/10.1146/annurev-publhealth-040218-044132.
    \332\ National Academies of Sciences, Engineering, and Medicine. 
(2006). Executive Summary: Cost-Benefit Analysis of Providing Non-
Emergency Medical Transportation. Washington, DC: The National 
Academies Press. Available at: https://nap.nationalacademies.org/catalog/23285/executive-summary-cost-benefit-analysis-of-providing-non-emergency-medical-transportation.
    \333\ Berkowitz SA, Seligman HK, Meigs JB, Basu S. (2018). Food 
Insecurity, Healthcare Utilization, and High Cost: A Longitudinal 
Cohort Study. The American Journal of Managed Care, 24(9), 399-404. 
http://www.ncbi.nlm.nih.gov/pmc/articles/pmc6426124/.
    \334\ Dean EB, French MT, Mortensen, K. (2020). Food insecurity, 
health care utilization, and health care expenditures. Health 
Services Research, 55(S2), 883-893. Available at: https://doi.org/10.1111/1475-6773.13283.
    \335\ Hill-Briggs, F. (2020). Social Determinants of Health and 
Diabetes: A Scientific Review. Diabetes Care, 44(1), 258-279. 
https://pubmed.ncbi.nlm.nih.gov/33139407/.
    \336\ Henry M, de Sousa T, Roddey C, Gayen S, Bednar T, Abt 
Associates. (January 2021). The 2020 Annual Homeless Assessment 
Report (AHAR) to Congress; Part 1: Point-in-Time Estimates of 
Homelessness. U.S. Department of Housing and Urban Development. 
Available at: https://www.huduser.gov/portal/sites/default/files/pdf/2020-AHAR-Part-1.pdf.
    \337\ Baxter A, Tweed E, Katikireddi S, Thomson H. (2019). 
Effects of Housing First approaches on health and well-being of 
adults who are homeless or at risk of homelessness: systematic 
review and meta-analysis of randomized controlled trials. Journal of 
Epidemiology and Community Health, 73; 379-387. https://doi.org/10.1136/jech-2018-210981.
    \338\ Centers for Medicare and Medicaid Services. (2023) 
Addressing Transportation Barriers: A User Case in Leveraging the 
Value-Based Insurance Design (VBID) Model. Available at: https://www.cms.gov/priorities/innovation/innovation-models/vbid.
    \339\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
    \340\ Shier G, Ginsburg M, Howell J, Volland P, Golden R. 
(2013). Strong Social Support Services, Such as Transportation And 
Help For Caregivers, Can Lead To Lower Health Care Use And Costs. 
Health Affairs, 32(3), 544-551. https://www.healthaffairs.org/doi/10.1377/hlthaff.2012.0170.
    \341\ National Alliance on Mental Illness. Medicaid: Non-
Emergency Medical Transportation (NEMT). Available at: https://www.nami.org/Advocacy/Policy-Priorities/Supporting-Community-Inclusion-and-Non-Discrimination/Medicaid-Non-Emergency-Medical-Transportation.
    \342\ Baxter A, Tweed E, Katikireddi S, Thomson H. (2019). 
Effects of Housing First approaches on health and well-being of 
adults who are homeless or at risk of homelessness: systematic 
review and meta-analysis of randomized controlled trials. Journal of 
Epidemiology and Community Health, 73; 379-387. https://doi.org/10.1136/jech-2018-210981.
    \343\ Wright BJ, Vartanian KB, Li HF, Royal N, Matson JK (2016). 
Formerly Homeless People Had Lower Overall Health Care Expenditures 
After Moving into Supportive Housing. Health Affairs, 35(1), 20-27. 
https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.0393.
    \344\ Billioux A, Verlander K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
    \345\ Henry M, de Sousa T, Roddey C, Gayen S, Bednar T, Abt 
Associates. (January 2021). The 2020 Annual Homeless Assessment 
Report (AHAR) to Congress; Part 1: Point-in-Time Estimates of 
Homelessness. U.S. Department of Housing and Urban Development. 
Available at: https://www.huduser.gov/portal/sites/default/files/pdf/2020-AHAR-Part-1.pdf.

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[[Page 94383]]

    These five evidence-based HRSN domains described in Table 161 
informed our development of the Screening for SDOH and Screen Positive 
Rate for SDOH measures. We used these five HRSN domains to inform the 
development of the SDOH measure we proposed to adopt in this final rule 
because the AHC Model's HRSN Screening Tool allows healthcare 
facilities to quickly screen for patients' core health-related social 
needs and was designed to work in a variety of clinical settings, 
making it ideal for implementing across quality reporting programs, 
including the Hospital OQR, REHQR, and ASCQR Programs, with minimal 
burden to healthcare facilities.\346\
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    \346\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
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    We recognize that patient interaction with the healthcare system 
may be limited by setting. For example, a patient receiving care in an 
HOPD, REH, or ASC may not have recently received care in an acute care 
hospital paid under IPPS, inpatient psychiatric facility cancer 
hospital, or dialysis facility, and therefore would not have the 
opportunity to benefit from being screened for SDOHs despite this 
measure's prior adoption in other quality programs. By adopting aligned 
Screening for SDOH measures within the Hospital OQR, REHQR, and ASCQR 
Programs, we expect to increase the likelihood that these settings will 
screen patients and provide contextualized care and any necessary 
relevant referrals to address their patient's needs.
    Screening for food insecurity, housing instability, transportation 
needs, utility difficulties, and interpersonal safety in HOPDs, REHs, 
and ASCs can help identify and provide appropriate referrals for 
patients who may benefit from greater support in one or more of those 
areas. Adoption of the Screening for SDOH measure in the Hospital OQR, 
REHQR, and ASCQR Programs would continue to support our priority of 
identifying risk factors for inadequate healthcare access and adverse 
health outcomes among patients.
b. Measure Overview
    The Screening for SDOH measure is a process measure that assesses 
the total number of patients, who were 18 years or older on the date of 
service, screened for social risk factors (specifically, the five HRSNs 
of food insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety) as they receive care from a 
HOPD, REH, or ASC.
c. Pre-Rulemaking Measure Review
    As part of the PRMR process, the Hospital Recommendation Group 
reviewed and voted on the Screening for SDOH measure during their 
meeting on January 18 and 19, 2024.\347\ The Hospital Recommendation 
Group ``recommended with conditions'' the Screening for SDOH measure 
for all three programs (that is, the Hospital OQR, REHQR, and ASCQR 
Programs).
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    \347\ The Screening for SDOH measure is identified on the MUC 
List as MUC2023-156.
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    The committee recommended a condition specific to the Hospital OQR 
Program, which was to allow hospitals to report this measure one time 
each year for both the Hospital IQR Program and Hospital OQR Program if 
applicable.\348\ We note that we considered allowing hospitals to 
report this measure jointly for the Hospital IQR and Hospital OQR 
Programs (if applicable); however, as the patient populations 
represented by the programs are different, as is the measure 
calculation due to this difference in the denominator, we proposed to 
require a separate data submission for each program. More importantly, 
patients and consumers would likely find useful Compare tool 
information on screening rates separated for inpatient and outpatient 
departments of the same hospital.
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    \348\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
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d. CBE Endorsement
    Section 1833(t)(17)(C)(i) of the Act provides that the Hospital OQR 
Program, to the extent feasible and practicable, shall include measures 
set forth by one or more national consensus building entities (not 
necessarily the CBE). Under section 1833(i)(7)(B) of the Act, this 
requirement at section 1833(t)(17)(C) applies to the ASCQR Program 
except as the Secretary may otherwise provide. For the Hospital OQR 
Program and ASCQR Program, we note that section 1833(t)(17) of the Act 
does not require that each measure we adopt for these programs be CBE-
endorsed (75 FR 72064 and 72065 for the Hospital OQR Program and 76 FR 
74494 for the ASCQR Program).
    Section 1833(t)(17)(C)(i) of the Act also requires measures 
developed for the Hospital OQR Program to reflect consensus among 
affected parties. Under section 1833(i)(7)(B), this requirement also 
applies to the ASCQR Program except as the Secretary may otherwise 
provide. As we have stated in previous rulemaking, consensus among 
affected parties can be reflected in ways other than CBE endorsement, 
including through the measure development process, through broad 
acceptance and use of the measure(s), and through public comment (75 FR 
72064 and 72065 for the Hospital OQR Program and 76 FR 74494 for the 
ASCQR Program).
    For the REHQR Program, section 1861(kkk)(7)(C)(i) of the Act 
generally requires that quality measures specified by the Secretary for 
the REHQR Program be endorsed by a CBE; however, section 
1861(kkk)(7)(C)(ii) of the Act provides an exception to the general 
CBE-endorsement requirement, stating that in the case of a specified 
area or medical topic determined appropriate by the Secretary for which 
a measure has not been endorsed by the entity with a contract under 
section 1890(a) of the Act, the Secretary may specify a measure that is 
not endorsed as long as due consideration is given to measures that 
have been endorsed or adopted by a consensus organization identified by 
the Secretary. We reviewed CBE endorsed measures and were unable to 
identify any other CBE-endorsed measures on this topic, and therefore 
we believe the exception in section 1861(kkk)(7)(C)(ii) of the Act 
applies for purposes of this measure for the REHQR Program.

[[Page 94384]]

    At this time, we find no other feasible and practicable measures 
set forth by a national consensus building entity on the topic of 
screening for SDOH. While we recognize the value of measures undergoing 
CBE endorsement review and prefer to use endorsed measures, there are 
currently no CBE-endorsed measures that address screening for SDOH in 
the outpatient setting. Given the urgency of achieving health equity, 
it is important to implement this measure as soon as possible. We note 
that the five domains for which patients would be screened were chosen 
based upon literature review and expert consensus, and that these five 
domains informed development of the Screening for SDOH measure. We will 
consider submitting the Screening for SDOH measure to the CBE for 
endorsement in the future.
e. Data Sources
    For data collection of the Screening for SDOH measure, we proposed 
that healthcare facilities would use a self-selected screening tool to 
collect these data. We proposed to allow healthcare facilities to 
select their screening tool to reduce burden and in recognition of the 
fact that some healthcare facilities may already be screening their 
patients for HRSNs. If a healthcare facility is not already doing so, 
many screening tools for HRSNs already exist. While we acknowledge the 
potential benefits of requiring all healthcare facilities to use the 
same screening instrument or a prescribed set of standards around the 
number or types of screening questions used, we also recognize the 
benefits of providing healthcare facilities with flexibility to 
customize screening and data collection to their patient populations 
and individual needs.
    One example of a screening tool that healthcare facilities could 
consider using is the AHC HRSN Screening Tool, which providers used in 
the AHC Model to screen for HRSNs in their Medicare, Medicaid, and 
dually eligible beneficiary populations.\349\ We have tested the AHC 
HRSN Screening Tool across many care delivery sites in diverse 
geographic locations and determined that it demonstrates evidence of 
both reliability and validity.\350\ The AHC HRSN Screening Tool can be 
implemented in a variety of healthcare settings, including HOPDs, REHs, 
and ASCs. While the AHC Model focused on HRSNs among community-dwelling 
Medicare and Medicaid beneficiaries, the AHC HRSN Screening Tool can be 
used to screen patients with any insurance status or type, including 
commercially insured and uninsured individuals. The AHC HRSN Screening 
Tool has broad applicability in settings outside of the AHC Model as it 
screens for a range of five HRSN domains while also being concise, 
limited to only ten questions. We believe this promotes manageable 
integration into clinical workflow settings and provides greater 
accessibility and application to diverse patient 
populations.351 352
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    \349\ Centers for Medicare and Medicaid Services. The 
Accountable Health Communities Health-Related Social Needs Screening 
Tool. Available at: https://www.cms.gov/priorities/innovation/files/worksheets/ahcm-screeningtool.pdf.
    \350\ Centers for Medicare and Medicaid Services. (2023). A 
Guide to Using the Accountable Health Communities Health-Related 
Social Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \351\ Ibid.
    \352\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
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    For additional screening tools for healthcare facilities to 
consider using to collect data for this Screening for SDOH measure, we 
refer readers to evidence-based resources like the Social Interventions 
Research and Evaluation Network (SIREN) website, for example, which 
provides comprehensive information about the most widely used HRSN 
screening tools.353 354 SIREN contains descriptions of the 
content and characteristics of various tools, including information 
about intended populations, completion time, and number of questions.
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    \353\ Social Interventions Research & Evaluation Network. 
(2019). Social Needs Screening Tool Comparison Table. Available at: 
https://sirenetwork.ucsf.edu/tools-resources/resources/screening-tools-comparison.
    \354\ The Social Interventions Research and Evaluation Network 
(SIREN) at University of California San Francisco was launched in 
the spring of 2016 to synthesize, disseminate, and catalyze research 
on SDOH and healthcare delivery.
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    We also encourage healthcare facilities to consider digital 
standardized screening tools. We refer readers to the FY 2023 IPPS/LTCH 
PPS final rule (87 FR 49207 through 49208), where we discuss how the 
use of certified health information technology (IT), including but not 
limited to CEHRT,\355\ can support capture of HRSN information in a 
standardized, interoperable fashion. We also encourage healthcare 
facilities to learn about the United States Core Data for 
Interoperability (USCDI) standard used in certified health IT and how 
this standard can support interoperable exchange of health and HRSN 
assessment data.\356\
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    \355\ CEHRT refers to certified health IT requirements defined 
by CMS for certain programs which incorporate health IT 
certification criteria established by the Office of the National 
Coordinator for Health Information Technology (ONC) at 45 CFR 
170.315.
    \356\ Office of the National Coordinator for Health IT (ONC). 
United States Core Data for Interoperability. Available at: https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi.
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    In alignment with the Hospital IQR Program, we proposed that HOPDs, 
REHs, and ASCs could confirm the current status of any previously 
reported HRSNs in another care setting and inquire about others not 
previously reported, in lieu of re-screening a patient within the 
reporting period. In addition, if this information has been captured in 
the EHR in another outpatient setting or the inpatient setting during 
the same reporting period, we proposed that the HOPD, REH, and ASC 
could use that information for purposes of reporting the measure in 
lieu of screening the patient. We intend to monitor and evaluate the 
measure screening requirements, including frequency, in these 
outpatient settings to ensure balance between quality of care for 
patients and facility burden.
f. Measure Calculation
    The Screening for SDOH measure is calculated as a percentage equal 
to the numerator over the denominator. The numerator is defined as the 
number of patients admitted to an HOPD, REH, or ASC, who are 18 years 
or older on the date of admission and are screened for all five HRSNs 
described in Table 161 during their receipt of services in the HOPD, 
REH, or ASC, as applicable.\357\ The denominator is defined as the 
number of patients who are admitted to a HOPD, REH, or ASC, as 
applicable, and who are 18 years or older.
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    \357\ The term ``admitted patients'' appears in the measure 
specifications and MUC documentation and is intended to refer to a 
person who receives ambulatory care in these designated settings.
---------------------------------------------------------------------------

    The measure excludes patients who: (1) opt-out of screening; or (2) 
are themselves unable to complete the screening and have no legal 
guardian or caregiver able to do so on the patient's behalf.
g. Data Submission and Reporting
    In the CY 2025 OPPS/ASC proposed rule, we proposed to allow 
healthcare facilities to voluntarily submit to CMS aggregate data for 
this measure for the CY 2025 reporting period and then to require 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment or program determination. Specifically, we

[[Page 94385]]

proposed that healthcare facilities would aggregate data they collect 
for the numerator and the denominator to CMS (as described in section 
XIV.B.2.f of this final rule with comment period), and that they would 
not be required to submit patient-level data. We proposed to require 
aggregate data because we believe patient-level reporting is 
unnecessary and would cause undue burden due to the transfer of large 
quantities of data. However, in the future, we may consider requiring 
the reporting of patient-level information. This measure aims to 
encourage healthcare facilities to screen for and identify HRSNs in 
order to identify and address social needs among their patient 
populations.
    We also proposed that healthcare facilities would be required to 
submit data on this measure annually using the CMS-designated 
information system (currently, the HQR system) consistent with the data 
submission requirements for this measure in the Hospital IQR, IPFQR and 
PCHQR Programs. We refer readers to sections XV.E.2.a, XVI.E.3.b, and 
XVII.E.2.a of this final rule with comment period for additional 
details regarding data submission using the CMS-designated information 
system in the Hospital OQR, REHQR, and ASC Programs, respectively.
    We proposed to adopt this measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 payment 
or program determination. We proposed to begin with 1 year of voluntary 
reporting to provide a transition period for healthcare facilities to 
select and integrate screening tools into their clinical workflow 
processes.
    We invited public comment on our proposal to adopt the Screening 
for SDOH measure for the Hospital OQR, REHQR, and ASCQR Programs 
beginning with voluntary reporting for the CY 2025 reporting period, 
and to require mandatory reporting beginning with the CY 2026 reporting 
period/CY 2028 payment or program determination, as described above.
    The following comments and responses are applicable for the 
Hospital OQR, REHQR, and ASCQR Programs unless noted otherwise.
    Comment: Many commenters supported the Screening for SDOH measure 
as well as CMS's efforts to align measures across programs and increase 
screening for SDOH in outpatient, rural, and ambulatory settings. 
Several commenters expressed support for adopting the Screening for 
SDOH measure in the outpatient programs because they believe the 
measure helps better identify patients with food insecurity, housing 
instability, transportation needs, utility difficulties, and 
interpersonal safety concerns, and they appreciate CMS's commitment to 
improving health outcomes for all patients with higher health-related 
needs. A few commenters expressed support for screening for food 
insecurity specifically, because it can help provide appropriate 
referrals for patients who may benefit from additional nutrition, 
identify malnutrition risk across outpatient settings, facilitate 
access to appropriate and timely nutrition interventions, and connect 
patients to community-based nutrition programs and services that 
address ongoing needs. A commenter supported the adoption of the 
Screening for SDOH measure across the Hospital OQR, ASCQR, and REHQR 
programs because the measure provides structured support that 
healthcare providers need to better support patients who have SDOH 
needs and help providers acknowledge how SDOH impact patient outcomes. 
Another commenter expressed appreciation for CMS's indication that the 
patient screening in the outpatient setting can leverage information 
that the patient has already provided in a prior encounter in the 
performance year.
    Response: We thank commenters for their support of the Screening 
for SDOH measure. We agree with commenters that availability of SDOH 
data will potentially identify innovative opportunities to support 
enhanced availability of community resources to meet the needs 
identified by the Screening for SDOH measure. We agree with the 
commenters' statement that this measure could support efforts to 
connect patients in need with community resources.
    Comment: Many commenters supported the adoption of the Screening 
for SDOH measure but offered specific recommendations, including that 
CMS provide a mechanism to confirm that referrals to appropriate 
services resulted in actual service delivery since the actual services, 
not the referrals, are the goal. These commenters recommended that CMS 
continue to take steps towards measuring prompt action to connect 
patients to a community-based organization, interventions to address 
the HRSN, the resolution of the need, and efforts to ensure that 
providers are able and incentivized to connect patients with necessary 
clinical, mental, behavioral, and social services as seamlessly as 
possible.
    Response: We thank the commenters for their broad support and 
recommendations. We will take into consideration as appropriate the 
recommendations to ensure that referrals of patients to various support 
services are addressing needs and resulting in actual services.
    Comment: Many commenters supported the adoption of the Screening 
for SDOH measure in the Hospital OQR Program because it affirms that 
any patient entering the care of the hospital undergoes an HRSN screen. 
Several commenters expressed support for the Screening for SDOH measure 
specifically in the Hospital OQR program noting that robust data 
collection on patient demographics and SDOH enables more accurate 
analysis of health equity and improves the quality of care for all 
beneficiaries in the Medicare program, and that the addition of the 
health equity measures HOPDs will allow for more consistency between 
the outpatient and inpatient space and will aid in identifying and 
assisting patients who are struggling with one of the five domains. A 
commenter supported the measure because it will allow for 1 year of 
voluntary reporting to support implementation in the outpatient setting 
and appreciated that HOPD staff could confirm the current status of any 
previously reported HRSNs in another care setting and inquire about 
others not previously reported. The commenter also supported that CMS 
would allow hospitals to use SDOH screening information that is 
recorded in the EHR in another health setting during the same reporting 
period to report data on the measures. A commenter supported that CMS 
emphasized a limited number of universal health-related domains and 
strongly supported CMS allowing health systems flexibility to use their 
preferred screening tool. Another commenter supported the measure 
because collecting SDOH data allows HOPDs to refer patients to care 
that can address their SDOH and connect patients to community-based 
resources based on their needs. Additionally, a commenter supported 
CMS's commitment to advancing health equity and improving health 
outcomes because occupational therapy (OT) practitioners can address 
SDOH at the person, group, and population level by assessing and 
addressing both the social needs of the individual clients and the 
structural challenges that impact the ability to meet these social 
needs. This commenter further stated that addressing SDOH within OT 
interventions can improve health outcomes, increase health equity, 
expand occupational engagement, and contribute to wellness. A commenter 
appreciated the decision to allow

[[Page 94386]]

inpatient screenings in the same reporting period to also be considered 
for measuring screening rates in the outpatient setting but requested 
clarification on whether non-office, procedural visits such as imaging 
or lab services in the outpatient department would be considered 
``admissions'' to an HOPD subject to screening in the measure 
calculation. A commenter recommended that outpatient lab tests and X-
Rays be included in the proposed outpatient requirements, and that 
clarification be provided on qualifying outpatient hospital encounters 
and on the types of HOPD environments SDOH screening requirements will 
cover.
    Response: We thank the commenters for their support of the 
Screening for SDOH measure in the Hospital OQR Program. We agree that 
HRSNs are critical factors that impact patient outcomes, and increased 
knowledge about patients' HRSNs will help hospitals shape goals 
associated with health equity. We agree with commenters that 
availability of SDOH quality data will support the identification of 
innovative opportunities to enhance availability of community resources 
to meet the needs identified by the Screening for SDOH measure. 
Further, we share the commenters' belief that this measure could 
support efforts to connect patients in need with community resources. 
We thank commenters for their questions regarding the technical 
specifications of the measure. We agree that screening for SDOH is most 
appropriate when administered so that the patient's information can be 
used by the patient's care team. As we stated in the proposed rule, 
screening for food insecurity, housing instability, transportation 
needs, utility difficulties, and interpersonal safety can help identify 
and provide appropriate referrals for patients who may benefit from 
greater support in one or more of those areas. As such, we are 
clarifying that while outpatient care can refer to numerous types of 
health services, such as emergency department (ED) services, 
observation services, outpatient surgical services, lab tests, and X-
rays, for purposes of this measure in the Hospital OQR Program, REHQR, 
and ASCQR programs, patients receiving services that are limited to 
specific medical tests are not included in the denominator cohort. 
These services include imaging, laboratory, and pharmacy services, 
which are typically specific types of auxiliary services to a patient's 
more comprehensive care, where such screenings and referrals should be 
provided.
    Comment: Several commenters supported the adoption of the Screening 
for SDOH measure and offered recommendations about the data in the 
Screening for SDOH measure, including that CMS should publish the 
standards on how SDOH data will be protected, and that CMS should 
require disaggregated collection of the measures at the individual 
level to allow providers to assess the factors impacting an individual 
patient's health to better meet their needs. These commenters also 
supported the expansion of the SDOH reporting and the changes to the 
transportation element, but recommended CMS focus on ensuring the data 
are collected rather than on the specific vendor or tool used for the 
collection.
    Response: We thank the commenters for their support and 
recommendations. We have given this significant consideration to 
ensuring data is protected in development of the SDOH measures. The 
combination of existing privacy laws and the measure specifications 
(requiring submission of aggregated data) address the concerns relative 
to patient rights and transparency. HOPDs, REHs, and ASCs generally 
must comply with applicable laws governing the confidentiality, 
privacy, and security of patient information. We have also specified 
the measure to allow patients to opt-out of screening. We thank the 
commenter for their recommendation to ensure that data are collected 
rather than focusing on a vendor or tool. We note that we do not 
require HOPDs, REHs or ASCs to report this measure using a specific 
vendor or tool. As previously discussed, outpatient settings are 
provided the flexibility to choose their own screening tool to 
eliminate redundancy, utilize interoperable systems, and reduce burden. 
We have provided suggestions for validated screening tools, such as the 
AHC HRSN Screening Tool, that HOPDs, REHs and ASCs may use if they 
choose, but we do not require outpatient settings to use these tools to 
maintain this flexibility.
    Comment: A few commenters supported the Screening for SDOH measure 
and recommended that CMS continue engaging with stakeholders to ensure 
that the measure remain relevant. A few commenters supported the 
Screening for SDOH measure but recommended additional efforts, 
including that CMS consider opportunities to implement higher level 
holistic SDOH screening approaches and accompany the SDOH screening 
with responsive care models that provide effective interventions to 
address patients' unmet needs, that CMS consider adopting the Social 
Need Screening and Intervention measure in its quality reporting 
programs as an alternative, and that CMS make the question related to 
interpersonal violence (IPV) optional.
    A commenter agreed with HOPDs having the flexibility to choose 
their own screening tool to measure HRSNs and recommended that we 
incorporate this flexibility across existing and future quality 
measures to eliminate redundancy, utilize interoperable systems, and 
reduce burden. A commenter appreciated that CMS allows HOPDs to utilize 
previous screens to avoid the burden of re-screening but recommended 
that CMS work with measure developers to develop a measure that focuses 
on the actions that were taken following a positive screen and evaluate 
the impact of SDOH on health outcomes to adjust the domains for social 
drivers. The commenter also recommended that CMS share the roadmap for 
moving the healthcare system beyond screening towards effectively 
closing gaps for social needs of patients and a plan to evaluate the 
link between identifying a social need and utilization of services to 
address the patients' needs. They also recommended expanding the 
measure and metric to include additional SDOH such as access to 
education, employment opportunities, digital connectivity, and 
environmental factors which can have significant impacts on health 
outcomes.
    A commenter recommended finalizing the Screening for SDOH measure 
with flexibility to allow HOPDs to use different screening tools and 
increasing support for safety net hospitals' ability to respond to SDOH 
needs, and another commenter recommended enhanced transparency because 
consumers should be able to identify the screening rate a facility 
attains for each domain and the reporting of more granular level 
results for each measure will contribute to driving improvement where 
the largest deficits are identified. A commenter recommended that CMS 
require disaggregated collection of the measures at the individual 
level to allow providers to assess the factors impacting an individual 
patient's health to better meet their needs. A commenter supported the 
adoption of the Screening for SDOH measure as an important first step 
but recommended that CMS increase funding to ensure that patients who 
screen positive for SDOH are able to receive resources including things 
like transportation, housing, and food security. The commenter also 
recommended that CMS align with

[[Page 94387]]

other organizations and national initiatives that are establishing 
coding and documentation standards in this space, simplifying the 
process to remove ambiguity, and supporting easy integration into 
providers' current workflow. Another commenter recommended that efforts 
to address SDOH ensure that providers are able and incentivized to 
connect patients with necessary clinical, mental, behavioral, and 
social services as seamlessly as possible.
    Response: We thank the commenters for the recommendations to engage 
in further efforts to implement holistic screening approaches, 
alternative measures, and expansion of additional social drivers of 
health and we will consider these recommendations in future rulemaking. 
However, in response to the recommendation to make the interpersonal 
safety domain optional, we note that we have prioritized selection of 
the proposed five HRSN domains based on existing evidence from both the 
AHC Model that informed the initial selection, and emerging evidence of 
correlations between given social drivers of health and worse health 
outcomes and SDOH for which interventions have shown marked 
improvements in health outcomes and healthcare utilization.
    It is imperative that HOPDs, REHs, and ASCs screen for all five 
domains established in this measure. We understand the sensitive nature 
of screening for risk of interpersonal violence and that patient safety 
must remain the hospital's, REH's, and ASC's principal concern. We 
recommend that hospitals, REHs, and ASCs ensure that patients feel that 
they are safe answering questions and remind patients that they may opt 
out of the screening for any reason. We note that the measure 
specifications exclude patients: (1) who opt-out of screening; and (2) 
are themselves unable to complete the screening and have no legal 
guardian or caregiver able to do so on the patient's behalf (89 FR 
59447). We also note that while individual responses to the SDOH survey 
may constitute protected health information (PHI) under the HIPAA 
Privacy Rule (45 CFR parts 160 and 164, subparts A and E), the 
information HOPDs, REHs, and ASCs must provide CMS to meet the 
requirements of the SDOH measure consist of aggregated, de-identified 
data only. Information that does not identify the individual that is 
the subject of the health information and for which there is no 
reasonable basis to believe it could be used to identify an individual, 
is not individually identifiable health information (IIHI) and is 
therefore not PHI (45 CFR 160.103). HIPAA covered entities must comply 
with requirements to use and disclose PHI only as permitted or required 
by the HIPAA Privacy Rule, but the HIPAA Privacy Rule does not place 
restrictions on the use or disclosure of information that is not PHI 
(45 CFR 164.502). While HOPDs, REHs, and ASCs that begin to collect 
SDOH information will be creating additional PHI that they did not 
previously create, the SDOH quality measure will not require them to 
disclose any PHI or IIHI to CMS. We remind HOPDs, REHs, and ASCs that 
as covered entities, they must ensure the confidentiality, integrity, 
and availability of all electronic PHI, including any electronic PHI 
generated in the course of collecting responses to any SDOH survey (45 
CFR 164.306).
    In response to the recommendation to align with other organizations 
and national initiatives, this data collection will inform meaningful 
and sustainable solutions for other provider types through similar 
collections in other quality reporting programs and note that we will 
continue identifying opportunities for collaboration with other 
stakeholders to align SDOH assessment across CMS programs. We commend 
additional stakeholder efforts currently underway to expand 
capabilities to capture additional drivers of health data elements. We 
will continue building the overarching strategy for integrating social 
drivers of health screening into quality improvement and future 
rulemaking. We also note that we will continue identifying 
opportunities for collaboration with other stakeholders to ensure the 
measure remains relevant in future years.
    As to commenters' request for additional information on CMS's work 
on health equity, we refer commenters to the CMS Framework for Health 
Equity 2022-2032 available at: https://www.cms.gov/priorities/health-equity/minority-health/equity-programs/framework.
    Comment: A few commenters expressed their support for the Screening 
for SDOH measure but requested clarifications including that CMS 
clarify any restrictions on what tools, modified or not, a hospital or 
facility can use to screen patients for the HRSNs. A commenter also 
requested clarification on the outpatient population in the denominator 
of this measure for use in the Hospital OQR program because not all 
outpatient interactions involve an office visit where screening would 
be appropriate. A commenter requested clarification on qualifying 
outpatient hospital encounters and further defining of the types of 
HOPD environments SDOH screening requirements will cover.
    Response: We appreciate the commenters' support and requests for 
clarification. We note that we are not mandating use of a specific 
screening tool, and we therefore defer to providers to make the 
appropriate determination regarding how to collect the data. We also 
note that, while outpatient care can refer to numerous types of health 
services, such as emergency department (ED) services, observation 
services, outpatient surgical services, lab tests, and X-rays, for 
purposes of this measure in the Hospital OQR, REHQR, and ASCQR 
Programs, patients receiving services that are limited to specific 
medical tests are not included in the denominator cohort. These 
services include imaging, laboratory, and pharmacy services, which are 
typically specific types of auxiliary services to a patient's more 
comprehensive care, where such screenings and referrals should be 
provided.
    Comment: A few commenters fundamentally supported the SDOH 
screening measure but expressed concerns that the data required for the 
measure may not currently be reliably documented using discrete data 
fields that can be captured electronically. A commenter recommended 
adding economic insecurity as a social risk factor for screening as it 
can lead to many other social determinants of health.
    Response: We thank the commenters for their broad support of the 
Screening for SDOH measure. We appreciate the commenter's concerns 
about the limits of the discrete data fields. The data collected by the 
measure captures critical information about SDOH, and we note that this 
measure does not restrict hospitals or facilities from documenting more 
qualitative data about SDOH. Hospitals and facilities are not 
restricted to the data fields provided if they wish to gather more 
qualitative data on their patients. We appreciate the recommendation to 
include economic insecurity and will consider adding it to the measure 
in future rulemaking.
    Comment: A few commenters recommended that CMS work with 
stakeholders on the best ways to gather more granular data while 
maintaining strong privacy and patient safeguards so researchers and 
other stakeholders can evaluate how hospitals are evaluating HRSNs as 
well as whether hospitals and large hospital systems are adequately 
evaluating HRSNs because it is important to understand how HRSNs 
contribute to healthcare spending, quality, and outcomes at the 
individual

[[Page 94388]]

and community levels. A commenter supported the use of Z-codes to 
inform social risk adjustment and recommended that CMS continue to use 
Z-codes as a proxy for social risk and to maintain a broad viewpoint on 
how social risk is identified. The commenter also recommended that CMS 
avoid leveraging SDOH screening data as if it were epidemiologic data 
rather than data intended to understand patients' needs and optimize 
their health and well-being. Another commenter recommended that CMS 
include the Distress Thermometer as a useful tool for providers seeking 
free resources to meet these measures. Another commenter noted that the 
measure is a welcome addition to the measure set but recommended that 
CMS develop a stronger audit function because without an adequate 
auditing function, the measures remain highly susceptible to 
subjectivity.
    The commenter also recommended keeping the Hospital IQR Program 
reporting separate from the Hospital OQR Program reporting because it 
will ensure a more accurate picture allowing for improved consistency 
in data collection over time. Another commenter recommended that CMS 
continue to make important changes to the Hospital OQR program by 
strengthening requirements for hospitals to report on a more 
comprehensive set of quality and equity measures. A commenter supported 
the inclusion of health equity and also recommended consolidating the 
reporting of HRSNs at the organizational level rather than separately 
for inpatient and outpatients to align human and technological 
resources. Another commenter supported CMS's work to identify and 
address social drivers of health in all patient care settings but 
recommended additional guidance from CMS and additional time to 
operationalize the screenings during outpatient visits.
    Response: We thank the commenters for the recommendation to engage 
with stakeholders and we will continue identifying opportunities for 
collaboration with stakeholders to ensure the measure is gathering 
granular data and adequately evaluating HRSNs. We agree with commenters 
that the intention of the measure is to understand patients' needs, 
rather than to provide epidemiologic information. We will also consider 
including references to the Distress Thermometer in our resources for 
this measure. Additionally, in response to the recommendation to keep 
the Hospital IQR Program reporting and the Hospital OQR Program 
reporting separate, we note that, as previously stated in the CY 2025 
OPPS/ASC proposed rule, the populations represented by the Hospital IQR 
and Hospital OQR programs are distinct, resulting in a different 
denominator calculation of the measure for each program (89 FR 59446). 
We will continue to require a separate data submission for each program 
in the HQR system.
    We appreciate the recommendations to consolidate the reporting of 
HRSNs at the organizational level, and to strengthen the requirements 
for hospitals to report on a more comprehensive set of equity measures. 
Additionally, regarding the recommendation to evaluate the initial 
metrics from the measure, we note that we will monitor measure 
implementation and data reporting as part of standard program and 
measure review and will consider updates to the measure if improvements 
are identified through this process. Regarding the use of Z codes, we 
appreciate commenters' recommendations; however, adoption of Z codes 
across healthcare systems has been slow and unstandardized, and the 
Screening for SDOH measure will be beneficial to clinicians in 
addressing patient social needs while provider uptake of Z codes 
improves.
    Comment: A few commenters supported the inclusion of the Screening 
for SDOH measure in the REHQR Program noting that they support the 
broad effort to evaluate and promote health equity and SDOH within the 
REH model and commended CMS for focusing on measures related to health 
equity for REHs because they play a vital role in ensuring healthcare 
access in rural and remote communities. They stated that inclusion of 
the measure will help ensure a focus on health-related social needs and 
address health equity across facilities. A commenter recommended that 
CMS prioritize inclusion of a patient experience measure in future 
rulemaking because they believe such measurement is currently missing 
from the REHQR program and is an important reflection of providing 
culturally relevant care.
    Response: We thank the commenters for their support of the 
inclusion of the Screening for SDOH measure in the REHQR Program, and 
we agree that HRSNs are critical factors that impact patient outcomes, 
and increased knowledge about patients' HRSNs will help REHs shape 
goals associated with health equity. Further, we agree that collecting 
these data will help REHs improve coordination with outpatient and 
community resources to better deliver patient-centered care. We thank 
the commenter for the recommendation and will consider inclusion of a 
patient experience measure in the REHQR Program in future rulemaking.
    Comment: A few commenters expressed specific support for the 
adoption of the Screening for SDOH measure in the ASCQR Program because 
it aligns with the measure as adopted in inpatient settings, reflects 
important priorities in safety and health equity, and will ensure that 
quality reporting is consistent across different healthcare settings. A 
commenter expressed support for CMS's efforts to improve health equity 
with the Screening of SDOH measure in the Hospital OQR and ASCQR 
Programs but recommended that CMS begin with voluntary reporting to 
allow HOPDs and ASCs time to implement the screening tools and 
workflows needed. The commenter also requested guidance on the cadence 
of required screenings such as if a patient is screened every visit or 
once every 6 months, or if a patient receives a HRSN screening in the 
emergency department and is then admitted, if they would need an 
additional screening to satisfy Hospital IQR Program reporting.
    Response: We appreciate the commenters' support and recommendation. 
We agree that the measure ensures alignment across quality programs and 
will help shape our goals associated with health equity. We thank the 
commenter for their recommendation to implement this measure with a 
voluntary reporting period. We remind readers that we proposed this 
measure with an initial voluntary reporting period beginning with the 
CY 2025 reporting period and proposed to require mandatory reporting 
beginning with the CY 2026 reporting period/CY 2028 payment or program 
determination.
    Regarding the commenter's request to clarify the cadence of 
screening we note that outpatient settings would not be required to re-
screen patients in the same reporting period if the data are already 
captured in the EHR. HOPDs, REHs and ASCs could confirm the current 
status of any previously reported HRSNs in another care setting and 
inquire about others not previously reported in lieu of re-screening a 
patient for all HRSN domains within the reporting period.
    Additionally, as previously discussed in the CY 2025 OPPS/ASC 
proposed rule, the populations represented by the Hospital IQR and 
other outpatient quality reporting programs are distinct, resulting in 
a different denominator calculation of the measure for each program (89 
FR 59446). Therefore, inpatient and outpatient settings will be unable 
to accurately report this measure

[[Page 94389]]

if data are combined for inpatient and outpatient programs. We will 
therefore continue to require a separate data submission for each 
program in the HQR system.
    In addition, as we stated in the proposed rule, screening for food 
insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety can help identify and provide 
appropriate referrals for patients who may benefit from greater support 
in one or more of those areas. As such, we are clarifying that while 
outpatient care can refer to numerous types of health services, such as 
emergency department (ED) services, observation services, outpatient 
surgical services, lab tests, and X-rays, for purposes of this measure 
in the Hospital OQR, REHQR, and ASCQR Programs, patients receiving 
services that are limited to specific medical tests are not included in 
the denominator cohort. These services include imaging, laboratory, and 
pharmacy services, which are typically specific types of auxiliary 
services to a patient's more comprehensive care, where such screenings 
and referrals should be provided.
    The following comments and responses are broadly applicable to the 
Hospital OQR, REHQR, and ASCQR Programs, unless noted otherwise.
    Comment: Many commenters expressed concerns about the 
administrative burden and insufficient reimbursement rate associated 
with the work required to collect data and report this measure for 
outpatient settings that are already under-resourced. These commenters 
recommended that CMS consider the administrative burden of the measure 
to ensure that new reporting processes do not place undue strain on 
entities. A few commenters recommended working with stakeholders to 
develop an electronic clinical quality measure to reduce burden. A few 
commenters recommended increased reimbursement due to the reporting 
burden of this measure. A commenter recommended removing other quality 
reporting requirements if there are no additional financial incentives.
    Response: We acknowledge commenters' concerns regarding resource 
constraints, including increased administrative burden; however, 
achieving health equity is an issue that deserves serious focus and 
rapid action for improvement. The benefits of screening patients for 
SDOH outweigh the minimal burden under this measure. As discussed in 
the CY 2025 OPPS/ASC proposed rule (89 FR 59516 and 59517, 89 FR 59522 
and 59523, and 89 FR 59526, respectively) and in sections XXVI.A.c, 
XXVI.B.c, and XXVI.C.c of this final rule with comment period, we 
estimated the collection burden for this measure to be 2 minutes per 
patient screening and 10 minutes annually per HOPD, REH, and ASC to 
report the measure data. We note that there are ongoing reevaluation 
efforts that aim to improve the Screening for SDOH measure through the 
development of the Addressing Social Needs (ASN) eCQM for introduction 
to the Hospital IQR Program and eventually the Merit-based Incentive 
Payment System (MIPS) and Hospital OQR Programs.\358\ As we move toward 
interoperability, we will consider this recommendation in future 
rulemaking. We will continue to identify opportunities for 
collaboration with stakeholders to align screening for SDOH assessment 
across CMS programs.
---------------------------------------------------------------------------

    \358\ Centers for Medicare & Medicaid Services. (2023). 
Addressing Social Needs (ASN) Electronic Clinical Quality Measure 
(eCQM) Specifications Document for Public Comment. Available at: 
https://mmshub.cms.gov/sites/default/files/Yale-CORE-ASN-measure-specs-for-public-comment.pdf.
---------------------------------------------------------------------------

    We seek to reduce reporting burden in all our quality reporting 
programs and value-based purchasing programs. As an example of our 
commitment to reducing burden in the ASCQR Program, we refer readers to 
our RFI on the Specialty-Select and the Specialty-Threshold frameworks 
as detailed in section XVII.G of this final rule with comment period, 
in an effort to decrease reporting burden by ensuring that ASCs are 
reporting on measures most meaningful to their facilities.
    Regarding commenters' recommendations for increased reimbursement, 
we reiterate that the Hospital OQR and ASCQR Programs are statutorily 
limited to reduce the fee schedule increase factor by 2-percentage 
points in the event the HOPD or ASC fails to meet program requirements 
as established by the Secretary (section 1833(i)(7) of the Act). The 
Hospital OQR, REHQR and ASCQR Program statutes do not provide authority 
for CMS to provide financial incentives. For the REHQR Program, there 
is no financial penalty or incentive for quality reporting (section 
1861(kkk)(7)); however, REHs will be paid for furnishing covered REH 
services at a rate that includes an additional five percent increase 
over the OPPS payment rate.
    To support implementation of the Screening for SDOH measure within 
HOPDs, REHs and ASC, we refer readers to the Hospital IQR Program's FAQ 
document regarding this measure in the Hospital IQR Program, available 
at: https://www.qualityreportingcenter.com/globalassets/2024/04/iqr/
17.-sdoh-measure_faqs_april-2024_vfinal508.pdf.
    We will develop a similar Frequently Asked Questions document for 
the Hospital OQR, REHQR, and ASCQR Programs as part of providing 
educational and outreach materials; this document will be conveyed 
through routine communication channels.
    Comment: Many commenters expressed concern about this Screening for 
SDOH measure under the ASCQR Program, stating that ASCs have 
insufficient resources, are likely understaffed, and have a lower 
reimbursement rate than hospitals, making this measure more difficult 
to implement given the increased reporting and operational burden 
required. A commenter stated that this measure expands the role of ASCs 
beyond their scope, without additional funding or resources. A 
commenter stated that ``we recently finalized a new standalone HCPCS G 
code describing a SDOH Risk Assessment'' and stated that providers can 
be paid for performing this service. This commenter further stated that 
this measure requires the ``same resource use in ASCs'' and recommended 
that CMS allow ASCs to receive reimbursement for the SDOH Risk 
Assessment. A commenter recommended implementing measures that only 
provide the greatest value to patient safety and quality of care in 
ASCs, as additional mandatory measures may divert revenue away from 
other patient safety investments.
    A few commenters expressed concern about the burden associated with 
aggregating and reporting results of existing screening for SDOH among 
HOPDs. A commenter expressed concern that the addition of this measure 
in the Hospital OQR Program may significantly increase burden on 
Emergency Departments (EDs), which are often resource strained.
    Response: We thank commenters for their concern that this measure 
is out of scope for ASCs; however, we respectfully disagree as ASCs are 
responsible for ensuring the best outcomes possible for the patients 
that they serve. Ensuring the best possible outcomes requires treating 
the whole patient, which includes identifying potential barriers to 
optimal health, and helping patients identify resources to address 
those barriers. Under the AHC Model, the five core domains selected to 
screen HRSNs (food insecurity, housing instability, transportation 
needs, utility difficulties and interpersonal safety) were chosen based 
upon literature

[[Page 94390]]

review and expert consensus utilizing the availability of scientific 
evidence linking a given HRSN to adverse health outcomes and increased 
healthcare utilization, including hospitalizations and associated costs 
(89 FR 59444). ASCs that have successfully connected patients to 
community resources may show a decrease in readmission rates and in 
cost savings associated with healthcare delivery over 
time.359 360 This may be beneficial for the health of the 
communities ASCs serve. We encourage ASCs to refer vulnerable patients 
to appropriate resources wherever possible or feasible.\361\
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    \359\ Bensken WP, Alberti PM, Koroukian SM. (2021) Health-
related social needs and increased readmission rates: findings from 
the nationwide readmissions database. J Gen Intern Med. 
2021;36:1173-1180. https://doi.org/10.1007/s11606-021-06646-3.
    \360\ Weaver RH, Bolkan C, Robbins SL, et al. (2021). Caring 
beyond health care: lessons learned from a community-based 
partnership to reduce hospital readmission among high-risk adults. J 
Comm Engag Scholarship. 2021;14(1). https://doi.org/10.54656/NWMT3812.
    \361\ We refer ASCs to the following resource that match 
patients with community resources based on geographic location: 
https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/CMLN%20Social%20Determinants%20of%20Health%20Relevance%20and%20Resources%20Guide.pdf.
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    Additionally, we appreciate the commenter's concern that this 
measure may divert revenue away from other patient safety investments 
among facilities and note the minimal burden of collecting data 
(estimated at 2 minutes per patient screening and 10 minutes annually 
per HOPD to report the measure data). We will monitor this measure, as 
we do all ASCQR measures, for any unintended or adverse outcomes 
associated with potential future implementation. The ability for 
medical providers to screen for social drivers of health through the 
five HRSN domains is important and will help patients with the most 
complex needs.
    We acknowledge commenters' concerns that this measure may place 
increased burden on HOPDs and reiterate that the benefits of screening 
patients for SDOH outweigh the minimal burden of collecting data 
(estimated at 2 minutes per patient screening and 10 minutes annually 
per HOPD to report the measure data) under this measure as achieving 
health equity requires swift action for improvement. We also note that 
hospitals participating in the Hospital IQR Program that choose to 
voluntarily report this measure will have experience screening patients 
for SDOH under the Hospital IQR Program, and HOPDs would not be 
required to re-screen the same patients for the Hospital OQR Program if 
the data are already captured in the EHR.
    Comment: Many commenters that did not support the Screening for 
SDOH measure expressed concern about the additional burden that would 
be created by implementing EHR systems to collect SDOH data. These 
commenters recommended additional time for measure implementation.
    Several commenters expressed concern that implementation of this 
measure under the ASCQR Program lacks feasibility and creates 
additional burden as a large portion of ASCs have not integrated EHRs 
into current workflow processes and would have limited resources to 
finance this technology due to the investments required for this 
quality reporting measure. A commenter recommended conducting 
additional research on how this measure can be applied to the ASC 
setting, especially for ASCs that are under-resourced and unable to 
implement EHR systems.
    Response: We thank the commenters for their feedback and note that 
the Screening for SDOH measure does not require EHRs for healthcare 
facilities that have not yet acquired one. We disagree that this 
concern is applicable to the adoption of the Screening for SDOH measure 
in the Hospital OQR and REHQR Programs. We note that, as of 2021, 96 
percent of hospitals have already integrated EHRs into their workflow 
processes.\362\ Further, hospitals that participate in the Hospital OQR 
Program are required to utilize health information technology modules 
certified to the 2015 Edition Cures Update, which was a specific 
edition of ONC health IT certification criteria, beginning with the CY 
2023 reporting period/CY 2025 payment determination to report eCQMs (86 
FR 63868 through 63869).\363\ We note that this rule with comment 
period finalizes a requirement at Sec.  419.46(j)(1) that hospitals 
participating in the Hospital OQR Program ``utilize certified 
technology updated to be consistent with the Office of the National 
Coordinator for Health Information Technology's health IT certification 
criteria, as adopted and updated in 45 CFR 170.315,'' which is 
consistent with ONC's current ``edition-less'' approach to the ONC 
health IT certification criteria (89 FR 1207). We also note that, for 
clarity, this finalized requirement differs from our proposal by the 
removal of an acronym and its replacement by the full agency name. 
Additionally, many REHs reported under the Medicare Promoting 
Interoperability and Hospital IQR Programs prior to conversion, and 
thus are likely to also have EHR systems already embedded in their 
workflows.
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    \362\ Office of the National Coordinator. National Trends in 
Hospital and Physician Adoption of Electronic Health Records. 
Available at: https://www.healthit.gov/data/quickstats/national-trends-hospital-and-physician-adoption-electronic-health-records.
    \363\ On July 29, 2024, notice was posted in the Federal 
Register that ONC would be dually titled to the Assistant Secretary 
for Technology Policy and Office of the National Coordinator for 
Health Information Technology (89 FR 60903).
---------------------------------------------------------------------------

    Adoption of EHR technology will lead to more positive outcomes in 
ASC settings, as EHR usage has been shown to have positive impacts on 
care quality, coordination, efficiency, patient care safety, 
documentation accuracy, and cost reduction.\364\ Although initial EHR 
adoption has associated costs, we expect that, over time, ASCs will 
experience less financial and operational burden. By purchasing an EHR, 
an ASC will save costs previously spent on maintaining and managing 
patient charts.\365\ EHRs additionally decrease duplicative testing and 
interventions and ensure all required patient information is included 
in the operative note, leading to accurate reimbursements.\366\ We 
continue to encourage ASCs to consider EHR adoption to streamline 
documentation of patient health information, including demographic 
characteristics and SDOH, which will incentivize ASCs to collect and 
utilize data to identify critical equity gaps, implement plans to 
address these gaps, and ensure that resources are dedicated toward 
addressing health equity initiatives.
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    \364\ Geier, A., & Smith, D. (2019). The role of electronic 
documentation in Ambulatory Surgery Centers. AORN Journal, 109(4), 
444-450. https://doi.org/10.1002/aorn.12636.
    \365\ Ibid.
    \366\ Ibid.
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    Comment: Many commenters recommended delaying voluntary 
implementation of the measure by at least 1 year and extending 
voluntary reporting to provide outpatient settings enough time to 
prepare and build the needed infrastructure and community networks or 
add a phased approach to mandatory reporting that allows flexibility 
for organizations to not burden their administrative tasks in ways that 
may hinder day-to-day operations. These commenters, across all 
programs, stated that the measure requires significant time and 
financial resources to integrate into workflows.
    A commenter recommended delaying implementation in the Hospital OQR 
Program until a comprehensive measure review has been performed. 
Another commenter specifically recommended that CMS delay voluntary 
reporting for the Hospital OQR Program until CY

[[Page 94391]]

2027 and begin mandatory reporting in CY 2029.
    Response: We thank the commenters for their feedback, and we 
acknowledge their concerns about the operational complexity of 
introducing new quality measures into existing clinical workflows and 
EHR systems. Beginning data collection remains imperative as we 
continue to build on our strategic pillar to advance health equity by 
addressing the health disparities that underlie our health system, and 
the proposed voluntary and mandatory reporting periods prioritize the 
urgency of capturing SDOH data and taking actionable steps towards 
closing health equity gaps.
    We acknowledge commenters' concerns regarding the financial 
resources needed to integrate this measure into workflows; however as 
previously noted, achieving health equity is an issue that deserves 
serious focus and rapid action for improvement. The benefits of 
screening patients for SDOH outweigh the minimal burden under this 
measure (estimated at 2 minutes per patient screening and 10 minutes 
annually per HOPD, REH, and ASC to report the measure data).
    Additionally, hospitals participating in the Hospital IQR Program 
that choose to voluntarily report this measure will have already 
reported data in FY 2024 (87 FR 49207 through 49208), and the Hospital 
IQR Program finalized mandatory reporting of this measure for the FY 
2026 payment determination (that is data submitted in FY 2025 
representing the FY 2024 performance period) (87 FR 49207 through 
49208). Given the timing of reporting this measure in the Hospital IQR 
Program, outpatient settings will have the opportunity to learn from 
the experiences of hospitals participating in the Hospital IQR Program, 
including best practices for collecting HRSN data, prior to mandatory 
reporting for the Hospital OQR, REHQR, and ASCQR Programs for the CY 
2026 Reporting Period/CY 2028 Payment or Program Determination.
    Comment: Many commenters that did not support adoption of the 
Screening for SDOH measure expressed concern that it has not been 
tested in the HOPD, REH or ASC settings. Many commenters urged CMS to 
continue testing the measure in these outpatient settings to 
demonstrate feasibility, reliability, validity, and to address 
challenges endured in the inpatient setting prior to expanding it as 
mandatory in the outpatient setting.
    Several commenters did not support adoption of the Screening for 
SDOH measure in the ASCQR Program based on their belief that there is 
insufficient evidence that this measure leads to improved patient 
outcomes among ASCs. A commenter expressed concern that the burden of 
implementation of this measure in the ASCQR Program and the potential 
for skewed results due to lack of testing outweighs the benefit of 
screening for SDOH due to the lack of evidence-based research and 
inaccuracy of non-risk adjusted data. A commenter expressed concern 
that without testing in the ASC setting, there are many unknowns 
regarding requirements for implementation such as determining the full-
time equivalent (FTE) impact of staffing the screening and referral 
processes. A commenter recommended first conducting screenings for SDOH 
in a smaller outpatient population to provide lessons learned.
    Response: We acknowledge that this measure was initially developed 
for the acute care setting. We recognize the value of measures 
undergoing testing and evaluation of validity and feasibility in the 
setting for which they are being adopted. As part of the PRMR process, 
the measure underwent an assessment of the measure's testing data and 
appropriateness for the outpatient setting, including a review of the 
measure's scientific acceptability, feasibility, and usability. 
Additionally, we will continue to test the performance of this measure 
in the HOPD, REH, and ASC settings throughout the voluntary reporting 
period. Given the urgency of achieving health equity, and as there are 
currently no other existing measures that address screening of HRSNs, 
it is important to implement this measure as soon as feasible. This 
measure is not specific to any particular setting of care and is 
equally applicable to the outpatient setting as to general acute care 
settings. Identifying the HRSNs of HOPD, REH, and ASC patients will be 
equally valuable in understanding patients' needs, improving care 
coordination with outpatient and community resources, increasing the 
dignity and respect with which patients are treated, and supporting 
development of patient-centered treatment plans. Additionally, 
outpatient settings are encouraged to prioritize screening tools that 
have undergone adequate testing to ensure they are accurate and 
reliable. For example, the AHC HRSN Screening Tool has been tested 
across many care delivery settings in diverse geographic locations and 
has demonstrated evidence of both reliability and validity.\367\ We 
thank the commenters for their recommendations and will monitor measure 
implementation and data reporting as part of standard program and 
measure review and will consider updates to the measure if improvements 
are identified through this process.
---------------------------------------------------------------------------

    \367\ Centers for Medicare and Medicaid Services. (2023). A 
Guide to Using the Accountable Health Communities Health-Related 
Social Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
---------------------------------------------------------------------------

    Comment: Many commenters did not support the Screening of SDOH 
measure due to their beliefs that the lack of standardized screening 
approach could introduce inaccuracies in data collection. These 
commenters recommended that CMS require outpatient settings to take a 
standardized screening approach for implementing this measure, 
including providing set screening tools, as this would allow for more 
valid comparisons between HOPDs, REHs, and ASCs and would reduce 
ambiguity.
    A few commenters recommended working with stakeholders to develop 
consistent survey questions while maintaining the flexibility for how 
and when facilities screen patients. A commenter expressed concern that 
not all tools compiled on the SIREN website have been validated or 
``vetted through all steps of gold standard measure development.'' This 
commenter recommended that CMS provide a list of screening tools that 
are adequately tested and validated to reduce potential burden that may 
occur if CMS were to mandate a standardized tool at a later time. A 
commenter expressed their belief that standardized measure definitions 
within and across programs, coupled with more timely performance data 
provided to facilities will greatly support the advancement of patient 
safety and quality improvement by creating consistent and actionable 
goals and results. The commenter recommended providing more timely 
actionable data to promote immediate advancements in patient safety and 
quality.
    Response: We thank the commenters for their feedback. We agree that 
allowing outpatient settings flexibility with tool selection is a 
tradeoff, but, as we discussed previously, this flexibility aims to 
reduce burden for HOPDs, REHs and ASCs, by allowing these settings to 
continue to use screening tools that they may already use for greater 
customization of screening and data collection for each settings' 
patient population and individual needs. This is the first time we will 
be collecting SDOH data in these settings as part of quality 
performance measurement and

[[Page 94392]]

we want to ensure that all HOPDs, REHs, and ASCs are working towards 
initial screening, in a form and manner that works for them. We 
anticipate that for HOPDs, REHs, and ASCs associated with other 
healthcare settings where this measure has been adopted, such as the 
Hospital IQR Program, an organic alignment of screening tools will 
emerge and generate a degree of industry-led standardization. We also 
anticipate additional emphasis on standardized and validated screening 
instruments in future versions of these measure. Outpatient settings 
are encouraged to prioritize screening tools that have undergone 
adequate testing to ensure they are accurate and reliable. As we 
indicated previously, health equity is a key priority, and we intend to 
continue to develop relevant measures. We are taking commenters' 
recommendations under consideration as appropriate to inform potential 
future notice-and-comment rulemaking.
    In response to the commenter's recommendation to provide more 
timely actionable data, we intend to publicly display data for the 
Screening for SDOH measure on the first available refresh of Care 
Compare. Typically, this would occur in October of the year following 
data submission. For example, for the CY 2026 Reporting Period/2028 
Payment Determination or Program year, the data would be displayed on 
Care Compare in October 2027. This is as soon as technically feasible 
for data collected during the CY 2026 performance period and submitted 
between January 1 and May 15, 2027.
    Comment: Many commenters that did not support adoption of the 
Screening for SDOH measure stated that the measure is not appropriate 
for the outpatient setting where there is little to no patient follow-
up. A few of these commenters noted that outpatient settings would need 
to hire staff such as case managers and social workers to conduct 
screening in advance of a patient visit and make any needed workflow 
changes.
    For the ASCQR Program specifically, many commenters stated their 
belief that the measure does not capture the essence of the work 
currently done by ASCs, the measure falls outside of the primary ASC 
function, the questions asked are inappropriate for the ASC setting, 
and the data should be collected by primary care physicians or 
hospitals.
    For the Hospital OQR Program, a commenter expressed concern that 
HOPDs that focus on diagnostic testing are not suited to conduct 
screening for SDOH due to the absence of specialized staff to conduct 
this screening. A commenter recommended a more targeted approach to 
screening that only requires screening under the Hospital OQR Program 
in HOPDs with long-term patient and provider relationships, adequate 
staff, and resources to respond to results from screening. This 
commenter recommended convening a TEP with representation from the 
hospital community to determine how to identify HOPDs that have the 
resources to implement this measure.
    Response: We thank the commenters for their concerns. However, we 
disagree with the commenters' assertion that the measure is not 
appropriate for outpatient settings. HOPDs, ASCs, and REHs are 
responsible for treating the whole patient and ensuring the best 
outcomes possible for the patients that they serve, including 
identifying potential barriers to optimal health, and helping patients 
identify resources to address those barriers. One of the benefits of 
collecting data from screening for HRSNs will be identification of 
opportunities to enable meaningful action, including prioritizing and 
investing in such resources. As part of the PRMR process, the measure 
underwent an assessment of the measure's testing data and 
appropriateness for the outpatient setting, including a review of the 
measure's scientific acceptability, feasibility, and usability. We are 
taking commenters' recommendations under consideration as appropriate 
to inform future potential rulemaking.
    Additionally, as previously noted, while outpatient care can refer 
to numerous types of health services, such as emergency department (ED) 
services, observation services, outpatient surgical services, lab 
tests, and X-rays, for purposes of this measure in the Hospital OQR, 
REHQR, and ASCQR Programs, patients receiving services that are limited 
to specific medical tests are not included in the screening cadence of 
this measure. These services include imaging, laboratory, and pharmacy 
services, which are typically specific types of auxiliary services to a 
patient's more comprehensive care, where such screenings and referrals 
should be provided.
    Comment: Many commenters that did not support adoption of the 
Screening for SDOH measure cited concerns about whether the data would 
be meaningful, accurately and fairly evaluate organizations, and lead 
to progress or change. A commenter questioned the efficacy and validity 
of the AHC Model and whether the testing of universal HRSN screening 
demonstrated meaningful impact on health outcomes and health equity. A 
commenter expressed concern about the required author permissions when 
using the AHC tool and noted that healthcare facilities would need to 
``reach out to the screening question author to notify them of their 
plan to use it.''
    Several commenters noted other factors to include in the measure to 
make it more meaningful, including demographics across communities 
other than race and ethnicity (such as age, gender, and health 
literacy, accessibility of services, etc.). A commenter recommended 
using a community needs assessment and implementing regulatory 
flexibilities to help providers effectively act on social determinants 
of health and gaps in access to care.
    A commenter urged CMS to develop a more meaningful measure for 
Hospital OQR Program that captures a granular scale of data and 
differentiates patients with the greatest need for follow-up.
    Response: We thank the commenters for their input. The intent of 
this measure is to promote adoption of screening patients for HRSNs by 
healthcare providers as well as taking action to connect patients who 
identify one or more HRSNs with available resources. Evaluation of the 
AHC Model concluded that universal screening may identify needs that 
would otherwise remain undetected.\368\ While broad availability of 
community-based resources that address patients' HRSNs would be ideal, 
one of the benefits of collecting data from screening for HRSNs will be 
identification of opportunities to enable meaningful action, including 
prioritizing and investing in such resources. Beginning to collect the 
data remains imperative and such data collection has already allowed 
some entities to reallocate resources to address HRSNs that 
disproportionately affect a given patient population or geographic 
region, as noted in the FY 2023 IPPS/LTCH PPS final rule, in which the 
Hospital IQR Program adopted this measure (87 FR 49213). This input is 
valuable in the continuing development of the CMS health equity quality 
measurement efforts and supports our aims to acknowledge the impact of 
HRSNs on healthcare access, utilization, outcomes, and costs. We will 
continue to take all concerns, comments, and suggestions into account 
for any potential future development and expansion of our health equity 
quality measurement efforts.
---------------------------------------------------------------------------

    \368\ Centers for Medicare and Medicaid Services. (2020). 
Accountable Health Communities Mode (AHC) First Evaluation Report. 
Available at: https://www.cms.gov/priorities/innovation/data-and-reports/2020/ahc-first-eval-rpt-perspective.
---------------------------------------------------------------------------

    Regarding the commenter's concern about using the AHC Screening 
tool, we

[[Page 94393]]

note that use of this tool is not required, but if healthcare 
facilities would like to use it, they can follow the guidance provided 
in the ``Accountable Health Communities Health-Related Social Needs 
Screening Tool Citation and Notification Information'' document, which 
requires citing the authors and in some instances, notifying the 
authors of intended use.\369\ Beyond notification and citation, there 
are no restrictions on use of the AHC screening tool questions. 
Furthermore, healthcare facilities may create or choose other tools to 
use for implementing this measure.
---------------------------------------------------------------------------

    \369\ Centers for Medicare and Medicaid Services. (2021). 
Accountable Health Communities Health-Related Social Needs Screening 
Tool Citation and Notification Information. Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screening-tool-citation.
---------------------------------------------------------------------------

    Comment: Several commenters that did not support adoption of the 
Screening for SDOH measure expressed concern that this measure has not 
received endorsement by the CBE. Some of these commenters noted that 
this was a previous condition placed by the MAP when the Screening for 
SDOH measure was adopted in other quality reporting programs. Several 
commenters recommended submitting the measure for endorsement by a CBE. 
A commenter also suggested using a different measure for achieving 
health equity that is endorsed by the National Quality Forum (NQF).
    Response: While we recognize the value of measures undergoing 
review for potential CBE endorsement, measures of health equity are a 
priority for CMS, and it is important to implement this measure as soon 
as possible, beginning with voluntary reporting for the CY 2025 
reporting period followed by mandatory reporting for the CY 2026 
reporting period. We note that section 1833(t)(17) of the Act requires 
measures developed for the Hospital OQR Program to reflect consensus 
among affected parties. Under section 1833(i)(7)(B), this requirement 
also applies to the ASCQR Program except as the Secretary may otherwise 
provide. Under section 1833(t)(17)(C)(i), the Hospital OQR Program is 
only required to include measures set forth by a national consensus 
building entity ``to the extent feasible and practicable.'' We have 
been unable to identify any measures on this topic set forth by a 
consensus building entity and it is not feasible and practicable to 
include such a measure at this time. As we have noted in previous 
rulemaking, consensus among affected parties can be reflected in ways 
other than CBE endorsement, including through the measure development 
process, through broad acceptance and use of the measure(s), and 
through public comment (75 FR 72064 and 72065 for the Hospital OQR 
Program and 76 FR 74494 for the ASCQR Program). As stated previously, 
this measure has been adopted through rulemaking with public comment 
periods in other care settings, including inpatient hospitals, PPS-
Exempt cancer hospitals, and dialysis facilities, which evidence broad 
applicability and acceptability of the measure concept and 
specifications for different healthcare facility types, both inpatient 
and outpatient.
    For the REHQR Program, we note that under section 
1861(kkk)(7)(C)(ii) of the Act, the Secretary may specify a measure 
that is not endorsed if due consideration is given to measures that 
have been endorsed or adopted by a consensus organization identified by 
the Secretary. We reviewed measures endorsed by consensus organizations 
and were unable to identify any other measures that assess screening 
for SDOH and are endorsed by a consensus organization, and therefore, 
the exception in section 1861(kkk)(7)(C)(ii) of the Act applies.
    We note further that the Screening for SDOH measure has been 
adopted in four other CMS quality reporting programs (Hospital IQR 
Program, IPFQR Program, PCHQR Program, and ESRD QIP), and that this 
measure establishes an important foundation to prioritize the 
achievement of health equity among outpatient settings.
    Regarding the commenter's recommendation that we implement measures 
endorsed by the NQF, we wish to clarify that the CBE is currently 
Battelle. Battelle administers the PQM in the pre-rulemaking and 
measure endorsement processes. As previously discussed in section 
XIV.B.1.c of this final rule with comment period, this measure has been 
reviewed during the Pre-Rulemaking Measure Review (PRMR) process, where 
the committee recommended this measure with conditions. We will 
consider submitting the Screening for SDOH measure to the CBE for 
endorsement in the future.
    Additionally, we note that our approach to developing health equity 
measures is incremental and intended to evolve over time to capture 
social drivers of health in the Hospital OQR, REHQR and ASCQR Programs. 
We will continue to take all concerns, comments, and suggestions into 
account for any potential future development and expansion of our 
health equity quality measurement efforts. As with all Hospital OQR, 
REHQR and ASCQR measures, we will monitor the data and any unintended 
consequences of the measure as part of standard measure maintenance.
    Comment: Several commenters recommended CMS use consistent 
terminology when describing social risk factors related to health 
outcomes to ensure consistency with other quality reporting programs 
and prevent unintended consequences that may negatively impact 
patients. A few commenters recommended that CMS work with stakeholders 
to clearly define terms and domains related to this measure to improve 
processes and data collection.
    Response: We thank the commenters for their feedback. HRSNs, which 
we have previously defined as individual-level, adverse social 
conditions that negatively impact a person's health or healthcare, are 
significant risk factors associated with worse health outcomes as well 
as increased healthcare utilization.\370\ As previously mentioned, SDOH 
is an umbrella term that refers to community-level factors that impact 
health and well-being, while HRSNs are social and economic needs that 
individuals experience that affect their ability to maintain their 
health and well-being.\371\ Conceptually, HRSNs exist along a continuum 
with other equity-related terms--such as ``social determinants of 
health'' and ``social risk factors''--used to describe upstream factors 
that can adversely affect the health of individuals and communities. We 
agree these terms are often conflated and even used interchangeably, 
and the variety of terms has created both confusion as well as concern, 
prompting leaders in the field to adopt ``social drivers of health'' 
instead. In the future, we intend to utilize ``social drivers of 
health'' terminology to more holistically capture aforementioned and 
related concepts, while minimizing potential misinterpretation or 
negative connotation. We thank commenters for their recommendations and 
will continue identifying opportunities for collaboration with 
stakeholders to determine the most appropriate terminology for 
screening for social drivers of health.
---------------------------------------------------------------------------

    \370\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. 
Available at: https://www.cms.gov/priorities/innovation/media/document/ahcm-screeningtool-companion.
    \371\ Assistant Secretary for Planning and Evaluation. (November 
2023). Call to Action: Addressing Health-Related Social Needs in 
Communities Across the Nation. Available at: https://aspe.hhs.gov/sites/default/files/documents/3e2f6140d0087435cc6832bf8cf32618/hhs-call-to-action-health-related-social-needs.pdf.

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[[Page 94394]]

    Comment: Several commenters expressed concerns regarding the 
measure specifications for the Screening for SDOH measure and asked for 
further clarification on the target population (or denominator), 
frequency of screening, and screening across multiple outpatient care 
settings.
    A commenter was further concerned that some domains will have small 
denominators that could produce inaccurate or biased results. Another 
commenter noted that the measure specifications were vague and needed 
additional clarification. A commenter requested clarification on how 
entities will verify and confirm that screenings were previously 
conducted within the reporting period. The commenter recommended 
allowing screening results to remain valid for 12 months to reduce risk 
of over-screening.
    A few commenters requested clarification on the measure 
specifications under the Hospital OQR Program. A commenter requested 
additional clarification on the denominator of the measure as the word 
``admitted'' is vague. Another commenter requested clarification on the 
frequency of screening required under the Hospital OQR Program. A 
commenter expressed concern that the broad screening policy fails to 
consider the nuances of screening pediatric patients for the Hospital 
OQR program. The commenter asked for clarification on the screening and 
reporting requirements for screening pediatric patients along with 
members of the household.
    Response: We acknowledge commenters' concerns regarding the measure 
specifications. The target population, or denominator, for the 
Screening for SDOH measure includes patients who are 18 years or older 
on the date of service and who are admitted to an HOPD, REH, or ASC. 
Patients can be excluded from the denominator if they opt-out of 
screening or are unable to complete the screening and have no legal 
guardian or caregiver to do so on their behalf during the visit. 
Additionally, as previously noted, patients receiving services that are 
limited to specific medical tests are not included in the denominator 
of this measure. These services include imaging, laboratory, and 
pharmacy services, which are typically specific types of auxiliary 
services to a patient's more comprehensive care, where such screenings 
and referrals should be provided.
    In addition, we acknowledge that certain patients will have 
frequent outpatient visits, such as patients receiving outpatient 
hospital-based chemotherapy or patients regularly receiving outpatient 
hospital-based infusions or injections. These patients and other 
patients frequently admitted to the hospital do not need to be re-
screened at every outpatient admission. Rather, after receiving an 
initial screening, during subsequent visits within the calendar year 
the patient's provider could confirm the accuracy of their previously 
reported screening result and provide an opportunity for the patient to 
update that information as needed. In addition, if a patient has 
documented SDOH screening results available for review within the 
patient's medical record or EHR at the time of the outpatient 
admission, even if the screening occurred outside of the HOPD, REH, or 
ASC, and these SDOH screening results fall within the same measure 
performance period year, then these previously captured SDOH Screening 
results could be included in the outpatient settings' reporting of 
numerator and denominator data, during the measure's reporting period. 
In addition, if a patient has multiple admissions during the same 
performance period, and receives multiple SDOH screenings and has 
results of each SDOH screening documented, then the most recent result 
should be submitted.372 373 For example, if the patient was 
screened in May 2025 and then screened again in December 2025, the 
results of the December 2025 admission would be used for the CY 2025 
reporting period.\374\ We intend to monitor and evaluate the measure 
screening requirements, including frequency, in these outpatient 
settings to ensure balance between quality of care for patients and 
facility burden.
---------------------------------------------------------------------------

    \372\ Centers for Medicare & Medicaid Services. (April 2024). 
Hospital Quality Reporting Program Frequently Asked Question: Social 
Drivers of Health (SDOH) Measures. Available at: https://
www.qualityreportingcenter.com/globalassets/2024/04/iqr/17.-sdoh-
measure_faqs_april-2024_vfinal508.pdf.
    \373\ Measure specifications are posted at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures2#tab2 for the 
Hospital OQR and REHQR Programs, and https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 for the ASCQR Program and may be moved 
to other pages on QualityNet upon publication of the final rule.
    \374\ Ibid.
---------------------------------------------------------------------------

    We thank the commenter for their concern regarding screening 
pediatric patients in the Hospital OQR Program and note that as 
outlined in the measure specifications, screening is only required for 
patients who are admitted to an outpatient facility and who are 18 
years or older on the date of admission. If the patient admitted to the 
HOPD is over 18 years of age and other members of the household are 
present, only the admitted patient is required to be screened.\375\ We 
note that the measure specifications do not prevent hospitals from 
screening additional patients at their discretion.
---------------------------------------------------------------------------

    \375\ Measure specifications are posted at https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures2#tab2 for the 
Hospital OQR and REHQR Programs, and https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 for the ASCQR Program and may be moved 
to other pages on QualityNet upon publication of the final rule.
---------------------------------------------------------------------------

    With respect to the commenter's question regarding the use of the 
word ``admitted'' in the HOPD setting, the term admitted patients 
refers to a person who receives ambulatory care in these designated 
settings. We agree that screening for SDOH is most appropriate when 
administered so that the patient's information can be used by the 
patient's care team. As we stated in the proposed rule, screening for 
food insecurity, housing instability, transportation needs, utility 
difficulties, and interpersonal safety can help identify and provide 
appropriate referrals for patients who may benefit from greater support 
in one or more of those areas. As such, we are clarifying that while 
outpatient care can refer to numerous types of health services, such as 
emergency department (ED) services, observation services, outpatient 
surgical services, lab tests, and X-rays, for purposes of this measure 
in the Hospital OQR Program, REHQR, and ASCQR programs, patients 
receiving services that are limited to specific medical tests are not 
included in the denominator cohort. These services include imaging, 
laboratory, and pharmacy services, which are typically specific types 
of auxiliary services to a patient's more comprehensive care, where 
such screenings and referrals should be provided.
    For additional information on how to apply and report these 
screenings, we refer readers to the Hospital IQR Program's FAQ document 
regarding this measure in the Hospital IQR Program, available at: 
https://www.qualityreportingcenter.com/globalassets/2024/04/iqr/17.-
sdoh-measure_faqs_april-2024_vfinal508.pdf. We will develop a similar 
Frequently Asked Questions document for the Hospital OQR, REHQR and 
ASCQR Programs as part of providing educational and training materials; 
this document will be conveyed through routine communication channels.
    Comment: A few commenters asked for clarification as to why the 
five HRSN domains were chosen for screening.
    Response: We have prioritized selection of the proposed five HRSN 
domains based on existing evidence

[[Page 94395]]

from the AHC Model that informed the initial selection, and emerging 
evidence of correlations between given SDOH and worse health outcomes 
and SDOH for which interventions have shown marked improvements in 
health outcomes and healthcare utilization (89 FR 59444).
    Comment: A few commenters raised concerns about penalization among 
healthcare facilities for not complying with the measure requirements. 
A commenter recommended sensitivity and a formulaic coefficient when 
evaluating under-resourced ASCs to ensure congruency on quality 
performance relative to facilities with more resources and adjusting 
programmatic requirements to ensure that reporting on quality measures 
is feasible for all facilities and that under-resourced facilities do 
not face undue difficulty or burdensome penalties that could affect 
access to care for vulnerable populations.
    A commenter expressed concern that mandatory reporting of SDOH data 
would place undue burden on REHs that could penalize or reduce 
reimbursement. This commenter recommended to continue with voluntary 
reporting and avoid linking mandatory reporting to financial penalties 
or reimbursement reductions.
    Response: We thank the commenters for their feedback and 
acknowledge their concerns. We note that the Hospital OQR and ASCQR 
Programs are pay-for-reporting programs, and participants are not 
scored, and do not have their payments affected, based on their 
performance on measures. The REHQR Program does not include a financial 
incentive or penalty for REHs. Additionally, we note that as discussed 
in the CY 2025 OPPS/ASC proposed rule (89 FR 59516 and 59517, 89 FR 
59522 and 59523, and 89 FR 59526, respectively) and in sections 
XXVI.A.c, XXVI.B.c, and XXVI.C.c of this final rule with comment 
period, we estimate minimal burden of 2 minutes per patient screening 
and 10 minutes per hospital/facility to report the measure annually.
    Comment: A few commenters recommended we ensure alignment with 
Project Gravity standards and promote interoperability standards for 
data collection. A commenter recommended we harmonize drivers of health 
assessment approaches with the National Committee for Quality Assurance 
(NCQA) to ensure these initiatives that address SDOH in patient 
assessments are not active performance measures, cause confusion, or 
waste resources. This commenter also recommended we ensure screening 
tools are approved by the Social Innovation and Research Evaluation 
Network (SIREN) and with the Core Quality Measures Collaborative (CQMC) 
to promote alignment across public and private payers.
    Response: We thank the commenters for this feedback. This data 
collection will inform meaningful and sustainable solutions for other 
provider types through similar collections in other quality reporting 
programs. We will continue identifying opportunities for collaboration 
with other stakeholders to align drivers of health assessment across 
CMS programs. We commend additional stakeholder efforts currently 
underway to expand capabilities to capture additional drivers of health 
data elements, including the Gravity Project.\376\ We support 
harmonization of social risk factor data for interoperable electronic 
health information exchange that will meet information exchange 
standards.
---------------------------------------------------------------------------

    \376\ The Gravity Project. Introducing the Gravity Project. 
Available at: https://thegravityproject.net/.
---------------------------------------------------------------------------

    We note that this rule finalizes a requirement at Sec.  
419.46(j)(1) that hospitals participating in the Hospital OQR Program 
``utilize certified technology updated to be consistent with the Office 
of the National Coordinator for Health Information Technology's health 
IT certification criteria, as adopted and updated in 45 CFR 170.315,'' 
which is consistent with ONC's current ``edition-less'' approach to the 
ONC health IT certification criteria (89 FR 1207). We also note that, 
for clarity, this finalized requirement differs from our proposal by 
the removal of an acronym and its replacement by the full agency name. 
Additionally, many REHs reported under the Medicare Promoting 
Interoperability and Hospital IQR Programs prior to conversion, and 
thus are likely to also have EHR systems already embedded in their 
workflows.
    Extraction of structured data from a certified EHR can make the 
data more accessible for utilization and submission for quality 
measurement reporting.\377\ As previously stated, this rule finalizes a 
requirement at Sec.  419.46(j)(1) that hospitals participating in the 
Hospital OQR Program ``utilize certified technology updated to be 
consistent with the Office of the National Coordinator for Health 
Information Technology's health IT certification criteria, as adopted 
and updated in 45 CFR 170.315.'' We encourage use of tools that will 
meet information exchange standards and facility interoperability. We 
also encourage providers to identify and utilize tools that rely on 
standards-based approaches to data collection and utilization to 
support interoperability of these data.
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    \377\ ONC certification criteria for health IT can be found at 
45 CFR 170.315. Please refer to the following for more details on 
CEHRT requirements: https://www.cms.gov/medicare/regulations-guidance/promoting-interoperability-programs/certified-ehr-technology. Please refer to the Measure Calculation section for more 
details on CEHRT and the HCHE Measure.
---------------------------------------------------------------------------

    We agree with the commenter that SIREN is a good resource when 
selecting a screening tool as it contains descriptions of the content 
and characteristics of various tools, including information about 
intended populations, completion time, and number of questions. Another 
example is the AHC HRSN Screening Tool. The AHC HRSN Screening Tool is 
a 10-item screening tool, with 16 supplemental questions, to identify 
patient needs that can be addressed through community services in four 
domains (economic stability, social and community context, neighborhood 
and physical environment, and food). Outpatient settings are encouraged 
to prioritize screening tools that have undergone adequate testing to 
ensure they are accurate and reliable.
    Comment: A few commenters recommended ensuring that screenings are 
performed in a person-centered way due to the sensitive nature of the 
screening domains and encouraged educating and building trust with 
patients as to why this SDOH data is being used and collected. A few 
commenters encouraged working with stakeholders to ensure different 
approaches to social needs screening are considered. These commenters 
recommended developing a database that provides information on the 
methods and processes that are most effective for HRSN screening.
    Response: We thank commenters for their recommendations on 
screening methods and agree with the importance of conducting person-
centered screenings to maintain trust between patients and their 
providers. We reiterate that healthcare facilities would have the 
flexibility to customize screening and data collection to their patient 
populations and individual needs. We encourage HOPDs, REHs, and ASCs to 
train staff on culturally sensitive engagement and trauma-centered 
care. We also encourage HOPDs, REHs, and ASCs to ensure that patients 
feel safe when answering questions and remind patients that they may 
opt out of the screening for any reason. We note that the measure 
specifications exclude patients: (1) who opt-out of screening; and (2) 
are

[[Page 94396]]

themselves unable to complete the screening and have no legal guardian 
or caregiver able to do so on the patient's behalf (89 FR 59447). 
Providers are also encouraged to use tools and screening protocols that 
consider the sensitive nature of the screening domains. We will 
continue identifying opportunities for collaboration with interested 
parties to align screening for social drivers of health assessment 
across CMS programs.
    Comment: Many commenters expressed concerns about the risk of over-
screening, as patients may receive care in multiple settings and that 
interoperability challenges prevent access to data collected by other 
healthcare facilities. These commenters noted that repeated screenings 
could be burdensome for both staff and patients and distressing for 
patients who would expect the healthcare facility to address their 
needs after the screening.
    A commenter expressed concern that ASCs are already engaging in 
facility-appropriate screening efforts to support patients with the 
social determinants of health and additional screening would be 
duplicative.
    Response: We acknowledge commenter's concerns regarding the risk of 
over screening and reiterate that HOPD, ASCs, and REHs could confirm 
the current status of any previously reported HRSNs in another care 
setting and inquire about others not previously reported in lieu of re-
screening a patient for all HRSN domains within the reporting period. 
This will reduce the burden and time necessary for re-screening a 
patient for all five HRSN domains. If this information has been 
captured in the EHR in another outpatient setting or the inpatient 
setting during the same reporting period, the HOPD, REH, and ASC could 
include that information in the reporting of numerator and denominator 
data during the measure's reporting period. Patients should be screened 
during every admission, but only unique patients should be included in 
each reporting period (year).\378\
---------------------------------------------------------------------------

    \378\ Centers for Medicare & Medicaid Services. (April 2024). 
Hospital Quality Reporting Program Frequently Asked Question: Social 
Drivers of Health (SDOH) Measures. Available at: https://
www.qualityreportingcenter.com/globalassets/2024/04/iqr/17.-sdoh-
measure_faqs_april-2024_vfinal508.pdf.
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    We thank commenters for their questions regarding the technical 
specifications of the measure. In addition, as we stated in the 
proposed rule, screening for food insecurity, housing instability, 
transportation needs, utility difficulties, and interpersonal safety 
can help identify and provide appropriate referrals for patients who 
may benefit from greater support in one or more of those areas. As 
such, we are clarifying that while outpatient care can refer to 
numerous types of health services, such as emergency department (ED) 
services, observation services, outpatient surgical services, lab 
tests, and X-rays, for purposes of this measure in the Hospital OQR 
Program, REHQR, and ASCQR programs, patients receiving services that 
are limited to specific medical tests are not included in the 
denominator cohort. These services include imaging, laboratory, and 
pharmacy services, which are typically specific types of auxiliary 
services to a patient's more comprehensive care, where such screenings 
and referrals should be provided.
    We commend ASC efforts currently underway to capture additional 
drivers of health data elements. As previously stated in the proposed 
rule, we are allowing healthcare facilities to select their screening 
tool to reduce burden and in recognition of the fact that some 
healthcare facilities may already be screening their patients for HRSNs 
as we recognize the benefits of providing healthcare facilities with 
flexibility to customize screening and data collection to their patient 
populations and individual needs (89 FR 59447). We note that while the 
Screening for SDOH measure requires screening for the five identified 
HRSNs, ASCs may screen for additional HRSNs that they determine are 
relevant for their patient population and the community in which they 
serve. For example, the AHC HRSN Screening Tool includes questions for 
eight supplemental domains, including financial strain. Furthermore, we 
note that this measure is a first step towards development of a long-
term strategy to integrate social drivers of health and HRSN data into 
quality performance measurement and is part of our broader commitment 
to health equity.
    Comment: A few commenters that did not support the Screening for 
SDOH measure expressed concerns regarding patient safety and privacy 
when conducting screening in small or rural communities. A commenter 
expressed concern about the increased reliance on quality measures for 
measuring safety. The commenter noted their belief that safety measures 
are surrogate measures of harm, subject to variation based on patient 
populations.
    Response: We acknowledge the commenters' concerns and recognize 
that facilitating quality improvement for rural healthcare facilities 
can present unique challenges and is a high priority under the 
Meaningful Measures Framework. One of the potential benefits of 
screening data will be identification of opportunities to enable 
meaningful action, including prioritizing and investing in community-
based resources that address patients' health-related social needs. We 
believe that each hospital best understands the patient population they 
serve and hope that hospitals can discern whether they have existing 
resources to meet their populations' unmet needs or dedicate further 
resources for which they know a need exists and now have evidence of 
the extent that resource allocation is necessary. It is important to 
use quality measures as a benchmark for identifying best practices in 
care and to accurately track quality improvement progress.\379\ We 
emphasize that quality measures help to improve the quality of 
healthcare through an approach that is consistent and holds healthcare 
facilities accountable.\380\
---------------------------------------------------------------------------

    \379\ Centers for Medicare & Medicaid Services. (2024). Quality 
Measurement and Quality Improvement. Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/MMS/Quality-Measure-and-Quality-Improvement-
#:~:text=Patient%20and%20families%20use%20quality,likelihood%20of%20d
esired%20health%20outcomes.
    \380\ Centers for Medicare & Medicaid Services. (September 
2021). Quality Measures: How They Are Developed, Used, & Maintained. 
Available at: https://www.cms.gov/sites/default/files/2021-09/Quality-Measures-How-They-Are-Developed-Used-Maintained.pdf.
---------------------------------------------------------------------------

    We also understand the sensitive nature of screening, and that 
patient safety must remain the HOPD's, REH's, and ASC's principal 
concern. We encourage all outpatient settings to train staff on 
culturally sensitive engagement and trauma-centered care and note that 
there are a variety of methods to screen for HRSNs that increase 
privacy, including written or digital methods, such electronically 
through a patient portal or on tablets. We advise HOPDs, REHs, and ASCs 
to ensure that patients feel safe answering questions and to further 
remind patients that they may opt out of the screening for any reason. 
We note that the measure specifications exclude patients: (1) who opt-
out of screening; and (2) are themselves unable to complete the 
screening and have no legal guardian or caregiver able to do so on the 
patient's behalf (89 FR 59447). We also note that, because these 
healthcare facilities are covered entities under the HIPAA Privacy and 
Security Rule (codified at 45 CFR parts 160 and 164),\381\ information 
provided by patients in response to screening for this

[[Page 94397]]

measure likely would be PHI.\382\ Therefore, these healthcare 
facilities are responsible for complying with applicable privacy and 
security requirements under HIPAA and other laws to ensure that 
patients' PHI is protected and not impermissibly disclosed.
---------------------------------------------------------------------------

    \381\ For more information on the three HIPAA rules, we refer 
readers to the HIPAA for Professionals site at: https://www.hhs.gov/hipaa/for-professionals/index.html.
    \382\ U.S. Department of Health and Human Services. What is PHI? 
Available at: https://www.hhs.gov/answers/hipaa/what-is-phi/index.html.
---------------------------------------------------------------------------

    In response to the commenter's concern about the increased reliance 
on quality measures for measuring safety, it is important to use 
quality measures as a benchmark for identifying best practices in care 
and to accurately track quality improvement progress.\383\ We emphasize 
that quality measures help to improve the quality of healthcare through 
an approach that is consistent and holds healthcare facilities 
accountable.\384\
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    \383\ Centers for Medicare & Medicaid Services. (2024). Quality 
Measurement and Quality Improvement. Available at: https://
www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/MMS/Quality-Measure-and-Quality-Improvement-
#:~:text=Patient%20and%20families%20use%20quality,likelihood%20of%20d
esired%20health%20outcomes.
    \384\ Centers for Medicare & Medicaid Services. (September 
2021). Quality Measures: How They Are Developed, Used, & Maintained. 
Available at: https://www.cms.gov/sites/default/files/2021-09/Quality-Measures-How-They-Are-Developed-Used-Maintained.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters that did not support the Screening for 
SDOH measure expressed concern that the measure does not account for 
geographic variation in screening. A commenter noted that there exists 
significant variation in community needs across geographic areas and 
not accounting for geographic variation of social drivers could be 
misleading. The commenter recommended using the Vizient Vulnerability 
Index for benchmarking to address these concerns.
    Response: Due to variability across healthcare facilities and the 
populations they serve, and in alignment with the Hospital IQR Program, 
we would allow healthcare facilities flexibility with the selection of 
tools to screen for food insecurity, housing instability, 
transportation needs, utility difficulties, and interpersonal safety. 
As we noted in the CY 2025 OPPS/ASC proposed rule (89 FR 59447), one 
example of a screening tool that healthcare facilities could consider 
using is the AHC HRSN Screening Tool, which providers used in the AHC 
Model to screen for HRSNs in their Medicare, Medicaid, and dually 
eligible beneficiary populations. The AHC HRSN Screening Tool has been 
tested across many care delivery sites in diverse geographic locations 
across the United States and demonstrates evidence of both reliability 
and validity across geographic regions. Moreover, the AHC HRSN 
Screening Tool can be implemented in a variety of healthcare settings, 
including HOPDs, REHs, and ASCs. We thank the commenter for their 
recommendation to utilize the Vizient Vulnerability Index and will take 
this into consideration as appropriate as we monitor implementation of 
the Screening for SDOH measure in our quality reporting programs.
    Comment: A few commenters recommended combining inpatient and 
outpatient reporting and noted that this would reduce duplicative 
efforts.
    Response: We thank commenters for their recommendation. As 
previously stated in the CY 2025 OPPS/ASC proposed rule, the 
populations represented by the Hospital IQR and Hospital OQR programs 
are distinct, resulting in a different denominator calculation of the 
measure for each program (89 FR 59446). Therefore, inpatient and 
outpatient settings will be unable to accurately report this measure if 
data are combined for the Hospital IQR and Hospital OQR Programs. We 
will continue to require a separate data submission for each program in 
the HQR system.
    Comment: A few commenters did not support the Screening for SDOH 
measure in the ASCQR Program due to the sensitive nature of screening 
for risk of interpersonal violence. These commenters recommended 
changes that included removing this domain from the measure 
specifications and updating the measure to ensure patient privacy when 
responding to this screening question, either by excluding patients who 
could not respond to the question confidentially, or by ensuring 
responses remain hidden in all records and handouts accessible to 
patients. Additionally, a commenter expressed concerns regarding the 
cited literature, stating their belief that the discussed pilot study 
was not representative of the ASC setting. A commenter also stated that 
CMS's assertion that ASCs already collect data regarding HRSNs is 
inaccurate.
    Response: We have prioritized selection of the proposed five HRSN 
domains based on existing evidence from the AHC Model that informed the 
initial selection, and emerging evidence of correlations between given 
social drivers of health and worse health outcomes and social drivers 
of health for which interventions have shown marked improvements in 
health outcomes and healthcare utilization. However, we understand 
commenters' concerns regarding the sensitive nature of screening for 
risk of interpersonal violence within the ASC environment and agree 
that patient safety must remain the ASC's principal concern.
    Regarding the interpersonal safety domain and appropriateness of 
screening in the ASC environment, we note that with a year of voluntary 
reporting, there is time for ASCs to train staff in the collection of 
data for HRSNs. Additionally, there are a variety of methods, other 
than audible methods, to screen for HRSNs that increase privacy, 
including written or digital methods, including electronically through 
a patient portal or on tablets. We advise ASCs to ensure that patients 
feel safe answering questions and to further remind patients that they 
may opt out of the screening for any reason. We note that the measure 
specifications as proposed excludes patients: (1) who opt-out of 
screening; and (2) are themselves unable to complete the screening and 
have no legal guardian or caregiver able to do so on the patient's 
behalf (89 FR 59447).
    Comment: A commenter expressed concern that the lack of 
standardization for this measure is not in alignment with the Medicaid 
and Children's Health Insurance Program (CHIP) data collection 
standards which require that data collection on race, ethnicity, sex, 
primary language, and disability status must be standardized. This 
commenter requested clarification on which aspects of SDOH would be 
exempt from necessary aggregation due to intrinsic intersection with 
race, ethnicity, sex, primary language, and disability status. The 
commenter further noted that if the data collected by a tool developed 
for this new proposed measure are not applicable or in line with 
Medicaid and CHIP data standards, it does not align with the first 
priority of CMS's Health Equity Framework of the ``collection . . . of 
standardized data . . . across CMS programs''.
    Response: We acknowledge the commenter's concern. We will explore 
opportunities to align with Medicaid and CHIP data collection 
standards; however, we currently collect race and ethnicity data for 
chart-abstracted measures, CAHPS surveys, and eCQMs.
    After consideration of the public comments we received, we are 
finalizing the adoption of the Screening for SDOH measure as proposed 
in the Hospital OQR, REHQR, and ASCQR Programs beginning with voluntary 
reporting for the CY 2025 reporting period/CY 2027 payment or program 
determination followed by mandatory reporting beginning with the CY 
2026

[[Page 94398]]

reporting period/CY 2028 payment or program determination.
3. Adoption of the Screen Positive Rate for Social Drivers of Health 
(SDOH) Measure for the Hospital Outpatient Quality Reporting (OQR), 
Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory 
Surgical Center Quality Reporting (ASCQR) Programs Beginning With 
Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Payment or Program Determination
a. Background
    In the outpatient setting, we encourage systematic screening of 
patients' HRSNs to identify patient needs and support improvements in 
health outcomes. While the Screening for SDOH measure (discussed 
previously in section XIV.B.2 of this final rule with comment period) 
identifies individuals with HRSNs, the Screen Positive Rate for SDOH 
measure estimates the magnitude of these needs for a healthcare 
facility's patient population served. We believe the adoption of the 
Screen Positive Rate for SDOH measure would encourage healthcare 
facilities to track the prevalence of specific HRSNs among patients 
over time and use the data to stratify risk as part of quality 
performance improvement efforts.
    We proposed that healthcare facilities would be required to report 
the Screen Positive Rate for SDOH measure as the rate of patients who 
screened positive for each of the five core HRSNs domains discussed in 
Table 161: food insecurity, housing instability, transportation needs, 
utility difficulties, and interpersonal safety.\385\
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    \385\ Billioux A, Verlander, K, Anthony S, Alley D. (2017). 
Standardized Screening for Health-Related Social Needs in Clinical 
Settings: The Accountable Health Communities Screening Tool. NAM 
Perspectives, 7(5). https://doi.org/10.31478/201705b.
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b. Measure Overview
    While the Screening for SDOH measure (discussed in section XIV.B.2 
of this final rule with comment period) enables identification of 
individuals with HRSNs, the Screen Positive Rate for SDOH measure would 
allow healthcare facilities to capture the magnitude of these needs by 
requiring healthcare facilities to report the rates of patients who 
screened positive for each of the five core HRSNs. The Screen Positive 
Rate for SDOH is a process measure that provides information on the 
percent of patients receiving care at an HOPD, REH, or ASC, who were 18 
years or older on the date of service, who were screened for all five 
HRSNs described in Table 161, and who screened positive for one or more 
of those HRSNs. Healthcare facilities would report this measure as five 
separate rates, one for each of the HRSNs: food insecurity, housing 
instability, transportation needs, utility difficulties, and 
interpersonal safety. This measure is not intended for comparison of 
screen positive rates of HRSNs between healthcare facilities but is 
rather to provide transparency in the delivery of care and actionable 
information to healthcare facilities on the unmet needs among their 
patients.
c. Pre-Rulemaking Measure Review
    As part of the PRMR process, the Hospital Recommendation Group 
reviewed and voted on the Screen Positive Rate for SDOH measure \386\ 
during their meeting on January 18 and 19, 2024.\387\ \388\ The 
committee did not reach the 75 percent vote required to reach a 
consensus as to its recommendation for the Screen Positive Rate for 
SDOH measure for the Hospital OQR, REHQR, or ASCQR Programs. The 
committee expressed a concern about ambiguity in the interpretation of 
data from the Screen Positive Rate for SDOH measure as well as 
expectations regarding healthcare facilities. We acknowledge that a 
high score could be interpreted in different ways but that the 
objective of this measure is to incentivize collection of these data to 
help identify patient needs and where resources constraints exist. The 
committee also discussed a condition specific to the Hospital OQR 
Program, which was to allow hospitals to report this measure one time 
each year for both the Hospital IQR Program and Hospital OQR 
Program.\389\ We note that we considered allowing hospitals to report 
this measure jointly for the Hospital IQR and Hospital OQR Programs (if 
applicable); however, as the patient populations represented by the 
programs are different, as is the measure calculation due to this 
difference in the denominator, we proposed to require a separate data 
submission for each program.
---------------------------------------------------------------------------

    \386\ The Screen Positive Rate for SDOH measure is identified on 
the MUC List as MUC2023-171.
    \387\ Centers for Medicare & Medicaid Services. List of Measures 
Under Consideration for December 1, 2023. Available at: https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
    \388\ Centers for Medicare & Medicaid Services. (December 2023). 
Overview of the List of Measures Under Consideration. Available at: 
https://mmshub.cms.gov/sites/default/files/2023-MUC-List-Overview.pdf.
    \389\ Partnership for Quality Measurement. (2023). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
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    Further, we have identified the implementation of this measure in 
the Hospital OQR, REHQR, and ASCQR Programs as an important way to 
address the health equity measurement gap. We also believe that the 
information collected from this measure can help HOPDs, REHs, and ASCs 
understand SDOH needs in their patient population and to devise 
appropriate interventions. On this basis, we proposed this measure for 
adoption for all three of our programs.
d. CBE Endorsement
    As discussed in section XIV.B.2.d of this final rule with comment 
period, we find no other feasible and practicable measures set forth by 
a national consensus building entity on the topic of screening for 
SDOH. While we recognize the value of measures undergoing CBE 
endorsement review and prefer to use endorsed measures, there are 
currently no CBE-endorsed measures that address screening for SDOH in 
the outpatient setting. Given the urgency of achieving health equity, 
it is important to implement this measure as soon as possible. We note 
that the five domains for which patients would be screened were chosen 
based upon literature review and expert consensus, and that these five 
domains informed development of the Screen Positive Rate for SDOH 
measure. We will consider submitting the Screen Positive Rate for SDOH 
measure to the CBE for endorsement in the future.
e. Data Sources
    The data sources for this measure are as described for the 
Screening for SDOH measure found in section XIV.B.2.e of this final 
rule with comment period.
f. Measure Calculation
    The Screen Positive Rate for SDOH measure is calculated with a 
numerator and denominator. The numerator is defined as the number of 
patients receiving care at an HOPD, REH, or ASC who are 18 years or 
older on the date of admission, who were screened for all five HRSNs 
described in Table 161, and who screen positive for having a need in 
one or more of those HRSNs (calculated separately). The denominator is 
defined as the number of patients receiving care at the HOPD, REH, or 
ASC who are 18 years or older on the date of admission and are screened 
for all five HRSNs during their care.

[[Page 94399]]

    The results of this measure are calculated and reported as five 
separate rates--one for each HRSN, each calculated with the same 
denominator. The measure excludes patients who: (1) opt-out of 
screening; or (2) are themselves unable to complete the screening and 
have no legal guardian or caregiver able to do so on the patient's 
behalf.
g. Data Submission and Reporting
    While this measure would require healthcare facilities to collect 
patient-level data on their patients' SDOH screening results, 
consistent with the Screening for SDOH measure, we proposed to adopt 
this measure as an aggregate measure in the CY 2025 OPPS/ASC proposed 
rule. Specifically, we proposed that healthcare facilities would be 
required to submit aggregated data representing the total numerator 
results for each of the five screening areas and the total number of 
patients screened for all five of the HRSNs. We proposed to require 
aggregate data because we believe it is unnecessary for healthcare 
facilities to submit data collected at the patient level as this would 
cause undue burden due to the transfer of large quantities of data. 
However, in the future, we may consider the reporting of patient-level 
information. This measure aims to encourage healthcare facilities to 
screen for and identify HRSNs as it is most important for healthcare 
facilities to collect this HRSN data to address social needs among 
their patient populations.
    Healthcare facilities would be required to submit information via a 
CMS-designated information system (currently the HQR system) consistent 
with the prior adoption of this measure in the Hospital IQR, IPFQR and 
PCHQR Programs. We refer readers to sections XV.E.2.a, XVI.E.3.b, and 
XVII.E.2.a of this final rule with comment period for additional 
details regarding data submission using the CMS-designated information 
system in the Hospital OQR, REHQR, and ASC Programs, respectively.
    As we noted in section XIV.B.3.c of this final rule with comment 
period, we considered allowing hospitals to report this measure jointly 
for the Hospital IQR and Hospital OQR Programs; that is, allowing 
hospitals to submit once under both programs rather than submitting 
data twice in the HQR system. However, as the populations represented 
by the programs are different, resulting in different calculations of 
the measure denominator under each program, we proposed to require a 
separate data submission for each program.
    We proposed to adopt this Screen Positive Rate for SDOH measure 
beginning with voluntary reporting for the CY 2025 reporting period, 
followed by mandatory reporting beginning with the CY 2026 reporting 
period/CY 2028 payment or program determination to be consistent with 
the Screening for SDOH measure. Similar to the Screening for SDOH 
measure, a voluntary period would allow time for healthcare facilities 
to select and integrate screening tools into their clinical workflow 
processes and gain experience with both measures before measure results 
are publicly displayed on the Compare tool.
    We invited public comment on our proposal to adopt the Screen 
Positive Rate for SDOH measure for the Hospital OQR, REHQR, and ASCQR 
Programs beginning with voluntary reporting on this measure for the CY 
2025 reporting period followed by mandatory reporting beginning with 
the CY 2026 reporting period/CY 2028 payment or program determination, 
as described above.
    Comment: Many commenters supported adoption of the Screen Positive 
Rate for SDOH measure and CMS's continuing efforts towards measure 
alignment across the CMS quality reporting programs. Commenters 
expressed support for hospitals not only tracking who gets screened but 
also who screens positive as a step toward hospitals developing action 
plans to address the risk factors identified. Commenters additionally 
supported the five domains identified as they support a stronger safety 
net and focus on unmet needs, noting that all five domains affect 
health and quality of patient lives. Some commenters noted that 
adoption of the measure will ensure that the practitioners' time 
conducting the screening is properly reimbursed.
    Response: We thank commenters for their support of the Screen 
Positive Rate for SDOH measure. We agree that HRSNs are critical 
factors that impact patient outcomes and health equity. By 
systematically screening for these factors and enabling early 
interventions, healthcare providers can address the root causes of 
disparities and encourage a shift toward a healthcare culture that 
prioritizes proactive intervention and data-driven policy changes to 
close the gap in health outcomes between different populations.
    Comment: A few commenters did not support the Screen Positive Rate 
for SDOH measure because it was not endorsed by the CBE or because the 
PQM did not reach consensus for recommending the measure. A few 
commenters recommended additional testing in the outpatient setting. A 
few commenters recommended that CMS continue to test these measures 
through voluntary reporting in the programs where they have already 
been adopted prior to expanding them into additional quality reporting 
programs. For ASCs, a commenter noted that the measure cannot be said 
to meet the requirement for consensus through broad acceptance of the 
measure by ASCs or through use of the measure by ASCs as ASCs were not 
involved in the development of the measure.
    Response: While we recognize the value of measures undergoing 
review for potential CBE endorsement, measures of health equity are a 
priority for CMS, and it is important to implement this measure as soon 
as possible. For the Hospital OQR and ASCQR Programs, we note that 
section 1833(t)(17) of the Act does not require that each measure we 
adopt be CBE-endorsed (76 FR 74494), but states that the Hospital OQR 
and ASCQR Programs, to the extent feasible and practicable, shall 
include measures set forth by one or more national consensus building 
entities. We reviewed measures endorsed by consensus organizations and 
were unable to identify any other measures on this topic endorsed by a 
consensus organization, so the inclusion of such a measure is not 
feasible or practicable. Section 1833(t)(17)(C)(i) also requires 
measures included in the Hospital OQR and ASCQR Programs to reflect 
consensus among affected parties. As we have stated in previous 
rulemaking (75 FR 72064 and 76 FR 74494), consensus among affected 
parties can be reflected in ways other than CBE endorsement, including 
through the measure development process, through broad acceptance and 
use of the measure(s), and through public comment. The Screen Positive 
Rate for SDOH measure achieved the aim of consensus among affected 
parties through its broad use in a number of quality reporting 
programs, including the Hospital IQR Program (87 FR 49215 through 
49220), IPFQR Program (88 FR 51117 through 51121), PCHQR Program (88 FR 
59219 through 59222), and ESRD QIP (88 FR 76476 through 76480).
    For the REHQR Program, we note that under section 
1861(kkk)(7)(C)(ii) of the Act, the Secretary may specify a measure 
that is not so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary. We reviewed measures endorsed by consensus 
organizations and were unable to identify any other measures on this 
topic endorsed by a consensus organization, and therefore, the

[[Page 94400]]

exception in section 1861(kkk)(7)(C)(ii) of the Act applies.
    As noted above, the Screen Positive Rate for SDOH measure has been 
adopted in four other CMS quality reporting programs (Hospital IQR 
Program, IPFQR Program, PCHQR Program, and ESRD QIP), and this measure 
establishes an important foundation to prioritize the achievement of 
health equity among outpatient settings. Additionally, we intend to 
conduct outreach and education to share information about the Screen 
Positive Rate for SDOH measure rates in conjunction with public 
reporting to prevent potential misinterpretation of the measure.
    Comment: Several commenters that did not support adoption of the 
Screen Positive Rate for SDOH measure raised concern with the burden 
associated with data collection and operational challenges associated 
with addressing needs identified through screening. A few commenters 
urged CMS to consider the staff burden and challenges experienced by 
different provider and facility types. A few commenters expressed 
concern about the administrative burden this may place on outpatient 
settings, particularly those that are under resourced, without 
accompanying reimbursement. A commenter expressed concern about the lag 
time between reporting or performance periods and reimbursement 
adjustments. A commenter suggested that CMS adjust programmatic 
requirements for under-resourced providers to ensure that health equity 
gaps could feasibly be addressed.
    For the ASCQR Program, a few commenters did not support the Screen 
Positive Rate for SDOH measure and raised concerns about 
interoperability challenges, noting that a large percentage of ASCs do 
not have an EHR. Therefore, they noted that those healthcare facilities 
would have to acquire EHR technology to improve patient care 
coordination and then turn their attention to SDOH data collection.
    Response: We thank commenters for their feedback. We acknowledge 
commenters' concerns regarding burden; however, achieving health equity 
is an issue that deserves serious focus and rapid action development. 
Additionally, as outlined in the CY 2025 OPPS/ASC proposed rule (89 FR 
59517, 89 FR 59523, and 89 FR 59527), the estimated burden for HOPDs, 
REHs, and ASCs to report this measure is estimated to be about 10 
minutes annually. Considering this burden estimate is a reasonable 
expectation for quality data submission, we do not agree it is 
necessary to provide reimbursements for the time taken to report this 
measure. We view this measure as a first step towards development of a 
long-term strategy to integrate social drivers of health data into 
healthcare facility quality performance measurement as part of our 
broader commitment to health equity. We will continue to take comments, 
concerns, and suggestions into consideration as appropriate in any 
future rulemaking.
    Regarding the ASCQR Program, we acknowledge that some ASCs may face 
challenges adopting EHR technology. We note that the ASCQR Program is a 
pay-for-reporting program, not a pay-for-performance program, and ASCs 
that do not have EHR technology can still satisfy reporting of both 
SDOH measures as the measures does not require an EHR for screening. As 
noted in the CY 2025 OPPS/ASC proposed rule (89 FR 59447), in alignment 
with the Hospital IQR Program, we proposed that HOPDs, REHs, and ASCs 
could confirm the current status of any previously reported HRSNs in 
another care setting and inquire about others not previously reported, 
in lieu of re-screening a patient within the reporting period.
    We note that this measure was designed to be implemented with or 
without an EHR. However, we also encourage ASCs to allocate resources 
towards EHR adoption if they are able. Adoption of EHR technology 
within ASCs will lead to more positive outcomes, as EHR usage has been 
shown to have positive impacts on care quality, coordination, 
efficiency, patient care safety, documentation accuracy, and cost 
reduction.\390\ Although initial EHR adoption has associated costs, it 
is expected that, over time, ASCs will experience a decrease in 
financial and operational burden. By purchasing an EHR, an ASC will 
save costs previously spent on maintaining and managing patient 
charts.\391\ EHRs additionally decrease duplicative testing and 
interventions. Furthermore, EHRs ensure all required patient 
information is included in the operative note, leading to accurate 
reimbursements.\392\ We continue to encourage ASCs to consider EHR 
adoption to streamline documentation of patient health information, 
including demographic characteristics and social determinants of 
health, which will support ASCs in collecting and utilizing data to 
identify critical equity gaps, implementing plans to address these 
gaps, and ensuring that resources are dedicated toward addressing 
health equity initiatives.
---------------------------------------------------------------------------

    \390\ Geier, A., & Smith, D. (2019). The role of electronic 
documentation in Ambulatory Surgery Centers. AORN Journal, 109(4), 
444-450. https://doi.org/10.1002/aorn.12636.
    \391\ Ibid.
    \392\ Ibid.
---------------------------------------------------------------------------

    Comment: A few commenters that did not support adoption of the 
Screen Positive Rate for SDOH measure expressed the concern that 
implementation of the measure raised expectations for providers to not 
only collect SDOH data but also be equipped to aid individuals in 
finding available community services. Some commenters expressed concern 
that this measure was not actionable and does not adequately match 
patients with resources. A few commenters argued the measure was 
inappropriate for the outpatient setting due to the lack of follow-up 
with patients. Several commenters expressed concern that small or rural 
outpatient settings may not have the community resources to assist 
patients.
    For the ASCQR Program, some commenters expressed concern that 
screenings could erode the provider-patient relationship if SDOHs are 
assessed, but the provider does not have a robust system in place to 
address the patient's needs once identified. A commenter expressed 
concerns with the requirement to screen for interpersonal safety in the 
context of outpatient surgical care, noting that this could jeopardize 
patient privacy and carry risk of patient harm.
    Response: We thank the commenters for their input. We appreciate 
the concerns noted and we have given them significant consideration in 
development of the proposal to adopt the Screen Positive Rate for SDOH 
measure. Regarding commenters' concerns with regard to potential 
erosion of the provider-patient relationship in the ASCQR Program, we 
first note that patients may decline participation, and second, 
reiterate that the intent of the measure is to promote adoption of HRSN 
screening by providers as part of a larger long-term strategy to 
improve patient outcomes and eliminate health equity gaps. As we noted 
in the CY 2025 OPPS/ASC proposed rule (89 FR 59448), the measure is 
intended to provide information to providers on the level of unmet 
social needs among patients served. Initiating data collection remains 
imperative and such data collection has already allowed some entities 
to reallocate resources to address HRSNs in disproportionately affected 
populations. We note this data collection is valuable in the continuing 
development of the CMS health equity quality measurement efforts and 
our aims to acknowledge the impact of HRSNs on healthcare access, 
utilization,

[[Page 94401]]

outcomes, and costs. The ability of medical providers to contextualize 
the interaction between HRSNs and poor health outcomes could strengthen 
referrals to and partnerships with community-based service providers 
for patients with the most complex needs.
    Regarding the interpersonal safety domain and appropriateness of 
screening in the ASC environment, we note that with a year of voluntary 
reporting, there is time for ASCs to train staff in the collection of 
data for HRSNs. Additionally, there are a variety of methods, other 
than audible methods, to screen for HRSNs that increase privacy, 
including written or digital methods, and electronically through a 
patient portal or on tablets. We advise ASCs to ensure that patients 
feel safe answering questions and to further remind patients that they 
may opt out of the screening for any reason. We note that the measure 
specifications as proposed excludes patients: (1) who opt-out of 
screening; and (2) are themselves unable to complete the screening and 
have no legal guardian or caregiver able to do so on the patient's 
behalf (89 FR 59447).
    Comment: A few commenters that did not support adoption of the 
Screen Positive Rate for SDOH measure expressed concern regarding 
interpretation and potential penalization of measure reporting, 
especially for REHs. A few commenters expressed concern that the 
measure is not standardized or validated, potentially leading to 
inappropriate comparisons among outpatient settings. A few commenters 
noted that the measure specifications were vague and needed additional 
clarification. A commenter was also concerned that facilities with 
higher screen positive rates would be penalized.
    For the ASCQR Program, a commenter requested that CMS maintain the 
measure as voluntary for the ASCQR Program as CMS continues to work 
through technical reporting challenges, such as publishing guidance on 
what constitutes a ``positive'' screen, with providers already 
reporting the measure in other quality reporting programs.
    Response: We appreciate the commenters' concerns. The measure is 
intended to provide information to providers on the level of unmet need 
among their patients and potentially in the community. To prevent 
potential misinterpretation of the measure rates, explanatory 
information will be included for the Screen Positive Rate for SDOH 
measure rates in conjunction with public reporting. We reiterate that 
the objective of this measure is to incentivize collection of these 
data to help identify patient needs and where resources constraints 
exist and is not intended for comparison between providers. Public 
reporting of healthcare quality data promotes transparency in the 
delivery of care by increasing the involvement of leadership in 
healthcare quality improvement, creating a sense of accountability, 
helping to focus organizational priorities, and providing a means of 
delivering important healthcare information to consumers and patient 
advocates. When the measure rates are publicly reported, the data will 
be accompanied by detailed explanations to understand what the measure 
means and how to interpret the rates in the appropriate context.
    Reporting a separate screen positive rate for each of the five 
HRSNs will provide important information to healthcare facilities, the 
communities that they serve, and policy makers. Because different 
community-based resources are appropriate to address each of the five 
HRSNs, reporting each of these rates separately will provide reliable 
and valid information to identify which communities are most in need of 
which resources to better enable support in addressing the most 
prevalent HRSNs. Additionally, as we stated in the CY 2025 OPPS/ASC 
proposed rule (89 FR 59448), this measure is not for comparison between 
healthcare facilities. Rather, the objective of this measure is to 
incentivize collection of these data to help identify patient needs and 
where resources constraints exist. Moreover, when the measure rates are 
publicly reported, the data will be accompanied by detailed 
explanations to understand what the measure means and how to interpret 
the rates in the appropriate context.
    Regarding commenters' concerns that these measures would penalize 
providers, we remind readers that the Hospital OQR and ASCQR Programs 
are pay-for-reporting programs. Participants are not scored, and their 
payments are not affected, based on their performance on measures; 
participants are only penalized for failure to submit required data on 
quality measures as specified. Additionally, the REHQR Program does not 
include a financial incentive or penalty for REHs.
    As we noted in the CY 2025 OPPS/ASC proposed rule (89 FR 59447), 
one example of a screening tool that healthcare facilities could 
consider using is the AHC HRSN Screening Tool, which providers used in 
the AHC Model to screen for HRSNs in their Medicare, Medicaid, and 
dually eligible beneficiary populations. We have tested the AHC HRSN 
Screening Tool across many care delivery sites in diverse geographic 
locations and determined that it demonstrates evidence of both 
reliability and validity. The AHC HRSN Screening Tool can be 
implemented in a variety of healthcare settings, including HOPDs, REHs, 
and ASCs. While the AHC Model focused on HRSNs among community-dwelling 
Medicare and Medicaid beneficiaries, the AHC HRSN Screening Tool can be 
used to screen patients with any insurance status or type, including 
commercially insured and uninsured individuals.
    We acknowledge that this measure was initially developed for the 
general acute care setting. While we recognize the value of measures 
undergoing testing and evaluation of validity and feasibility in the 
setting for which they are being adopted, given the urgency of 
achieving health equity, it is important to implement this measure as 
soon as feasible. We note that health equity is a critical topic for 
patients and that there are high levels of health disparities 
experienced by the ASC patient population, for example. Measure 
specifications are posted at: https://qualitynet.cms.gov/outpatient/oqr/proposedmeasures2#tab2 and https://qualitynet.cms.gov/asc/ascqr/proposedmeasures2#tab2 and may be moved to other pages on QualityNet 
upon publication of the final rule. We will monitor measure 
implementation and data reporting as part of standard program and 
measure review and will consider updates to the measure if improvements 
are identified through this process.
    Regarding comments about the ASCQR Program, for additional 
information on what constitutes a ``positive'' screen, we refer readers 
to discussion of this measure in section XIV.B.3 of this final rule 
with comment period and the CY 2025 OPPS/ASC proposed rule (89 FR 59448 
through 59449). We also refer readers to a Frequently Asked Questions 
document for the SDOH measures developed for the Hospital IQR Program, 
which can be found at: https://www.qualityreportingcenter.com/
globalassets/2024/04/iqr/17.-sdoh-measure_faqs_april-
2024_vfinal508.pdf. We intend to conduct outreach and education to 
share information about the Screen Positive Rate for SDOH measure rates 
in conjunction with public reporting. We reiterate that with a year of 
voluntary reporting, there is time for ASCs to train staff in the 
collection of data for HRSNs and that there are a variety of methods to 
screen for HRSNs including electronically through a patient portal or 
via tablets.

[[Page 94402]]

    Comment: Several commenters expressed that publicly reporting these 
data may lead to inaccurate perceptions of the quality of care in 
outpatient settings, particularly in the absence of any context. A 
commenter added that interpretation of this measure is difficult. 
Therefore, these commenters recommend that the measure not be publicly 
reported and instead be used for organizational quality improvement.
    Response: We appreciate the commenters' concerns. The measure is 
intended to provide information on the level of unmet need among 
patients and potentially in the community, and not for comparison 
between healthcare facilities (89 FR 59448). The objective of this 
measure is to incentivize collection of these data to help identify 
patient needs and determine where resource constraints exist. Public 
reporting of healthcare quality data promotes transparency in the 
delivery of care by increasing the involvement of leadership in 
healthcare quality improvement, creating a sense of accountability, 
helping to focus organizational priorities, and providing a means of 
delivering important healthcare information to consumers and patient 
advocates. When the measure rates for the Screen Positive Rate for SDOH 
measure are publicly reported, the data will be accompanied by detailed 
explanations to understand what the measure means and how to interpret 
the rates in the appropriate context. We also intend to conduct 
outreach and education to share information about the Screen Positive 
Rate for SDOH measure in conjunction with public reporting.
    Comment: Several commenters requested that CMS delay mandatory 
implementation of the measure until the CY 2027 reporting period, with 
mandatory reporting beginning in CY 2029, which would give providers at 
least 2 years to build needed infrastructure and community networks, 
and effectively collect and analyze necessary information without 
compromising care quality.
    For the Hospital OQR Program, a commenter noted that the measure 
would require significant time for participating hospitals to integrate 
the data collection and create clinical workflows to capture and 
improve patient care, particularly if they intend to integrate the 
measure into the HOPD's EHR system, which is often not the same vendor 
as what is used in the inpatient setting.
    For the ASCQR Program, a commenter noted challenges with the 
implementation timeline for the Screen Positive Rate for SDOH measure 
because it does not account for mandatory reporting of the OAS CAHPS 
Survey measure in the ASCQR Program, which begins in 2025, and would 
thus not allow sufficient time for work that would need to be done for 
the Screening for SDOH measure, if it were to include screening for 
interpersonal safety.
    Response: We thank the commenters for their recommendation. 
Collecting these data will help healthcare facilities improve care 
coordination and use of community resources to better deliver patient-
centered care. The proposed voluntary reporting period provides a 
sufficient transition period for healthcare facilities to select and 
integrate screening tools into their clinical workflow processes (89 FR 
59448), as we have permitted flexibility in tool selection and have 
already adopted this measure in other care settings to which these 
settings may utilize as resources for best practices. Regarding 
interoperability, we encourage healthcare facilities to configure their 
health IT in a manner that uses health IT vocabulary standards that 
enable interoperability of this data across systems. We note that the 
use of certified health IT that uses standardized exchange protocols 
and vocabularies can support the capture and exchange of HRSN 
information in an interoperable fashion, because standards increase the 
likelihood that facilities use the same encoding and exchange protocols 
for data transfer. These data can then be shared across the care 
continuum to support coordinated care.
    Regarding the ASCQR Program, we reiterate that with a year of 
voluntary reporting, there is time for ASCs to train staff in the 
collection of data for HRSNs and that there are a variety of methods to 
screen for HRSNs including electronically through a patient portal or 
via tablets. We will consider feedback about timeline, OAS CAHPS Survey 
overlap, and reporting as appropriate, in future potential rulemaking, 
should issues arise as we monitor implementation of this measure in the 
ASCQR Program.
    Comment: A few commenters recommended we facilitate the development 
of partnerships as well as sharing HRSN information with community 
health workers and community-based organizations to help patients with 
basic resource needs. A commenter recommended we ensure alignment with 
Project Gravity standards and promote interoperability standards for 
data collection. A commenter recommended harmonization of drivers of 
health assessment approaches with the National Committee for Quality 
Assurance (NCQA). The commenter also recommended we ensure screening 
tools are approved by the Social Innovation and Research Evaluation 
Network (SIREN) and with the Core Quality Measures Collaborative (CQMC) 
to promote alignment across public and private payers. A commenter 
recommended improving the measure's interoperability to avoid 
administrative burden and duplicative efforts.
    Response: We thank the commenters for their recommendations. We are 
working with our partners to ensure standardization and alignment where 
possible. The measure aligns with NCQA's Healthcare Effectiveness Data 
and Information Set (HEDIS[supreg]) measure, Social Need Screening and 
Intervention (SNS-E), by focusing on food insecurity, housing 
instability, and transportation needs. We also note that the five 
domains covered by this measure are included within the ``social risk 
domains'' of the Gravity Project. We also note ongoing reevaluation 
efforts that aim to improve the Screening for SDOH and Screen Positive 
Rate for SDOH measures through the development of the Addressing Social 
Needs (ASN) electronic clinical quality measure (eCQM) for introduction 
into the Hospital IQR Program and eventually the MIPS and Hospital OQR 
Programs.\393\ As noted in the CY 2025 OPPS/ASC proposed rule (89 FR 
59447), we refer readers to evidence based resources like the SIREN 
website which includes comprehensive information about the most widely 
used HRSN screening tools. We encourage healthcare facilities to 
consider digital standardized screening tools. We refer readers to the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49207 through 49208), where we 
discuss how the use of certified health information technology (IT), 
including but not limited to CEHRT, can support capture of HRSN 
information in a standardized, interoperable fashion. We also encourage 
healthcare facilities to learn about the United States Core Data for 
Interoperability (USCDI) standard used in certified health IT and how 
this standard can support interoperable exchange of health and HRSN 
assessment data. We wish to reiterate that our approach to developing 
health equity measures is incremental and will evolve over time to 
capture health

[[Page 94403]]

equity outcomes and ensure alignment with our partners.
---------------------------------------------------------------------------

    \393\ Centers for Medicare & Medicaid Services. (2023). 
Addressing Social Needs (ASN) Electronic Clinical Quality Measure 
(eCQM) Specifications Document for Public Comment. Available at: 
https://mmshub.cms.gov/sites/default/files/Yale-CORE-ASN-measure-specs-for-public-comment.pdf.
---------------------------------------------------------------------------

    Comment: A few commenters recommended other factors to include in 
the measure to make it more meaningful, including demographics across 
communities other than race and ethnicity (such as age, gender, health 
literacy, etc.), accessibility of services, as well as more granularity 
in reporting to identify the patients with the greatest need for 
follow-up referrals or to vary interventions based on patient need. A 
few commenters urged CMS to evaluate ways to better support providers 
and community-based organizations in addressing HRSNs, including 
through Innovation Center model tests and flexibilities in the Medicare 
statute.
    For the ASCQR Program, a few commenters suggested that a measure be 
developed to assess whether an ASC's quality program addresses 
equitable care and outcomes for the surgical services provided at the 
center. A commenter suggested that CMS should develop claims-based 
measures that evaluate surgical care outcomes stratified by patient 
characteristics such as race and ethnicity, SES, dual eligibility and 
other related factors.
    Response: We thank the commenters for their recommendations and 
will take them into consideration as appropriate as we monitor 
implementation of the Screen Positive Rate for SDOH measure in our 
quality reporting programs.
    After consideration of the public comments we received, we are 
finalizing the adoption of the Screen Positive Rate for SDOH measure as 
proposed in the Hospital OQR, REHQR and ASCQR Programs.

C. Modification of the Immediate Measure Removal Policy for the 
Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical 
Center Quality Reporting (ASCQR) Programs Beginning With CY 2025

    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60634 
through 60635) and the CY 2015 OPPS/ASC final rule with comment period 
(79 FR 66967 through 66968), we finalized a process for immediate 
removal of Hospital OQR and ASCQR Program measures, respectively, based 
on evidence that the continued use of a measure as specified raises 
patient safety concerns. We refer readers to our regulations at 42 CFR 
419.46(i)(2) for the Hospital OQR Program and 42 CFR 416.320(b) for the 
ACSQR Program for the codification of these immediate measure removal 
policies.
    When there is evidence that continued use of a measure potentially 
raises patient safety concerns, we believe that immediate action should 
be taken to discontinue collection of the measure to not encourage 
potentially harmful practices. We also believe that seeking public 
input on the removal of such measures increases the public's voice in 
decision-making and increases transparency. We noted this in the CY 
2024 OPPS/ASC final rule (88 FR 82052), where we finalized an immediate 
measure suspension policy for the REHQR Program in lieu of an immediate 
measure removal policy. The REHQR Program's immediate measure 
suspension policy more appropriately provides that, in cases where we 
believe that a measure raises patient safety concerns, we will suspend 
the measure's use in the program, instead of immediately removing the 
measure, until its potential removal undergoes the standard rulemaking 
process (88 FR 82052).
    We believe that our rationale for finalizing the immediate measure 
suspension policy in the REHQR Program (88 FR 82052) also applies to 
the Hospital OQR and ASCQR Programs. On this basis, in the CY 2025 
OPPS/ASC proposed rule, we proposed to modify the immediate measure 
removal policies in the Hospital OQR and ASCQR Programs so that they 
are more appropriately referred to as immediate measure suspension 
policies beginning with CY 2025.
    Under the proposed immediate measure suspension policy in the 
Hospital OQR or ASCQR Programs, in cases where we determine there is 
evidence that the collection and reporting of a measure raises 
potential patient safety concerns, we would suspend the measure from 
the program (as applicable) until potential removal can be proposed 
through the rulemaking process. We will notify the healthcare facility 
(HOPDs or ASCs, as applicable) and the public of the decision to 
suspend the measure through standard communication channels, including, 
but not limited to, program-specific listservs and program guidance 
currently housed on a CMS-designated website. We would then address the 
suspension and propose policies regarding any such suspended measure in 
the next feasible rulemaking cycle.
    In the CY 2025 OPPS/ASC proposed rule, we also proposed to revise 
the Hospital OQR Program regulatory text at Sec.  419.46(i)(2) and the 
ASCQR Program regulatory text at Sec.  416.320(b) to codify the 
immediate measure suspension policy. We further proposed to clarify the 
standard for immediate measure suspension in these regulatory texts by 
revising references to patient safety concerns raised by ``continued 
use of a measure as specified'' to patient safety concerns raised by 
``collection and reporting activities related to a quality measure''.
    We invited public comment on these proposals.
    Comment: Several commenters expressed broad support of CMS's 
proposal to modify the immediate measure removal policy to an immediate 
measure suspension policy for the Hospital OQR and ASCQR Programs, 
stating that the revised policy promotes transparency and allows for 
thorough assessment of a measure prior to its potential removal. A few 
commenters supported soliciting public input through rulemaking prior 
to removal, and one commenter specifically noted that this could result 
in modifications to a measure rather than permanent removal.
    Response: We thank commenters for their support of our proposal to 
immediately suspend a measure, instead of removing it, when potential 
patient safety concerns arise. As previously noted, we would suspend 
the use of such a measure until removal, modification, or retention 
could be proposed and finalized through the rulemaking process. We 
agree with the commenters that this revised policy would enhance 
transparency and increase public involvement in decision-making 
regarding permanent action for suspended measures.
    Comment: A commenter supported finalizing the immediate measure 
suspension policy for the ASCQR Program, stating their belief that the 
proposed policy will help address potential safety concerns associated 
with screening for interpersonal safety as part of the Screening for 
SDOH measure.
    Response: We thank the commenter for their support of our proposal, 
and we acknowledge their concern regarding possible patient safety 
issues with the Screening for SDOH measure. We will monitor the impacts 
of this measure on patient safety, as we do with all measures, and in 
cases where we determine there is evidence that the collection and 
reporting of a measure raises patient safety concerns, we will suspend 
the measure from the program (as applicable) until potential removal 
can be proposed through the rulemaking process.
    Comment: A commenter did not support the proposal and urged CMS to 
utilize the rulemaking process prior to suspending a measure. If the 
proposal is finalized, the commenter urged CMS to limit suspension to 
public reporting while continuing data collection and measure 
calculation to assess whether a

[[Page 94404]]

lack of transparency results in diminished performance for the measure. 
Additionally, the commenter suggested that CMS focus on improving and 
developing measures rather than removing them.
    Response: We thank the commenter for their feedback. However, we 
note that patient safety is a high priority area, as underscored by our 
National Quality Strategy goal to achieve zero preventable harm. When a 
measure raises potential patient safety concerns, immediate action must 
be taken to halt data collection and reporting activities. Limiting the 
suspension to public reporting alone would not accomplish our objective 
of preventing patient harm. Public reporting does not occur until after 
the performance period, whereas data collection is continuous. 
Immediate suspension of both data collection and reporting ensures that 
potentially harmful actions do not continue in between rulemaking 
periods and that appropriate modification or removal can then be 
proposed and finalized in a subsequent rulemaking cycle. We acknowledge 
the commenter's recommendation to assess whether a lack of transparency 
results in diminished performance. However, when a measure presents a 
potential safety risk, the priority is eliminating any risks to patient 
harm.
    While we agree that the Hospital OQR and ASCQR Programs should 
prioritize retaining and adopting meaningful, high-quality measures, 
patient safety is an urgent issue and measures that result in potential 
safety risks should be thoroughly evaluated and considered for 
potential removal or modification from the programs. This approach 
allows us to safeguard patients while still ensuring transparency and 
public participation in decision-making.
    We also reiterate that this is an amendment to a currently adopted 
policy in which a measure is immediately removed if there are patient 
safety concerns. This revised policy would allow for appropriate 
modification or retention of a measure over removal, thus supporting 
the preservation of a measure set that ensures safe, quality care.
    Comment: A commenter recommended that once a measure is suspended, 
hospitals should not be penalized for non-compliance with the 
requirements of the suspended measure in the subsequent payment 
determination year. Another commenter suggested expanding the immediate 
measure suspension policy to the REHQR Program.
    Response: We appreciate the commenters' feedback, and we wish to 
clarify that, under the immediate measure suspension policy we 
proposed, once a measure is suspended, data collection and reporting 
would cease until permanent action could be determined in a subsequent 
rulemaking cycle. Entities would not be penalized for non-compliance 
with the suspended measure as the requirement to collect and report 
data would not be in effect. This approach ensures that any potentially 
harmful actions related to the measure are halted until permanent 
action regarding the suspended measure is determined. We also wish to 
clarify that this policy was previously finalized for the REHQR Program 
in the CY 2024 OPPS/ASC final rule (88 FR 82052).
    After consideration of the public comments we received, we are 
finalizing immediate measure suspension policies for the Hospital OQR 
and ASCQR Programs, as proposed. We are codifying these policies at 
Sec.  419.46(i)(2) for the Hospital OQR Program and at Sec.  416.320(b) 
for the ASCQR Program, as proposed.

XV. Hospital Outpatient Quality Reporting (OQR) Program

A. Background and Statutory Authority

    The Hospital Outpatient Quality Reporting (OQR) Program is a pay-
for-reporting program intended to improve the quality of care provided 
to Medicare beneficiaries, facilitate public transparency, and ensure 
accountability of hospital outpatient departments (HOPDs). Section 
1833(t)(17)(A) of the Social Security Act (the Act) states that 
subsection (d) hospitals (as defined under section 1886(d)(1)(B) of the 
Act) that do not submit data required for measures selected with 
respect to such a year, in the form and manner required by the 
Secretary, will incur a 2.0 percentage point reduction to their annual 
Outpatient Department (OPD) fee schedule increase factor.
    We refer readers to the CY 2011 OPPS/ASC final rule (75 FR 72064 
through 72065) for a detailed discussion of the statutory history of 
the Hospital OQR Program, as well as program requirements codified at 
42 CFR 419.46, and to the CY 2024 OPPS/ASC final rule for information 
regarding the program's regulatory history (88 FR 81961 through 82012).
1. Previously Finalized Program Measure Set Beginning With the CY 2027 
Payment Determination
    Table 162 summarizes the previously finalized Hospital OQR Program 
measures beginning with the CY 2027 payment determination:
BILLING CODE 4120-01-P

[[Page 94405]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.219

BILLING CODE 4120-01-C

B. Program Measure Set Policies

1. Measure Retention
    We refer readers to Sec.  419.46(i)(1) and the CY 2013 OPPS/ASC 
final rule (77 FR 68471) for our policies regarding measure retention. 
We did not propose any changes to these policies in the CY 2025 OPPS/
ASC proposed rule.
2. Measure Suspension or Removal
    We refer readers to Sec.  419.46(i)(2) and (3) and the CY 2013 
OPPS/ASC final rule (77 FR 68472 and 68473) for our program policies 
regarding: (1) general measure removal, suspension, and replacement; 
and (2) immediate measure removal.
    We refer readers to section XIV.C of this final rule with comment 
period for the discussion of public comments received and our 
subsequent decision regarding our cross-program proposal to modify the 
immediate removal policy for adopted Hospital OQR Program measures.
3. Measure Adoption
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 81973) for a discussion of the statutory requirements and 
our considerations for adopting quality measures under the Hospital OQR 
Program. We did not propose any changes to these policies in the CY 
2025 OPPS/ASC proposed rule.

C. Program Measure Updates

1. Adoption of New Measures for the Hospital OQR Program Measure Set
a. Adoption of the Health Equity Measures in the Hospital OQR Program
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 of the 
final rule with comment period, respectively, for our cross-program 
proposals and discussion of public comments received to adopt the 
following measures in the Hospital OQR Program: (1) the Hospital 
Commitment to Health Equity (HCHE) measure, beginning with the CY 2025 
reporting period/CY 2027 payment determination; (2) the Screening for 
Social Drivers of Health (SDOH) measure, beginning with voluntary 
reporting for the CY 2025 reporting

[[Page 94406]]

period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination; and (3) the Screen 
Positive Rate for SDOH measure, beginning with voluntary reporting for 
the CY 2025 reporting period and mandatory reporting beginning with the 
CY 2026 reporting period/CY 2028 payment determination.
b. Adoption of the Patient Understanding of Key Information Related to 
Recovery After a Facility-Based Outpatient Procedure or Surgery Patient 
Reported Outcome-Based Performance Measure (Information Transfer PRO-
PM) Beginning With Voluntary Reporting for the CY 2026 Reporting Period 
Followed by Mandatory Reporting Beginning With the CY 2027 Reporting 
Period/CY 2029 Payment Determination
(1) Background
    Recent studies have shown that compared to inpatient settings, 
outpatient settings are associated with worse patient understanding and 
lower patient activation (that is, an individual's understanding, 
competence, and willingness to participate in care decisions during 
their recovery), indicating an area for quality of care 
improvement.394 395 396 One study found that providers in 
the inpatient setting provided more complete discharge instructions and 
end-of-visit summaries to patients when compared to providers in the 
ambulatory setting, including continuing medication names and 
instructions (96 percent vs. 40 percent), new medication names and 
instructions (99 percent vs. 29 percent), and pending diagnostic test 
names and instructions (90 percent vs. 61 percent).\397\ A lack of 
understanding of recovery information \398\ and other aspects of health 
literacy have been linked to poor adherence to treatment, decreased 
patient safety, increased return to the emergency department (ED), 
lower levels of patient satisfaction, and disproportionate effects on 
patients with limited English proficiency and patients over age 65, who 
face additional barriers and recovery issues after their receipt of a 
hospital outpatient service.399 400 Reduced patient 
engagement and a deficiency in detailed discharge information in the 
inpatient setting were also associated with a higher risk of 
readmissions to an inpatient setting.\401\ Research indicates that 
information that is simpler to read and more complete has been 
associated with fewer follow-up calls to providers as well as less 
frequent hospital readmissions.402 403
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    \394\ Kang E, Gillespie BM, Tobiano G, et al. (2018). Discharge 
education delivered to general surgical patients in their management 
of recovery post discharge: A systematic mixed studies review. Int J 
Nurs Stud. 87:1-13. https://doi.org/10.1016/j.ijnurstu.2018.07.004.
    \395\ Hoek AE, Anker SCP, van Beeck EF, et al. (2020). Patient 
Discharge Instructions in the Emergency Department and Their Effects 
on Comprehension and Recall of Discharge Instructions: A Systematic 
Review and Meta-analysis. Ann Emerg Med. 75(3):435-444. https://doi.org/10.1016/j.annemergmed.2019.06.008.
    \396\ Downey E, Olds DM. (2021). Comparison of Documentation on 
Inpatient Discharge and Ambulatory End-of-Visit Summaries. J Healthc 
Qual. 43(3):e43-e52. https://doi.org/10.1097/JHQ.0000000000000269.
    \397\ Ibid.
    \398\ We use the term ``recovery information'' to mean the 
clinical care instructions provided to patients or their caregivers 
after the completion of surgery or a non-surgical procedure.
    \399\ DeSai C, Janowiak K, Secheli B, et al. (2021). Empowering 
patients: simplifying discharge instructions. BMJ Open 
Quality;10(3)001419. http://doi.org/10.1136/bmjoq-2021-001419.
    \400\ Malevanchik L., Wheeler M., Gagliardi K., Karliner L., 
Shah S.J. (2021). Disparities After Discharge: The Association of 
Limited English Proficiency and Postdischarge Patient-Reported 
Issues, The Joint Commission Journal on Quality and Patient Safety, 
47(12):775-782. https://doi.org/10.1016/j.jcjq.2021.08.013.
    \401\ Erlang AS, Schj[oslash]dt K, Linde JKS, Jensen AL. (2021). 
An observational study of older patients' experiences of involvement 
in discharge planning. Geriatr Nurs 42(4):855-862. http://doi.org/10.1016/j.gerinurse.2021.04.002.
    \402\ Choudhry AJ, Younis M, Ray-Zack MD, et al. (2019). 
Enhanced readability of discharge summaries decreases provider 
telephone calls and patient readmissions in the posthospital 
setting. Surgery. 165(4):789-794. https://doi.org/10.1016/j.surg.2018.10.014.
    \403\ Mitchell JP. (2015). Association of provider communication 
and discharge instructions on lower readmissions. J Healthc Qual., 
37(1):33-40. https://doi.org/10.1097/01.JHQ.0000460126.88382.13.
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(2) Measure Overview
    The Information Transfer PRO-PM aims to assess the level of clear, 
personalized recovery information provided to patients aged 18-years or 
older who had surgery or a procedure at an HOPD. The measure reports 
the average score of a patient's ratings on a three-domain, 9-item 
survey \404\ to evaluate the clarity of the clinical information 
patients are given before, during, and after an outpatient surgery or 
procedure. The survey covers three domains for patients or their 
caregivers to rate the clarity of information received regarding their 
post-discharge \405\ recovery: applicability to patient needs, 
medication, and daily activities. The applicability to patient needs 
domain assesses whether the recovery information considered a patient's 
health needs and personal circumstances. The medications domain 
examines the clarity of medication information provided, specifically 
guidance on taking new medications, potential side effects, and 
discontinuing medication. The daily activities domain assesses the 
clarity of guidelines around diet, physical activity, returning to 
work, and driving. Results from the survey provide hospitals with 
patient reported outcome (PRO) data designed to assess communication 
efforts and enable hospitals to reduce the risk of patient harm that 
may occur if the patient does not fully understand the recovery 
information.
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    \404\ A copy of the survey instrument is available at: https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf.
    \405\ The term ``discharge'' appears in the measure 
specifications and is intended to refer to the transition of a 
patient from the outpatient hospital setting to home or next level 
of care.
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    This measure addresses the priority area stated in our Meaningful 
Measures Framework of adopting high-quality measures that focus on 
person-centered care.\406\ Additionally, the Information Transfer PRO-
PM supports the National Quality Strategy goal of equity and engagement 
by engaging individuals to become partners in their care and ensuring 
that individuals and caregivers have the information needed to make the 
best choices for their health.\407\
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    \406\ Centers for Medicare & Medicaid Services. (2024). 
Meaningful Measures 2.0: Moving to Measure Prioritization and 
Modernization. Available at: https://www.cms.gov/medicare/quality/
cms-national-quality-strategy/meaningful-measures-20-moving-measure-
reduction-
modernization#:~:text=Meaningful%20Measures%202.0%20promotes%20innova
tion%20and%20modernization%20of,variety%20of%20settings%2C%20interest
e.
    \407\ Centers for Medicare & Medicaid Services. (2024). CMS 
Quality Strategy. Available at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.
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    Pilot testing conducted by the measure developer in 26 HOPDs in 
five states demonstrated that the measure is reliable and 
meaningful.408 409 The measure developer assessed 
reliability of the measure using the Cronbach alpha score \410\ to 
determine whether the nine survey questions reliably measured the same 
underlying characteristic; that is, the clarity and applicability of 
recovery instructions. The Cronbach alpha score, which compares the 
amount of shared variance, or covariance, among the instrument items

[[Page 94407]]

to the total variance, indicated that the survey items are reliable 
because they reflect a high level of covariance relative to the total 
variance.\411\ Additionally, the measure developer found the 
performance scores among facilities in the pilot study to be moderately 
reliable using a signal-to-noise ratio, which estimated variance among 
facilities and facility specific errors to determine the extent to 
which variance in facility scores can be attributed to variance in 
actual performance.\412\
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    \408\ Partnership for Quality Measurement. (2024). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \409\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
    \410\ For more information on what the Cronbach alpha score 
determines and how it is used, we refer readers to: Tavakol M & 
Dennick R. (2011). Making sense of Cronbach's alpha. Int J Med Educ. 
27;2: 53-55. www.doi.org/10.5116/ijme.4dfb.8dfd.
    \411\ Ibid.
    \412\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
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    To assess meaningfulness, the measure developer asked members of a 
Patient and Family Engagement (PFE) Work Group and a Technical Expert 
Panel (TEP) to vote on the measure's ability to distinguish between 
good and poor quality of care at measured facilities.413 414 
All of the patients from the PFE Work Group and 80 percent of the TEP 
panel members who participated in the vote agreed that the measure 
could distinguish between good and poor quality of care.\415\ We refer 
readers to https://p4qm.org/measures/4210 for more information about 
the feasibility, scientific acceptability, meaningfulness, and validity 
of the Information Transfer PRO-PM.
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    \413\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \414\ See also https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/measure-methodology.
    \415\ Ibid.
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    As previously stated in the CY 2024 OPPS/ASC final rule (88 FR 
81985), while we acknowledge that PRO-PMs require providers to 
integrate data collection into clinical information systems, this 
integration provides an important opportunity for patient-reported 
outcomes to inform clinical decision-making and benefits patients by 
engaging them in discussions about potential outcomes. The testing of 
this measure by the measure developer, which included interviews with 
clinicians, nurses, quality improvement officers, and data 
administrators in HOPDs, indicated that the increased burden on HOPDs 
would be minimal because the data would be collected and reported 
electronically by administrative staff and quality officers engaged in 
data sharing activities, outside of the clinical workflow, before being 
integrated into a clinical information system. Additionally, testing 
indicated that the increased burden on respondents would be minimal and 
contribute minimally to patient survey fatigue because the survey is 
easily understood and consists of only nine questions administered 
electronically,\416\ presenting a low burden for completion.
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    \416\ Examples of survey administration and collection include 
email, text, and patient information portals. These examples are not 
exhaustive. By leaving the method of survey administration and 
collection to the HOPD, we allow facilities the flexibility to 
choose the most appropriate method for their current infrastructure 
and patient base.
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(3) Pre-Rulemaking Measure Review
    Under the PRMR process, the Hospital Recommendation Group reviewed 
and voted on the Information Transfer PRO-PM \417\ during their meeting 
on January 18-19, 2024.\418\ The voting results for the Information 
Transfer PRO-PM measure for the Hospital OQR Program were ``recommend 
with conditions''. The condition was that the survey be administered at 
the time of the surgery or procedure so there is no conflict with other 
measured pain and function outcomes to improve response rates.\419\ We 
have taken into account the condition to administer the survey at the 
time of the surgery or procedure; however, we have determined that 
allowing time after the surgery or procedure before administration of 
the survey is important to limit the possibility that the patient's 
responses are influenced by time-dependent variables related to 
proximity to the surgery or procedure, such as medications that could 
affect comprehension, fatigue, or acute pain. In addition, 
administering the survey more than 1 day but less than 7 days post-
procedure mitigates overlap of the initial administration and survey 
reminder of the OAS CAHPS, which is administered on the first day post-
procedure and then followed up at 14 days.\420\
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    \417\ The Information Transfer PRO-PM is identified on the MUC 
List as MUC2023-17.
    \418\ Partnership for Quality Measurement. (2024). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \419\ Ibid.
    \420\ Centers for Medicare and Medicaid Services. Schedule of 
OAS CAHPs Contact Attempts by Survey Mode. Available at: https://oascahps.org/ScheduleOASCAHPSContactAttempts_7-20-21.pdf.
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(4) CBE Endorsement
    We submitted the Information Transfer PRO-PM to the CBE for 
endorsement review in the Fall 2023 cycle (CBE #4210), and the CBE 
endorsed the measure on March 18, 2024.\421\
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    \421\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
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(5) Data Collection, Submission, and Reporting
(a) Data Collection
(i) Data Sources
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59453 through 59454), 
we proposed that the Information Transfer PRO-PM would be calculated 
based on PRO data collected by HOPDs directly or through their 
authorized third-party vendors through a web-based survey instrument 
distributed to patients or their caregivers.

[[Page 94408]]

    We also proposed that the survey would be administered 2-to-7 days 
post-procedure or surgery, based on evidence that the most common time 
period for patients to be delivered a survey is within 0-48 hours post-
procedure or surgery at a HOPD (n=6),422 423 424 425 426 427 
while other time periods include within 2 weeks post-procedure or 
surgery (n=4),428 429 430 431 1 week post-procedure or 
surgery, (n=3) 432 433 434 or 90 days post-procedure or 
surgery (n=1).\435\ We proposed that the survey would be administered 
not less than 2 days post-procedure or surgery because we have 
determined, as discussed above, that allowing time after the surgery or 
procedure before administration of the survey will limit the 
possibility that the patient's responses are influenced by time-
dependent variables related to proximity to the surgery or procedure, 
such as medications that could affect comprehension, fatigue, or acute 
pain. We proposed that the survey would be administered no later than 7 
days post-procedure or surgery because this timeframe may be more 
appropriate for patient reporting of specific events than longer time 
periods.436 437 In pilot testing, patients were sent a 
reminder to complete the survey 7 days after receipt. The survey 
remained open until pilot testing was completed, with the mean length 
of time between the procedure date to the survey response date being 65 
days, or approximately 2 months. We therefore proposed a 65-day window 
for patient response.
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    \422\ Engel KG, Buckley BA, Forth VE, et al. (2012). Patient 
understanding of emergency department discharge instructions: where 
are knowledge deficits greatest? Acad Emerg Med. 19(9):E1035-1044.
    \423\ Engel KG, Heisler M, Smith DM, Robinson CH, Forman JH, 
Ubel PA. (2009). Patient comprehension of emergency department care 
and instructions: are patients aware of when they do not understand? 
Ann Emerg Med. 53(4):454-461 e415.
    \424\ Erlang AS, Schjodt K, Linde JKS, Jensen AL. (2021). An 
observational study of older patients' experiences of involvement in 
discharge planning. Geriatr Nurs. 42(4):855-862.
    \425\ Lin MJ, Tirosh AG, Landry A. (2015). Examining patient 
comprehension of emergency department discharge instructions: Who 
says they understand when they do not? Intern Emerg Med. 10(8):993-
1002.
    \426\ Makaryus AN, Friedman EA. (2005). Patients' understanding 
of their treatment plans and diagnosis at discharge. Mayo Clin Proc. 
80(8):991-994.
    \427\ Hastings S, Stechuchak K, Oddone E, et al. (2012). Older 
veterans and emergency department discharge information. BMJ Qual 
Saf. 21(10):835-842.
    \428\ Clarke C, Friedman SM, Shi K, Arenovich T, Monzon J, 
Culligan C. (2005). Emergency department discharge instructions 
comprehension and compliance study. CJEM. 7(1):5-11.
    \429\ Henderson A, Zernike W. A study of the impact of discharge 
information for surgical patients. (2001). J Adv Nurs. 35(3):435-
441.
    \430\ Karliner LS, Auerbach A, Napoles A, Schillinger D, 
Nickleach D, Perez-Stable EJ. (2012). Language barriers and 
understanding of hospital discharge instructions. Med Care. 
50(4):283-289.
    \431\ Makaryus AN, Friedman EA. (2005). Patients' understanding 
of their treatment plans and diagnosis at discharge. Mayo Clin PRac. 
80(8):991-994.
    \432\ Albrecht JS, Gruber-Baldini AL, Hirshon JM, et al. (2014). 
Hospital discharge instructions: comprehension and compliance among 
older adults. J Gen Intern Med. 29(11):1491-1498.
    \433\ Coleman EA, Chugh A, Williams MV, et al. (2013). 
Understanding and execution of discharge instructions. AM J Med 
Qual. 28(5):383-391.
    \434\ Flacker J, Park W. Sims A. (2007). Hospital discharge 
information and older patients; do they get what they need? J Hosp 
Med. 2(5):291-296.
    \435\ Hastings SN, Barrett A, Weinberger M, et al. (2011). Older 
patients' understanding of emergency department discharge 
information and its relationship with adverse outcomes. J Patient 
Saf. 7(1):19-25.
    \436\ Stull, D, Leidy, N, Parasuraman, B, et al. (2009). Optimal 
recall periods for patient-reported outcomes: Challenges and 
potential solutions. Current medical research and opinion. 25. 929-
42. www.doi.org/10.1185/03007990902774765.
    \437\ Peasgood T, Caruana JM, Mukuria C. (2023). Systematic 
Review of the Effect of a One-Day Versus Seven-Day Recall Duration 
on Patient Reported Outcome Measures (PROMs). Patient. 16(3):201-
221. www.doi.org/10.1007/s40271-022-00611-w.
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    The survey has been tested and reliability determined in English 
and Spanish, and the survey can be completed using a translator, proxy, 
or caregiver.
(ii) Measure Specifications
    The measure numerator is the sum of all individual scores a HOPD 
receives from eligible respondents, which could be patients or 
caregivers. Individual scores are calculated using a top-box approach; 
each individual score is calculated for each respondent by taking the 
sum of items for which the respondent gave the most positive response 
(``Yes'' or ``Very Clear'') and dividing by the number of items the 
respondent deemed applicable to their procedure or surgery. Applicable 
items are calculated by subtracting the sum of items for which the 
respondent selected ``Does not apply'' from the total number of survey 
items (nine).\438\
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    \438\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
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    The measure denominator is the total number of patients 18 years or 
older who had a procedure or surgery in an HOPD, left the HOPD alive, 
and responded to the survey.439 440 Only fully completed 
surveys are included in the measure calculation.
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    \439\ Surveys could be completed by patient or a caregiver.
    \440\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
---------------------------------------------------------------------------

    The intent of the measure is to encourage HOPDs to provide 
individualized recovery instructions regardless of the patient's unique 
characteristics; therefore, there is no need for risk-adjustment. For 
additional details regarding the measure specifications, we refer 
readers to our QualityNet website.\441\
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    \441\ The specifications for the newly finalized OQR Program 
measures can be found at https://qualitynet.cms.gov/outpatient.
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(b) Data Submission and Reporting
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59492 through 59454), 
we proposed to adopt the Information Transfer PRO-PM as a voluntary 
measure for the CY 2026 reporting period followed by mandatory 
reporting beginning with the CY 2027 reporting period/CY 2029 payment 
determination. We would utilize the voluntary period to monitor the 
implementation and operationalization of the measure.
    We refer readers to section XV.E.2.c of this final rule with 
comment period for a discussion of the Information Transfer PRO-PM 
form, manner, and timing of data submission and reporting requirements.
    We invited public comment on the proposal.
    Comment: Many commenters supported adopting the Information 
Transfer PRO-PM into the Hospital OQR Program. Commenters noted that 
this measure addresses an important measurement area (care 
coordination) and is an effective means of collecting patient 
experience data. A few of these commenters noted the importance of 
patients receiving clear, personalized recovery information and 
engaging in a shared decision-making process with their healthcare 
provider. A few commenters further emphasized that this measure may 
increase patient satisfaction and trust in their healthcare providers, 
as patients feel more informed and supported during their recovery. 
Commenters also stated that this measure can provide valuable feedback 
to clinicians about their communication practices, highlighting areas 
for improvement. A commenter applauded CMS for including caregivers as 
eligible respondents for providing survey feedback, stating that 
caregivers play a vital role in a patient's post-procedure care. 
Another commenter expressed gratitude for the time CMS has allotted for 
hospitals to implement this measure.
    Response: We thank commenters for their support. We agree that this 
measure addresses an important measurement area (care coordination) and 
is an effective means of collecting patient experience data. We agree 
with

[[Page 94409]]

commenters that this measure can provide valuable feedback to 
clinicians about their communication practices and highlight areas of 
needed improvement.
    Comment: A few commenters supported CMS' proposal and noted that 
the measure is CBE-endorsed and tested, showing moderate reliability 
and a reliable Cronbach alpha score.
    Response: We thank commenters for their support.
    Comment: Several commenters supported CMS' proposal to adopt the 
Information Transfer PRO-PM citing evidence that poor recovery 
instructions result in poor outcomes, such as mortality and 
readmissions. A few of these commenters noted that clear communication 
between healthcare providers and patients regarding post-procedure 
recovery is crucial to ensure positive health outcomes and fewer 
readmissions. A commenter noted that many older patients being 
discharged from surgery experience post-operative cognitive dysfunction 
(POCD), which, when added to possible limited English proficiency, 
literacy, or pre-existing vision or cognitive concerns, can 
significantly impact a patient's ability to understand and follow post-
operative recommendations without additional intervention and 
instruction. Further, this commenter noted that post-surgical 
instructions received by occupational therapy (OT) clinics are often 
incomplete, missing, or confusing to the patient and the OT 
practitioner, forcing the practitioner to seek additional clarification 
resulting in delay in care initiation and increased risk of re-injury.
    Response: We thank commenters for their support. We agree that 
clear communication between healthcare providers and patients is 
crucial to ensure positive health outcomes and fewer readmissions. We 
further thank commenters for their feedback of how poor post-procedure 
instructions to patients could adversely impact their ability to 
receive proper and timely post-procedure care such as physical or 
occupational therapy.
    Comment: A commenter supported CMS' use of PRO-PMs in quality 
reporting programs because PRO-PMs provide valuable insights into 
patients' perspectives on their health, quality of life, and functional 
status. This commenter further noted that PRO-PMs are especially 
important in the outpatient setting where procedures and patients are 
typically less complex compared to the inpatient setting. The commenter 
noted that PRO-PMs offer every patient an opportunity to provide direct 
feedback about their care, which is valuable when this feedback is 
typically collected only when measuring a rare or adverse event.
    Response: We thank the commenter for their support of the use of 
PRO-PMs.
    Comment: Several commenters expressed concerns with CMS' proposal 
to adopt the Information Transfer PRO-PM due to the burden on HOPDs to 
implement the PRO-PM. Commenters expressed concern regarding the 
challenge of integrating surveys into provider workflows. Commenters 
expressed concern that HOPDs are currently facing staffing challenges 
and resource constraints. Commenters stated that the burden of 
implementing this measure is greater than CMS indicated in the proposed 
rule and does not account for a facility's time spent strategizing, 
reviewing and updating policies, building the technology, training 
staff, and implementing change management processes required for new 
measures. A commenter expressed concern that the cost of programming 
the measure into health information technology may not be minimal 
because the survey would have to be set up as a stand-alone survey 
instead of being grafted onto an already existing survey, such as OAS 
CAHPS, and the potential cost of the initial programming and 
implementation is not acknowledged in the proposed rule. Another 
commenter expressed concern that ensuring consistency in communication, 
so all patients receive the same quality and clarity of recovery 
information, can also be challenging, especially in busy hospital 
outpatient departments.
    Response: We acknowledge that collecting PRO-PM data may involve 
more burden and initial implementation resources compared to some other 
types of quality measures. However, we believe the benefit of 
collecting direct functional improvement information from the patients 
outweighs the burden. Measuring patient-reported outcomes is an 
important aspect of patient-centered healthcare and we continue to 
emphasize, as highlighted in our Meaningful Measures 2.0 Framework, 
that the patient voice should be elevated across the healthcare system. 
As also discussed in a recent request for information related to 
guiding principles for patient-reported outcome measures in Federal 
models and quality reporting and payment programs, patient-reported 
outcomes, as captured using PRO-PMs, are critical for the support of 
person-centered care, as they provide information from the patient or 
caregiver perspective and offer important information to improve 
patient-provider communications (89 FR 62043 through 62044).
    As we stated in the CY 2024 OPPS/ASC proposed rule (89 FR 59518), 
we estimate that annually each HOPD would spend 10 minutes (0.167 
hours) per response to report the Information Transfer PRO-PM data to 
CMS, and that annually 498,843,518 patients would be screened if the 
Information Transfer PRO-PM became mandatory. While PRO-PMs may require 
providers to integrate data collection into clinical workflows, this 
integration provides an important opportunity for patient-reported 
outcomes to inform clinical decision-making and benefits patients by 
engaging them in discussions about potential outcomes. Specifically, 
regarding the Information Transfer PRO-PM, as stated in the CY 2025 
OPPS/ASC proposed rule, data would be collected and reported 
electronically by administrative staff and quality officers engaged in 
data sharing activities, outside of the clinical workflow, before being 
integrated into a clinical information system (89 FR 59453). 
Additionally, to provide more flexibility, we are not requiring HOPDs 
to collect data in a standardized way. HOPDs may use a variety of data 
collection, storage, and submission approaches, and we encourage HOPDs 
to use processes best suited to them. Further, a study in the Journal 
of the American Medical Association found that, when reviewing the 
annual person-hours and personnel costs across different elements of 
quality reporting (that is, entering information, reviewing reports, 
tracking specifications, developing processes, and collecting and 
validating data) for surveys, the majority of annual person-hours and 
personnel costs were allocated to reviewing reports.\442\ Therefore, 
the burden of developing processes (such as a facilities' time 
strategizing, reviewing and updating policies, building technology, 
training staff, and implementing change management processes) for the 
Information Transfer PRO-PM should be minimal. Finally, we note that 
additional actions an HOPD may take in the process of implementing this 
measure will vary among HOPDs due to, for example, an HOPD's size, 
services, and current processes and policies in place.
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    \442\ Saraswathula A, Merck SJ, Bai G, et al. (2023). The Volume 
and Cost of Quality Metric Reporting. JAMA. 329(21):1840-1847. 
www.doi.org/10.1001/jama.2023.7271.
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    As to commenters' concern regarding ensuring consistency in 
communication so all patients receive the same quality and clarity of 
recovery information, we note that the goal of this measure is to 
assess how well facilities provide clear,

[[Page 94410]]

personalized recovery information. While we agree that HOPDs are busy, 
it is important for patients to understand their recovery information 
and for HOPDs to communicate to each patient in a clear, personalized 
way.
    Comment: Several commenters expressed concerns with CMS' proposal 
to adopt the Information Transfer PRO-PM due to patient survey burden. 
Commenters stated that the addition of this patient survey to the 
Hospital OQR Program would result in patient survey fatigue and 
decreased patient responses to surveys across the board. A commenter 
noted that if a patient received a hospital outpatient total knee 
replacement, the surveys the patient would receive would include: (1) 
screening for five SDOH domains, (2) pre-operative data collection for 
the THA/TKA PRO-PM, (3) OAS CAHPS, (4) Information Transfer PRO-PM, and 
(5) post-operative data collection for the THA/TKA PRO-PM. The 
commenter further noted that patients would likely also receive 
additional questionnaires (such as the CAHPS for MIPS survey) from 
other provider types. A few commenters expressed concern regarding low 
participation rates due to language barriers, lack of internet access, 
lack of understanding of or access to technology, and the current 
timeframe in which the survey is administered.
    Response: Our aim is to promote better collection and integration 
of patients' voices by incorporating Patient Reported Outcome Measures 
(PROMs) that are embedded into clinical workflow, easy to use, and as 
minimally burdensome to patients and providers as possible. We are 
dedicated to improving the quality of care provided to patients, and 
believe patients are a vital source of information in assessing quality 
of care provided at a HOPD. Patient feedback from a Technical Expert 
Panel (TEP), which informed our initial selection and development of 
this measure, indicated that patients are experiencing survey fatigue 
in all facets of their lives, and as such preferred shorter surveys in 
an electronic format.\443\ Several TEP members also noted the 
importance of a quick and easy survey built into the care process as 
part of a positive patient experience following outpatient 
surgery.\444\
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    \443\ Centers for Medicare & Medicaid Services. (July 2021). 
Summary of Technical Expert Panel (TEP) Meeting, April 23, 2021: 
Patient Receipt of Key Information Following Outpatient Procedure 
Patient-Reported Outcome-Based Performance Measure (PRO-PM). 
Available at: https://www.cms.gov/files/document/patient-receipt-key-info-tep-summary-072621.pdf.
    \444\ Ibid.
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    Regarding screening for five SDOH domains, as finalized in section 
XIV.B of this final rule with comment period, we recognize that some 
healthcare facilities may already be screening their patients for 
HRSNs, and in alignment with the Hospital IQR Program, we proposed that 
HOPDs could confirm the status of any previously reported HRSNs in 
another care setting and inquire about others not previously reported, 
in lieu of re-screening a patient within the reporting period. In 
addition, if this information has been captured in the EHR in another 
outpatient setting or the inpatient setting during the same reporting 
period, we proposed that the HOPD could use that information for 
purposes of reporting the measure in lieu of screening the patient.
    Regarding pre-operative and post-operative data collection for the 
THA/TKA PRO-PM, the Information Transfer PRO-PM is a nine-item survey 
offered once to patients who meet the measure denominator 
specifications and, unlike the THA/TKA PRO-PM, does not require pre-
operative and post-operative surveys to evaluate functional improvement 
following the surgical procedure. Regarding OAS CAHPS, we selected a 
timeframe for administration of 1 to 7 days post-procedure for the 
Information Transfer PRO-PM, both to limit the possibility that the 
patient's responses are influenced by time-dependent variables related 
to proximity to the surgery or procedure (such as medications that 
could affect comprehension, fatigue, or acute pain), and to mitigate 
overlap of the initial administration and survey reminder of the OAS 
CAHPS, which is administered on the first day post-procedure and then 
followed up at 14 days.
    Regarding concerns about low participation rates due to language 
barriers, lack of internet access, lack of understanding of or access 
to technology, and the current timeframe in which the survey is 
administered, as we note later in this final rule, the Information 
Transfer PRO-PM is available in English and Spanish. Additionally, in 
order to ensure that hospitals are administering the survey in the 
patient's preferred language, hospitals are permitted to use 
interpretation and translation services. For patients that lack 
internet access or lack understanding of or access to technology, we 
note that the Information Transfer PRO-PM can be completed using a 
translator, proxy, or caregiver.
    We anticipate data collection for the Information Transfer PRO-PM 
to present a low burden to patients thereby fostering receptiveness to 
survey participation. As we stated in the CY 2024 OPPS/ASC proposed 
rule (89 FR 59518), we estimate that each patient would require an 
average of 6 minutes to complete the nine-item survey. We intend to 
evaluate response rates associated with the Information Transfer PRO-PM 
and continue to consider ways to reduce patient survey fatigue.
    Comment: A few commenters did not support adoption of any 
additional PROMs, including the Information Transfer PRO-PM, because of 
the challenges they have recently experienced while implementing the 
THA/TKA PRO-PM measure, such as the financial burden of implementing 
that measure and challenges in meeting the current 50 percent reporting 
threshold for the THA/TKA measure.
    Response: We do not believe that the challenges providers may face 
in implementing the THA/TKA PRO-PM warrant declining to adopt other 
important PRO-PMs in the Hospital OQR Program. We addressed commenters' 
concerns regarding implementation of the THA/TKA PRO-PM in the CY 2024 
OPPS/ASC final rule (88 FR 81984 through 81986) and maintain that this 
measure is an important addition to the Hospital OQR Program as the 
volume of THA and TKA procedures for Medicare beneficiaries aged 65 
years and older have been increasing in outpatient settings.
    We note that, in comparison to the THA/TKA PRO-PM, the Information 
Transfer PRO-PM does not have a reporting threshold and thus providers 
would not be subject to a similar reporting threshold. Additionally, we 
note that the Information Transfer PRO-PM is a nine-item survey offered 
to patients who meet the measure denominator specifications as a one-
time survey, and that, unlike the THA/TKA PRO-PM, it does not require 
pre-operative and post-operative surveys to evaluate functional 
improvement following the surgical procedure. We therefore believe that 
the financial burden would be reduced in comparison to the THA/TKA PRO-
PM which has multiple surveys within the measure.
    Comment: A few commenters expressed concerns around the measure 
testing of the Information Transfer PRO-PM and recommended more testing 
be done before inclusion into the Hospital OQR Program. A commenter 
stated that the limited geographic scope of testing might not have 
captured the diversity of patient experiences across the country. A 
commenter expressed concern regarding the lack of risk adjustment in 
the measure because it prevents understanding of which vulnerable

[[Page 94411]]

patients/populations could benefit from additional education.
    Response: We thank the commenters for their feedback on this 
measure. Testing of the measure results including for risk adjustment 
need, response rates, and data missingness was conducted and is 
described in the methodology report.\445\ As the outcome for this 
measure is the patient's rating of the clarity of information about 
their recovery process, it is important to test for certain patient 
characteristics that may bias results. Analysis of factors that are and 
are not correlated with the measure is critical in assessing whether 
the measure should be risk adjusted. Evaluation of risk adjustment in 
pilot testing survey results found no statistically significant 
differences between adjusted and unadjusted result scores. 
Additionally, non-response bias, which is the likelihood of a patient 
responding to a survey based on patient characteristics, was also 
analyzed during pilot testing. Non-responders were significantly 
younger and more likely to be male, but these factors were not 
significant toward measure results. We reiterate that this measure was 
submitted to the CBE by the measure developer for endorsement review 
(CBE #4210), which includes a review of testing data, measure 
importance, feasibility, and usability. When submitted for endorsement, 
a measure is reviewed on its reliability and validity within the 
context of its intended application, justifying a measure's use in the 
HOPD setting.\446\ This measure was endorsed on March 18, 2024. 
Furthermore, during measure testing, the measure developer engaged in 
extensive discussions with clinicians and patient stakeholders 
regarding the need to risk-adjust. After discussion and analysis of 
pilot data, risk-adjustment was not added to the measure because it 
could unintentionally encourage disparate outcomes between different 
patient populations. The performance differences between the adjusted 
and unadjusted measures in testing were also minimal.\447\
---------------------------------------------------------------------------

    \445\ Centers for Medicare & Medicaid Services. (2024). Patient 
Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (PRO-PM) Version 1.0 Methodology 
Report. Available at: https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf.
    \446\ Partnership for Quality Measurement. (September 2023). 
Guidebook of Policies and Procedures for Pre-Rulemaking Measure 
Review and Measure Set Review. Available at: https://p4qm.org/sites/default/files/2023-09/Guidebook-of-Policies-and-Procedures-for-Pre-Rulemaking-Measure-Review-%28PRMR%29-and-Measure-SetReview-%28MSR%29-Final_0.pdf.
    \447\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
---------------------------------------------------------------------------

    Comment: Several commenters expressed concern regarding the 
measure's feasibility as CMS requires a minimum random sample size of 
300 completed surveys, which is inconsistent with the minimum responses 
outlined in the measure specifications. A commenter requested 
clarification on how to count partially completed surveys, and whether 
100 percent of questions need to be completed to meet the 300-survey 
minimum.
    Response: We acknowledge the commenters' concerns regarding the 
inconsistency of the minimum sample size as stated in the proposed rule 
(89 FR 59459) and the measure specifications. We intend to update the 
measure specification manual to reflect the minimum random sample size 
of 300 completed surveys. A minimum random sample size of 300 completed 
surveys is recommended for a population of 1,500 to provide a 95 
percent confidence interval and a 90 percent confidence interval for a 
population of over 10,000 by reducing the standard 
error.448 449 We also believe it is important for the 
Information Transfer PRO-PM to be administered to every patient 
following an outpatient surgery or procedure, as recent studies show 
outpatient settings are associated with worse patient understanding, 
450 451 452 and that a lack of understanding of patient 
recovery information is associated with worse outcomes, including poor 
adherence to treatment, decreased patient safety, increased return to 
the ED, lower levels of patient satisfaction, and disproportionate 
effects on patients with limited English proficiency and patients over 
age 65.453 454 We note that all questions on the survey need 
to be completed to meet the 300-survey minimum. Partially completed 
surveys should not be counted towards the 300-survey minimum.
---------------------------------------------------------------------------

    \448\ Ahmad, H., & Halim, H. (2017). Determining Sample Size for 
Research Activities. Selangor Business Review, 2(1), 20-34. 
Retrieved from https://sbr.journals.unisel.edu.my/ojs/index.php/sbr/article/view/12.
    \449\ Voorhis, C. & Morgan, B. (2007). Understanding Power and 
Rules of Thumb for Determining Sample Size. Tutorials in 
Quantitative Methods for Psychology. 3(2), 43-50. https://doi.org/10.20982/tqmp.03.2.p043.
    \450\ Kang E, Gillespie BM, Tobiano G, et al. (2018). Discharge 
education delivered to general surgical patients in their management 
of recovery post discharge: A systematic mixed studies review. Int J 
Nurs Stud. 87:1-13. https://doi.org/10.1016/j.ijnurstu.2018.07.004.
    \451\ Hoek AE, Anker SCP, van Beeck EF, et al. (2020). Patient 
Discharge Instructions in the Emergency Department and Their Effects 
on Comprehension and Recall of Discharge Instructions: A Systematic 
Review and Metaanalysis. Ann Emerg Med. 75(3):435-444. https://doi.org/10.1016/j.annemergmed.2019.06.008.
    \452\ Downey E, Olds DM. (2021). Comparison of Documentation on 
Inpatient Discharge and Ambulatory End-of-Visit Summaries. J Healthc 
Qual. 43(3): e43-e52. https://doi.org/10.1097/JHQ.0000000000000269.
    \453\ DeSai C, Janowiak K, Secheli B, et al. (2021). Empowering 
patients: simplifying discharge instructions. BMJ Open 
Quality;10(3)001419. http://doi.org/10.1136/bmjoq-2021-001419.
    \454\ Malevanchik L., Wheeler M., Gagliardi K., Karliner L., 
Shah S.J. (2021). Disparities After Discharge: The Association of 
Limited English Proficiency and Postdischarge Patient-Reported 
Issues, The Issues, The Joint Commission Journal on Quality and 
Patient Safety, 47(12):775-782. https://doi.org/10.1016/j.jcjq.2021.08.013.
---------------------------------------------------------------------------

    Comment: A commenter expressed concern that safety net hospitals 
might face difficulty adopting the Information Transfer PRO-PM due to a 
large, underserved population with low health literacy, and language 
and cultural differences contributing to lower response rates. The 
commenter recommended CMS investigate how disadvantaged populations may 
impact PRO data collection before adopting PRO-PMs in the Hospital OQR 
Program.
    Response: We believe that the measurement of patient-reported 
outcomes is vital for advancing patient-centered care and improving 
overall healthcare quality for all patients. We note that one of our 
CMS National Quality Strategy goals, ``Advance Equity and Engagement 
for All Individuals'' seeks to ensure engagement to improve healthcare 
quality by incorporating individual and community input into strategy 
and policy. PRO-PMs are unique because they are based on patients' 
input on their health and the effectiveness of the care they receive, 
providing a crucial dimension to quality improvement that other 
measures may not offer. By integrating the Information Transfer PRO-PM 
into the Hospital OQR Program as a complement to the other outcome 
measures, CMS can better support patient-centered quality improvement 
efforts.
    While we acknowledge the commenter's concern that safety net 
hospitals may face lower response rates due to a large, underserved 
population with low health literacy, in addition to language and 
cultural differences, the Information Transfer PRO-PM has mitigated 
these challenges by limiting the survey to nine items and offering the 
survey in English and Spanish. Additionally, to ensure that hospitals 
are administering the survey in the patient's preferred language, 
hospitals

[[Page 94412]]

are permitted to use interpretation and translation services. 
Minimizing language barriers and survey duration can improve response 
rates.\455\ As previously noted, testing of the measure results 
including for risk adjustment need, response rates, and data 
missingness was conducted and is described in the methodology 
report.\456\ As the outcome for this measure is the patient's rating of 
the clarity of information about their recovery process, it is 
important to test for certain patient characteristics that may bias 
results. Analysis of factors that are and are not correlated with the 
measure is critical in assessing whether the measure should be risk 
adjusted. Evaluation of risk adjustment in pilot testing survey results 
found no statistically significant differences between adjusted and 
unadjusted result scores. Additionally, non-response bias, the 
likelihood of a patient responding to a survey based on patient 
characteristics, was also analyzed during pilot testing. Non-responders 
were significantly younger and more likely to be male, but these 
factors were not significant toward measure results. We will continue 
to monitor trends and evaluate feedback on data collection for the 
Information Transfer PRO-PM.
---------------------------------------------------------------------------

    \455\ Reyes, G. (2016). Understanding non response rates: 
insights from 600,000 opinion surveys. Available at: https://thedocs.worldbank.org/en/doc/708511466183857404-0050022016/original/paperreyes.pdf.
    \456\ Centers for Medicare & Medicaid Services. (2024). Patient 
Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (PRO-PM) Version 1.0 Methodology 
Report. Available at: https://www.cms.gov/files/document/patient-understanding-key-information-related-recovery-after-facility-based-outpatient-procedure-or.pdf.
---------------------------------------------------------------------------

    Comment: A commenter expressed concerns about CMS' ability to 
correlate patient understanding with overall patient outcomes, stating 
that recovery can be influenced by numerous external factors beyond 
comprehension, and that using data from this measure could lead to 
misguided conclusions about effectiveness of care.
    Response: Usability of the measure was tested during measure 
development. The measure developer interviewed quality officers of the 
organizations that participated in pilot testing about the 
meaningfulness of the performance score. The quality officers indicated 
that the scores aligned with known issues raised by patients in an 
open-ended survey and accurately quantified known issues with the post-
operative process.\457\ Further, as previously noted, the measure 
developer asked members of a PFE Work Group and a TEP panel to vote on 
the measure's ability to distinguish between good and poor quality of 
care at measured facilities.458 459 All of the patients from 
the PFE Work Group and 80 percent of the TEP panel members who 
participated in the vote agreed that the measure could distinguish 
between good and poor quality of care.\460\ Therefore, we do not expect 
data from this measure to lead to misguided conclusions about 
effectiveness of care. Additionally, we are not using PRO-PMs such as 
the Information Transfer PRO-PM to replace outcome measures, but to 
serve as complementary measures to support patient-centered care.
---------------------------------------------------------------------------

    \457\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/4210.
    \458\ Partnership for Quality Measurement. 2023 Pre-Rulemaking 
Measure Review (PRMR) Meeting Summary: Hospital Committee. Available 
at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-Meeting-Summary-Final.pdf.
    \459\ See also https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/measure-methodology.
    \460\ Ibid.
---------------------------------------------------------------------------

    Comment: Many commenters recommended integrating the Information 
Transfer PRO-PM into the OAS CAHPS survey, expressing concern regarding 
the potential for patient confusion, low response rates, and survey 
fatigue. A commenter stated that OAS CAHPS is experiencing declining 
response rates over time, citing an 18 percent drop in survey response 
rates in a seven-year period. A few commenters stated that the 
Information Transfer PRO-PM survey administration overlaps with the OAS 
CAHPS survey administration, expressing concern that response rates for 
both surveys may be affected as patients may experience survey fatigue. 
A commenter noted that sending multiple surveys would result in survey 
fatigue and decrease the likelihood of response. A few commenters 
recommended expanding the survey beyond English and Spanish, stating 
that it should be made available in the nine languages that are offered 
for OAS CAHPS.
    Response: We considered integrating questions from the Information 
Transfer PRO-PM survey into the OAS CAHPS survey to reduce the number 
of surveys a patient could receive regarding their episode of care. 
However, we decided against doing so as the specifications for 
administering the OAS CAHPS (such as the survey timing, allowing 
multiple submission modes, and requiring a CMS-approved vendor) do not 
align with the Information Transfer PRO-PM. We note that the voting 
results of the Hospital Recommendation Group under the PRMR process 
were ``recommend with conditions'' for the Information Transfer PRO-PM 
measure for the Hospital OQR Program, and that the condition was to 
administer the survey at the time of the surgery or procedure so there 
is no conflict with other measured pain and function outcomes to 
improve response rates.\461\ We considered this condition and decided 
on the current timeframe for survey administration of more than 1 day 
but less than 7 days post-procedure to strike a balance between patient 
recovery and comprehension of the Information Transfer PRO-PM and 
mitigating overlap with the initial administration of the OAS CAHPS on 
the first day post-procedure and the survey reminder at 14 days.
---------------------------------------------------------------------------

    \461\ Partnership for Quality Measurement. (2024). 2023 Pre-
Rulemaking Measure Review (PRMR) Meeting Summary: Hospital 
Committee. Available at: https://p4qm.org/sites/default/files/2024-02/PRMR-Hospital-Recommendation-Group-MeetingSummary-Final.pdf.
---------------------------------------------------------------------------

    We are currently working to expand the survey to additional 
languages beyond English and Spanish. Additionally, in order to ensure 
that hospitals are administering the survey in the patient's preferred 
language, hospitals are permitted to use interpretation and translation 
services.
    Comment: A few commenters recommended CMS build on this measure to 
better align with patient goal identification and attainment across the 
episode of care. A commenter recommended broadening PRO-PMs to assess 
the degree to which the entire care journey is understood and accepted. 
A commenter recommended adding questions to the medication question 
category of the Information Transfer PRO-PM to ensure proper 
measurement regarding the completeness of recovery information, and to 
account for a patient's understanding of the care plan. A commenter 
recommended extending patient response periods for the Information 
Transfer PRO-PM beyond 65 days. Another commenter recommended 
measurement on pre-procedure screening for patients' communication 
disorders to help ensure post-operative instructions are understood. A 
commenter recommended that CMS explore ways to leverage technology to 
reduce the effort required to participate in the survey, such as 
administering it online rather than on paper. Another commenter 
recommended that CMS consider how it can support hospitals in efforts 
to increase responsiveness. Another commenter recommended that CMS 
consider implementing a bonus to

[[Page 94413]]

encourage investment in reporting PRO-PMs.
    Response: We thank commenters for their support and recommendations 
and will take them into consideration as we begin implementing the 
Information Transfer PRO-PM in the Hospital OQR Program. As previously 
noted, the Information Transfer PRO-PM can be distributed 
electronically via text or email by a vendor or individual facility. 
Regarding the implementation of a bonus to encourage investment in 
reporting PRO-PMs, we note that the statutory payment provisions for 
the Hospital OQR Program do not provide for the payment of any bonus.
    Comment: Many commenters expressed concern regarding the 
implementation timeline of the Information Transfer PRO-PM and 
recommended that CMS delay voluntary reporting or remove the mandatory 
reporting requirement. A commenter recommended that CMS provide 
feedback reports during the voluntary period.
    Response: Given the importance of patient understanding of recovery 
instructions, we believe it is important to adopt this PRO-PM in the 
Hospital OQR Program and begin reporting as soon as possible while also 
allowing HOPDs time to implement processes for data collection on this 
measure, which is why we proposed to begin with a voluntary reporting 
period. Because the measure only uses a nine-item survey with 
flexibility to HOPDs on the modes of data collection, as well as 
sampling when reporting the PRO-PM data to CMS, we consider a one-year 
voluntary reporting period to be sufficient. We will monitor 
implementation of the measure and carefully consider feedback received 
during the voluntary reporting period.
    Comment: A few commenters requested additional information 
regarding measure specifications. A commenter requested that CMS 
disclose the copyright protections on surveys when adopting new PRO-PMs 
in the future.
    Response: We thank commenters for their questions and point them to 
the technical specification manuals that can be found on the CMS 
website at: https://qualitynet.cms.gov/outpatient/specifications-manuals. We note that the Information Transfer PRO-PM survey, as well 
as the THA/TKA PRO-PM survey, is nonproprietary and free to use. We 
will disclose copyright protections on surveys as necessary.
    After consideration of the public comments we received, we are 
finalizing our proposal to adopt the Patient Understanding of Key 
Information Related to Recovery After a Facility-Based Outpatient 
Procedure or Surgery Patient Reported Outcome-Based Performance Measure 
beginning with voluntary reporting for the CY 2026 reporting period 
followed by mandatory reporting beginning with the CY 2027 reporting 
period/CY 2029 payment determination.
2. Measure Removals From the Hospital OQR Program Measure Set
a. Removal of the MRI Lumbar Spine for Low Back Pain Measure Beginning 
With the CY 2025 Reporting Period/CY 2027 Payment Determination
    In the CY 2009 OPPS/ASC final rule (73 FR 68766), we adopted the 
MRI Lumbar Spine for Low Back Pain measure beginning with the CY 2010 
payment determination. This claims-based measure evaluates the 
percentage of magnetic resonance imaging (MRI) of the lumbar spine 
studies for low back pain performed in the outpatient setting where 
conservative therapy was not attempted prior to the MRI. The MRI Lumbar 
Spine for Low Back Pain measure was initially endorsed by a consensus-
based entity (CBE) in 2008, but endorsement of this measure was removed 
in 2017 because the measure developer did not submit the measure for 
review during its designated measure endorsement maintenance cycle.
    When we adopted this measure for the Hospital OQR Program, we cited 
growing concerns about the overuse of imaging services and evidence 
that a substantial portion of MRIs for low back pain does not lead to 
any modification of therapy based on MRI results, especially when 
performed on the first visit prior to any attempt to diagnose or treat 
the patient through more conservative means (73 FR 68764). Since then, 
our internal analyses have shown that the measure has maintained stable 
national performance (excluding the CY 2022 performance period impacted 
by our COVID-19 exception policies) and low average volumes, indicating 
limited reliability and capacity to improve the quality of care for 
patients with reported low back pain. A study in the Journal of the 
American College of Radiology found that documentation of conditions 
that fall into the exclusion criteria of the measure increased after 
implementation, resulting in smaller patient populations and indicating 
that the measure may not translate to improvement of imaging 
appropriateness.\462\ Other studies have shown that the MRI Lumbar 
Spine for Low Back Pain measure has not correlated with improved 
outcomes.463 464 465 The latest findings are consistent with 
responses to a 2020 request for public comment where commenters 
expressed concerns regarding measure exclusion conditions, imaging 
modalities, measure validity, and measure usability. In response to 
that request for public comments, commenters also stated that an 
unintended consequence of using this measure may be delayed 
diagnoses.\466\
---------------------------------------------------------------------------

    \462\ Flug JA and Lind KE. (2017). Public Reporting of MRI of 
the Lumbar Spine for Low Back Pain and Changes in Clinical 
Documentation, Journal of the American College of Radiology (14)12: 
1545-1551. https://doi.org/10.1016/j.jacr.2017.07.012.
    \463\ Blackmore CC. (2019). The Relationship Between Medicare 
Outpatient Efficiency Measure OP8 and Lumbar MRI Utilization, 
Journal of the American College of Radiology 16(3): 276-281. https://doi.org/10.1016/j.jacr.2018.10.026.
    \464\ Lind KE and Flug JA. (2019). Sociodemographic Variation in 
the Use of Conservative Therapy Before MRI of the Lumbar Spine for 
Low Back Pain in the Era of Public Reporting, Journal of the 
American College of Radiology 16(4): 560-569. https://doi.org/10.1016/j.jacr.2018.12.047.
    \465\ Martin BI and Jarvik JG. (2015). The Medicare Outpatient 
Imaging Efficiency Measure for Low Back Pain (``OP-8''), Radiology 
276(1). https://doi.org/10.1148/radiol.2015150648.
    \466\ Centers for Medicare & Medicaid Services, Public Comment 
Summary Report. Available at: https://www.cms.gov/files/document/lumbar-spine-imaging-low-back-pain-public-comment-summary-report.pdf.
---------------------------------------------------------------------------

    Based on these findings, this measure meets the criteria that we 
have adopted for measure removal Factor 2 (that is, performance or 
improvement on a measure does not result in better patient outcomes), 
as codified under Sec.  419.46(i)(3)(i)(B). Therefore, in the CY 2025 
OPPS/ASC proposed rule (89 FR 59454 through 59455), we proposed to 
remove the MRI Lumbar Spine for Low Back Pain measure from the Hospital 
OQR Program beginning with the CY 2025 reporting period/CY 2027 payment 
determination.
    We invited public comment on the proposal, including feedback on 
other potential measures that may better address unnecessary imaging, 
which we will consider for adoption into the Hospital OQR Program in 
future rulemaking.
    Comment: Many commenters supported CMS' proposal to remove the MRI 
Lumbar Spine for Low Back Pain measure beginning with the CY 2025 
reporting period/CY 2026 payment determination. Several of these 
commenters concurred with the rationale in the CY 2025 OPPS/ASC 
proposed rule to remove the measure based on measure removal Factor 2, 
stating that the measure does not provide actionable data toward 
quality improvement and lacks sufficient

[[Page 94414]]

evidence that the measure promotes quality of care and improved patient 
outcomes. A few of these commenters supported CMS' proposal to remove 
the MRI Lumbar Spine for Low Back Pain measure because the measure is 
no longer CBE endorsed. Commenters also supported CMS' proposal because 
it would allow HOPDs to focus improvement initiatives on other areas of 
quality.
    Response: We thank commenters for their support.
    Comment: A commenter recommended that CMS continue to prioritize 
overutilization measures and to work with stakeholders to develop 
clinically meaningful measures that promote value for all stakeholders 
and protect patients from harm from unnecessary services.
    Response: We thank the commenter for their recommendation to 
utilize stakeholders in developing clinically meaningful measures. We 
note that one of our CMS National Quality Strategy goals, ``Advance 
Equity and Engagement for All Individuals,'' seeks to ensure engagement 
to improve healthcare quality by incorporating individual and community 
input into strategy and policy. We will consider the commenter's 
recommendation to prioritize imaging efficiency and overutilization 
measures in future potential rulemaking as appropriate.
    Comment: A commenter did not support removing the MRI Lumbar Spine 
for Low Back Pain measure from the measure set, noting that four 
additional ICD-10-CM codes that describe ``discogenic back pain'' were 
issued.
    Response: We recognize that there are now four additional ICD-10-CM 
codes that describe ``discogenic back pain.'' These additional ICD-10-
CM codes do not reflect a new condition but allow practitioners more 
specificity in coding conditions already captured by the measure. We 
therefore do not believe the additional ICD-10 codes would 
substantively expand the measure cohort or impact our analysis that the 
measure has maintained stable national performance (excluding the CY 
2022 performance period impacted by our COVID-19 exception policies) 
and low average volumes, indicating limited reliability and capacity to 
improve the quality of care for patients with reported low back pain.
    Comment: A few commenters did not support removing the MRI Lumbar 
Spine for Low Back Pain measure and expressed criticism of the studies 
cited by CMS supporting the assertion that the measure does not 
correlate with improved outcomes. The commenters stated that none of 
the studies analyzed the relationship between the measure and outcomes, 
and that one study provides a rationale to retain the measure as it 
underscores disparities in care. These commenters also expressed 
concern that the rate of inappropriate use of MRIs is high, based on a 
recent publication of the CMS Provider Data Catalog showing an average 
rate of 38 percent. Finally, the commenters recommended that CMS make 
public the denominator for results across all measures.
    Response: We appreciate commenters' feedback regarding the removal 
of the MRI Lumbar Spine for Low Back Pain measure. The studies cited by 
CMS in the proposed rule (89 FR 59455) analyzed and found limited 
correlation between the measure and utilization of lumbar MRIs, 
utilization of conservative therapy, and usage of MRI lumbar imaging in 
hospitals, respectively.467 468 469 Further, one study found 
that less than five percent of all MRIs of the lumbar spine for low 
back pain were included in the MRI Lumbar Spine for Low Back Pain 
measure because of documented conditions that fell within the measure 
exclusion criteria.\470\ The study also noted that compliance rates may 
be related to more complete documentation and coding, rather than 
actual changes in patient care.\471\ These findings indicate that 
improvement on this measure is a result of the continued exclusion of 
conditions, and that improvement does not drive better patient 
outcomes.
---------------------------------------------------------------------------

    \467\ [thinsp]Blackmore CC. (2019). The Relationship Between 
Medicare Outpatient Efficiency Measure OP8 and Lumbar MRI 
Utilization, Journal of the American College of Radiology 16(3): 
276-281. https://doi.org/10.1016/j.jacr.2018.10.026.
    \468\ Lind KE and Flug JA. (2019). Sociodemographic Variation in 
the Use of Conservative Therapy Before MRI of the Lumbar Spine for 
Low Back Pain in the Era of Public Reporting, Journal of the 
American College of Radiology 16(4): 560-569. https://doi.org/10.1016/j.jacr.2018.12.047.
    \469\ [thinsp]Martin BI and Jarvik JG. (2015). The Medicare 
Outpatient Imaging Efficiency Measure for Low Back Pain (``OP-8''), 
Radiology 276(1). https://doi.org/10.1148/radiol.2015150648.
    \470\ Flug JA and Lind KE. (2017). Public Reporting of MRI of 
the Lumbar Spine for Low Back Pain and Changes in Clinical 
Documentation, Journal of the American College of Radiology (14)12: 
1545-1551. https://doi.org/10.1016/j.jacr.2017.07.012.
    \471\ Ibid.
---------------------------------------------------------------------------

    Regarding recent measure performance rates, this measure calculates 
the percentage of MRI of the lumbar spine studies with a diagnosis of 
low back pain on the imaging claim for which the beneficiary did not 
have prior claims-based evidence of antecedent conservative therapy 
with lower scores indicating higher performance. The most recent mean 
score as published in the July 2024 refresh of the CMS Provider Data 
Catalog for national data was 36.2 percent for data collected from July 
2022 to June 2023.\472\ As we discussed in the CY 2025 OPPS/ASC 
proposed rule, the measure has maintained stable national performance 
and low average volumes, indicating limited reliability and capacity 
that the measure improves the quality of care for patients with 
reported low back pain. We will take into consideration commenters' 
recommendation that CMS make public the denominator for results across 
all measures in the Provider Data Catalog as appropriate in future 
potential rulemaking.
---------------------------------------------------------------------------

    \472\ Centers for Medicare and Medicaid Services. Provider Data 
Catalog. Available at: https://data.cms.gov/provider-data/dataset/di9i-zzrc.
---------------------------------------------------------------------------

    Comment: A commenter recommended that CMS review alternative 
measure concepts that could improve care for patients with low back 
pain.
    Response: We thank the commenter for their recommendation. We will 
continue engaging with interested parties through education and 
outreach opportunities for any feedback about potential new measures in 
the future.
    After consideration of the public comments received, we are 
finalizing our proposal to remove the MRI Lumbar Spine for Low Back 
Pain measure beginning with the CY 2025 reporting period/CY 2027 
payment determination.
b. Removal of the Cardiac Imaging for Preoperative Risk Assessment for 
Non-Cardiac, Low-Risk Surgery Measure Beginning with the CY 2025 
Reporting Period/CY 2027 Payment Determination
    In the CY 2011 OPPS/ASC final rule (75 FR 72079 and 72080), we 
adopted the claims-based Cardiac Imaging for Preoperative Risk 
Assessment for Non-Cardiac, Low-Risk Surgery measure beginning with the 
CY 2012 payment determination. This measure calculates the percentage 
of stress echocardiography, single photon emission computed tomography 
myocardial perfusion imaging (SPECT MPI), stress magnetic resonance 
imaging (MRI), or computed coronary tomography angiography (CCTA) 
performed at each facility in the 30 days prior to an ambulatory non-
cardiac, low-risk surgery performed at any location, and was endorsed 
by a CBE in 2011. Endorsement was removed in 2021 after the measure 
developer did not submit the measure for review during its designated 
measure endorsement maintenance cycle.
    We adopted the measure for the Hospital OQR measure set, in part, 
to

[[Page 94415]]

address an area of patient safety related to one of the most common 
imaging services in the Medicare population at the time, as we believed 
inappropriate use could increase the patient's risk of cancer, 
contribute no benefit to the quality of care, and result in the 
unnecessary waste of services (75 FR 72076). In response to commenter 
concerns regarding the infrequent occurrence of low-risk non-cardiac 
surgeries, and whether this measure may assess significant differences 
in the provision of imaging tests and their impact on the quality of 
care provided, we stated at the time that the measure could identify 
outlier practice patterns and encourage HOPDs to improve their quality 
of care.
    Our routine monitoring and evaluation shows that the range of cases 
per HOPD varies greatly (that is, from one to over 1,300 cases), posing 
limitations when assessing and interpreting comparative performance 
trends over time. In addition, while there was a slight average 
performance score improvement from payment determination years CY 2020 
to 2024 (despite the COVID-19 pandemic and the larger pool of 
reporters) of about one percent (4.7 percent and 3.6, respectively), 
the variation between the 10th and 25th percentiles of performance is 
not statistically distinguishable, indicating the measure may not 
provide meaningful data for informing consumers about quality of care 
for this service in HOPDs. Furthermore, at a 3.5 percent average 
overall rate for this measure for the CY 2024 payment determination 
year, there is little room for national performance on this measure to 
show significant improvement as lower rates are better for this 
measure.
    Based on these findings, this measure meets the criteria for 
measure removal Factor 2 (that is, performance or improvement on a 
measure does not result in better patient outcomes), as codified under 
Sec.  419.46(i)(3)(i)(B). Therefore, in the CY 2025 OPPS/ASC proposed 
rule (89 FR 59455), we proposed to remove the Cardiac Imaging for 
Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery measure 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination.
    We invited public comment on the proposal, including feedback on 
other potential measures that may better address unnecessary imaging, 
which we will consider for adoption into the Hospital OQR Program in 
future rulemaking.
    Comment: Many commenters supported CMS' proposal to remove the 
Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-
Risk Surgery measure beginning with the CY 2025 reporting period/CY 
2027 payment determination. Several of these commenters concurred with 
the rationale in the CY 2025 OPPS/ASC proposed rule to remove the 
Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-
Risk Surgery measure based on measure removal Factor 2, stating the 
measure does not provide actionable data toward quality improvement and 
lacks sufficient evidence that the measure promotes quality of care and 
improved patient outcomes. A few of these commenters supported the 
removal of the measure as it is no longer CBE endorsed. A commenter 
stated that removing this measure would allow HOPDs to focus 
improvement initiatives on other areas of quality. Another commenter 
stated that the removal of this measure can help cardiovascular 
specialists focus on more meaningful and high-value care practices, 
aligning with initiatives like Choosing Wisely, a campaign by the 
American Board of Internal Medicine that advocates for avoiding 
unnecessary medical tests and procedures. This commenter further noted 
that studies have shown that such imaging often does not change patient 
management or outcomes and can lead to unnecessary costs.
    Response: We thank commenters for their support.
    Comment: A commenter recommended CMS continue to prioritize 
overutilization measures and to work with stakeholders to develop 
clinically meaningful measures that promote value for all stakeholders 
and protect patients from harm from unnecessary services.
    Response: We thank the commenter for their recommendation to 
utilize stakeholders in developing clinically meaningful measures and 
to prioritize overutilization measures. We note that one of our CMS 
National Quality Strategy goals, ``Advance Equity and Engagement for 
All Individuals,'' seeks to ensure engagement to improve healthcare 
quality by incorporating individual and community input into strategy 
and policy. We will consider the commenter's recommendation to 
prioritize imaging efficiency and overutilization measures in future 
rulemaking.
    Comment: A few commenters did not support removal of the Cardiac 
Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk 
Surgery measure, stating that measure removal Factor 2 (that is, 
performance or improvement does not result in better outcomes) is 
inapplicable because inappropriate testing causes adverse reactions. 
Commenters expressed concern about categorizing the performance score 
improvement (4.7 percent to 3.6 percent) from 2020 to 2024 as `slight,' 
stating that it was a significant reduction in unnecessary testing.
    Response: We disagree with commenters' feedback that removal Factor 
2 is inapplicable to this measure. We cannot solely evaluate the 1.1 
percentage point improvement from the 4.7 percent 2020 performance 
score in determining clinical significance for quality measure 
performance. To adequately determine whether removal Factor 2 applies, 
we review the performance score data in its entirety, including the 
number of HOPDs meeting case minimums and the variation between the 
10th and 25th percentiles of performance. As previously discussed, this 
variation is not statistically distinguishable, indicating that the 
measure may not provide meaningful data for informing consumers about 
quality of care for this service in HOPDs. Additionally, while 
inappropriate testing causes adverse reactions, our routine monitoring 
and evaluation shows that the range of cases per HOPD varies from one 
to over 1,300 cases, posing limitations when assessing and interpreting 
comparative performance trends over time. We therefore cannot 
extrapolate patient outcomes from the measure results.
    After consideration of the public comments received, we are 
finalizing our proposal to remove the Cardiac Imaging for Preoperative 
Risk Assessment for Non-Cardiac, Low-Risk Surgery measure beginning 
with the CY 2025 reporting period/CY 2027 payment determination.
3. Summary of Finalized Program Measure Set Updates
a. Newly Finalized Program Measure Set Beginning With the CY 2027 
Payment Determination
    Table 163 summarizes the newly finalized Hospital OQR Program 
measure set beginning with the CY 2027 payment determination, which 
removes the two imaging efficiency measures discussed in sections 
XV.C.2.a and XV.C.2.b of this final rule with comment period and adds 
three cross-program health equity measure discussed in sections 
XV.C.1.a and XIV.B of this final rule with comment period.
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[[Page 94416]]

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b. Newly Finalized Program Measure Set Beginning With the CY 2031 
Payment Determination
    Table 164 summarizes the newly finalized Hospital OQR Program 
measure set for the CY 2031 payment determination, which removes the 
two imaging efficiency measures, discussed in sections XV.C.2.a and 
XV.C.2.b of this final rule with comment period; adds the Information 
Transfer PRO-PM, discussed in section XV.C.1.b of this final rule with 
comment period; and adds three cross-program health equity measures, 
discussed in section XIV.B of this final rule with comment period.

[[Page 94417]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.221

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D. Administrative Requirements

    We refer readers to Sec.  419.46(b) and (c) and the CYs 2014, 2016, 
and 2019 OPPS/ASC final rules (78 FR 75108 through 75109, 80 FR 70519, 
and 83 FR 59103 through 59104, respectively) for our policies regarding 
program participation requirements and withdrawal from the program. We 
did not propose any changes to these policies in the CY 2025 OPPS/ASC 
proposed rule.

E. Form, Manner, and Timing of Data Submission

1. General Data Submission Policy
    We refer readers to Sec.  419.46(d) and the CY 2023 OPPS/ASC final 
rule with comment period (87 FR 72110 through 72112) for our general 
program policies regarding: (1) submission of data under the Hospital 
OQR Program generally; (2) review and correction of submitted data; and 
(3) extraordinary circumstance exception requests (ECE) for data 
submission.
    We also refer readers to the CYs 2019 and 2022 OPPS/ASC final rules 
(83 FR 59104 through 59105 and 86 FR 63861, respectively) for details 
regarding our maintenance of technical specifications. We maintain 
measure technical specification manuals (referred to as Specifications 
Manuals) that can be found on the CMS website at: https://qualitynet.cms.gov/outpatient/specifications-manuals.
    We did not propose any changes to these policies in the CY 2025 
OPPS/ASC proposed rule.
2. Measure Specific Data Submission and Reporting Requirements
    We refer readers to the CYs 2014, 2016, 2022, 2023, and 2024 OPPS/
ASC final rules (77 FR 68484; 80 FR 70521, 87 FR 72110 through 72112; 
78 FR 75097 through 75100; and 88 FR 82004 through 82006, respectively) 
for information regarding our claims-based, web-based, eCQM, chart-
abstracted, PRO-PM, and survey-based data submission and reporting 
requirements.

[[Page 94418]]

a. Web-Based Measures
(1) CMS-Designated Information System and Data Submission for the 
Hospital Commitment to Health Equity (HCHE), Screening for Social 
Drivers of Health (SDOH), and Screen Positive Rate for SDOH Measures
    We refer readers to the CY2014 OPPS/ASC final rule (78 FR 75112 
through 75115), the CY2016 OPPS/ASC final rule (80 FR 70521), and the 
CMS website, currently available at https://qualitynet.cms.gov, for a 
discussion of the requirements for measure data submitted via the 
Hospital Quality Reporting (HQR) System (formerly referred to as the 
QualityNet Secure Portal). The HQR System safeguards protected health 
information in compliance with the HIPAA Privacy and Security Rules (45 
CFR parts 160 and 164, subparts A, C, and E).
    In sections XIV.B.1, XIV.B.2, and XIV.B.3 of this final rule with 
comment period, we are adopting: (1) the Hospital Commitment to Health 
Equity measure, beginning with the CY 2025 reporting period/CY 2027 
payment determination; (2) the Screening for SDOH measure, beginning 
with voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; and (3) the Screen Positive Rate for SDOH 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination.
    Consistent with our established data submission requirements (80 FR 
70521 and 70522), we proposed in the CY 2025 OPPS/ASC proposed rule (89 
FR 59458) that HOPDs would be required to submit all of the data 
required to calculate each of these three measures annually using a 
CMS-approved, web-based, data collection tool available within the HQR 
System starting January 1 through and including May 15 in the year 
prior to the applicable payment determination year. For the Hospital 
OQR Program, the performance period (which we refer to as the CY 
reporting period) for each of these measures on which data is submitted 
using a web-based tool would be January 1 through and including 
December 31 of the year that is 2 years prior to the applicable payment 
determination year; and the data submission period would be January 1 
through and including May 15 in the calendar year immediately following 
the CY reporting period and immediately prior to the applicable payment 
determination year. For example, for the CY 2025 reporting period/2027 
payment determination, the data submission period would be January 1, 
2026, through and including May 15, 2026, covering the performance 
period of January 1, 2025, through and including December 31, 2025. 
Pursuant to Sec.  419.46(d)(4), a review and corrections period runs 
concurrently with the data submission period. During this timeframe, 
HOPDs would be able to enter, review, and correct data submitted for 
these measures.
    We invited public comment on the proposal.
    Comment: Several commenters expressed concerns regarding 
duplicative reporting of attestations between hospital inpatient 
departments and hospital outpatient departments for the HCHE measure in 
the Hospital OQR Program, noting that this measure has already been 
adopted into the Hospital IQR Program. These commenters requested the 
ability to submit one single submission jointly for both programs. 
Another commenter noted that many of the priorities included in this 
measure are currently addressed by hospitals and health systems and 
urged CMS to catalogue what hospitals are already doing before 
establishing new measures or requirements to reduce burden and 
redundancy. A commenter recommended conducting an environmental scan, 
listening sessions, focus groups, and a TEP to reduce instances of 
redundant measures.
    Response: We appreciate commenters' input on mechanisms to reduce 
burden and reporting duplication. We acknowledge that the HCHE measure 
has been adopted into the Hospital IQR Program, and the importance of 
prioritizing resources and streamlining hospital-wide system processes 
to promote administrative efficiency. However, because hospital 
inpatient departments and hospital outpatient departments treat 
different patient populations and employ different staff, we are 
requiring that hospitals participating in both the Hospital IQR and 
Hospital OQR Programs submit their HCHE measure data separately. We 
will monitor implementation of the HCHE measure and consider 
modifications to the manner of data submission for this measure in 
future rulemaking.
    We refer readers to sections XIV.B.1, XIV.B.2, XIV.B.3 of this 
final rule with comment period for our cross-program proposals and full 
discussion of public comments received. We are finalizing our proposal 
that HOPDs would be required to submit all of the data required to 
calculate the HCHE, Screening for SDOH, and Screen Positive Rate for 
SDOH measures annually using a CMS-approved, web-based, data collection 
tool available within the HQR System starting January 1 through and 
including May 15 in the year prior to the applicable payment 
determination year.
(2) National Healthcare Safety Network (NHSN)
    We refer readers to the CY 2014 OPPS/ASC final rule (78 FR 75097 
through 75100) for a discussion of the previously finalized 
requirements for measure data submitted via the Centers for Disease 
Control and Prevention NHSN website. We did not propose any changes to 
these policies in the CY 2025 OPPS/ASC proposed rule.
b. Electronic Clinical Quality Measures (eCQMs) and the Requirement 
That Electronic Health Record (EHR) Technology Be Certified to All 
eCQMs Available To Report Beginning With the CY 2025 Reporting Period/
CY 2027 Payment Determination
    In the CY 2024 Medicare Physician Fee Schedule (PFS) final rule (88 
FR 79307 through 79312), we finalized revisions to the definition of 
certified electronic health record technology (CEHRT) for the Medicare 
Promoting Interoperability Program at 42 CFR[thinsp]495.4 and for the 
Quality Payment Program at 42 CFR 414.1305. Specifically, we added a 
reference to the ``Base EHR definition,'' which ONC proposed in the 
Health Data, Technology, and Interoperability: Certification Program 
Updates, Algorithm Transparency, and Information Sharing (HTI-1) 
proposed rule (88 FR 23759, 23905). We finalized these revisions to 
ensure, if the HTI-1 proposals were finalized, the ``Base EHR 
definition'' would be applicable for the CEHRT definitions going 
forward (88 FR 79309 through 79312).\473\ ONC subsequently finalized a 
definition of ``Base EHR'' in the Health Data, Technology, and 
Interoperability: Certification Program Updates, Algorithm 
Transparency, and Information Sharing final rule (89 FR 1192, 1298).
---------------------------------------------------------------------------

    \473\ Revisions to the CEHRT definition are intended to 
incorporate ONC's approach of discontinuing references to yearly 
editions. For additional background, we refer readers to HTI-1 
proposed rule (88 FR 23759).
---------------------------------------------------------------------------

    We also finalized the replacement of references to the ``2015 
Edition health IT certification criteria'' with ``ONC health IT 
certification criteria,'' and the addition of the regulatory citation 
for ONC health IT certification criteria in 45 CFR 170.315. We 
finalized the proposal to specify that EHR technology must meet ONC's 
health IT certification criteria ``as adopted and updated in 45

[[Page 94419]]

CFR 170.315'' to qualify as CEHRT (88 FR 79553). These revisions, 
finalized in the CY 2024 PFS final rule, are consistent with the policy 
subsequently finalized in ONC's HTI-1 final rule, which appeared in the 
Federal Register on January 9, 2024 (89 FR 1205 through 1210). For 
additional background and information on this update, we refer readers 
to the discussion in the CY 2024 PFS final rule on this topic (88 FR 
79307 through 79312).
    In the CY 2022 OPPS/ASC final rule (86 FR 63868 and 63869), we 
adopted a requirement for hospitals to utilize certified technology 
updated to be consistent with the 2015 Edition Cures Update (now 
referred to as the ONC health IT certification criteria) for reporting 
eCQMs under the Hospital OQR Program, beginning with the CY 2023 
reporting period/CY 2025 payment determination. However, we did not 
propose or finalize a requirement that the EHR technology used for eCQM 
reporting must be certified to all eCQMs (that is, tested and validated 
on each individual eCQM) in the Hospital OQR Program.
    The Hospital IQR Program and the Medicare Promoting 
Interoperability Program require EHRs to be certified to all available 
eCQMs in the programs. We finalized this policy for the Hospital IQR 
Program in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38393) for the 
FY 2019 and FY 2020 payment determination years, and we finalized in 
the FY 2020 IPPS/LTCH PPS final rule (84 FR 42505 through 42506) that 
this policy would continue beginning with the CY 2020 reporting period/
FY 2022 payment determination. For the Medicare Promoting 
Interoperability Program, we finalized this policy in the FY 2018 and 
FY 2019 IPPS/LTCH PPS final rules for CYs 2018 and 2019, respectively 
(82 FR 38483 through 38485 and 83 FR 41671 through 41672, 
respectively). We also finalized the continuation of this requirement 
in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42600 and 42601) for CY 
2020 and subsequent years. When EHRs are certified to all available 
eCQMs in a program measure set, hospitals are able to accurately 
capture and report data for these measures. For this reason, and to 
align the Hospital OQR Program's eCQM certification requirements with 
the Hospital IQR Program and Medicare Promoting Interoperability 
Program clinical quality measure electronic submission requirements for 
eligible hospitals, we proposed in the CY 2025 OPPS/ASC proposed rule 
(89 FR 59458 through 59459) that beginning with the CY 2025 reporting 
period/CY 2027 payment determination, a HOPD using EHR technology 
certified to the ONC health IT certification criteria would be required 
to have its EHR technology certified to all eCQMs that are available to 
report under the Hospital OQR Program to meet reporting requirements 
for the Hospital OQR Program.
    We further proposed that for the CY 2025 reporting period/CY 2027 
payment determination and subsequent years, HOPDs would additionally be 
required to use the most recent version of the eCQM electronic measure 
specifications for the designated reporting period available on the 
Electronic Clinical Quality Improvement (eCQI) Resource Center website 
at: https://ecqi.healthit.gov/. We noted in the CY 2021 OPPS/ASC final 
rule (86 FR 63861) that we would generally update the measure 
specifications on an annual basis to align with current clinical 
guidelines and code systems.
    Our proposal to require that EHRs be certified to all available 
eCQMs would promote more accurate electronic quality reporting by 
incentivizing HOPDs to have their EHR and other health information 
technology (IT) vendors test all available eCQMs and offer reporting 
modules with certified eCQMs. Through this requirement, we expect 
greater certainty for hospitals that their EHR systems are capable of 
accurately calculating the eCQMs reported to CMS under the Hospital OQR 
Program because the EHR technology would be up to date and tested on 
each eCQM. Additionally, we anticipate this requirement would help 
reduce burden for hospitals by potentially reducing the frequency of 
needing to consult with their EHR and other health IT vendors to 
troubleshoot implementation or reporting issues.
    Finally, in the CY 2025 OPPS/ASC proposed rule (89 FR 59459) we 
proposed to revise regulatory text at Sec.  419.46 to add a new 
paragraph (j) to codify submission requirements for eCQMs under the 
Hospital OQR Program. Under the proposal, we would codify in Sec.  
419.46(j)(1) the requirement for hospitals to utilize certified 
technology updated to be consistent with ONC's health IT certification 
criteria, as adopted and updated in 45 CFR 170.315, for reporting eCQMs 
under the Hospital OQR Program. We proposed to codify in Sec.  
419.46(j)(2) the requirement that the EHR technology used for eCQM 
reporting must be certified to all eCQMs (that is, tested and validated 
on each individual eCQM) available to report under the Hospital OQR 
Program. We also proposed to codify in Sec.  419.46(j)(3) the 
requirement that hospitals use the most recent version of the eCQM 
electronic measure specifications for the applicable reporting period 
available on the Electronic Clinical Quality Improvement (eCQI) 
Resource Center website at: https://ecqi.healthit.gov/ or another 
website as designated by CMS.
    We invited public comment on these proposals.
    Comment: Several commenters supported the proposal requiring EHRs 
to be certified to all available eCQMs in the Hospital OQR Program, 
citing that this policy is an important step to promoting 
interoperability and will incentivize EHR vendors to take 
responsibility for eCQMs. A commenter applauded CMS for promoting 
alignment with other programs.
    Response: We thank commenters for their support.
    Comment: A few commenters expressed concern about the potential 
financial and operational burden for hospitals to meet the 
requirements, such as the need to invest in new technology, train 
staff, coordinate with EHR vendors, implement new workflows, and the 
risk of incurring potential penalties due to loss of quality reporting 
reimbursement. A commenter noted that hospitals continue to grapple 
with eCQM calculation, data analysis, and performance improvement. The 
commenter further stated that requiring EHR certification for all eCQMs 
without adequate time for system updates and testing could create undue 
burden and hinder quality improvement efforts. A few commenters 
requested that CMS delay implementation of the policy to provide 
additional time to meet requirements and for smoother implementation.
    Response: Requiring EHR technology to be certified to all available 
eCQMs is important in collecting the most relevant electronic data and 
would help streamline the electronic data extrapolation component of 
HOPD workflow in the future. We recognize that requiring EHRs to be 
certified to all available eCQMs initially creates some costs for both 
HOPDs and health IT vendors. However, once the initial process of 
certifying the EHR to all available eCQMs has been completed, hospitals 
would not have to certify measures individually, and the EHR would 
accurately capture and calculate all eCQMs in the Hospital OQR Program. 
Given the benefits of certifying EHRs to all eCQMs and the small number 
of eCQMs in the Hospital OQR Program, we will not be delaying the 
policy.
    Comment: A few commenters expressed concerns over accessing timely 
and reliable eCQM data through their EHR. A commenter specifically

[[Page 94420]]

noted that the ability to leverage CEHRT and the most recent eCQM 
specifications is dependent on updates incorporated by EHR vendors. 
Commenters urged CMS to work with the Office of the National 
Coordinator for Health Information Technology (ONC) and health IT 
vendors to include commensurate requirements on vendors, including 
making eCQM performance data available within 1 month of the start of 
the performance period and encouraging EHR vendors to provide 
functionality with sufficient lead time.\474\
---------------------------------------------------------------------------

    \474\ On July 29, 2024, notice was posted in the Federal 
Register that ONC would be dually titled to the Assistant Secretary 
for Technology Policy and Office of the National Coordinator for 
Health Information Technology (89 FR 60903).
---------------------------------------------------------------------------

    Response: Utilizing certified technology updated consistent with 
ONC's health IT certification criteria and certified to all eCQMs would 
streamline and mitigate challenges related to accessing and exporting 
eCQM data. As specified in 45 CFR 170.315(c)(1) through (4), health IT 
systems that present for certification to these criteria under the ONC 
Health IT Certification Program must support the recording, exporting, 
importing, calculating, reporting, and filtering of clinical quality 
measures selected for certification by developers and CMS. 
Specifically, certified health IT certified to 45 CFR 170.315(c)(1) and 
(3) must be able to record all data necessary to calculate each 
clinical quality measure and enable users to export a data file that is 
formatted in accordance with Quality Reporting Document Architecture 
(QRDA) Category 1 and do so without subsequent developer assistance. 
For additional information on the ONC certification criteria for health 
IT, we refer readers to the web page available at: https://www.healthit.gov/topic/certification-ehrs/certification-criteria.
    We will continue to seek input from health IT vendors and 
collaborate with ASTP/ONC to define standards that influence eCQM data 
collection and reporting for our quality reporting programs.
    Comment: A commenter stated their belief that CEHRT would not 
enable CMS to meet its goal of improving data standardization and 
standardized data collection for eCQMs and encouraged CMS to take these 
factors into consideration.
    Response: We disagree that CEHRT updated consistent with ONC's 
health IT certification criteria would not support our goal of 
standardization. Key elements of a number of ONC certification criteria 
for health IT, such as adopted versions of the United States Core Data 
for Interoperability (USCDI), are designed to promote the 
standardization of data collection and exchange, including standards 
for structured data capture and the use of relevant health data classes 
and elements.
    After consideration of the public comments we received, we are 
finalizing our proposal requiring use of EHR technology certified to 
all eCQMs that are available to report under the Hospital OQR Program 
and codifying this policy in Sec.  419.46(j)(2). We are also codifying 
in Sec.  419.46(j)(1) the requirement for hospitals to utilize 
certified technology updated consistent with ONC's health IT 
certification criteria and codifying in Sec.  419.46(j)(3) the 
requirement that hospitals use the most recent version of the eCQM 
electronic measure specifications.
c. Patient-Reported Outcome-Based Performance Measures (PRO-PMs)
(1) Data Submission of PRO-PM Data
    In the CY 2024 OPPS/ASC final rule (88 FR 82006) we finalized that 
for the Total Hip Arthroplasty and/or Total Knee Arthroplasty (THA/TKA) 
PRO-PM, hospitals must use the HQR system for data submission for a 
PRO-PM. In the CY 2025 OPPS/ASC proposed rule (89 FR 59459), we 
proposed to apply this submission method to PRO-PMs generally, 
including the Information Transfer PRO-PM. We proposed that hospitals 
must use the HQR system for data submission for any PRO-PM that we 
adopt for the Hospital OQR Program measure set. HOPDs may choose to: 
(1) directly submit their PRO-PM data to CMS using the HQR system; or 
(2) utilize a third-party entity, such as a vendor or registry, to 
submit their data using the HQR system. The HQR system allows for data 
submission using multiple file formats (such as CSV, XML) and a manual 
data entry option, allowing HOPDs additional flexibility in data 
submission.
    We invited public comment on the proposal.
    We did not receive any public comments on our proposal and 
therefore, we are finalizing our proposal that hospitals must use the 
HQR system for data submission for any PRO-PM that we adopt for the 
Hospital OQR Program measure set.
(2) Data Submission and Reporting Requirements for the Patient 
Understanding of Key Information Related to Recovery After a Facility-
Based Outpatient Procedure or Surgery, Patient Reported Outcome-Based 
Performance Measure (Information Transfer PRO-PM)
    As discussed in section XV.C.1.b of this final rule with comment 
period, we are adopting the Information Transfer PRO-PM beginning with 
voluntary reporting for the CY 2026 reporting period followed by 
mandatory reporting beginning with the CY 2027 reporting period/CY 2029 
payment determination.
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59459), we proposed 
that the performance period on which data is submitted would be January 
1 through and including December 31 of the year that is two years prior 
to the applicable payment determination year. We proposed to require 
HOPDs to submit their Information Transfer PRO-PM data between the 
period starting January 1st through and including May 15 of the year 
prior to the applicable payment determination year. All deadlines 
occurring on a Saturday, Sunday, or legal holiday, or on any other day 
all or part of which is declared to be a non-workday for Federal 
employees by statute or Executive order would be extended to the first 
day thereafter.
    We proposed to require HOPDs to offer all patients meeting the 
measure's denominator specifications the opportunity to complete the 
survey. Additionally, we proposed a minimum random sample size of 300 
completed surveys to ensure the reliability of the measure, as this is 
a recommended minimum sample size for a population of 1,500 to provide 
a 95 percent confidence interval and a 90 percent confidence interval 
for a population of over 10,000; this is also generally accepted as a 
minimum sample size for stable population estimates.475 476
---------------------------------------------------------------------------

    \475\ Ahmad, H., & Halim, H. (2017). Determining Sample Size for 
Research Activities. Selangor Business Review, 2(1), 20-34. 
Retrieved from https://sbr.journals.unisel.edu.my/ojs/index.php/sbr/article/view/12.
    \476\ Voorhis, C., & Morgan, B. (2007). Understanding Power and 
Rules of Thumb for Determining Sample Size. Tutorials in 
Quantitative Methods for Psychology. 3(2), 43-50. www.doi.org/10.20982/tqmp.03.2.p043.

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[[Page 94421]]

HOPDs that are unable to collect 300 completed surveys will not be able 
to perform random sampling, and would instead be required to submit 
data on survey responses from all completed surveys received.
    We invited public comment on these proposals.
    We did not receive any public comments on our proposal and 
therefore, we are finalizing our proposal for data submission and 
reporting requirements for the Information Transfer PRO-PM as proposed.

F. Public Reporting of Measure Data

1. General Policy
    We refer readers to the CY 2024 OPPS/ASC final rules (88 FR 81995 
and 81996) for our previously finalized policies regarding public 
display of quality measures.
2. Public Reporting of Median Time From Emergency Department (ED) 
Arrival to ED Departure for Discharged ED Patients--Psychiatric/Mental 
Health Patients Strata on Care Compare
    We refer readers to the CY 2011 OPPS/ASC final rule (75 FR 72086) 
where we adopted the Median Time from ED Arrival to ED Departure for 
Discharged ED Patients (Median Time for Discharged ED Patients) measure 
beginning with CY 2013 payment determination. The Median Time for 
Discharged ED Patients measure is a chart-abstracted measure that 
evaluates the time from ED arrival to departure, also known as ED 
throughput time. The measure data are stratified into four separate 
calculations: (a) Median Time for Discharged ED Patients--Overall Rate; 
(b) Median Time for Discharged ED Patients--Reporting Measure, which 
excludes psychiatric/mental health and transfer patients; (c) Median 
Time for Discharged ED Patients--Psychiatric/Mental Health Patients, 
which includes information only for psychiatric/mental health patients; 
and (d) Median Time for Discharged ED Patients--Transfer Patients, 
which includes information only for patients transferred from the ED.
    In the CY 2024 OPPS/ASC final rule (88 FR 81995 and 81996), we 
finalized that data for three measure strata (that is, the Overall 
Rate, Reporting Measure, and Transfer Patients strata) would be 
publicly reported both on data.medicare.gov in downloadable data files 
and on Care Compare (or subsequent CMS-designated websites). Data for 
the Psychiatric/Mental Health Patients stratum are not currently 
publicly reported on Care Compare, though these data are published on 
data.medicare.gov in downloadable data files (82 FR 59438). In the CY 
2018 OPPS/ASC final rule (82 FR 52576 through 52578), we summarized 
commenters' concerns that delays in ED discharge of mental health 
patients may be influenced, in part, by the availability of community 
resources. In response, we stated that we would take additional time 
for further consideration prior to displaying this subset of data on 
Care Compare. We have considered commenters' concern that factors 
outside of an HOPD's control may influence ED throughput for 
psychiatric/mental health patients; however, it is our understanding 
that many hospitals face such concerns, and that timely care is a 
critical aspect of quality of care. We also stated in the CY 2024 OPPS/
ASC final rule (88 FR 82061) in the context of adopting this measure 
for the REHQR Program that the public reporting of these data on Care 
Compare could help patients and their caregivers identify which 
facilities are performing better than others despite potential 
challenges, and drive quality improvement efforts.
    Our routine monitoring and evaluation of the CY 2024 performance 
period for this measure has shown a median ED throughput time of 4.7 
hours for psychiatric/mental health patients compared to 2.6 hours for 
non-psychiatric/mental health patients, suggesting this is an area that 
may benefit from additional quality improvement efforts. Data from the 
Median Time for Discharged ED Patients--Psychiatric/Mental Health 
Patients will be useful for patients choosing a care location, as well 
as researchers and hospital staff as they attempt to address health 
disparities and improve the timeliness of care for mental health 
patients. Since the data required for public reporting are already 
collected and submitted by participating HOPDs, publicly reporting this 
stratification would not create additional hospital burden.
    For these reasons, in the CY 2025 OPPS/ASC proposed rule (89 FR 
59459 through 59460), we proposed to make data for the Psychiatric/
Mental Health Patients stratification available on Care Compare, 
including data that were previously published on data.medicare.gov but 
not displayed on Care Compare, beginning in CY 2025.
    We invited public comment on the proposal.
    Comment: Several commenters supported CMS' proposal to publicly 
report data for the Psychiatric/Mental Health patient stratum on Care 
Compare, noting that reporting these data would help consumers make 
educated decisions for timely, appropriate care and promote 
accountability for throughput time. A commenter noted that these data 
will provide policymakers the necessary information to address 
challenges with ED boarding for this patient population.
    Response: We thank commenters for their support of our proposal.
    Comment: A commenter supported making data for the Median Time for 
Discharged ED Patients--Psychiatric/Mental Health stratum more 
accessible but did not support imposing additional reporting burdens on 
hospitals.
    Response: We appreciate the commenter's support for increasing data 
accessibility. We wish to clarify that the proposed policy would not 
increase reporting burden for HOPDs. Data for the Median Time for 
Discharged ED Patients measure are already collected and submitted by 
participating HOPDs and are currently accessible in downloadable files 
from CMS' Provider Data Catalog available at data.cms.gov. The public 
reporting of the Psychiatric/Mental Health Patients stratum on Care 
Compare would not require hospitals to collect or submit any additional 
data beyond what is already required.
    Comment: Many commenters opposed the proposal to publicly report 
the Median Time for Discharged ED Patients--Psychiatric/Mental Health 
stratum on Care Compare, noting that ED throughput times for this 
population are influenced by factors outside of a provider's control, 
including lack of psychiatric resources in a community, barriers to 
efficient transition, and challenges with screening this population. 
Several commenters noted their beliefs that the measure does not 
reflect the efficacy and quality of care provided in an ED. A few 
commenters stated concerns regarding a lack of evidence demonstrating 
that ED throughput time influences patient outcomes.
    Response: We understand commenters' concerns that there are many 
factors outside a hospital's control that could affect ED throughput, 
such as limited psychiatric resources; however, the Compare tool data 
indicate that hospitals with 50 beds or less performed better on this 
measure overall and had lower median ED throughput times for discharged 
psychiatric/mental health patients than larger hospitals (88 FR 82049), 
despite evidence indicating that smaller hospitals often lag behind in 
their quality performance and maintain limited scale and resources 
compared to

[[Page 94422]]

large systems.477 478 479 Therefore, while external factors 
can play a role in Median Time from ED Arrival to ED Departure, 
resource constraints alone do not fully account for variations in 
performance, as evidenced by the better performance of smaller 
hospitals on this measure.
---------------------------------------------------------------------------

    \477\ Chartis. Healthcare's uneven financial performance: Large 
hospitals bounce back while rural facilities face ongoing 
vulnerability concerns. Available at: https://www.chartis.com/insights/healthcares-uneven-financial-performance-large-hospitals-bounce-back-while-rural.
    \478\ Chartis. Unrelenting Pressure Pushes Rural Safety Net 
Crisis into Uncharted Territory. Available at: https://www.chartis.com/sites/default/files/documents/chartis_rural_study_pressure_pushes_rural_safety_net_crisis_into_uncharted_territory_feb_15_2024_fnl.pdf.
    \479\ Sherry TB, Damberg CL, DeYoreo M, et al. (2022). Is Bigger 
Better?: A Closer Look at Small Health Systems in the United States. 
Med Care. 60(7):504-511. www.doi.org/10.1097/MLR.0000000000001727.
---------------------------------------------------------------------------

    We respectfully disagree that the measure does not represent the 
efficacy or quality of care provided in an ED. While ED throughput 
alone may not reflect all aspects of care in an ED, it is an important 
indicator of operational efficiency \480\ and timely care, which have 
direct influence on the quality of care provided to patients.\481\ 
Prolonged ED throughput times can lead to overcrowding, and 
overcrowding is associated with avoidable problems in the ED, such as 
poor outcomes resulting from delays in treatment and ambulance 
diversion.\482\ Additionally, ED throughput has a direct influence on 
patient experience \483\ in the ED setting, and studies demonstrate 
that higher patient satisfaction is associated with improved patient 
outcomes, including decreased mortality \484\ and lower readmission 
rates.\485\
---------------------------------------------------------------------------

    \480\ Gardner, R.M., N.A. Friedman, M. Carlson, T.S. Bradham and 
T.W. Barrett. Impact of revised triage to improve throughput in an 
ED with limited traditional fast track population. Am J Emerg Med., 
2017,36(1), 124-127.
    \481\ Kelen GD, Wolfe R, D-Onofrio G, Mills AM, Diercks D, Stern 
SA, Wadman MC, Sokolove PE. Emergency Department Crowding: The 
Canary in the Health Care System. NEJM Catalyst. 2021; 5(2).
    \482\ Ibid.
    \483\ Nyce, A, Gandhi, S, Freeze, B, Bosire, J, Ricca, T, 
Kupersmith, E, Mazzarelli, A, Rachoin, J-S. Association of Emergency 
Department Waiting Times With Patient Experience in Admitted and 
Discharged Patients. 2021. J Pat Exp 8:1-7. https://doi.org/10.1177/23743735211011404.
    \484\ Glickman SW, Boulding W, Manary M, Staelin R, Roe MT, 
Wolosin RJ. et al. Patient satisfaction and its relationship with 
clinical quality and inpatient mortality in acute myocardial 
infarction. Circ Cardiovasc Qual Outcomes. 2010; 3:188-95. Available 
at https://www.ahajournals.org/doi/10.1161/CIRCOUTCOMES.109.900597?url_ver=Z39.88-2003&rfr_id=ori:rid:crossref.org&rfr_dat=cr_pub%20%200pubmed.
    \485\ Boulding W, Glickman SW, Manary MP, Schulman KA, Staelin 
R. Relationship between patient satisfaction with inpatient care and 
hospital readmission within 30 days. Am J Manag Care. 2011;17:41-8. 
Available at https://www.ajmc.com/view/ajmc_11jan_boulding_41to48.
---------------------------------------------------------------------------

    We reiterate that timely care is a critical aspect of quality of 
care and directly impacts patient outcomes, particularly for an ED 
episode of care. The public reporting of these data can help patients 
and their caregivers identify which hospitals are performing better 
than others, despite the challenges many hospitals face, and drive 
quality improvement efforts. Additionally, aligning the reporting of ED 
throughput data across the Hospital OQR and REHQR Programs will allow 
consumers to make informed comparisons across settings.
    Comment: A few commenters expressed their belief that there is no 
added benefit to reporting the Median Time for Discharged ED Patients--
Psychiatric/Mental Health data on Care Compare since these data are 
already available in downloadable files on cms.data.gov. Another 
commenter noted that reporting the data would be duplicative of other 
strata listed on the Compare tool, and a few commenters expressed 
concern that publicly reporting the stratum may not help patients when 
making care decisions.
    Response: The inclusion of the Median Time for Discharged ED 
Patients--Psychiatric/Mental Health stratum on the Compare tool 
addresses a critical behavioral health gap in the publicly reported 
Hospital OQR Program measure set and is not duplicative of other data 
listed on the Compare tool. By publicly reporting these data, we aim to 
increase transparency around the care provided to this vulnerable 
patient population and highlight areas where resources and processes 
may need to be strengthened. We reiterate that publicly reporting these 
data on the Compare tool will be useful for patients choosing a care 
location, as well as researchers, policymakers, and hospital staff as 
they attempt to address health disparities and improve the timeliness 
of care for mental health patients.
    Comment: A few commenters expressed concerns regarding potential 
unintended consequences of publicly reporting the data. A commenter 
expressed their belief that publicly displaying the data could 
discourage facilities from taking the necessary time to ensure patients 
have adequate resources in place before discharge. Several commenters 
stated their belief that reporting the data may deter individuals from 
seeking care during mental health crises.
    Response: We appreciate the commenter's input regarding potential 
unintended consequences of displaying these data on the Compare tool. 
We remain confident that rather than deterring individuals from seeking 
care, publicly reporting these data on the Compare tool would help 
patients and their caregivers identify the hospitals that are 
performing better on this metric and empower consumers to make informed 
decisions. We also respectfully disagree that publicly reporting ED 
throughput data on the Compare tool for the Psychiatric/Mental Health 
stratum would incentivize HOPDs to inappropriately limit their care to 
quickly discharge one of their most vulnerable patient populations from 
the ED. Rather, we remain confident that HOPDs will continue to provide 
high quality care for psychiatric/mental health patients and submit 
data as part of their commitment to the patient experience and ongoing 
quality improvement efforts. We further note that these data have been 
available since 2018 in the Provider Data Catalog located at https://
data.cms.gov (82 FR 59437), as part of CMS' assessment of timely and 
effective care, and that median time for ED discharge continued to 
increase for psychiatric/mental health patients after 2018, indicating 
that HOPDs were not incentivized to limit their care after these data 
became publicly available.
    Comment: A commenter raised concerns that limited pediatric 
inpatient psychiatric beds contribute to very long boarding times in 
the ED and recommended further stratifying the data by pediatric and 
adult populations.
    Response: We acknowledge the commenter's concerns that limited 
pediatric psychiatric resources may contribute to longer ED throughput 
times for the pediatric patient population. However, we believe it is 
important to not separate the pediatric and adult populations when 
calculating this measure. The current measure aims to capture 
performance for all Psychiatric/Mental Health patients. Stratifying by 
age does not align with our broader goals of improving emergency care 
across all age groups, as these patient groups should be provided the 
same level of care in the ED setting. We will continue to monitor 
feedback on this measure and evaluate potential future refinements 
based on trends and stakeholder input.
    Comment: A commenter stated that the current data, presented 
without additional context or risk adjustment may lead to 
misinterpretation by consumers. The commenter recommended risk-
adjusting the data and establishing a cap on the maximum time from ED 
arrival to ED departure,

[[Page 94423]]

noting that a ceiling on this metric would help level the playing field 
for hospitals in areas with bed shortages.
    Response: We thank the commenter for their input. We believe that 
publicly displaying the full range of time from ED arrival to ED 
departure is necessary to improve transparency around wait times for 
all hospitals and allow for more informed decision-making for patients. 
Establishing a cap or ceiling for this metric could result in extremely 
long or outlier wait times not being shown on Care Compare, and we 
believe that information about outlier wait times is important to 
display on Care Compare for patient awareness. Similarly, we disagree 
that risk-adjustment is appropriate for this measure because a 
patient's ED wait time should not be related to any patient-specific 
factors.
    Comment: A few commenters recommended that the publicly displayed 
data for the Median Time for Discharged ED Patients--Psychiatric/Mental 
Health population also include data on the mental health resources in a 
HOPD's community. Commenters also encouraged partnership with 
stakeholders to provide the needed resources for this patient 
population.
    Response: We appreciate the recommendation to provide context for 
the data publicly displayed for the Median Time for Discharged ED 
Patients--Psychiatric/Mental Health population. Dashboards on resource 
availability do exist, such as the Health Resources and Services 
Administration's (HRSA) tool for Health Professional Shortage Areas and 
the Medically Underserved Areas/Populations dashboard. We will consider 
using HRSA's dashboards, or other tools that provide context on the 
availability of resources in a community, to potentially supplement 
data for the Psychiatric/Mental Health Patients population on Care 
Compare as appropriate in the future.
    We thank commenters for their feedback to work with interested 
parties and will take these recommendations into consideration as 
appropriate as we continue to evaluate all elements of the Hospital OQR 
Program to ensure a relevant and meaningful measure set.
    Comment: A few commenters recommended removing the Median Time for 
Discharged ED Patients measure from the Hospital OQR Program measure 
set. A commenter specifically noted that the measure currently lacks 
CBE endorsement and raised concerns regarding the strength of evidence 
supporting the measure's use in quality reporting programs.
    Response: One of the Meaningful Measures 2.0 goals is to address 
measurement gaps, reduce burden, and increase efficiency by using high-
value quality measures impacting key quality domains. ED performance 
and care continues to be a key quality domain of the Hospital OQR 
Program. Removal of the Median Time for Discharged ED Patients measure 
would result in an incomplete measure set with no measures that review 
ED throughput. We continue to believe that the Median Time for 
Discharged ED Patients measure supports our Meaningful Measures 2.0 
goals. Additionally, behavioral health is a high-priority outcome area 
and one of the CMS National Quality Strategy Goals is to improve 
quality and health outcomes across the care journey by driving 
improvements in high-priority areas, such as behavioral health. We 
acknowledge that the measure is no longer CBE endorsed because the 
measure was withdrawn by the developer,\486\ however, we continue to 
assert that the Median Time for Discharged ED Patients continues to 
provide valuable information regarding timely care. Furthermore, 
quality improvement efforts aimed at reducing ED overcrowding and 
length of stay have been associated with an increase in ED patient 
volume, decrease in number of patients who leave without being seen, 
reduction in costs, and increase in patient 
satisfaction.487 488 489 490 Section 1833(t)(17)(C)(i) of 
the Act provides that the Hospital OQR Program, to the extent feasible 
and practicable, shall include measures that reflect consensus among 
affected parties and, to the extent feasible and practicable, measures 
set forth by one or more national consensus building entities. As we 
have noted in previous rulemaking, consensus among affected parties can 
be reflected in ways other than CBE endorsement, including through the 
measure development process, through broad acceptance and use of the 
measure(s), and through public comment (75 FR 72064 and 72065). The 
CBE's continued endorsement until the measure developer withdrew the 
measure, and the continuous use of the measure in both the Hospital OQR 
Program and in academic studies, such as those cited in a previous 
endorsement cycle,491 492 493 494 495 demonstrate ongoing 
acceptance of its value.
---------------------------------------------------------------------------

    \486\ Partnership for Quality Measurement. Submission Tool and 
Repository Measure Database. https://p4qm.org/measures/0496.
    \487\ Nyce A, Gandhi S, Freeze B, et al. (2021). Association of 
Emergency Department Waiting Times With Patient Experience in 
Admitted and Discharged Patients. Journal of Patient Experience. 
2021;8. www.doi.org/10.1177/23743735211011404.
    \488\ Bucci S, de Belvis AG, Marventano S, et al. (2016). 
Emergency department crowding and hospital bed shortage: Is Lean a 
smart answer? A systematic review. Eur Rev Med Pharmacol Sci, 
20(20), 4209-4219. https://www.europeanreview.org/article/11589.
    \489\ Chang AM, Lin A, Fu R, et al. (2017). Associations of 
Emergency Department Length of Stay With Publicly Reported Quality-
of-care Measures. Acad Emerg Med. 24(2):246-250. www.doi.org/10.1111/acem.13102.
    \490\ Melton JD, Blind F, Hall AB, et al. (2016). Impact of a 
Hospitalwide Quality Improvement Initiative on Emergency Department 
Throughput and Crowding Measures. The Joint Commission Journal on 
Quality and Patient Safety. 42(12); 533-542. www.doi.org/10.1016/S1553-7250(16)30104-0.
    \491\ NQF. Measure Worksheet. https://www.qualityforum.org/Projects/c-d/Cost_and_Efficiency/Measure_Worksheet_0496.aspx.
    \492\ Mullins PM, Pines JM. National ED crowding and hospital 
quality: Results from the 2013 Hospital Compare data. Am J Emerg Med 
2014; 32(6): 634-639. doi: 10.1016/j.ajem.2014.02.008.
    \493\ Zocchi MS, McClelland MS, & Pines JM. Increasing 
Throughput: Results from a 42-Hospital Collaborative to Improve 
Emergency Department Flow. Jt Comm J Qual Patient Saf. 2015 
Dec;41(12):532-42. doi: 10.1016/s1553-7250(15)41070-0.
    \494\ Gardner RM, Friedman NA, Carlson M, Bradham TS, Barrett 
TW. Impact of revised triage to improve throughput in an ED with 
limited traditional fast track population. Am J Emerg Med. 2018 
Jan;36(1):124-127. doi: 10.1016/j.ajem.2017.10.016.
    \495\ Chang AM, Lin A, Fu R, McConnell KJ, Sun B. Associations 
of Emergency Department Length of Stay With Publicly Reported 
Quality-of-care Measures. Acad Emerg Med. 2017 Feb;24(2):246-250. 
doi: 10.1111/acem.13102.
---------------------------------------------------------------------------

    After consideration of the public comments we received, we are 
finalizing our proposal to publicly display the Median Time for 
Discharged ED Patients--Psychiatric/Mental Health stratum on the 
Compare tool, beginning with measure data for the CY 2025 reporting 
period.

G. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR 
Program Requirements for the CY 2025 Payment Determination

1. Background
    Section 1833(t)(17) of the Act, which applies to subsection (d) 
hospitals (as defined under section 1886(d)(1)(B) of the Act), states 
that hospitals that fail to report data required to be submitted on 
measures selected by the Secretary, in the form and manner, and at a 
time, specified by the Secretary will incur a 2.0 percentage point 
reduction to their Outpatient Department (OPD) fee schedule increase 
factor; that is, the annual payment update factor. Section 
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only 
to the payment year involved and will not be taken into account in 
computing the applicable OPD fee schedule increase factor for a 
subsequent year.

[[Page 94424]]

    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 the proposed rule, which is available via the internet on the CMS 
website): ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' 
``T,'' ``V,'' or ``U.'' 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. In the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79796), we clarified 
that the reporting ratio does not apply to codes with status indicator 
``Q4'' because services and procedures coded with status indicator 
``Q4'' are either packaged or paid through the Clinical Laboratory Fee 
Schedule and are never paid separately through the OPPS.
    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/ASC final rule with comment period, we multiplied 
the final full national unadjusted payment rate found in Addendum B of 
the CY 2010 OPPS/ASC final rule with comment period by the CY 2010 OPPS 
final rule with comment period reporting ratio of 0.980 (74 FR 60642).
    We note that the only difference in the calculation for the full 
conversion factor and the calculation for the reduced conversion factor 
is that the full conversion factor uses the full OPD update, and the 
reduced conversion factor uses the reduced OPD update. The baseline 
OPPS conversion factor calculation is the same since all other 
adjustments would be applied to both conversion factor calculations. 
Therefore, our standard approach of calculating the reporting ratio as 
described earlier in this section is equivalent to dividing the reduced 
OPD update factor by that of the full OPD update factor. In other 
words:

Full Conversion Factor = Baseline OPPS conversion factor * (1 + OPD 
update factor)
Reduced Conversion Factor = Baseline OPPS conversion factor * (1 + OPD 
update factor -0.02)
Reporting Ratio = Reduced Conversion Factor/Full Conversion Factor

    Which is equivalent to:

Reporting Ratio = (1 + OPD Update factor -0.02)/(1 + OPD update factor)

    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 
through 68772), we established a policy that the Medicare beneficiary's 
minimum unadjusted copayment and national unadjusted copayment for a 
service to which a reduced national unadjusted payment rate applies 
would each equal the product of the reporting ratio and the national 
unadjusted copayment or the minimum unadjusted copayment, as 
applicable, for the service. Under this policy, we apply the reporting 
ratio to both the minimum unadjusted copayment and national unadjusted 
copayment for services provided by hospitals that receive the payment 
reduction for failure to meet the Hospital OQR Program reporting 
requirements. This application of the reporting ratio to the national 
unadjusted and minimum unadjusted copayments is calculated according to 
Sec.  419.41 of our regulations, prior to any adjustment for a 
hospital's failure to meet the quality reporting standards according to 
Sec.  419.43(h). Beneficiaries and secondary payers thereby share in 
the reduction of payments to these hospitals.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68772), we established the policy that all other applicable adjustments 
to the OPPS national unadjusted payment rates apply when the OPD fee 
schedule increase factor is reduced for hospitals that fail to meet the 
requirements of the Hospital OQR Program. For example, the following 
standard adjustments apply to the reduced national unadjusted payment 
rates: the wage index adjustment, the multiple procedure adjustment, 
the interrupted procedure adjustment, the rural sole community hospital 
adjustment, and the adjustment for devices furnished with full or 
partial credit or without cost. Similarly, OPPS outlier payments made 
for high cost and complex procedures will continue to be made when 
outlier criteria are met. For hospitals that fail to meet the quality 
data reporting requirements, the hospitals' costs are compared to the 
reduced payments for purposes of outlier eligibility and payment 
calculation. We established this policy in the OPPS beginning in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60642). For a 
complete discussion of the OPPS outlier calculation and eligibility 
criteria, we refer readers to section II.G of the CY 2023 OPPS/ASC 
proposed rule (87 FR 44533 through 44534).
2. Reporting Ratio Application and Associated Adjustment Policy for CY 
2025
    We proposed 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 2025 annual payment update factor. 
For the CY 2025 OPPS/ASC proposed rule, the proposed reporting ratio 
was 0.9805, which, when multiplied by the proposed full conversion 
factor of $89.379, equaled a proposed conversion factor for hospitals 
that fail to meet the

[[Page 94425]]

requirements of the Hospital OQR Program (that is, the reduced 
conversion factor) of $87.636. We proposed to continue to apply the 
reporting ratio to all services calculated using the OPPS conversion 
factor. We proposed to continue to apply the reporting ratio, when 
applicable, to all HCPCS codes to which we have proposed status 
indicator assignments of ``J1,'' ``J2,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' 
``R,'' ``S,'' ``T,'' ``V,'' and ``U'' (other than New Technology APCs 
to which we have proposed status indicator assignments of ``S'' and 
``T''). We proposed to continue to exclude services paid under New 
Technology APCs. We proposed 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 proposed 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 proposed 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. 
In addition to our proposal to implement the policy through the use of 
a reporting ratio, we also proposed to calculate the reporting ratio to 
four decimals (rather than the previously used three decimals) to more 
precisely calculate the reduced adjusted payment and copayment rates.
    For CY 2025, the proposed reporting ratio was 0.9805, which, when 
multiplied by the proposed full conversion factor of $89.379, equaled a 
proposed conversion factor for hospitals that fail to meet the 
requirements of the Hospital OQR Program (that is, the reduced 
conversion factor) of $87.636.
    We did not receive any public comments on our proposal. For this 
final rule with comment period, the final reporting ratio is 0.9806, 
which, when multiplied by the final full conversion factor of $89.169, 
equals a final conversion factor for hospitals that fail to meet the 
requirements of the Hospital OQR Program (that is, the reduced 
conversion factor) of $87.439. We are finalizing our proposal 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 are also finalizing our proposals 
to implement the policy through the use of a reporting ratio, and to 
calculate the reporting ratio to four decimals (rather than the 
previously used three decimals) to more precisely calculate the reduced 
adjusted payment and copayment rates for hospitals that fail to meet 
the Hospital OQR Program requirements for CY 2025 payment.

XVI. Rural Emergency Hospital Quality Reporting (REHQR) Program

A. Background and Statutory Authority

    The Rural Emergency Hospital Quality Reporting (REHQR) Program's 
overarching goals are to improve the quality of care provided to 
Medicare beneficiaries, facilitate public transparency, ensure 
accountability, and safeguard the accessibility of hospitals in rural 
settings.
    Section 1861(kkk)(7)(A) of the Social Security Act (the Act) 
provides that the Secretary shall establish quality measurement 
reporting requirements for Rural Emergency Hospitals (REHs), which may 
include the use of a small number of claims-based outcomes measures or 
surveys of patients with respect to their experience in the REH. In 
selecting measures for quality reporting, section 1861(kkk)(7)(C)(iii) 
provides that the Secretary shall take into consideration ways to 
account for REHs that lack sufficient case volume to ensure that the 
performance rates for such measures are reliable. Although section 
1861(kkk)(7)(C)(i) of the Act requires that measures specified by the 
Secretary for use in the REHQR Program be endorsed by the entity with a 
contract under section 1890(a) of the Act, section 1861(kkk)(7)(C)(ii) 
of the Act states that in the case of a specified area or medical topic 
determined appropriate by the Secretary for which a feasible and 
practical measure has not been endorsed by the entity with a contract 
under section 1890(a) of the Act, the Secretary may specify a measure 
that is not so endorsed as long as due consideration is given to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary.
    In addition, section 1861(kkk)(7)(D) of the Act provides that the 
Secretary shall establish procedures for making data submitted by REHs 
for the REHQR Program available to the public, following the 
opportunity for the REH to review and submit corrections on such data, 
with such data to be posted on a CMS website as determined appropriate 
by the Secretary. Beginning with 2023 (or each year beginning on or 
after the date that is 1 year after one or more measures are first 
specified), section 1861(kkk)(7)(B)(ii) of the Act requires REHs to 
submit quality measure data to the Secretary ``in a form and manner, 
and at a time, specified by the Secretary.''
    We refer readers to section XVI of the CY 2024 OPPS/ASC final rule 
(88 FR 82046 through 82076) for an overview of the REHQR Program, which 
includes a more detailed discussion of the statutory history and 
program requirements codified at 42 CFR 419.95.
1. Previously Finalized Program Measure Sets
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 82066 
through 82067) for more information regarding the previously finalized 
REHQR Program measure set beginning with the CY 2024 reporting period.
    Table 165 below summarizes the previously finalized REHQR Program 
measure set and initial reporting periods with program determinations 
beginning with the CY 2026 program determination.\496\
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    \496\ We use the phrase ``Program Determination'' for the REHQR 
Program to represent our assessment of compliance with program 
requirements for an applicable year because the REHQR Program does 
not include an associated payment adjustment.

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[[Page 94426]]

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B. Program Measure Set Policies

    We refer readers to Sec.  419.95(e) and the CY 2024 OPPS/ASC final 
rule (88 FR 82051 through 82053) for our program policies regarding 
measure retention, and immediate and general measure suspension and 
removal, and to Sec.  419.95(d) and the CY 2024 OPPS/ASC final rule (88 
FR 82054) for our program policies regarding modifications to 
previously adopted measures.
    We further refer readers to the CY 2024 OPPS/ASC final rule (88 FR 
82047 through 82051) for a discussion of our considerations for 
adopting quality measures under the REHQR Program, and to section 
XIV.B.1.c of this final rule with comment period for information 
regarding the pre-rulemaking process.
    We did not propose any changes to these policies in the CY 2025 
OPPS/ASC proposed rule.

C. Program Measure Updates

1. Adoption of Health Equity Quality Measures in the REHQR Program
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 of this 
final rule with comment period for a discussion of our cross-program 
proposals to adopt the following measures in the REHQR Program: (1) the 
Hospital Commitment to Health Equity (HCHE) measure, beginning with the 
CY 2025 reporting period/CY 2027 program determination; (2) the 
Screening for Social Drivers of Health (SDOH) measure, beginning with 
voluntary reporting for the CY 2025 reporting period, followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
program determination; and (3) the Screen Positive Rate for SDOH 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period, followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 program determination. In these sections, we 
also discuss the public comments received, our responses thereto, and 
our final decisions regarding these proposals for the REHQR Program.
    As noted in the CY 2025 OPPS/ASC proposed rule (89 FR 59462 through 
59463), in selecting measures for the REHQR Program, CMS takes into 
consideration ways to account for REHs that lack sufficient case volume 
to ensure that performance rates for such measures are reliable.\497\ 
Once mandatory reporting begins, the measure specifications require all 
patients to be screened so we do not believe the Screening for SDOH 
measure or the Screen Positive Rate for SDOH measure would suffer from 
low case volumes. In addition, we noted that, as stated in the CY 2024 
OPPS/ASC final rule (88 FR 82066), CMS does not report measures 
publicly unless it achieves sufficient case volumes for reliability 
purposes to allow for public reporting of the collected data.
---------------------------------------------------------------------------

    \497\ See section 1861(kkk)(7)(C)(iii) of the Act.
---------------------------------------------------------------------------

2. Modification to the Reporting Period for the Risk-Standardized 
Hospital Visits Within 7 Days After Hospital Outpatient Surgery Measure 
Beginning With the CY 2027 Program Determination
    In the CY 2024 OPPS/ASC final rule, we adopted the Risk-
Standardized Hospital Visits Within 7 Days After Hospital Outpatient 
Surgery measure in the REHQR Program with a 1-year reporting period 
beginning with the CY 2024 reporting period (88 FR 82064 through 
82066).
    This measure is calculated from Part A and Part B Medicare 
administrative claims data for Medicare Fee-for-Service (FFS) 
beneficiaries with an outpatient same-day surgical procedure excluding 
eye surgeries and colonoscopies (except colonoscopy with biopsy). 
Colonoscopies are excluded from this measure as these procedures are 
examined separately on their own. Eye surgeries are excluded because 
they are performed in high volume and are generally perceived as being 
``low risk.'' As stated in the CY 2024 OPPS/ASC final rule (88 FR 
82064), this measure makes unplanned patient hospital visits (ED 
visits, observation stays, or unplanned inpatient admissions) after 
surgery more visible to providers and patients through publicly 
reporting scores.
    As noted in the CY 2024 OPPS/ASC final rule (88 FR 82064), we 
believe this measure could also encourage providers to engage in 
quality improvement activities to reduce these visits by providing 
feedback to hospitals and providers. This measure meets the National 
Quality Strategy goals of embedding quality into the care journey and 
promoting safety,\498\ and we expect that the measure would promote 
improvement in patient care over time (88 FR 82064 through 82065).
---------------------------------------------------------------------------

    \498\ CMS, What is the CMS National Quality Strategy?. Available 
at: https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
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    We have monitored and evaluated the reporting patterns of hospitals 
that have converted to REH status and have found that under the 
Hospital Outpatient Quality Reporting (OQR) Program, a

[[Page 94427]]

limited number of current REHs were able to publicly report on this 
measure as specified based on case threshold minimums. Therefore, in 
consideration of our statutory obligation to consider ways to account 
for low case volumes and to publicly report on quality-of-care metrics 
for REHs, in the CY 2025 OPPS/ASC proposed rule (89 FR 59463 through 
59464), we proposed to increase the reporting period from 1 year to 2 
years beginning with the CY 2027 program determination.
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59463), we explained 
that under the proposal, the previously finalized 1-year data 
collection period for the CY 2026 program determination would remain 
(that is, encounters from January 1, 2024, through December 31, 2024), 
and then beginning with the CY 2027 program determination, the 
reporting period would be supplemented with data from the prior 
calendar year. For example, for the CY 2027 program determination, the 
reporting period would comprise data from CYs 2024 and 2025 (that is, 
encounters from January 1, 2024, through December 31, 2025). We noted 
that, as stated in the CY 2024 OPPS/ASC final rule (88 FR 82066), CMS 
does not report measures publicly unless it achieves sufficient case 
volumes to allow for public reporting based on reliability or privacy 
concerns of the collected data.
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BILLING CODE 4120-01-C
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59463), we explained 
that as seen in Table 166, the longer reporting period of 2 years would 
facilitate greater case volumes for this measure and, subsequently, a 
larger portion of REHs would have data that could be reported publicly 
as more REHs attain the Risk-Standardized Hospital Visits Within 7 Days 
After Outpatient Surgery measure's minimum case threshold for 
reliability of 30 surgical cases. In addition, REHs reporting on the 
measure with 2 years of data would have more eligible patients to 
assess; this increase in eligible cases would also reduce the error 
estimate, making the confidence interval narrower, that is, increasing 
the reliability of the calculated measure. We refer readers to the CY 
2019 OPPS/ASC final rule (83 FR 59106 through 59107) where we finalized 
a similar policy to extend the reporting period of the Facility 7-Day 
Risk-Standardized Hospital Visit Rate After Outpatient Colonoscopy 
measure in the Hospital OQR Program from 2 to 3 years.
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59464), we explained 
that under the proposal, there would be no gap in public reporting nor 
delay in providing REHs with data for quality improvement efforts. As 
this measure is calculated solely from administrative Medicare 
information, REHs would not have any additional reporting burden 
associated with a longer reporting period.
    We invited public comment on the proposal.
    Comment: Several commenters supported the proposal to extend the 
reporting period for the Risk-Standardized Hospital Visits Within 7 
Days After Hospital Outpatient Surgery measure, stating that finalizing 
the policy would allow a broader range of hospitals to reliably and 
validly report the measure, provide consumers with ratings for a 
greater number of facilities, enhance the reliability of the measure 
results due to the larger sample size, provide hospitals with a more 
accurate and comprehensive understanding of performance trends over 
time, allow for improved data analysis and better-informed decisions 
regarding patient care, and reduce the pressure on hospitals to gather 
and report data within a shorter window thereby supporting more 
sustainable and effective reporting practices.
    Response: We thank the commenters for their support.
    After consideration of the public comments we received, we are 
finalizing the extension of the reporting period for the Risk-
Standardized Hospital Visits Within 7 Days After Hospital Outpatient 
Surgery measure

[[Page 94428]]

from 1 year to 2 years, beginning with the CY 2027 program 
determination, as proposed.
3. Summary of Finalized Program Measure Set Updates
a. Finalized Program Measure Set Beginning With the CY 2027 Program 
Determination
    Table 167 summarizes the finalized REHQR Program measure set and 
reporting periods beginning with the CY 2027 program determination.
    Table 167 includes the previously finalized measure set with 
updates to reflect the finalized extension of the reporting period for 
the Risk-Standardized Hospital Visits Within 7 Days After Hospital 
Outpatient Surgery measure beginning with the CY 2027 program 
determination, and the three new cross-program health equity measures 
as detailed in sections XIV.B.1, XIV.B.2, and XIV.B.3, respectively, of 
this final rule with comment period:
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[GRAPHIC] [TIFF OMITTED] TR27NO24.224

b. Finalized Program Measure Set Beginning With the CY 2028 Program 
Determination
    Table 168 summarizes the finalized REHQR Program measure set and 
reporting periods beginning with the CY 2028 program determination.
    Table 168 includes the previously finalized measure set with 
updates to reflect the finalized extension of the reporting period for 
the Risk-Standardized Hospital Visits Within 7 Days After Hospital 
Outpatient Surgery measure beginning with the CY 2028 program 
determination, and the three new cross-program health equity measures 
as detailed in sections XIV.B.1, XIV.B.2, and XIV.B.3, respectively, of 
this final rule with comment period.

[[Page 94429]]

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D. Administrative Requirements

    We refer readers to Sec.  419.95(b) and the CY 2024 OPPS/ASC final 
rule (88 FR 82074) for our policies regarding administrative 
requirements previously finalized for the REHQR Program. We did not 
propose any changes to these policies in the CY 2025 OPPS/ASC proposed 
rule.

E. Form, Manner, and Timing of Data Submission

1. General Policy
    We refer readers to Sec.  419.95(c) and (g) and the CY 2024 OPPS/
ASC final rule (88 FR 82074 through 82076) for our general policies 
regarding: (1) submission of data under the REHQR Program generally; 
(2) review and correction of submitted data; and (3) extraordinary 
circumstance exception (ECE) requests for data submission. We did not 
propose any changes to these policies in the CY 2025 OPPS/ASC proposed 
rule.
2. Data Submission Policy Following Conversion to REH Status
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59465), we noted that 
with implementation of these general data reporting policies and 
hospitals continuing to convert to REH status throughout the year, we 
believed that it was necessary to specify when a hospital that converts 
to REH status is required to begin reporting data to the REHQR Program. 
Thus, we proposed that an REH must begin submitting data to the REHQR 
Program on the first day of the quarter following the date that a 
hospital has been designated as converted to an REH in accordance with 
the process outlined in section 1861(kkk) of the Act.
    We invited public comment on the proposal.
    Comment: Several commenters supported the proposal to require REHs 
to begin submitting data to the REHQR Program on the first day of the 
quarter following the date that a hospital has been designated as 
converted to an REH, stating that this aligns with regulatory 
requirements and ensures a structured transition for newly designated 
REHs.
    Response: We thank the commenters for their support.
    Comment: A commenter recommended that CMS provide additional 
technical assistance to hospitals during the conversion period to help 
them prepare for reporting and suggested that CMS develop strategies to 
mitigate the financial impacts associated with reporting requirements 
in the first fiscal year following the REH conversion, to support a 
smoother transition and reduce the burden on these facilities.
    Response: Technical assistance for reporting information is 
available on the QualityNet website (https://qualitynet.cms.gov/reh) 
and questions can be submitted via the Quality Question and Answer Tool 
(https://cmsqualitysupport.servicenowservices.com/qnet_qa). We have 
limited the burden associated with reporting by limiting the number and 
types of measures in the REHQR Program (for example, by primarily 
implementing measures calculated using Medicare administrative data and 
measures submitted using aggregate counts).
    After consideration of the public comments we received, we are 
finalizing the data submission policy following conversion to REH 
status as proposed.
3. Measure-Specific Data Submission and Reporting Requirements
a. Data Submission Requirements for Chart-Abstracted Measures
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 82074 
through 82075) for information regarding chart-abstracted data 
submission and reporting requirements. We did not propose any changes 
to these policies in the CY 2025 OPPS/ASC proposed rule.

[[Page 94430]]

b. HCHE, Screening for SDOH, and Screen Positive Rate for SDOH 
Measures' Data Submission Requirements and Reporting Requirements
    In the CY 2025 OPPS/ASC proposed rule (89 FR 59465 through 59466), 
to align with the Hospital OQR (80 FR 70521 through 70522) and ASCQR 
(81 FR 79821 through 79822) Programs, we proposed a web-based 
submission policy where REHs would submit data for applicable measures 
once annually using a CMS-approved, web-based, data collection tool 
available within the Hospital Quality Reporting system.\499\ We 
proposed that, in alignment with the Hospital OQR and ASCQR Programs, 
REHs would submit data during the period of January 1 to May 15 in the 
year prior to the affected program determination year. For example, for 
the CY 2025 reporting period/CY 2027 program determination, the data 
submission period would be January 1, 2026, to May 15, 2026, covering 
the performance period of January 1, 2025, to December 31, 2025. Under 
the review and corrections period provided at Sec.  419.95(c)(3), REHs 
would be able to enter, review, and correct data submitted during the 
data submission period.
---------------------------------------------------------------------------

    \499\ The Hospital Quality Reporting (HQR) system (formerly 
referred to as the QualityNet Secure Portal) is the only CMS-
approved website for secure communications and health care quality 
data exchange to and within various CMS quality reporting programs. 
For more information regarding the HQR system, we refer readers to 
the CMS eCQI Resource Center (https://ecqi.healthit.gov/tool/hospital-quality-reporting-hqr-system). In addition, we refer 
readers to the CY 2024 OPPS/ASC final rule (88 FR 82074 through 
82075) for a discussion of data submission requirements for chart-
abstracted measures under the REHQR Program, which includes 
submission of measure data via the HQR system.
---------------------------------------------------------------------------

    In the CY 2025 OPPS/ASC proposed rule (89 FR 59465), we proposed 
that these policies would apply to web-based measures adopted by the 
REHQR Program, including the following three measures:
     The HCHE measure, beginning with the CY 2025 reporting 
period/CY 2027 program determination;
     The Screening for SDOH measure, beginning with voluntary 
reporting for the CY 2025 reporting period, followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 program 
determination; and
     The Screen Positive Rate for SDOH measure, beginning with 
voluntary reporting for the CY 2025 reporting period, followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
program determination.
    As discussed in sections XIV.B.1, XIV.B.2, and XIV.B.3 of this 
final rule with comment period, we are finalizing adoption of the HCHE, 
Screening for SDOH, and Screen Positive Rate for SDOH measures into the 
REHQR Program.
    We invited public comment on the proposal.
    Comment: A commenter supported the proposed policy to align the 
web-based measure submission policy for the REHQR Program with the 
Hospital OQR and ASCQR Programs.
    Response: We thank the commenter for its support.
    After consideration of the public comments we received, we are 
finalizing the data submission requirements related to the HCHE, 
Screening for SDOH, and Screen Positive Rate for SDOH measures as 
proposed.
c. Data Submission Requirements for Claims-Based Measure Data
    In addition, we refer readers to section XVI.C.2 of this final rule 
with comment period where we discuss finalizing a modification to the 
Risk-Standardized Hospital Visits Within 7 Days After Hospital 
Outpatient Surgery Measure beginning with the CY 2027 program 
determination. This claims-based measure would continue to be reported 
in accordance with other claims-based measures, as previously finalized 
in the CY 2024 OPPS/ASC final rule (88 FR 85075). We did not propose 
any changes to these policies in the CY 2025 OPPS/ASC proposed rule.

F. Public Reporting of Measure Data

    We refer readers to Sec.  419.95(f) and the CY 2024 OPPS/ASC final 
rule with comment period (88 FR 82071 through 82074) for our program 
policy regarding the public reporting of quality data. We did not 
propose any changes to these policies in the CY 2025 OPPS/ASC proposed 
rule.

XVII. Ambulatory Surgical Center Quality Reporting (ASCQR) Program

A. Background and Statutory Authority

    The Ambulatory Surgical Center Quality Reporting (ASCQR) Program is 
a pay-for-reporting program intended to improve the quality of care 
provided to Medicare beneficiaries, facilitate public transparency, and 
ensure accountability of ambulatory surgical centers (ASCs). Section 
1833(i)(7)(A) of the Act authorizes the Secretary to reduce any annual 
increase under the revised ambulatory surgical center (ASC) payment 
system by 2.0 percentage points for such year that an ASC that fails to 
submit required data on quality measures specified by the Secretary in 
accordance with section 1833(i)(7)(B) of the Act. Section 1833(i)(7)(B) 
of the Act states that, except as the Secretary may otherwise provide, 
several of the statutory provisions governing the Hospital Outpatient 
Quality Reporting (OQR) Program, specifically sections 1833(t)(17)(B) 
through (E) of the Act, also apply to the services of ASCs under the 
ASCQR Program in a similar manner to the manner in which they apply to 
the services of hospital outpatient departments under the Hospital OQR 
Program. Sections 1833(t)(17)(B) through (E) of the Act generally 
govern the adoption and replacement of quality measures, the form and 
manner of submission of data to CMS, and procedures for making the data 
submitted to CMS available to the public.
    We refer readers to the CY 2012 OPPS/ASC final rule (76 FR 74492 
through 74494) for a detailed discussion of the program's statutory 
authority, as well as program requirements codified at 42 CFR part 416, 
subpart H (Sec. Sec.  416.300 through 416.330), and the CY 2024 OPPS/
ASC final rule (88 FR 82012) for information regarding the program's 
regulatory history.
1. Previously Finalized Program Measure Sets
    We refer readers to the CY 2024 OPPS/ASC final rule (88 FR 82038) 
for additional information regarding the previously finalized ASCQR 
Program measure set beginning with the CY 2027 payment determination.
a. Previously Finalized Measure Set Beginning With the CY 2027 Payment 
Determination
    Table 169 summarizes the previously finalized ASCQR Program 
measures beginning with the CY 2027 payment determination.

[[Page 94431]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.226

b. Previously Finalized Measure Set Beginning With the CY 2031 Payment 
Determination
    Table 170 summarizes the previously finalized ASCQR Program 
measures beginning with the CY 2031 payment determination.

[[Page 94432]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.227

B. Program Measure Set Policies

1. Measure Retention
    We refer readers to Sec.  416.320 and the CY 2012 OPPS/ASC final 
rule (76 FR 74504) for our policies regarding measure retention. We did 
not propose any changes to these policies in the CY 2025 OPPS/ASC 
proposed rule.
2. Measure Suspension or Removal
    We refer readers to Sec.  416.320 and the CY 2019 OPPS/ASC final 
rule (83 FR 59111 through 59115) for our program policies regarding: 
(1) general measure removal, suspension, or replacement; and (2) 
immediate measure removal.
    We refer readers to section XIV.C of this final rule with comment 
period for the discussion of public comments received and our 
subsequent decision regarding our cross-program proposal to modify the 
immediate measure removal policy for quality measures adopted for the 
ASCQR Program.
3. Measure Modification
    We refer readers to Sec.  416.325 and the CY 2016 OPPS/ASC final 
rule (80 FR 70531) for our program policies regarding modifications to 
previously adopted measures. We did not propose any changes to these 
policies in the CY 2025 OPPS/ASC proposed rule.
4. Measure Adoption
    We refer readers to the CY 2013 OPPS/ASC final rule (77 FR 68493 
and 68494) for details regarding program priorities we consider for 
quality measure selection. We did not propose any changes to these 
policies in the CY 2025 OPPS/ASC proposed rule.

C. Program Measure Updates

1. Adoption of the Health Equity Quality Measures in the ASCQR Program
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 of this 
final rule with comment period for our discussion of our cross-program 
proposals to adopt the following measures in the ASCQR Program: (1) the 
Facility Commitment to Health Equity (FCHE) measure, beginning with the 
CY 2025 reporting period/CY 2027 payment determination; (2) the 
Screening for Social Drivers of Health (SDOH) measure, beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination; and (3) the Screen Positive Rate for SDOH 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination. In these sections, we 
also discuss the public comments received, our responses thereto, and 
our final decisions regarding these proposals for the ASCQR Program. As 
discussed in sections XIV.B.1, XIV.B.2, and XIV.B.3 of this final rule 
with comment period,

[[Page 94433]]

we are finalizing these three measures for the ASCQR Program, as 
proposed.
2. Summary of Finalized Program Measure Set Updates
a. Newly Finalized ASCQR Program Measure Set Beginning With the CY 2027 
Payment Determination
    Table 171 summarizes the newly finalized ASCQR Program measure set 
beginning with the CY 2027 payment determination.
[GRAPHIC] [TIFF OMITTED] TR27NO24.228

[[Page 94434]]

b. Newly Finalized ASCQR Program Measure Set Beginning With the CY 2031 
Payment Determination
    Table 172 summarizes the newly finalized ASCQR Program measure set 
beginning with the CY 2031 payment determination.
[GRAPHIC] [TIFF OMITTED] TR27NO24.229

3. Comments Regarding the COVID-19 Vaccination Coverage Among 
Healthcare Personnel (HCP) Measure
    We received many comments requesting that we remove the COVID-19 
Vaccination Coverage Among Healthcare Personnel (HCP) from the ASCQR 
Program. A few commenters recommended, in the absence of removal, that 
we revise the measure specifications to have data submitted annually. 
While we appreciate these comments, we note that they fall outside the 
scope of this rulemaking. We will consider these comments as we 
continue to evolve the ASCQR Program in the future.

D. Administrative Requirements

    We refer readers to Sec.  416.305 and the CY 2016 OPPS/ASC final 
rule (80 FR 70533 and 70534) for our program policies regarding 
participation and withdrawal requirements. We did not

[[Page 94435]]

propose any changes to these policies in the CY 2025 OPPS/ASC proposed 
rule.

E. Form, Manner, and Timing of Data Submission

1. General Policy
    We refer readers to Sec.  416.310 and the CYs 2017, 2018, and 2021 
OPPS/ASC final rules (81 FR 79824 and 79825; 82 FR 59472 through 59475; 
and 85 FR 86191 and 86192, respectively) for our general program 
policies regarding: (1) submission of data under the ASCQR Program 
generally; (2) review and correction of submitted data; and (3) 
extraordinary circumstance exception (ECE) requests for data 
submission. We did not propose any changes to these policies in the CY 
2025 OPPS/ASC proposed rule.
    We also refer readers to the CY 2016 OPPS/ASC final rule (80 FR 
70531) for details regarding submission requirements for previously 
adopted ASCQR Program measures in the ASCQR Program Specifications 
Manual.
2. Measure-Specific Data Submission and Reporting Requirements
    We refer readers to Sec.  416.310 and the CYs 2016, 2022, and 2024 
OPPS/ASC final rules (80 FR 70534 through 70536; 86 FR 63905 through 
63909; and 88 FR 82041 through 82045, respectively) for information 
regarding our claims-based, survey-based, and PRO-PM data submission 
and reporting requirements.
a. Web-Based Measures
    (1) CMS-Designated Information System and Proposal for Data 
Submission for the Facility Commitment to Health Equity (FCHE), 
Screening for Social Drivers of Health (SDOH), and Screen Positive Rate 
for SDOH Measures
    We refer readers to Sec.  416.310(c)(1), the CY 2017 OPPS/ASC final 
rule (81 FR 79821 and 79822), the CY 2018 OPPS/ASC final rule (82 FR 
59473), and the CY 2024 final rule (88 FR 82039 and 82040) for details 
regarding submission of web-based data via a CMS-designated information 
system (currently the Hospital Quality Reporting (HQR) system).
    In sections XIV.B.1, XIV.B.2, and XIV.B.3 of this final rule with 
comment period, we discuss the proposals and public comments received 
regarding the adoption of: (1) the FCHE measure, beginning with the CY 
2025 reporting period/CY 2027 payment determination; (2) the Screening 
for SDOH measure, beginning with voluntary reporting for the CY 2025 
reporting period followed by mandatory reporting beginning with the CY 
2026 reporting period/CY 2028 payment determination; and (3) the Screen 
Positive Rate for SDOH measure, beginning with voluntary reporting for 
the CY 2025 reporting period followed by mandatory reporting beginning 
with the CY 2026 reporting period/CY 2028 payment determination.
    Consistent with our established data submission requirements (81 FR 
79821 and 79822; 82 FR 59473; 88 FR 82039 and 82040), we proposed in 
the CY 2025 OPPS/ASC proposed rule (89 FR 59471) that ASCs would be 
required to submit all of the data required to calculate each of these 
three measures annually using a CMS-approved, web-based, data 
collection tool available within the HQR System starting January 1 
through and including May 15 in the year prior to the applicable 
payment determination year. As discussed in sections XIV.B.1, XIV.B.2, 
and XIV.B.3 of this final rule with comment period, we are finalizing 
the FCHE measure, the Screening for SDOH measure, and the Screen 
Positive Rate for SDOH measure as proposed.
    For the ASCQR Program, the performance period (which we refer to as 
the CY reporting period) for each measure on which data is submitted 
using a web-based tool would be January 1 through and including 
December 31 of the year that is 2 years prior to the applicable payment 
determination year; and the data submission period would be January 1 
through and including May 15 in the calendar year immediately following 
the CY reporting period and immediately prior to applicable payment 
determination year. For example, for the CY 2025 reporting period/CY 
2027 payment determination, the data submission period would be January 
1, 2026, through and including May 15, 2026, covering the performance 
period of January 1, 2025, through and including December 31, 2025. 
Pursuant to Sec.  416.310(c)(1)(iii), a review and corrections period 
runs concurrently with the data submission period. During this 
timeframe, ASCs would be able to enter, review, and correct data 
submitted during the data submission period.
    We invited public comment on the proposal.
    Comment: Several commenters that did not support adoption of the 
FCHE measure expressed concern over reporting burden, as this timeline 
coincides with OAS CAHPS and THA/TKA PRO-PM measure compliance. A few 
commenters expressed that there would not be sufficient time to 
implement processes, technology, and training needed to successfully 
report this measure. A few commenters suggested delaying the 
implementation of this measure or allowing for voluntary reporting.
    Response: We acknowledge commenters' concerns regarding resources, 
including increased data collection burden; however, achieving health 
equity is an issue which deserves serious focus and rapid action for 
improvement. Therefore, we do not find it appropriate to delay the 
implementation of this measure. We believe the benefits of encouraging 
ASC commitment to health equity outweigh the burden of attestation 
under this measure.
    We note that hospitals participating in the Hospital IQR Program 
will have already reported data on the similar Hospital Commitment to 
Health Equity measure for the FY 2025 payment determination (that is, 
data submitted in FY 2024 representing the FY 2023 performance period) 
(87 FR 49191 through 49201) before required reporting of the Facility 
Commitment to Health Equity measure begins within the ASCQR Program, as 
reporting for this measure would begin with the CY 2027 payment 
determination. Given the timing of this similar measure's 
implementation in the Hospital IQR Program, ASCs will have had the 
opportunity to learn from the experiences of acute care hospitals, 
including best practices for minimally burdensome assessment of 
performance on the required domains. We will also monitor measure 
implementation and data reporting as part of standard program and 
measure review and will consider updates to the measure if we identify 
implementation strategies to reduce burden.
    Comment: A commenter requested that CMS maintain the Screening for 
SDOH and the Screen Positive Rate for SDOH measures as voluntary for 
the ASCQR Program as CMS continues to work through technical reporting 
challenges, such as publishing guidance on what constitutes a 
``positive'' screen, with providers already reporting the measure in 
other quality reporting programs. Another commenter noted challenges 
with the implementation timeline in the ASCQR Program because it does 
not account for mandatory reporting of the OAS CAHPS Survey measure, 
which begins in 2025, and does not allow sufficient time for the amount 
of work that would need to be done for the Screening for SDOH measure, 
if it were to include screening for interpersonal safety.
    Response: We thank the commenters for their feedback and 
recommendations. As previously discussed in sections XIV.B.2 and 
XIV.B.3 of this final rule with comment

[[Page 94436]]

period, the Screening for SDOH and Screen Positive Rate for SDOH 
measures provide information on the percent of patients receiving care 
at an ASC who were 18 years or older on the date of service, who were 
screened for all five HRSNs described in Table 171, and who screened 
positive for one or more of those HRSNs. For additional information on 
what constitutes a ``positive'' screen we refer readers to: https://
www.qualityreportingcenter.com/globalassets/2024/04/iqr/17.-sdoh-
measure_faqs_april-2024_vfinal508.pdf. We will develop a similar 
Frequently Asked Questions document for the ASCQR Program as part of 
providing educational and training materials. This document will be 
conveyed through routine communication channels, including, but not 
limited to, issuing memos, emails, and notices on a CMS website.
    We will consider feedback about timeline, OAS CAHPS Survey overlap, 
and reporting in future rulemaking and measure development. We may 
address related proposals, including the form, manner, and timing of 
data reporting, in future rulemaking. We reiterate that, with a year of 
voluntary reporting for these measures, there is time for ASCs to train 
staff in the collection of data for HRSNs. Additionally, there are a 
variety of methods, other than audible methods, to screen for HRSNs 
that increase privacy, such as written or digital methods, including 
electronically through a patient portal or on tablets. We advise ASCs 
to ensure that patients feel safe answering questions and to further 
remind patients that they may opt out of the screening for any reason.
    After consideration of the public comments we received, we are 
finalizing the data submission requirements related to the adoption of 
the FCHE, Screening for SDOH, and the Screen Positive Rate for SDOH 
measures in the ASCQR Program as proposed.
    We refer readers to sections XIV.B.1, XIV.B.2, and XIV.B.3 of this 
final rule with comment period for our cross-program proposals and 
discussion of all public comments received regarding the FCHE, 
Screening for SDOH, and Screen Positive Rate for SDOH measures.
(2) National Healthcare Safety Network (NHSN)
    We refer readers to Sec.  416.310(c)(2) and the CY 2014 OPPS/ASC 
final rule (78 FR 75139 and 75140) for our policies regarding 
submission of web-based data via the Centers for Disease Control and 
Prevention's NHSN. We did not propose any changes to these policies in 
the CY 2025 OPPS/ASC proposed rule.

F. Public Reporting of Measure Data

    We refer readers to Sec.  416.315 and the CY 2018 OPPS/ASC final 
rule (82 FR 59472) for our program policies regarding public reporting 
of quality data. We did not propose any changes to these policies in 
the CY 2025 OPPS/ASC proposed rule.

G. Request for Information (RFI)--Development of Frameworks for 
Specialty Focused Reporting and Minimum Case Number for Required 
Reporting

    The ASCQR Program promotes informed patient decision-making 
regarding clinical care across ASC procedures through a robust set of 
quality measures, data on which the ASCQR Program publicly reports as 
discussed in section XVII.F of this final rule with comment period. The 
ASCQR Program's current measure set captures clinical quality across 
all ASCs, including specialty clinical procedures performed only by a 
subset of ASCs. Thus, a portion of the ASCQR Program measure set only 
applies to an ASC if it performs those specialty procedures. Currently, 
ASCs are required to attest if they do not have cases for a given 
measure, increasing reporting burden.
    We seek to ensure the most meaningful measures apply to each 
facility, as requiring an ASC to report on measures minimally relevant 
to their patient population increases burden with minimal benefit. 
Therefore, we sought comment on two potential future frameworks which 
would achieve the following outcomes: (1) the addition of case minimums 
for specialty measure reporting; (2) the removal of the zero case 
attestation requirement for specialty measures to decrease reporting 
burden; and (3) the verification of individual measure case counts 
using claims data to determine which specialty measures would 
potentially be required for reporting for individual ASCs. Verifying 
case counts using claims data would allow us to confirm that individual 
ASCs are reporting on measures meeting or surpassing case minimums.
    Under these potential frameworks, we are considering revising the 
data reporting requirements for the ASCQR Program to only require that 
ASCs report data to CMS on quality measures that are related to their 
medical interventions, policies, processes, and procedures, or can be 
abstracted from claims. These potential frameworks would require ASCs 
to report measures generally applicable to all ASCQR Program 
participants and relevant specialty-specific measures, defined as those 
which evaluate performance on certain specialty clinical procedures 
performed only by a subset of ASCs.
    The current ASCQR Program measure set has seven generally 
applicable measures for which reporting would be required in both 
frameworks for all ASCs: four patient safety measures (Patient Burn; 
Patient Fall; Wrong Site, Wrong Patient, Wrong Procedure, Wrong 
Implant; All-Cause Hospital Transfer Admission), one general surgery 
measure (Facility-Level 7-Day Hospital Visits After General Surgery 
Procedures Performed at Ambulatory Surgical Centers), one vaccination 
measure (COVID-19 Vaccination Coverage Among Healthcare Personnel), and 
one patient experience of care survey measure (OAS CAHPS). In addition, 
in the CY 2025 OPPS/ASC proposed rule (89 FR 59439 through 59449), we 
proposed the adoption of three new generally applicable measures (FCHE, 
Screening for SDOH, and Screen Positive Rate for SDOH), which ASCs 
would also be required to report. As discussed in section XVII.C.1 of 
this final rule with comment period, we are finalizing these three 
measures for the ASCQR Program, as proposed.
    The specialties addressed by the current ASCQR Program measure set, 
and the related specialty-specific measures, are described in Table 
173. Under our first potential framework, the ``Specialty-Select'' 
framework, all ASCs would be required to report all specialty-specific, 
claims-based measures (currently, three) \500\ because these measures 
are not administratively burdensome to ASCs. Additionally, ASCs would 
also be required to select a specified number of the remaining non-
claims-based specialty-specific measures (currently, five) \501\ to 
report if those measures are applicable to that ASC. We would define 
the number of

[[Page 94437]]

non-claims-based specialty-specific measures that ASCs would be 
required to report in future rulemaking.
---------------------------------------------------------------------------

    \500\ In the CY 2025 OPPS/ASC proposed rule (89 FR 59471), we 
inadvertently noted that there were currently four specialty-
specific, claims-based measures. As noted in Table 173 below, we 
inadvertently categorized the Endoscopy/Polyp Surveillance: 
Appropriate Follow-Up Interval for Normal Colonoscopy in Average 
Risk Patients measure as a claims-based measure and, on this basis, 
incorrectly attributed the number of claims-based, specialty-
specific measures and non-claims-based, specialty-specific measures. 
We have corrected this error here in this final rule.
    \501\ In the CY 2025 OPPS/ASC proposed rule (89 FR 59471), we 
inadvertently noted that there were currently four non-claims-based 
specialty-specific measures. As noted in Table 173 below, we 
inadvertently categorized the Endoscopy/Polyp Surveillance: 
Appropriate Follow-Up Interval for Normal Colonoscopy in Average 
Risk Patients measure as a claims-based measure and, on this basis, 
incorrectly attributed the number of claims-based, specialty-
specific measures and non-claims-based, specialty-specific measures. 
We have corrected this error here in this final rule.
---------------------------------------------------------------------------

    To determine if a non-claims-based specialty-specific measure is 
applicable to an ASC, we are considering the implementation of a case 
threshold minimum, which we would specify in future rulemaking, for 
each measure. We would determine if case threshold minimums, defined as 
the number of cases for a specific measure that must be met or exceeded 
to potentially require reporting, have been met using claims data. Once 
an ASC met the measure's case threshold minimum, that measure would 
become available for that ASC to select to meet reporting requirements. 
We note that reporting claims-based specialty-specific measures would 
be required regardless of whether the case threshold minimum is met. In 
the CY 2025 OPPS/ASC proposed rule (89 FR 59472), we sought comment on 
the number of non-claims-based specialty specific measures that ASCs 
should be required to report and what the appropriate threshold for the 
case threshold minimum should be.
    We are considering the use of Medicare Fee-for-Service (FFS) and 
Medicare Advantage claim volume data to determine which non-claims-
based specialty-specific measures have met the specified case threshold 
minimum (that is, claims information would indicate whether an ASC was 
performing sufficient case volumes in a specialty area). We note that 
this threshold would be independent from our ``Minimum case volume for 
program participation'' policy, which exempts ASCs with fewer than 240 
total Medicare claims per year from participating in the ASCQR Program, 
as specified at Sec.  416.305(c). The case threshold minimum discussed 
in this RFI would be applied to individual non-claims-based specialty-
specific measures for ASCs required to participate in the ASCQR 
Program.
    For example, if we decide that each ASC must select three out of 
the five available non-claims-based specialty-specific measures to 
report, and an ASC surpasses the specified case threshold minimum for 
all five non-claims-based specialty-specific measures, the ASC would 
then choose three out of the five non-claims-based specialty-specific 
measures to report. If an ASC surpasses the specified case threshold 
minimum for only one or two non-claims-based specialty-specific 
measures, the ASC will no longer have a choice, and must report all 
measures meeting the case threshold minimum. If an ASC does not meet 
the case threshold minimum for any non-claims-based specialty-specific 
measures, reporting for any of these measures would be voluntary. Under 
such a framework, ASCs could not utilize the claims-based measures to 
meet the Specialty-Select reporting requirements nor could ASCs opt-out 
of reporting these measures. ASCs which do not have one or more cases 
for a given measure would no longer be required to provide an 
attestation of having zero cases.
[GRAPHIC] [TIFF OMITTED] TR27NO24.230

[[Page 94438]]

    Five of these measures are not claims-based and, under this 
potential framework, would not be applicable or required for all ASCs 
to report, but would rather be available for selection upon meeting a 
specified case threshold minimum:
     Unplanned Anterior Vitrectomy;
     Cataracts: Improvement in Patient's Visual Function within 
90 Days Following Cataract Surgery (voluntary);
     Normothermia Outcome;
     Risk-Standardized Patient-Reported Outcome-Based 
Performance Measure (PRO-PM) Following Elective Primary Total Hip 
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) in the ASC 
Setting (THA/TKA PRO-PM); and
     Endoscopy/Polyp Surveillance: Appropriate Follow-Up 
Interval for Normal Colonoscopy in Average Risk Patients.
    We acknowledge that currently there are few non-claims-based 
specialty-specific measures from which to choose to report. However, we 
are interested to learn if such a framework with both mandatory 
measures applicable to all ASCs and selectable, specialty-specific 
measures could lay the groundwork for providing higher quality data to 
patients while ensuring ASCs are not reporting data on measures that 
are minimally relevant, if not irrelevant, to their patient population.
    Regarding this Specialty-Select framework, we requested comment on 
the following questions:
     Given that ASCs would still be required to report claims-
based specialty-specific measures, as these measures are not 
administratively burdensome to ASCs, and there are currently only five 
non-claims-based specialty-specific quality measures in the ASCQR 
Program data set, how many non-claims-based specialty-specific measures 
should we require ASCs select to report?
     Are there specialty-specific measures that commenters 
would recommend for development and adoption in the ASCQR Program 
measure set to create a more robust selection?
     How should we determine what non-claims-based specialty-
specific measures would be eligible for a given ASC to select toward 
meeting reporting requirements? In other words, how can we determine if 
an ASC meets the minimum case number for a given measure, which would 
allow the ASC to choose that measure to meet reporting requirements?
    As an alternative to the Specialty-Select framework discussed 
previously, we are considering requiring reporting for all non-claims-
based specialty-specific measures for which case counts reach a 
specified case threshold minimum. This case threshold minimum would not 
apply to claims-based specialty-specific measures, as their reporting 
would be mandatory since these measures are not administratively 
burdensome to ASCs. Under this alternative framework, mandatory data 
reporting for non-claims-based specialty-specific measures would occur 
only if an ASC met established case threshold minimums. For example, if 
an ASC has 30 or more qualifying patients for the measure during the 
applicable reporting period, which is the current minimum case 
threshold required for public reporting for some measures, the ASC 
would be required to submit data for these measures. Likewise, if an 
ASC has fewer than 30 patients for the measure, data reporting on the 
measure would be voluntary. This framework could be termed a Specialty 
Threshold framework and would differ from the previously discussed 
Specialty-Select framework as an ASC would be required to report on all 
non-claims-based specialty-specific measures for which the ASC reaches 
the case threshold minimum.
    Regarding both the Specialty Threshold framework and the Specialty-
Select framework, we requested comment on the following questions:
     Would use of Medicare Fee-for-Service (FFS) claim volume 
be sufficient for determining minimum case volumes?
     Should Medicare Advantage claim volume or service data be 
included when determining case volume thresholds for reporting a 
measure?
     Do commenters recommend any processes that could be 
followed or analyses we could conduct to determine case minimums?
    We invited public comment on both the Specialty-Select framework 
and the alternative Specialty Threshold framework for potential 
inclusion in the ASCQR Program.
    Comment: Several commenters supported the implementation of either 
the Specialty-Select framework or the Specialty-Threshold framework, as 
they would decrease reporting burden on ASCs to ensure the most 
meaningful measures apply to each facility. A few commenters 
specifically supported a Specialty-Threshold framework instead of the 
Specialty-Select framework to reduce the complexity that may result 
from measure selection. A commenter specifically supported the use of 
case minimums for specialty reporting.
    Response: We thank commenters for their support of the specialty-
focused frameworks. We also believe that these frameworks would reduce 
burden while ensuring ASCs are reporting on measures most applicable to 
their performed procedures.
    Comment: A few commenters provided feedback on the inclusion of 
Medicare Advantage data when determining case volume thresholds. A few 
commenters recommended that CMS only use FFS data and exclude Medicare 
Advantage service or volume data when determining the applicable case 
volume thresholds. A commenter further added that ASCs offer a diverse 
range of services, and the patient population can vary significantly 
from one center to another. This commenter expressed concern that 
including Medicare Advantage claim volume in the threshold 
determination could lead to a misrepresentation of the services most 
commonly provided by an ASC.
    Response: We thank the commenters for their input and appreciate 
the many thoughtful responses on the use of administrative data that 
CMS already receives when determining case volume thresholds. We will 
consider these comments in any future rulemaking on this topic.
    Comment: Several commenters offered recommendations for the 
specialty-focused frameworks. A few commenters recommended measure 
additions and modifications to the ASCQR Program measure set to support 
a specialty-focused framework. A few commenters recommended the 
inclusion of the Toxic Anterior Segment Syndrome (TASS) measure in the 
ASCQR Program. Another commenter recommended areas for measure 
development to support a specialty framework, including ASC discharges 
with subsequent unplanned hospital visits, pain management, and 
surgical site infections (SSIs). This commenter added that the 
specialty-specific suitability of targeted services performed in ASCs 
should be evaluated, as there are currently procedures and treatments 
that practitioners widely agree are inappropriately used and should be 
eliminated. A commenter recommended the development of condition or 
procedure specific PROMs or PRO-PMs for patient goal attainment and 
patient experience. Another commenter expressed that a number of 
currently included ASCQR Program measures were not developed for 
measuring facility-level performance. This commenter recommended that 
all measures considered for inclusion in the ASCQR Program should first 
be tested at the facility level for analysis.
    Regarding how CMS would determine what non-claims-based, specialty-

[[Page 94439]]

specific measures would be eligible for selection, a commenter 
recommended that there should be a process and analysis managed by CMS 
to determine an appropriate case threshold for reporting non-claims-
based, specialty-specific measures with adequate reliability. This 
commenter further recommended that reporting of non-claims-based, 
specialty-specific measures should be mandatory only if a facility 
meets the minimum threshold requirement during the previous and current 
performance year. The commenter suggested that if the facility only 
meets the requirement in the current year, then voluntary reporting 
should be permitted.
    Response: We thank the commenters for their input and appreciate 
the many recommendations received regarding the specialty-focused 
frameworks. We will take these comments into consideration as 
appropriate in any future rulemaking on this topic.
    Comment: A few commenters requested clarification regarding the 
Specialty-Select and Specialty-Threshold frameworks. A commenter 
requested clarification on when the case count for each specialty 
measure would be calculated. The commenter further requested 
clarification on the potential consequences of not meeting the 
specified case threshold for the specified number of specialty measures 
ASCs would be required to report. Another commenter raised concern that 
ASCs may not know definitively which measures they would be required to 
report on until after the end of the reporting period. This commenter 
requested clarification on when CMS plans to release this information. 
Furthermore, a commenter requested clarification on whether measure 
case counts would include Medicare Advantage data and whether the 
counts would only include paid claims.
    Response: We thank the commenters for highlighting aspects of these 
frameworks we could clarify in any future rulemaking. We will consider 
these comments moving forward.
    Comment: A few commenters raised concern over the specialty-focused 
frameworks. A few commenters stated that the ASCQR Program has a small 
measure set, and raised concerns that these frameworks may inhibit a 
patient's ability to compare ASCs, or an ASC's ability to compare their 
performance to other ASCs, as different ASCs may report different 
measures. These commenters noted that this disparity in quality 
information may result in the unintended consequence of people electing 
to receive care in hospital settings for procedures that could be 
performed at more cost-efficient ASCs. Additionally, a commenter noted 
that selecting non-claims-based specialty-specific measures may be 
challenging, as there are few in the measure set. Furthermore, a few 
commenters raised concerns that these frameworks could increase burden 
for multi-specialty ASCs, as they would be required to report on more 
specialty measures than single-specialty ASCs. A few commenters raised 
concerns that if an ASC has a choice of which measures to report, they 
will choose the measures which will yield the most favorable results, 
creating an inaccurate representation of quality.
    Furthermore, a few commenters raised concerns about the minimum 
case threshold, stating that volume and quality are positively 
correlated. These commenters stated that the exclusion of data from 
low-volume facilities may result in reduced reporting in clinical areas 
where performance is worse. A commenter raised concern over the burden 
of having to collect data regardless of if the case threshold minimum 
is met, as ASCs would only find out if reporting was mandatory after 
the relevant reporting period. Another commenter raised concern that 
the implementation of a specialty framework will be inconsistent with 
other programs. This commenter further stated that a specialty approach 
would lead to redundant reporting since Qualified Clinical Data 
Registries already report specialty data to the Merit-based Incentive 
Payment System for eligible clinicians.
    Response: We thank commenters for raising concerns about the 
specialty-focused frameworks. We appreciate commenters' identification 
of areas that may need further consideration and will review these 
comments during future rulemaking.
    Comment: Regarding the current zero-case attestation requirement, a 
commenter recommended the implementation of automated data validation 
checks to identify incomplete fields, to alert an ASC of missing 
information during the completion of the zero-case attestation 
requirement.
    Response: We thank commenters for their feedback and will consider 
this feedback for any future rulemaking. We would like to note that our 
HQR system already has mechanisms in place which ensure facilities are 
aware of missing data entry information. These mechanisms include an 
online lookup tool where facilities can download data entry reports, as 
well as phone call and fax reminders.
    Comment: A commenter added that public reporting of ASC data should 
be available at the facility level, rather than the system level.
    Response: We thank commenters for their feedback and will consider 
this feedback for any future rulemaking. We would like to remind 
commenters that public reporting of ASC data is already captured at the 
facility level, as opposed to the system level.
    Data that an ASC submitted for the ASCQR Program are displayed 
publicly on a CMS website. Before these data are published, ASCs can 
review the data. ASC data are publicly displayed by the National 
Provider Identifier (NPI) when data are submitted by the NPI. When data 
are submitted by the CCNS, we will publicly display ASC data by the CMS 
Certification Number (CCN).

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

1. Statutory Background
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74492 through 74493) for a detailed discussion of the 
statutory background regarding payment reductions for ASCs that fail to 
meet the ASCQR Program requirements.
2. Policy Regarding Reduction to the ASC Payment Rates for ASCs That 
Fail To Meet the ASCQR Program Requirements for a Payment Determination 
Year
    The national unadjusted payment rates for many services paid under 
the ASC payment system are equal to the product of the ASC conversion 
factor and the scaled relative payment weight for the APC to which the 
service is assigned. For CY 2025, the ASC conversion factor is equal to 
the conversion factor calculated for the previous year updated by the 
productivity-adjusted hospital market basket update factor. The 
productivity adjustment is set forth in section 1833(i)(2)(D)(v) of the 
Act. The productivity-adjusted hospital market basket update is the 
annual update for the ASC payment system for a 5-year period (CY 2019 
through CY 2023), which was extended an additional 2 years (through CY 
2025) in the CY 2024 OPPS/ASC final rule with comment period (88 FR 
81960). Under the ASCQR Program, in accordance with section 
1833(i)(7)(A) of the Act and as discussed in the CY 2013 OPPS/ASC final 
rule with comment period (77 FR 68499), any annual increase in certain 
payment rates under the ASC payment system shall be reduced by 2.0 
percentage points for ASCs that fail to meet the reporting requirements 
of the ASCQR

[[Page 94440]]

Program. This reduction applied beginning with the CY 2014 payment 
rates (77 FR 68500). For a complete discussion of the calculation of 
the ASC conversion factor and our finalized proposal to update the ASC 
payment rates using the inpatient hospital market basket update for CYs 
2019 through 2023, we refer readers to the CY 2019 OPPS/ASC final rule 
with comment period (83 FR 59073 through 59080).
    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 the following policies: (1) to calculate a 
full update conversion factor and an ASCQR Program reduced update 
conversion factor; (2) 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 that calendar year payment determination; and (3) 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 productivity adjustment. The ASC 
conversion factor is used to calculate the ASC payment rate for 
services with the following payment indicators (listed in Addenda AA 
and BB to the proposed rule, which are available via the internet on 
the CMS website): ``A2,'' ``G2,'' ``P2,'' ``R2'' and ``Z2,'' as well as 
the service portion of device-intensive procedures identified by ``J8'' 
(77 FR 68500). We finalized our proposal that payment for all services 
assigned the payment indicators listed would be subject to the 
reduction of the national unadjusted payment rates for applicable ASCs 
using the ASCQR Program reduced update conversion factor (77 FR 68500).
    The conversion factor is not used to calculate the ASC payment 
rates for separately payable services that are assigned status 
indicators other than payment indicators ``A2,'' ``D2'', ``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, radiology 
services and diagnostic tests where payment is based on the PFS 
nonfacility PE RVU-based amount, and a few other specific services that 
receive cost-based payment (77 FR 68500). As a result, we also 
finalized our proposal that the ASC payment rates for these services 
would not be reduced for failure to meet the ASCQR Program requirements 
because the payment rates for these services are not calculated using 
the ASC conversion factor and, therefore, are not affected by 
reductions to the annual update (77 FR 68500).
    Office-based surgical procedures (generally those performed more 
than 50 percent of the time in physicians' offices) and separately paid 
radiology services (excluding covered ancillary radiology services 
involving certain nuclear medicine procedures or involving the use of 
contrast agents) are paid at the lesser of the PFS nonfacility PE RVU-
based amounts or the amount calculated under the standard ASC 
ratesetting methodology. Similarly, in the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66933 through 66934), we finalized our 
proposal that payment for certain diagnostic test codes within the 
medical range of CPT codes for which separate payment is allowed under 
the OPPS will be at the lower of the PFS nonfacility PE RVU-based (or 
technical component) amount or the rate calculated according to the 
standard ASC ratesetting methodology when provided integral to covered 
ASC surgical procedures. In the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68500), we finalized our proposal that the 
standard ASC ratesetting methodology for this type of comparison would 
use the ASC conversion factor that has been calculated using the full 
ASC update adjusted for productivity. This is necessary so that the 
resulting ASC payment indicator, based on the comparison, assigned to 
these procedures or services is consistent for each HCPCS code, 
regardless of whether payment is based on the full update conversion 
factor or the reduced update conversion factor.
    For ASCs that receive the reduced ASC payment for failure to meet 
the ASCQR Program requirements, we have noted our belief that it is 
both equitable and appropriate that a reduction in the payment for a 
service should result in proportionately reduced coinsurance liability 
for beneficiaries (77 FR 68500). Therefore, in the CY 2013 OPPS/ASC 
final rule with comment period (77 FR 68500), we finalized our proposal 
that the Medicare beneficiary's national unadjusted coinsurance for a 
service to which a reduced national unadjusted payment rate applies 
will be based on the reduced national unadjusted payment rate.
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized our proposal that all other applicable adjustments to the ASC 
national unadjusted payment rates would apply in those cases when the 
annual update is reduced for ASCs that fail to meet the requirements of 
the ASCQR Program (77 FR 68500). For example, the following standard 
adjustments would apply to the reduced national unadjusted payment 
rates: the wage index adjustment; the multiple procedure adjustment; 
the interrupted procedure adjustment; and the adjustment for devices 
furnished with full or partial credit or without cost (77 FR 68500). We 
believe that these adjustments continue to be equally applicable to 
payment for ASCs that do not meet the ASCQR Program requirements (77 FR 
68500).
    In the CY 2015 through CY 2024 OPPS/ASC final rules with comment 
period, we did not make any other changes to these policies. We 
proposed to continue applying these policies for the CY 2025 reporting 
period/CY 2027 payment determination and for subsequent years.
    We did not receive any public comments on our proposal. We are 
finalizing as proposed the continuation of these policies for the CY 
2025 reporting period/CY 2027 payment determination and for subsequent 
years.

XVIII. Medicaid Clinic Services Four Walls Exceptions

A. Background

    Under section 1902(a)(10) of the Act, States may offer certain 
Medicaid benefits, at State option, to categorically needy and 
medically needy Medicaid beneficiaries, as described in that section of 
the statute. Clinic services are one of these optional benefit 
categories. Section 1905(a)(9) of the Act, as amended by section 4105 
of part 1 of subtitle B of title IV of the Omnibus Budget 
Reconciliation Act of 1987 (OBRA '87, Pub. L. 100-203), defines clinic 
services as services furnished by or under the direction of a 
physician, without regard to whether the clinic itself is administered 
by a physician, including such services furnished outside the clinic by 
clinic personnel to an eligible individual who does not reside in a 
permanent dwelling or does not have a fixed home or mailing address 
(hereinafter referred to as ``individuals who are 
unhoused'').502 503
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    \502\ Public Law 100-203, enacted December 22, 1987, 100 Stat. 
1330, 1330-147, https://www.congress.gov/100/statute/STATUTE-101/STATUTE-101-Pg1330.pdf.
    \503\ This document contains links to non-United States 
Government websites. We are providing these links because they 
contain additional information relevant to the topic(s) discussed in 
this document or that otherwise may be useful to the reader. We 
cannot attest to the accuracy of information provided on the cited 
third-party websites or any other linked third-party site. We are 
providing these links for reference only; linking to a non-United 
States Government website does not constitute an endorsement by CMS, 
HHS, or any of their employees of the sponsors or the information 
and/or any products presented on the website. Also, please be aware 
that the privacy protections generally provided by United States 
Government websites do not apply to third-party sites.

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[[Page 94441]]

    The regulation implementing section 1905(a)(9) of the Act, 42 CFR 
440.90, includes certain conditions and limitations on Medicaid 
coverage of clinic services. Specifically, Sec.  440.90 defines clinic 
services as preventive, diagnostic, therapeutic, rehabilitative, or 
palliative services that are furnished by a facility that is not part 
of a hospital but is organized and operated to provide medical care to 
outpatients.\504\ Section 440.90 further provides that clinic services 
include two types of services furnished to outpatients, listed at Sec.  
440.90(a) and (b). The first type of services included in the benefit, 
under Sec.  440.90(a), is services furnished at the clinic (hereinafter 
referred to as the ``four walls'' requirement) by or under the 
direction of a physician or dentist. Section 440.90(b) implements the 
statutory language providing that clinic services also include services 
furnished outside the clinic, by clinic personnel under the direction 
of a physician, to an eligible individual who is unhoused. In section 
4320 of the State Medicaid Manual, we explained that if a State elects 
to cover clinic services, the State may choose the type of clinics or 
clinic services that are covered.\505\
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    \504\ An outpatient is defined at 42 CFR 440.2 as a patient of 
an organized medical facility, or distinct part of that facility who 
is expected by the facility to receive and who does receive 
professional services for less than a 24-hour period regardless of 
the hour of admission, whether or not a bed is used, or whether or 
not the patient remains in the facility past midnight.
    \505\ U.S. Department of Health and Human Services, Health Care 
Financing Administration (HCFA), The State Medicaid Manual, Manual, 
(Baltimore, MD, 1985), Section 4320, https://www.cms.gov/regulations-and-guidance/guidance/manuals/paper-based-manuals-items/cms021927.
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    We added Sec.  440.90(b) in 1991, after Congress added the language 
about services furnished outside the clinic to individuals who are 
unhoused to section 1905(a)(9) of the Act in OBRA '87.\506\ In the 
preamble to that rule, we explained that clinic services have always 
been limited to people who go to the clinic (or a satellite location) 
and get the services onsite, and that the exception added by OBRA '87 
represents an exception to the general coverage requirement for 
services to be furnished on the premises of the clinic. Further, we 
explained our view that Congress ratified the requirement that other 
clinic services must be furnished onsite by establishing an explicit 
exception to the requirement that clinic services be furnished onsite 
in order to be covered. CMS has long interpreted the exception to the 
four walls requirement at Sec.  440.90(b) to be mandatory for States 
that opt to cover the clinic services benefit. We reiterated CMS's 
longstanding interpretation that section 1905(a)(9) of the Act and 
Sec.  440.90 establish a four walls requirement in a frequently asked 
questions document that we published on January 18, 2017 (hereinafter 
referred to as ``the January 18, 2017 FAQ''), to supplement State 
Health Official letter number 16-002, Federal Funding for Services 
``Received Through'' an IHS/Tribal Facility and Furnished to Medicaid-
Eligible American Indians and Alaska Natives.507 508
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    \506\ Medicare and Medicaid Programs; OBRA '87 Conforming 
Amendments, 56 FR 8832, 8835 (March 1, 1991) (hereinafter referred 
to as the 1991 rule). https://archives.federalregister.gov/issue_slice/1991/3/1/8829-8854.pdf.
    \507\ CMS, Federal Funding for Services ``Received Through'' an 
IHS/Tribal Facility and Furnished to Medicaid-Eligible American 
Indians and Alaska Natives, State Health Official Letter (SHO) #16-
002, (Baltimore, MD, 2016), https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/sho022616.pdf.
    \508\ CMS, Frequently-Asked Questions (FAQs) Federal Funding for 
Services ``Received Through'' an IHS/Tribal Facility and Furnished 
to Medicaid Eligible American Indians and Alaska Natives (SHO #16-
002), FAQ, (Baltimore, MD, 2017), https://www.medicaid.gov/media/40241.
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    The Medicaid clinic services benefit is distinct from the Medicaid 
federally qualified health center (FQHC) services benefit and the 
Medicaid rural health clinic (RHC) services benefit. The Medicaid FQHC 
services benefit is defined at section 1905(a)(2)(C) of the Act, and 
FQHCs and FQHC services are further defined at section 1905(l)(2) of 
the Act. The Medicaid RHC services benefit is defined at section 
1905(a)(2)(B) of the Act, and RHCs and RHC services are further defined 
at section 1905(l)(1) of the Act. Unlike the clinic services benefit, 
which is an optional benefit for States, the FQHC and RHC benefits are 
mandatory for categorically needy Medicaid beneficiaries under section 
1902(a)(10) of the Act. In addition, there is no Federal four walls 
requirement under the Medicaid FQHC or RHC services benefits, unlike 
the clinic services benefit. Federal Medicaid law does not prevent 
States from covering Medicaid FQHC and RHC services provided outside of 
the four walls of an FQHC or RHC.\509\
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    \509\ We note that the Consolidated Appropriations Act, 2024, 
Division G, Title I, Section 209 (Pub. L. 118-42) amended section 
1905 of the Act to establish a certified community behavioral health 
clinic (CCBHC) services benefit effective March 9, 2024. The CCBHC 
services benefit is distinct from the clinic services benefit and 
there is no four walls requirement for the CCBHC services benefit 
under Federal Medicaid law.
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    On January 28, 2021, President Biden signed Executive Order (E.O.) 
14009, ``Strengthening Medicaid and the Affordable Care Act,'' which 
established the policy objective to protect and strengthen Medicaid and 
the Affordable Care Act and to make high-quality health care accessible 
and affordable for every American, and directed executive departments 
and agencies to review existing regulations, orders, guidance 
documents, and policies to determine whether such agency actions are 
inconsistent with this policy.\510\ As part of this review of existing 
policies, E.O. 14009 directed Federal agencies to consider whether to 
suspend, revise, or rescind agency actions considered inconsistent with 
this objective. On April 5, 2022, E.O. 14070, ``Continuing to 
Strengthen Americans' Access to Affordable, Quality Health Coverage,'' 
directed Federal agencies with responsibilities related to Americans' 
access to health coverage to review agency actions to identify ways to 
continue to expand the availability of affordable health coverage, to 
improve the quality of coverage, to strengthen benefits, and to help 
more Americans enroll in quality health coverage.\511\
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    \510\ E.O. 14009, 86 FR 7793 (Jan. 28, 2021). See, https://www.Federalregister.gov/documents/2021/02/02/2021-02252/strengthening-medicaid-and-the-affordable-care-act.
    \511\ E.O. 14070, 87 FR 20689 (Apr. 8, 2021). See, https://www.Federalregister.gov/documents/2022/04/08/2022-07716/continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage.
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    On November 6, 2000, President Clinton signed E.O. 13175, 
``Consultation and Coordination With Indian Tribal Governments,'' which 
recognizes the unique legal relationship between the United States and 
Indian Tribal governments and, to strengthen this government-to-
government relationship and support Tribal sovereignty and self-
determination, charges all executive departments and agencies with 
engaging in meaningful and timely consultation with Tribal officials in 
the development of Federal policies that have Tribal implications.\512\ 
On January 26, 2021, President Biden issued a ``Memorandum on Tribal 
Consultation and Strengthening Nation-to-Nation Relationships,'' which 
reaffirms E.O. 13175's directive to engage in regular, meaningful, and 
robust consultation with Tribal officials in the development

[[Page 94442]]

of Federal policies that have Tribal implications.\513\
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    \512\ E.O. 13175, 65 FR 67249 (Nov. 6, 2000). See, https://www.Federalregister.gov/documents/2000/11/09/00-29003/consultation-and-coordination-with-indian-tribal-governments.
    \513\ President Joseph R. Biden to Heads of Executive 
Departments and Agencies, memorandum, ``Tribal Consultation and 
Strengthening Nation-to-Nation Relationships,'' January 26, 2021, 
Presidential Actions, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/26/memorandum-on-tribal-consultation-and-strengthening-nation-to-nation-relationships/.
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    Consistent with E.O. 13175, CMS issued a Tribal Consultation policy 
in 2011 and updated it in 2015 for the purpose of building meaningful 
relationships with Indian Tribes and to establish a clear, concise and 
mutually acceptable process through which consultation can take place 
between CMS and Tribes.\514\ \515\ As one of its core principles, the 
policy provides that, because Congress amended titles XVIII and XIX of 
the Act to authorize Indian Health Service (IHS) and Tribal health 
programs to bill Medicare and Medicaid, ``[t]he involvement of Indian 
tribes in the development of CMS policy is crucial for mutual 
understanding and development of culturally appropriate approaches to 
improve greater access to CMS programs for American Indians and Alaska 
Natives (AI/ANs), to enhance health care resources to IHS and tribal 
health programs, and to contribute to overall improved health outcomes 
for American Indians.'' As part of its government-to-government 
relationship with the Tribes, CMS has engaged in meaningful 
consultation with Tribes and Tribal leaders, the CMS Tribal Technical 
Advisory Group (TTAG), and the HHS Secretary's Tribal Advisory 
Committee (STAC) regarding concerns about the impact that the four 
walls requirement could have on IHS/Tribal clinics and AI/AN 
beneficiaries' access to health care when a grace period currently in 
place for IHS/Tribal clinics (as discussed later in this section of the 
preamble) ends. As part of this consultation, Tribes requested a 
permanent exemption from the four walls requirement for IHS/Tribal 
clinics.
---------------------------------------------------------------------------

    \514\ CMS, ``Tribal Consultation,'' CMS.gov, September 6, 2023, 
https://www.cms.gov/training-education/partner-outreach-resources/american-indian-alaska-native/tribal-consultation.
    \515\ CMS, Tribal Consultation Policy, Policy (Washington, DC, 
2015), https://www.cms.gov/outreach-and-education/american-indian-alaska-native/aian/downloads/cmstribalconsultationpolicy2015.pdf.
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    IHS, a Federal agency within the Department of Health and Human 
Services, is responsible for furnishing comprehensive, culturally 
appropriate health services to, as of April 2024, almost $2.8 million 
AI/ANs who are eligible for services from IHS, per regulations at 42 
CFR part 136, as well as other individuals whom IHS or Tribes are 
authorized to serve under 25 U.S.C. 1680c.\516\ IHS's provision of 
health services to its beneficiaries stems from the special government-
to-government relationship between the Federal Government and Indian 
Tribes. The Federal Government's relationship with Tribes is based on 
Article I, section 8 of the Constitution, and has been given form and 
substance by numerous treaties, statutes, Supreme Court decisions, and 
Executive orders. The IHS delivery system includes hospitals and 
clinics that are owned and operated by IHS, owned by IHS and tribally-
operated as authorized by the Indian Self-Determination and Education 
Assistance Act (ISDEAA, Pub. L. 93-638 (as amended)), or owned and 
operated by Tribes and Tribal organizations as authorized by the 
ISDEAA.\517\ We refer to these three kinds of facilities in our 
discussions of the proposed amendments to Sec.  440.90 as ``IHS/Tribal 
facilities'' or, when referring to circumstances where these facilities 
operate as Medicaid clinic services providers, ``IHS/Tribal clinics.'' 
\518\ Section 1911 of the Act and implementing regulations at Sec.  
431.110 provide that a facility of IHS, whether operated by IHS or by a 
Tribe or Tribal organization (CMS has interpreted similar language in 
section 1905(b) of the Act to refer to all three kinds of IHS/Tribal 
facilities described previously),\519\ may participate in the Medicaid 
program subject to the conditions and requirements generally applicable 
under Title XIX of the Act. Many IHS/Tribal facilities are covered and 
paid as clinic services providers in the Medicaid program. Under 
section 1903(a)(1) of the Act, the Federal Government is required to 
match State expenditures for medical assistance at the Federal Medical 
Assistance Percentage (FMAP), which is defined at section 1905(b) of 
the Act to be 100 percent for State expenditures for Medicaid-covered 
services received through an IHS facility whether operated by IHS or by 
a Tribe or Tribal organization (which, again, CMS has interpreted to 
refer to all three kinds of IHS/Tribal facilities described 
previously). Under CMS's longstanding interpretation of section 1905(b) 
of the Act, this 100 percent FMAP is available only for State 
expenditures on services received through an IHS/Tribal facility (such 
as a clinic) by AI/AN Medicaid beneficiaries. State expenditures on 
services furnished by an IHS/Tribal facility to other individuals are 
not matched by the Federal Government at 100 percent, but rather at the 
State's regularly applicable FMAP rate.
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    \516\ IHS, Indian Health Service Health Equity Report, Fact 
Sheet, (2024), https://www.ihs.gov/sites/newsroom/themes/responsive2017/display_objects/documents/factsheets/IHS_Health_Equity_Report_FactSheet_2024.pdf.
    \517\ HCFA and IHS, ``Memorandum of Agreement Between the Indian 
Health Services and the Health Care Financing Administration,'' 
Memorandum of Agreement, December 19, 1996, https://www.cms.gov/Outreach-and-Education/American-Indian-Alaska-Native/AIAN/LTSS-TA-Center/pdf/memorandum-of-agreement.pdf.
    \518\ Although Urban Indian Organizations that operate under 
Title V of the Indian Health Care Improvement Act are also part of 
the IHS delivery system, for purposes of our discussions of the 
proposed amendments to Sec.  440.90, the terms IHS/Tribal facility 
and IHS/Tribal clinic do not include a facility operated by an Urban 
Indian Organization.
    \519\ HCFA and IHS, Memorandum of Agreement.
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    As part of our Center for Medicaid & CHIP Services (CMCS) Mental 
Health and Substance Use Disorder Action Plan published in July 2023, 
we are pursuing strategies to increase access to prevention and 
treatment, engagement in care, and improve quality of care for 
beneficiaries with behavioral health disorders.\520\ Behavioral health 
disorders include both substance use disorders and mental health 
disorders. Medicaid plays a crucial role in financing health care for 
individuals with behavioral health disorders and is the largest payer 
of behavioral health services.\521\ There are no Federal requirements 
for States to cover services furnished by behavioral health clinics or 
any specific types of behavioral health clinics under the clinic 
services benefit. However, we are aware that approximately 16 States 
cover services provided by behavioral health clinics of varying types 
under the clinic services benefit, such as Community Mental Health 
Centers certified under the Medicare Conditions of Participation at 42 
CFR part 485, subpart J, substance use disorder clinics, or mental 
health clinics.
---------------------------------------------------------------------------

    \520\ CMS, Mental Health and Substance Use Disorder Action Plan, 
(2023), Action Plan, https://www.medicaid.gov/medicaid/benefits/downloads/cmcs-mntl-helth-substnce-disrdr-actn-plan.pdf.
    \521\ Guth, Madeline, Heather Saunders, Lauren Niles, Angela 
Bergefurd, Kathleen Gifford, and Roxanne Kennedy Published. 2023. 
``How Do States Deliver, Administer, and Integrate Behavioral Health 
Care? Findings from a Survey of State Medicaid Programs.'' KFF. May 
25, 2023. https://www.kff.org/mental-health/issue-brief/how-do-states-deliver-administer-and-integrate-behavioral-health-care-findings-from-a-survey-of-state-medicaid-programs/.
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    We released a framework for advancing health care in rural, Tribal, 
and geographically isolated communities in November 2022.\522\ Our 
framework focuses on six priorities,

[[Page 94443]]

including expanding access to comprehensive health care coverage, 
benefits, and services and supports to individuals who live in these 
communities. Medicaid plays an important role in financing health care 
in rural areas, as nearly a quarter of individuals under age 65 who 
live in rural areas are covered by Medicaid. Importantly, Medicaid also 
provides critical access to care for individuals in rural areas who are 
older or disabled, as more than one in five residents of rural areas 
(approximately 22 percent) are dually enrolled in Medicaid and 
Medicare.\523\ There are no Federal requirements under the clinic 
services benefit governing how States should provide coverage of 
services furnished specifically by clinics located in rural areas under 
that benefit--the Federal requirements that apply generally to that 
benefit, including the four walls requirement, also apply to services 
furnished by clinics in rural areas. A State may cover Medicaid clinic 
services provided by various types of clinics located in rural areas, 
such as primary care clinics, behavioral health clinics, surgical 
clinics, and other types of clinics. As noted earlier in this section, 
the Medicaid RHC services benefit is different from the Medicaid clinic 
services benefit and does not include a four walls requirement under 
Federal Medicaid law; thus, facilities that qualify as RHCs under 
Federal Medicaid law could provide Medicaid services under the RHC 
services benefit, including outside of the four walls.
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    \522\ CMS, CMS Framework for Advancing Health Care in Rural, 
Tribal, and Geographically Isolated Communities, (2022), Framework, 
https://www.cms.gov/files/document/cms-geographic-framework.pdf.
    \523\ Medicaid and CHIP Payment and Access Commission (MACPAC), 
Medicaid and Rural Health, Issue Brief, (Washington, DC, 2021), 1, 
https://www.macpac.gov/wp-content/uploads/2021/04/Medicaid-and-Rural-Health.pdf.
---------------------------------------------------------------------------

    Section 1902(a)(30)(A) of the Act requires that Medicaid payments 
for services be consistent with efficiency, economy, and quality of 
care, and be sufficient to enlist enough providers so that care and 
services are available under the plan at least to the extent that such 
care and services are available to the general population in the 
geographic area. Under this requirement, States generally have 
significant latitude in setting payment methodologies and rates for 
covered services, and there is no specific payment methodology required 
for clinic services, although regulations at Sec.  447.321 require the 
application of upper payment limits for clinics that are not IHS/Tribal 
clinics. States generally pay for clinic services via a facility rate. 
They typically adopt, as the payment rate for Medicaid clinic services 
furnished by IHS/Tribal clinics, the Outpatient per Visit Rate 
(excluding Medicare) that IHS establishes for services provided by IHS 
facilities to Medicaid beneficiaries and for certain other Federal 
programs. This rate, and a set of three other rates for Medicare 
outpatient visits and certain inpatient services, are frequently 
referred to collectively as the IHS all-inclusive rates (AIRs), and 
therefore this IHS Outpatient per Visit Rate (excluding Medicare) is 
hereinafter referred to as the ``AIR.'' \524\ In contrast, States 
generally pay for Medicaid benefits provided by individual 
practitioners, such as the physician services benefit, at a 
professional fee schedule rate under the Medicaid State plan.
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    \524\ IHS establishes the AIRs under the authority in sections 
321(a) and 322(b) of the Public Health Service Act (42 U.S.C. 248 
and 249(b)), Public Law 83-568 (42 U.S.C. 2001(a)), and the Indian 
Health Care Improvement Act (25 U.S.C. 1601 et seq.). IHS calculates 
AIRs on an annual basis and the rates are then published in the 
Federal Register. The AIRs are based on annual cost report analysis 
prepared by IHS's contractor. IHS reviews the cost report analysis 
and upon completion of the review, IHS submits recommended rates to 
the Office of Management and Budget (OMB) for final approval through 
HHS and CMS. Upon approval by OMB, the approved rates are published 
in the Federal Register. See https://www.ihs.gov/BusinessOffice/reimbursement-rates/. Calendar year 2024 rates and additional 
information can be found in the Federal Register published December 
19, 2023 (88 FR 87789): https://www.Federalregister.gov/documents/
2023/12/19/2023-27815/reimbursement-rates-for-calendar-year-2024.
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    As we noted in the January 18, 2017 FAQ, CMS recognized in 2017 
that IHS/Tribal clinics were providing services outside of the four 
walls, including to individuals to whom the existing statutory and 
regulatory exception does not apply, and that States were paying for 
these services at the clinic services rate (which in all or nearly all 
cases is the AIR). In the January 18, 2017 FAQ, we announced a 4-year 
grace period to January 30, 2021, to allow States time to come into 
compliance with the four walls requirement for IHS/Tribal clinics. On 
January 15, 2021, due to the COVID-19 Public Health Emergency (PHE), 
CMS issued a CMCS Informational Bulletin (CIB) announcing an extension 
of the four walls grace period to October 31, 2021. CMS issued 
subsequent CIBs on October 4, 2021, and September 8, 2023, announcing 
further extensions of the grace period to nine months from when the 
COVID-19 PHE ended, and February 11, 2025, respectively.\525\
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    \525\ CMS, Further Extension of Grace Period Related to the 
``Four Walls'' Requirement under 42 CFR 440.90 for Indian Health 
Service and Tribal Facilities to February 11, 2025, CMCS 
Informational Bulletin, (Baltimore, MD, 2023), https://www.medicaid.gov/sites/default/files/2023-09/cib090823.pdf.
---------------------------------------------------------------------------

    Since the release of the January 18, 2017 FAQ and throughout the 
grace period, we have heard from Tribes, the CMS TTAG, and the HHS 
STAC, that the four walls requirement will create barriers in access to 
care for Medicaid beneficiaries who receive care from IHS/Tribal 
clinics after the grace period expires. Tribes, the TTAG, and the STAC 
have requested that CMS eliminate the four walls requirement for IHS/
Tribal clinics. In addition to these requests, CMS has received a 
handful of other requests from States to allow exceptions to the four 
walls requirements for clinics that serve vulnerable populations. For 
example, we received one section 1115 demonstration request to cover 
clinic services outside of the four walls for behavioral health 
clinics, under which the State sought to use the requested section 1115 
demonstration authority to improve access to and retention in 
behavioral health treatment. In addition, we received inquiries from 
States seeking to cover, under the clinic services benefit, mobile 
crisis services provided by behavioral health clinics to individuals 
experiencing a behavioral health crisis, but we advised those States 
that we could not approve coverage of mobile crisis services under the 
clinic services benefit due to the four walls requirement.
    The proposed rule aimed to address the concerns we have heard from 
Tribes, the TTAG, the STAC, States, and other interested parties. It 
aimed to fulfill E.O.s 14009 and 14070 by helping States to strengthen 
and improve access to clinic services. It also helped to fulfill E.O. 
13175 by recognizing the United States' unique legal relationship with 
Tribes and by responding to advice and input received from Tribes 
through consultation. In addition, we believe the proposed rule is 
consistent with our strategies, goals, and objectives to advance health 
equity and improve health care access for Tribal, behavioral health, 
and rural populations as described in our CMCS Mental Health and 
Substance Use Disorder Action Plan and CMS Framework for Advancing 
Health Care in Rural, Tribal, and Geographically Isolated Communities.
    Consistent with our statutory authority at section 1905(a)(9) of 
the Act, we proposed to add three exceptions to the four walls 
requirement at Sec.  440.90, for the reasons set forth in section 
XVIII.B of the proposed rule. First, we proposed to add an exception 
for clinic services furnished by IHS/Tribal clinics. Second, we 
proposed to add an exception for clinic services furnished by a clinic 
that is primarily organized for the care and treatment of outpatients 
with behavioral health disorders, including mental health and substance 
use disorders. Third, we

[[Page 94444]]

proposed to add an exception for clinic services furnished by a clinic 
located in a rural area (and that is not an RHC, which could already 
provide services covered under a separate Medicaid benefit). We 
proposed to make the exception for clinic services furnished by IHS/
Tribal clinics a mandatory component of the clinic benefit and to make 
the exceptions for clinic services furnished by behavioral health 
clinics and clinics located in rural areas optional for States.

B. Summary of the Medicaid Clinic Services Four Walls Exceptions 
Proposed Provisions, Public Comments and Responses to Comments

    On July 22, 2024, the CY 2025 OPPS/ASC proposed rule (89 FR 59186) 
was published in the Federal Register. In response to the proposed 
exceptions, we received 96 public comments. Commenters included 
individuals, State Medicaid agencies, health care provider 
associations, individual health care providers, Tribes, Tribal 
organizations, urban Indian organizations (UIOs), health plans and 
associations, advocacy groups, academic and research organizations, and 
other health organizations. In this section, we provide a summary of 
the proposals, a summary of the public comments received, our responses 
to the public comments, and the policies we are finalizing for the 
Medicaid clinic services benefit.
1. General Comments
    Comment: One commenter recommended that the final rule include a 
severability provision to clarify that the Medicaid clinic services 
benefit four walls exceptions at Sec.  440.90 are not connected to 
other provisions contained in the OPPS/ASC final rule, so that if any 
other provision in the OPPS/ASC final rule is held to be invalid or 
unenforceable it would not apply to the Medicaid clinic services 
benefit four walls exceptions.
    Response: We thank the commenter for their recommendation that the 
final rule include a severability provision to clarify that the 
Medicaid clinic services benefit four walls exceptions at Sec.  440.90 
are not connected to other provisions contained in the OPPS/ASC final 
rule. We agree with the commenter and have included language in the 
supplementary information section of the final rule explaining our 
intent that if any provision in the OPPS/ASC final rule is held to be 
invalid or unenforceable, the remaining provisions that could function 
independently should take effect and be given the maximum effect 
permitted by law.
    Comment: Many commenters expressed gratitude and support for CMS's 
proposed efforts to mitigate operational burdens under the proposed 
rule, such as not proposing to require behavioral health clinics to 
verify that an individual has a behavioral health diagnosis or that 
clinics located in rural areas verify that an individual lives in a 
rural area.
    Response: We appreciate the comments in support of our proposed 
efforts to mitigate operational burdens.
    Comment: Many commenters thanked CMS for including a clarifying 
footnote that the Consolidated Appropriations Act, 2024, Division G, 
Title I, section 209 (Pub. L. 118-42) amended section 1905(a) of the 
Act to establish a certified community behavioral health clinic (CCBHC) 
services benefit effective March 9, 2024; the footnote indicated that 
the CCBHC services benefit is distinct from the clinic services benefit 
and that there is no four walls requirement for the CCBHC services 
benefit under Federal Medicaid law.
    Response: We appreciate the comments thanking us for clarifying 
that the Medicaid CCBHC services benefit is distinct from the Medicaid 
clinic services benefit and that there is no four walls requirement for 
the CCBHC services benefit under Federal Medicaid law.
    Comment: Three commenters expressed concerns with the physician 
direction requirement, with two of the comments expressing that the 
physician direction requirement may limit access to care for 
individuals who receive services from IHS/Tribal clinics. One commenter 
recommended that CMS defer to States and providers in determining the 
meaning of the physician direction requirement for the Medicaid clinic 
services benefit and indicated that the current definition is overly 
stringent and reduces access to care.
    Another commenter wanted to know if CMS defined ``under the 
direction of a physician'' in guidance and recommended that CMS 
reinterpret the physician direction requirement to include non-
physician licensed practitioners; the commenter explained that they 
believed CMS has the statutory authority to allow clinic services to be 
furnished under the direction of non-physician licensed practitioners 
because the current regulation at Sec.  440.90 allows clinic services 
to be under the direction of a dentist despite not being included in 
section 1905(a)(9) of the Act.
    Finally, the third commenter recommended CMS amend the final rule 
to not apply the physician direction requirement or other clinic 
services benefit requirements to IHS/Tribal clinics.
    Response: We thank the commenters for sharing their concerns about 
the physician direction requirement. As we noted in section XVIII of 
the proposed rule (89 FR 59186), section 1905(a)(9) of the Act, as 
amended by section 4105 of part 1 of subtitle B of title IV of the 
Omnibus Budget Reconciliation Act of 1987 (OBRA '87, Pub. L. 100-203), 
defines clinic services as ``services furnished by or under the 
direction of a physician, without regard to whether the clinic itself 
is administered by a physician, including such services furnished 
outside the clinic by clinic personnel to an eligible individual who 
does not reside in a permanent dwelling or does not have a fixed home 
or mailing address.'' Because all services covered under the clinic 
services benefit are required by statute to be furnished by or under 
the direction of a physician, we proposed to include language in each 
of the proposed exceptions specifying that services subject to the 
exception would have to be furnished under the direction of a 
physician, to make that requirement clear.
    Physician direction has been a longstanding component of the clinic 
benefit. We do not have the statutory authority to eliminate the 
requirement that clinic services must be furnished by or under the 
direction of a physician. In addition, we did not propose changes to 
that requirement, so we are finalizing this rulemaking without any 
changes to the meaning of ``under the direction of a physician.''
    Comment: Two commenters supported CMS's goal of expanding access 
but expressed concern about the Federal and State budgetary impacts of 
the proposed policies, given that the policies may increase provider 
payment rates. The commenters recommended that CMS reinforce that it is 
important for States to meet the statutory requirement that capitated 
rates to Medicaid managed care plans be made on an actuarially sound 
basis during the annual rate setting process or as a mid-year rate 
update if warranted when payments for clinic services are made through 
managed care.
    Response: We thank the commenters for their comments. We 
acknowledge that adding additional exceptions to the four walls 
requirement for IHS/Tribal clinics, and (at State option) behavioral 
health clinics and clinics located in rural areas is likely to have a 
Federal and State budgetary impact. As we noted in our economic 
analysis in section XXVI of the proposed rule, the total estimated 
impact of the proposed regulation over five years is $1.18

[[Page 94445]]

billion, including Federal impact of $1.15 billion and State impact of 
$30 million. However, as we also described in section XXVI of the 
proposed rule, the changes to the Medicaid clinic services benefit are 
expected to benefit Medicaid beneficiaries, Tribes, and States by 
improving access to care for the populations served by IHS/Tribal 
clinics, behavioral health clinics, and clinics in rural areas.
    When benefits are provided through a managed care delivery system, 
States must meet statutory and regulatory requirements for setting 
actuarially sound capitation rates that are projected to provide for 
all reasonable, appropriate, and attainable costs that are required 
under the terms of the contract and for the operation of the managed 
care plan for the time period and the population(s) covered under the 
terms of the contract. We remind States of the importance of meeting 
these requirements. States and their actuaries should assess if the 
programmatic changes under this final rule would materially impact 
actuarially sound capitation rates, and if so the State and its actuary 
should account for this programmatic change appropriately in developing 
capitation rates in accordance with 42 CFR 438.4 and 438.5.
    Comment: Two commenters recommended that CMS ensure that all 
populations that are exempt from the four walls requirement receive the 
full spectrum of physical and behavioral health care.
    Response: We appreciate the commenters' recommendation that we 
ensure that all populations that are exempt from the four walls 
requirement receive the full spectrum of physical and behavioral health 
care. We note that for most Medicaid beneficiaries, the clinic benefit 
would generally be one component of a broader Medicaid benefit package. 
Per section 1902(a)(10)(A) and (C) of the Act and implementing 
regulations at 42 CFR part 440, most beneficiaries in the categorically 
and medically needy eligibility groups are eligible for a benefit 
package consisting of an array of mandatory services that address a 
broad range of healthcare needs, and States can choose to include 
optional services, such as the clinic services benefit, in that 
coverage. Other beneficiaries may have different or more limited 
coverage under the governing statutes and regulations. Nothing about 
our proposed exceptions to the four walls requirement under the clinic 
benefit affects States' obligations and options regarding 
beneficiaries' benefit packages. We are not including any new 
requirements in response to these comments.
    Comment: Several commenters urged CMS to work closely with States 
and Tribes in implementing the additional exceptions to the four walls 
requirement if the rule is finalized. One commenter recommended that 
CMS issue detailed implementation guidance if the proposed rule is 
finalized.
    Response: We appreciate the commenters' suggestions and we intend 
to work closely with States and Tribes in implementing these 
exceptions. We have no current plans to issue detailed implementation 
guidance, but we might revisit those plans based on States' and Tribes' 
needs for assistance.
    Comment: One commenter urged CMS to ensure that FDA-cleared medical 
devices that help prevent overdose and significantly reduce opioid 
withdrawal symptoms be adequately covered and reimbursed when furnished 
outside of the four walls by IHS/Tribal clinics, behavioral health 
clinics, and clinics located in rural areas if the proposal is 
finalized.
    Response: We appreciate the commenter's recommendation; however, we 
are not including any new requirements related to this recommendation. 
We note that nothing about the proposed exceptions to the four walls 
requirement reduces the scope of items and services that may be paid 
for under the clinic benefit.
2. Justification and Criteria for Additional Medicaid Clinic Services 
Four Walls Exceptions
    As explained in section XVIII.A of the proposed rule, we previously 
interpreted section 1905(a)(9) of the Act to limit Medicaid clinic 
services to services furnished within the four walls of the clinic, 
except only for services furnished by clinic personnel to individuals 
who are unhoused. We continue to believe that because Congress added 
only one specific reference to services furnished outside the clinic to 
the statute in OBRA `87, it generally ratified our prior interpretation 
of the four walls requirement. Thus, we continue to believe that the 
statute authorizes neither broad exceptions to the four walls 
requirement that have no relationship to the current exception nor a 
complete elimination of the four walls requirement. However, we now 
interpret section 1905(a)(9) of the Act as permitting additional 
exceptions to the four walls requirements for populations served by 
clinics if those populations have similar health care access issues to 
individuals who are unhoused. When Congress added the exception to the 
statute, it introduced the exception with the word ``including'' (OBRA 
'87). We interpret the word ``including'' in the statute as not 
precluding additional exceptions to the four walls requirement, so long 
as any additional exception is similar to the exception for individuals 
who are unhoused. Had Congress wanted to limit the clinic benefit to 
only services provided within the four walls and services provided 
outside the four walls to the unhoused, it could have written a 
narrower exception instead of using ``including'' as it did when adding 
the exception to section 1905(a)(9) of the Act. As discussed in the 
Congressional Record for OBRA '87 in H.R. Rep. 100-391, Congress 
amended section 1905(a)(9) of the Act to create an exception to the 
four walls requirement for individuals who are unhoused to address 
access concerns for a population that has unmet health needs, distrusts 
mainstream providers, and has difficulty accessing care when providers 
are unable to meet them where they are located.\526\ We believe that 
adding exceptions to the four walls requirement for populations with 
similar needs and barriers to access as individuals who are unhoused is 
consistent with the statutory text and purpose of the initial 
exception.
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    \526\ H.R. Rep. No. 100-391, at 523 (1987), reprinted in 1987 
U.S.C.C.A.N. 2313-1, 2313-343.
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    In developing the proposed exceptions, we considered the 
characteristics of the unhoused population that is targeted by the 
current statutory and regulatory exception. According to data from the 
Department of Housing and Urban Development (HUD), 21 percent of 
individuals who are unhoused reported having a serious mental illness 
while 16 percent reported having a substance use disorder.\527\ 
Individuals who are unhoused often lack transportation to access health 
care and cite this lack of transportation as a barrier to managing 
their health.528 529 In many cases, individuals who are 
unhoused distrust providers due to perceptions of

[[Page 94446]]

disrespect and discrimination.\530\ Individuals who are unhoused also 
experience much poorer health outcomes than those who are housed; for 
example, nearly two thirds of individuals who are unhoused experience 
clinically significant dental problems and are four times as likely to 
visit an emergency department.531 532 A recent study found 
that when controlling for demographic and geographic differences, an 
individual who is unhoused is three and one half times more likely to 
experience early mortality than an individual who is housed.\533\ As 
indicated in the proposed rule, we believe that providing additional 
exceptions to the clinic services four walls requirement for 
populations with similar needs and barriers to access as individuals 
who are unhoused is consistent with the statute.
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    \527\ U.S. Department of Housing and Urban Development (HUD), 
HUD 2022 Continuum of Care Homeless Assistance Programs Homeless 
Populations and Subpopulations, Summary Report, (Washington, DC, 
2022), https://files.hudexchange.info/reports/published/CoC_PopSub_NatlTerrDC_2022.pdf.
    \528\ Yale University, ``Barrier to Care,'' Hypertension 
Awareness & Prevention Program at Yale, accessed March 15, 2024, 
https://happy.sites.yale.edu/barriers-care.
    \529\ Murphy, Erin Roark. 2019. ``Transportation and 
Homelessness: A Systematic Review.'' Journal of Social Distress and 
the Homeless 28(2): 1-10. https://doi.org/10.1080/10530789.2019.1582202.
    \530\ Becker, Jenna N., and Karen J. Foli. 2021. 
``Health[hyphen]Seeking Behaviours in the Homeless Population: A 
Concept Analysis.'' Health & Social Care in the Community 30(2). 
https://doi.org/10.1111/hsc.13499.
    \531\ Baggett, Travis P., James J. O'Connell, Daniel E. Singer, 
and Nancy A. Rigotti. 2010. ``The Unmet Health Care Needs of 
Homeless Adults: A National Study.'' American Journal of Public 
Health 100(7): 1326-33. https://doi.org/10.2105/ajph.2009.180109.
    \532\ Lin, Wen-Chieh, Monica Bharel, Jianying Zhang, Elizabeth 
O'Connell, and Robin E. Clark. 2015. ``Frequent Emergency Department 
Visits and Hospitalizations among Homeless People with Medicaid: 
Implications for Medicaid Expansion.'' American Journal of Public 
Health 105(S5): S716-22. https://doi.org/10.2105/ajph.2015.302693.
    \533\ Logani, Ilina, Bruce Meyer, and Angela Wyse. 2023. The 
Mortality of the US Homeless Population. BF Becker Friedman 
Institute for Economics at UChicago. The University of Chicago. 
March 27, 2023. https://bfi.uchicago.edu/insight/research-summary/the-mortality-of-the-us-homeless-population/.
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    The exceptions outlined in the proposed rule followed four criteria 
that mirror the needs and barriers to access experienced by individuals 
who are unhoused:
     The population experiences high rates of behavioral health 
diagnoses or difficulty accessing behavioral health services;
     The population experiences issues accessing services due 
to lack of transportation;
     The population experiences a historical mistrust of the 
health care system; and
     The population experiences high rates of poor health 
outcomes and mortality.
    By authorizing additional clinic services to be furnished outside 
of the four walls, the proposed exceptions are expected to improve 
access to care for the populations targeted by the exceptions. The 
exceptions would authorize States to pay the facility-based clinic 
services payment rates (such as the AIR for IHS/Tribal clinics) for the 
excepted services. Currently, due to the four walls requirement, States 
can cover and pay for services that are provided by clinic personnel 
outside the four walls--but that do not fit within the exception at 
Sec.  440.90(b)--only under Medicaid practitioner services benefits, 
such as physician services, rehabilitative services, or other licensed 
practitioner services--not under the clinic services benefit.
    It is CMS's understanding that State payment rates for these 
Medicaid practitioner services benefits are generally lower than the 
facility-based payment rates that States establish or adopt for 
Medicaid clinic services (such as the facility-based payment rate under 
the AIR, in the case of IHS/Tribal clinics), because the facility-based 
payment rates typically account for more overhead costs. While it is 
CMS's understanding that States generally pay lower rates for Medicaid 
practitioner services than they do for Medicaid facility-based 
services, it should be noted that States generally have the flexibility 
to increase practitioner services payment rates. States must also 
comply with section 1902(a)(30)(A) of the Act, which requires States to 
assure that payments are consistent with efficiency, economy, and 
quality of care, and are sufficient to enlist enough providers so that 
care and services are available under the Medicaid State plan at least 
to the extent that such care and services are available to the general 
population in the geographic area.
    Creating the exceptions could thus result in higher payments to 
providers for the excepted services. Studies of Medicaid payment rates 
have found that provider willingness to furnish services may be greater 
in States that pay providers at higher rates.534 535 
Further, practitioners may be reluctant to provide home-based care when 
paid under a professional fee schedule rate, since travel expenses and 
time are often not factored into the payment rate.\536\ As this 
evidence suggests, higher payment rates for services are more likely to 
incentivize providers to furnish those services. The proposal would 
authorize payment at the generally higher facility-based clinic 
services payment rates for the excepted services, therefore we believe 
that it would incentivize providers to provide these services, and 
thereby meet these beneficiaries where they are located, which for 
reasons further discussed later in this section of this preamble, will 
help to ensure access to necessary care.
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    \534\ Candon, Molly, Stephen Zuckerman, Douglas Wissoker, 
Brendan Saloner, Genevieve M. Kenney, Karin Rhodes, and Daniel 
Polsky. 2018. ``Declining Medicaid Fees and Primary Care Appointment 
Availability for New Medicaid Patients.'' JAMA Internal Medicine 178 
(1): 145. https://doi.org/10.1001/jamainternmed.2017.6302.
    \535\ Holgash, Kayla, and Martha Heberlein. 2019. Physician 
Acceptance of New Medicaid Patients: What Matters and What Doesn't. 
Health Affairs Blog (blog). April 19, 2019. https://www.healthaffairs.org/content/forefront/physician-acceptance-new-medicaid-patients-matters-and-doesn-t.
    \536\ Klein, Sarah, Martha Hostetter, and Douglas McCarthy. 
2017. An Overview of Home-Based Primary Care: Learning from the 
Field. The Commonwealth Fund. The Commonwealth Fund. June 7, 2017. 
https://www.commonwealthfund.org/publications/issue-briefs/2017/jun/overview-home-based-primary-care-learning-field.
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    We considered whether this change in interpretation could burden 
States, beneficiaries, providers, or others who have relied on our 
current interpretation. Based on our current awareness of how States 
implement the Medicaid clinic services benefit, we do not anticipate 
that our proposal would create burdens for Medicaid clinic services 
providers or Medicaid beneficiaries, and we have considered the 
possible burden for State Medicaid programs in developing the proposal. 
We invited comments on whether our proposal might create any burdens 
for States, beneficiaries, providers, or other interested parties.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Many commenters agreed with CMS that authorizing payment 
at the generally higher facility-based clinic services payment rates 
for services furnished outside of the four walls would help incentivize 
providers to furnish these services, and thereby meet beneficiaries 
where they are located and help ensure access to care.
    Response: We appreciate the comments that agreed that that 
authorizing payment at the generally higher facility-based clinic 
services payment rates for the expected services would help incentivize 
providers to furnish these services, and thereby meet beneficiaries 
where they are located and help ensure access to care.
    Comment: Many commenters agreed with CMS's interpretation that it 
is within CMS's authority under section 1905(a)(9) of the Act to 
include additional exceptions to the four walls requirement for 
populations with similar needs and barriers to access as individuals 
who are unhoused.
    Response: We appreciate the comments in support of the explanation 
in the proposed rule for why it is within our authority under section 
1905(a)(9) of the Act to include additional exceptions

[[Page 94447]]

to the four walls requirement for populations that meet more of the 
four criteria we described in the proposed rule.
    Comment: Three commenters recommended CMS consider eliminating the 
four walls requirement completely as they believed the four walls 
requirement creates barriers to the delivery of Medicaid clinic 
services via telehealth. One commenter urged CMS to work with Congress 
to eliminate the four walls requirement through legislation; while 
another commenter indicated that CMS is misinterpreting section 
1905(a)(9) of the Act and that the statute does not require clinic 
services to be furnished within the four walls of a clinic.
    Response: We thank the commenters for their recommendations, but we 
do not interpret the statute as authorizing us to completely eliminate 
the four walls requirement in Sec.  440.90 through rulemaking. As we 
discussed in section XVIII.B of the proposed rule (89 FR 59186), we 
continue to believe that the statute authorizes neither broad 
exceptions to the four walls requirement that have no relationship to 
the current exception nor a complete elimination of the four walls 
requirement. However, in this rule, we now interpret section 1905(a)(9) 
of the Act as permitting additional exceptions to the four walls 
requirements for populations served by clinics if those populations 
have similar health care access issues to individuals who are unhoused. 
We will take the commenters' concerns about telehealth into 
consideration as we contemplate issuing sub-regulatory guidance 
regarding our interpretation of how the four walls requirement applies 
when Medicaid clinic services are delivered via telehealth.
3. IHS/Tribal Clinics
    In response to advice and input received through Tribal 
consultation, we proposed to add a new paragraph (c) to Sec.  440.90 to 
add an exception to the four walls requirement for IHS/Tribal clinics, 
to authorize payment for clinic services provided outside the four 
walls by IHS/Tribal clinic personnel. This exception would be mandatory 
for all States that opt to cover the Medicaid clinic services benefit. 
We referred in the proposed regulation text to clinics that are 
facilities of the IHS, whether operated by IHS or by a Tribe or Tribal 
organization as authorized by the ISDEAA, to make clear that this 
exception applies only to IHS/Tribal clinics. The proposed regulatory 
language identifying the facilities that would be subject to the 
exception is consistent with our longstanding interpretation of the 
language used in sections 1905(b) and 1911 of the Act, and would mean 
clinics that are owned and operated by IHS, clinics that are owned by 
IHS and tribally-operated as authorized by the ISDEAA, or clinics that 
are owned and operated by Tribes and Tribal organizations as authorized 
by the ISDEAA.\537\
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    \537\ HCFA and IHS, Memorandum of Agreement.
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    Under section 1903(a)(1) of the Act, as discussed earlier, the 
Federal Government is required to match State expenditures for medical 
assistance at the FMAP, which is defined at section 1905(b) of the Act 
to be 100 percent for State expenditures for Medicaid-covered services 
received through an IHS facility whether operated by IHS or by a Tribe 
or Tribal organization (which, again, CMS has interpreted to refer to 
all three kinds of IHS/Tribal facilities described previously). Under 
CMS's longstanding interpretation of section 1905(b) of the Act, this 
100 percent FMAP is available only for State expenditures on services 
received through an IHS/Tribal facility (such as a clinic) by an AI/AN 
Medicaid beneficiary. State expenditures on services furnished by an 
IHS/Tribal facility to other Medicaid beneficiaries are not matched by 
the Federal Government at 100 percent, but rather at the otherwise 
applicable FMAP, and this would continue to apply for services provided 
outside the four walls of a clinic.
    We did not propose to include facilities operated by UIOs in the 
proposed exception, because it is our understanding that many of those 
facilities currently participate in Medicaid as providers of the 
Medicaid FQHC services benefit, not as providers of the clinic services 
benefit. Because Medicaid FQHC services are not subject to a four walls 
requirement under Federal Medicaid law, we believe that UIOs are 
unlikely to need the proposed exception. UIO facilities that provide 
Medicaid clinic services might qualify as behavioral health clinics or 
clinics in rural areas and be exempt from the four walls requirement 
under one of the two optional exceptions discussed later in this 
section of the preamble.
    This exception would apply to any Medicaid beneficiary who receives 
services from the IHS/Tribal clinic. Under IHS authorities, these 
clinics serve Medicaid beneficiaries who are eligible to receive 
services from the IHS/Tribal clinic under IHS regulations at 42 CFR 
part 136, and also may serve other Medicaid beneficiaries under 25 
U.S.C. 1680c. As mentioned in section XVIII.A of the proposed rule, all 
services covered under the clinic services benefit must be furnished by 
or under the direction of a physician, so we proposed to include 
language in this exception specifying that services subject to the 
exception would have to be furnished under the direction of a physician 
to make that requirement clear.
    We proposed this exception based on advice and input received 
through Tribal consultation and because the population served by IHS/
Tribal clinics, which is predominately AI/AN, tends to meet the 
criteria CMS has identified that warrant an exception from the four 
walls requirement (for example, high rates of behavioral health needs, 
lack of accessible transportation, mistrust of the health care system, 
and high rates of morbidity and poor health outcomes).
    AI/ANs experience high rates of behavioral health diagnoses. In 
particular, the opioid crisis plaguing many communities is especially 
acute in Tribal communities.\538\ As reported by the Centers for 
Disease Control and Prevention (CDC), AI/ANs have the highest rate of 
drug overdose compared to other U.S. populations, and they experienced 
a 39 percent increase in overdoses between 2019 and 2020.\539\
---------------------------------------------------------------------------

    \538\ Tipps, Robin T., Gregory T. Buzzard, and John A. 
McDougall. 2018. ``The Opioid Epidemic in Indian Country.'' The 
Journal of Law, Medicine & Ethics 46 (2): 422-36. https://doi.org/10.1177/1073110518782950.
    \539\ Centers for Disease Control and Prevention (CDC), ``Drug 
Overdose Prevention in Tribal Communities,'' CDC, May 2, 2024, 
https://www.cdc.gov/overdose-prevention/health-equity/tribal-communities.html?CDC_AAref_Val=https://www.cdc.gov/drugoverdose/health-equity/tribal.html.
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    Many AI/ANs also experience difficulties accessing services due to 
lack of transportation. Tribal lands encompass about 56 million acres 
nationwide, including 145,000 miles of roads.\540\ Roads in Tribal 
communities are typically rudimentary and in poor condition. For 
example, about 70 percent of Tribal roads across the country are 
unpaved compared to 45 percent of all rural roads.541 542 
Because Tribal communities are often located in rural or remote areas 
covering vast distances, providers can be extremely far away from their 
patients. For example, it is common for AI/ANs to have to travel 
between 60 and 90 miles one-way for health care

[[Page 94448]]

appointments.\543\ Many AI/ANs also do not have reliable personal 
transportation. The rate of AI/ANs without a personal vehicle is more 
than double that of individuals in other rural areas.\544\ Per a recent 
CDC report, approximately 17.1 percent of AI/ANs lack reliable 
transportation, the highest rate compared to other U.S. populations, 
and this is a barrier to accessing health care.\545\ Many AI/ANs have a 
profound mistrust of the Federal Government and mainstream providers 
based on trauma from a long history of harmful U.S. Tribal policies, 
such as removal of AI/ANs from homelands and Tribal community 
structures, bans on cultural practices and language, forced relocation 
to reservations, abusive boarding school practices, and other 
destructive policies. AI/AN health disparities are the visible, 
lingering result of these harmful policies.\546\
---------------------------------------------------------------------------

    \540\ Congressional Research Service (CRS), Highways and Highway 
Safety on Indian Lands, CRS Report, (Washington, DC, 2016), https://www.everycrsreport.com/files/20160202_R44359_38af583fdef681edc7b5d4daeeeb5bc506a4f919.pdf.
    \541\ Id.
    \542\ CRS, Rural Highways, CRS Report, (Washington, DC, 2018), 
https://crsreports.congress.gov/product/pdf/R/R45250.
    \543\ Government Accountability Office (GAO), Indian Health 
Service: Health Care Services Are Not Always Available to Native 
Americans, GAO-05-789, (Washington, DC, 2005), https://www.gao.gov/assets/gao-05-789.pdf.
    \544\ CRS, Tribal Highway and Public Transportation Programs, In 
Focus, (Washington, DC, 2022), https://crsreports.congress.gov/product/pdf/IF/IF12129.
    \545\ CDC, National Center for Health Statistics (NCHS), Lack of 
Reliable Transportation for Daily Living Among Adults: United 
States, 2022, by Amanda E. Ng, Dzifa Adjaye-Gbewonyo, and James 
Dahlhamer, NCHS Data Brief No. 490, (Hyattsville, MD, 2024), https://dx.doi.org/10.15620/cdc:135611.
    \546\ U.S. Commission Civil Rights, Broken Promises: Continuing 
Federal Funding Shortfall for Native Americans, Briefing Report, 
(Washington, DC, 2018), https://www.usccr.gov/files/pubs/2018/12-20-Broken-Promises.pdf.
---------------------------------------------------------------------------

    Furthermore, AI/ANs face poorer health outcomes than all other 
adults on average and have the lowest life expectancy compared to other 
U.S. populations. For example, AI/ANs have higher rates of obesity, 
heart disease, and diabetes than other adults in the U.S. population on 
average.\547\ The CDC's Provisional Life Expectancy Estimates for 2021 
found a severe drop in life expectancy for AI/ANs--decreasing by 6.6 
years from 2019 to 2021.\548\ Not only do AI/ANs, on average, die 
younger than all other Americans, but this disparity is worsening at an 
alarming rate. AI/AN life expectancy today is the same as it was for 
the average American in 1944.\549\
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    \547\ MACPAC, Medicaid's Role in Health Care for American 
Indians and Alaska Natives, Issue Brief, (Washington, DC, 2021), 
https://www.macpac.gov/wp-content/uploads/2021/02/Medicaids-Role-in-Health-Care-for-American-Indians-and-Alaska-Natives.pdf.
    \548\ CDC, NCHS, Provisional Life Expectancy Estimates for 2021, 
by Elizabeth Arias, Betzaida Tejada-Vera, Kenneth D. Kochanek, and 
Farida B. Ahmad, Vital Statistics Rapid Release Report No. 23, 
(Hyattsville, MD, 2022), https://dx.doi.org/10.15620/cdc:118999.
    \549\ IHS, ``Disparities,'' Indian Health Services, October 
2019, https://www.ihs.gov/newsroom/factsheets/disparities/.
---------------------------------------------------------------------------

    This evidence indicates that an exception to the four walls 
requirement is warranted for IHS/Tribal clinics because the individuals 
served by these clinics are more likely than those in other groups to 
meet a higher number of the four criteria we described in the proposed 
rule. Through Tribal Consultation, Tribal leaders indicated that IHS/
Tribal clinics need the flexibility to provide services to AI/ANs where 
they are located due to their high levels of behavioral health 
diagnoses, challenges accessing services due to lack of transportation 
and appropriate infrastructure, historic mistrust of the Federal 
Government and the health care system, and poor health outcomes.
    As explained later in this section of the preamble, we proposed 
that behavioral health clinics and clinics in rural areas would serve 
as a proxy for their patient populations, instead of limiting the 
exception for behavioral health clinics to patients with behavioral 
health disorders or limiting the exception for clinics in rural areas 
to patients residing in rural areas. We proposed this approach because 
we believe that these clinics serve predominantly patients with 
behavioral health disorders or who live in rural areas (as applicable), 
and to reduce the operational burden of implementing these exceptions. 
Similar to the proposed exceptions for behavioral health clinics and 
clinics in rural areas, we also proposed that the IHS/Tribal clinics 
would be a proxy for their patient population, but for somewhat 
different reasons. The operational burden that the proposed proxy 
approach would address for behavioral health clinics and clinics in 
rural areas would not be as much of an issue for IHS/Tribal clinics, 
because the entire patient population of an IHS/Tribal clinic is likely 
to meet some or all of the four criteria described in the proposed 
rule. For that same reason, a proxy approach would be appropriate for 
these clinics. These clinics serve a clearly identifiable group of 
Medicaid beneficiaries under IHS statutes and regulations: Medicaid 
beneficiaries whom IHS/Tribal clinics serve under 42 CFR part 136 or 
other Medicaid beneficiaries whom these clinics may serve under 25 
U.S.C. 1680c. As discussed previously, the population served by IHS/
Tribal clinics, which is predominately AI/AN, is more likely than other 
groups to meet a higher number of the criteria identified in the 
proposed rule as warranting an exception.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Most commenters expressed support for our proposed 
exception to the Medicaid clinic services benefit four walls 
requirement for IHS/Tribal clinics at Sec.  440.90(c). Many commenters 
indicated that Tribal communities face significant barriers in 
accessing healthcare facilities and could benefit from an exception to 
the four walls requirement. Several commenters noted that IHS/Tribal 
clinics are experiencing substantial practitioner shortages that create 
long wait times for in-person services, and that without a permanent 
exception to the Medicaid four walls requirement the wait times for in-
person services will worsen. One commenter explained that continued 
access to Medicaid clinic services outside the four walls of IHS/Tribal 
clinics is vital for isolated Tribal communities that rely upon rely 
upon traveling practitioners from these clinics, as there are great 
distances between the communities and the closest IHS/Tribal clinics. 
Finally, commenters also noted that allowing an exception to the four 
walls requirement for IHS/Tribal clinics will ensure that services 
continue to be provided in the location that is best for the Tribal 
member after the end of the grace period.
    Response: We appreciate the comments in support of our proposed 
exception to the Medicaid clinic services benefit four walls 
requirement for IHS/Tribal clinics. We agree that the population served 
by IHS/Tribal clinics faces significant barriers in accessing services 
and could benefit from an exception to the four walls requirement. We 
also agree that this exception will allow this population to continue 
to receive services in the location that best meets the individual's 
needs after the grace period.
    Comment: Many commenters agreed with CMS that the population that 
receives services from IHS/Tribal clinics meets more of the four 
criteria we described in the proposed rule than other groups and that 
an exception to the four walls requirement is justified for IHS/Tribal 
clinics. Several commenters noted that AI/ANs experience some of the 
highest rates of chronic illness of any population in the U.S., and a 
few commenters noted that AI/ANs are more than twice as likely to miss 
appointment times than other U.S. populations.

[[Page 94449]]

    Response: We appreciate the comments in support of the evidence we 
presented that the population that receives services from IHS/Tribal 
clinics meets more of the four criteria we described in the proposed 
rule than other groups and that an exception to the four walls 
requirement is justified for IHS/Tribal clinics.
    Comment: A few commenters inquired whether the proposed IHS/Tribal 
clinic exception at Sec.  440.90(c) would apply to services furnished 
to individuals who are not AI/AN.
    Response: As we indicated in section XVIII.B of the proposed rule 
(89 FR 59186), the exception would apply to any Medicaid beneficiary 
who receives services from the IHS/Tribal clinic, not just individuals 
who are AI/AN.
    Comment: One commenter inquired whether the proposed IHS/Tribal 
clinic exception at Sec.  440.90(c) would apply to Tribal facilities 
that participate in Medicaid as FQHCs.
    Response: We noted in section XVIII.B of the proposed rule (89 FR 
59186) that the Medicaid clinic services benefit is distinct from the 
Medicaid FQHC services benefit and there is no Federal four walls 
requirement under the Medicaid FQHC benefit, unlike the Medicaid clinic 
services benefit.
    Comment: One commenter inquired whether the proposed IHS/Tribal 
clinic exception at Sec.  440.90(c) would apply to traditional healing 
services.
    Response: CMS recently approved several States' section 1115 
demonstration proposals to cover traditional health care practices, 
which cannot currently be covered under Medicaid State plan benefits, 
such as the clinic services benefit.\550\ The traditional health care 
practices that can be covered under these demonstrations are not clinic 
services within the meaning of section 1905(a)(9) of the Act, 42 CFR 
440.90, or this rulemaking. As such, the clinic services benefit four 
walls requirement does not apply to that coverage.
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    \550\ CMS, Biden-Harris Administration Takes Groundbreaking 
Action to Expand Health Care Access by Covering Traditional Health 
Care Practices, Press Release, (Baltimore, MD, 2024), https://www.cms.gov/newsroom/press-releases/biden-harris-administration-takes-groundbreaking-action-expand-health-care-access-covering.
---------------------------------------------------------------------------

    Comment: One commenter recommended that CMS expand the IHS/Tribal 
clinic exception at Sec.  440.90(c) in the final rule to include non-
Tribal clinics that operate on Tribal lands.
    Response: We appreciate the commenter's recommendation and will 
take it into consideration for future rulemaking; however, we decline 
to expand the IHS/Tribal clinic exception at Sec.  440.90(c) in this 
final rule to include non-Tribal clinics that operate on Tribal lands. 
We did not propose including non-Tribal clinics that operate on Tribal 
lands within the exception for IHS/Tribal clinics and believe that such 
a change would require additional consideration and discussion with the 
public beyond what could be finalized in this current rule. However, we 
would also note that we included an exception at Sec.  440.90(e) for 
clinics located in rural areas and non-Tribal clinics that operate on 
Tribal lands might fall within that exception in States that choose to 
adopt such exception.
    After consideration of the public comments we received, we are 
finalizing, without modification, an exception to the Medicaid clinic 
services four walls requirement at Sec.  440.90(c) for IHS/Tribal 
clinics.
4. Behavioral Health Clinics
    We proposed to add a new paragraph (d) to Sec.  440.90 to authorize 
an exception to the four walls requirement for clinic services provided 
outside the four walls by personnel of behavioral health clinics. This 
exception would not be mandatory in States that opt to cover the clinic 
services benefit but could be implemented as a State option. 
Specifically, we proposed an exception for clinics that are primarily 
organized for the care and treatment of outpatients with behavioral 
health disorders, including mental health disorders and substance use 
disorders. We noted that the proposed exception would include any 
clinic services furnished outside of the four walls by a behavioral 
health clinic, including non-behavioral clinic services such as 
physical health services.
    The proposed exception would include behavioral clinic types that 
are recognized nationally, such as Community Mental Health Centers, and 
other behavioral health clinics organized in a State. We recognize that 
the types of behavioral health clinics within a State may vary, so we 
did not propose to limit this exception to specific types of behavioral 
health clinics. However, to be considered a behavioral health clinic 
under the proposed exception, the clinic would have to be primarily 
organized to treat outpatients with behavioral health disorders 
regardless of the patient mix of the clinic. For example, if a State 
has established separate licensure or certification requirements for 
mental health clinics and primary care clinics, under which primary 
care clinics are licensed to treat outpatients for a range of services 
beyond the treatment of behavioral health disorders, then we would 
consider a mental health clinic in that State to be primarily organized 
to treat outpatients with behavioral health disorders but would not 
consider a primary care clinic in that State to be primarily organized 
to treat such outpatients. We recognize that there may be other means 
by which a State determines that a clinic is primarily organized to 
treat outpatients with behavioral health disorders (that is, other than 
through licensure or certification), including behavioral health 
accreditation by accrediting organizations, such as the Joint 
Commission, or based on the organizing documents of the clinic, such as 
a business charter. If the proposal were finalized as described, States 
that choose to adopt this exception would describe the types of 
behavioral health clinics such exception applies to in their Medicaid 
State plan. Just like our proposed exception for IHS/Tribal clinics, we 
proposed to include language in this exception specifying that services 
subject to the exception would have to be furnished under the direction 
of a physician.
    Per 2022 data from the Substance Abuse and Mental Health Services 
Administration (SAMHSA), approximately 94.7 percent of adults 
nationwide with a substance use disorder did not seek substance use 
treatment and nearly half of adults nationwide with a mental health 
disorder did not receive mental health treatment, which suggests that 
this population may have difficulty accessing behavioral health 
services.\551\ Lack of transportation and geographic distance from 
behavioral health services are often cited in research as barriers to 
behavioral health treatment.\552\ One study of transportation-
disadvantaged adults found that nearly half of adults nationwide who 
lacked medical transportation were diagnosed with depression or another 
mental health disorder.\553\ Studies have found that

[[Page 94450]]

individuals with behavioral health disorders often report negative 
experiences with providers and stigmatizing attitudes from providers 
are common, which can lead to a mistrust of the health care system and 
forgone care.\554\ Finally, research has found that individuals with a 
severe mental illness or substance use disorder experience worse health 
outcomes and increased risk of premature mortality, with one recent 
study finding individuals with a severe mental illness or substance use 
disorder experiencing a shorter life span than comparable individuals 
by an average of 6 years.\555\
---------------------------------------------------------------------------

    \551\ Substance Abuse and Mental Health Services Administration 
(SAMHSA), Key substance use and mental health indicators in the 
United States: Results from the 2022 National Survey on Drug Use and 
Health, HHS Publication No. PEP23-07-01-006, NSDUH Series H-58, 
(Rockville, MD, 2023), https://www.samhsa.gov/data/report/2022-nsduh-annual-national-report.
    \552\ Priester, Mary Ann, Teri Browne, Aidyn Iachini, Stephanie 
Clone, Dana DeHart, and Kristen D. Seay. 2016. ``Treatment Access 
Barriers and Disparities among Individuals with Co-Occurring Mental 
Health and Substance Use Disorders: An Integrative Literature 
Review.'' Journal of Substance Abuse Treatment 61 (61): 47-59. 
https://doi.org/10.1016/j.jsat.2015.09.006.
    \553\ Wallace, Richard J, Paul Hughes-Cromwick, Hillary J Mull, 
and Snehamay Khasnabis. 2005. ``Access to Health Care and 
Nonemergency Medical Transportation: Two Missing Links.'' 
Transportation Research Record 1924 (January): 76-84. https://doi.org/10.3141/1924-10.
    \554\ Knaak, Stephanie, Ed Mantler, and Andrew Szeto. 2017. 
``Mental Illness-Related Stigma in Healthcare.'' Healthcare 
Management Forum 30 (2): 111-16. https://doi.org/10.1177/0840470416679413.
    \555\ Iturralde, Esti, Natalie Slama, Andrea H. Kline-Simon, 
Kelly C. Young-Wolff, Don Mordecai, and Stacy A. Sterling. 2021. 
``Premature Mortality Associated with Severe Mental Illness or 
Substance Use Disorder in an Integrated Health Care System.'' 
General Hospital Psychiatry 68 (January): 1-6. https://doi.org/10.1016/j.genhosppsych.2020.11.002.
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    State-specific circumstances may affect the degree to which a 
State's population of individuals with behavioral health disorders 
meets the four criteria described in the proposed rule. The Health 
Resources and Services Administration (HRSA), in coordination with 
State primary care offices, designates as Health Professional Shortage 
Areas (HPSAs) \556\ areas experiencing a shortage in primary care, 
dental care, or mental health care providers for a whole geographic 
area, a specific population within a geographic area, and facilities 
that serve these areas. HRSA publishes data for each State on the 
percent of need met for primary care, dental care, and mental health 
providers, with a lower percentage indicating a lower availability of 
providers. It should be noted that the types of mental health providers 
counted in HPSAs are set in regulation, and based on the regulations, 
HRSA allows State Primary Care Offices to choose whether to count: 
psychiatrists only, core mental health professionals (psychiatrists, 
clinical psychologists, clinical social workers, psychiatric nurse 
specialists, and marriage and family therapists), or a combination of 
all types. As of December 31, 2023, there is significant variation 
among States in the percent of need met for mental health care, with a 
low of 9 percent and a high of 63 percent.\557\ This variation in 
availability of mental health care providers may suggest that 
populations of individuals with behavioral health disorders in some 
States may have greater difficulty accessing behavioral health services 
or accessing transportation to a behavioral health provider than those 
populations in other States. There may also be significant variability 
between States with regard to behavioral health outcomes and mortality. 
For example, in 2021 the age-adjusted drug overdose mortality rate by 
State had significant variation, from a low of 11 per 100,000 to a high 
of 90 per 100,000.\558\ These differences between populations of 
individuals with behavioral health disorders in different States may 
suggest that the degree to which a State's population of individuals 
with behavioral health disorders meets the four criteria may be 
variable.
---------------------------------------------------------------------------

    \556\ Health Resources & Services Administration (HRSA), ``What 
is Shortage Designation?'' HRSA Health Workforce, June 2023, https://bhw.hrsa.gov/workforce-shortage-areas/shortage-designation.
    \557\ HRSA, Designated Health Professional Shortage Areas 
Statistics, Designated HPSA Quarterly Summary, (Rockville, MD, 
2024), https://data.hrsa.gov/Default/GenerateHPSAQuarterlyReport.
    \558\ CDC, NCHS, ``Drug Overdose Mortality by State,'' CDC, 
March 1, 2022, https://www.cdc.gov/nchs/pressroom/sosmap/drug_poisoning_mortality/drug_poisoning.htm.
---------------------------------------------------------------------------

    This evidence indicates that an exception to the clinic services 
four walls requirement could be warranted, based on State-specific 
circumstances, for clinics that are primarily organized for the care 
and treatment of outpatients with a behavioral health disorder, as 
these clinics might primarily serve a patient population that may be 
more likely than other groups to meet more of the four criteria we 
described in the proposed rule. The evidence also suggests that this 
patient population is less likely to meet as many of the criteria as 
consistently nationwide as patients served by IHS/Tribal clinics. Under 
the proposal, a State could determine that individuals with a 
behavioral health disorder in that State should be engaged by 
behavioral health clinic personnel where they are located due to their 
challenges accessing services, including lack of transportation and 
geographic distance from services, historic mistrust and stigmatization 
in the health care system, and poor health outcomes.
    We considered proposing that, to qualify for the proposed 
exception, clinic services would have to be provided specifically to 
individuals with a behavioral health disorder, in addition to being 
provided by personnel of a behavioral health clinic. However, we 
believe that such a requirement would be too operationally burdensome 
and that instead behavioral health clinics can serve as a proxy for a 
population that generally consists of individuals with a behavioral 
health disorder. We recognize there may be circumstances in which a 
behavioral health clinic furnishes services to an individual who does 
not have a behavioral health disorder, but it is our understanding that 
behavioral health clinics generally serve a patient population that 
consists primarily of individuals with behavioral health disorders 
(including individuals with a formal behavioral health disorder 
diagnosis and those with an undiagnosed behavioral health disorder). 
Thus, these clinics can serve as a proxy for a patient population that 
is more likely to have such a disorder--and thus, that includes people 
who are more likely to meet more of the four criteria. In addition, we 
believe that requiring clinics or States to verify that a clinic 
patient has a behavioral health disorder and to deny coverage of 
Medicaid clinic services provided outside the four walls if the patient 
does not, would be too operationally burdensome. For example, an 
individual might experience or present their behavioral health symptoms 
in an uncommon way, an individual might be misdiagnosed, or an 
individual might be experiencing a crisis where services are needed 
urgently and verifying that they have a behavioral health disorder 
might delay needed care. Because we believe that behavioral health 
clinics can serve as a proxy for individuals with behavioral health 
disorders, and because we do not want to make this exception too 
operationally burdensome, we did not propose that to qualify for the 
proposed exception, clinic services must be provided by a behavioral 
health clinic specifically to an individual with a behavioral health 
disorder.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Most commenters expressed support for our proposed 
exception to the Medicaid clinic services benefit four walls 
requirement for behavioral health clinics at Sec.  440.90(d). 
Commenters indicated that individuals with behavioral health needs 
would benefit from receiving care in environments where they feel most 
comfortable rather than solely within the four walls of a clinic. One 
commenter noted that an exception to the four walls requirement for 
behavioral health clinics might lead to earlier diagnosis, better 
adherence to

[[Page 94451]]

treatment plans, and improved outcomes for beneficiaries with 
behavioral health needs. Many commenters explained that beneficiaries 
that receive services from behavioral health clinics often experience 
transportation, financial, safety, behavioral health, or physical 
health challenges that impede their ability to travel to behavioral 
health clinics.
    Several commenters expressed that telehealth flexibilities adopted 
by States under section 1135 waivers during the COVID-19 public health 
emergency (PHE) to allow coverage of Medicaid clinic services outside 
of the four walls (when neither the clinic practitioner nor beneficiary 
was present at the clinic) increased access to services furnished by 
behavioral health clinics, and that a permanent exception to the four 
walls requirement for behavioral health clinics would increase access 
to care. Many commenters indicated that CMS's current interpretation of 
how the four walls requirement applies when Medicaid clinic services 
are furnished via telehealth, under which clinic services furnished via 
telehealth are covered only when either the clinic practitioner or the 
beneficiary is physically onsite at the clinic facility, is burdensome 
for behavioral health clinics.
    In addition, several commenters noted that there are national 
behavioral health workforce shortages and allowing an exception to the 
four walls requirement for behavioral health clinics would increase 
clinic practitioner recruitment and retention rates.
    Response: We appreciate the comments in support of our proposed 
exception to the Medicaid clinic services benefit four walls 
requirement for behavioral health clinics. We thank the commenters for 
sharing additional information on how the population served by 
behavioral health clinics may benefit from an exception to the four 
walls requirement and how an exception could lead to better workforce 
recruitment and retention rates. We also agree that an exception to the 
four walls requirement for behavioral health clinics could increase 
access to care. Finally, we agree with the commenters that noted that 
an exception to the four walls requirement for behavioral health 
clinics might increase clinic practitioner recruitment and retention 
rates.
    We acknowledge the commenters' concerns regarding our current 
interpretation of how the four walls requirement applies when Medicaid 
clinic services are furnished via telehealth. We note that upon the 
effective date of this rule, if a State adopts exceptions to the four 
walls requirement for behavioral health clinics and/or clinics located 
in rural areas, then neither the beneficiary nor the clinic 
practitioner would need to be present in such a clinic for services to 
be delivered via telehealth. In addition, IHS/Tribal clinic services 
can be delivered via telehealth without the beneficiary or clinic 
practitioner present in the clinic upon the effective date of this 
final rule with comment period. Finally, we will take these comments 
into consideration as we contemplate issuing sub-regulatory guidance 
regarding our interpretation of how the four walls requirement applies 
when Medicaid clinic services are delivered via telehealth.
    Comment: One commenter inquired whether psychiatric outpatient 
clinics are considered behavioral health clinics, for purposes of the 
proposed exception for behavioral health clinics at Sec.  440.90(d).
    Response: The proposed exception for behavioral health clinics 
applies to services furnished outside of a clinic that is primarily 
organized for the care and treatment of outpatients with behavioral 
health disorders, including mental health and substance use disorders, 
by clinic personnel under the direction of a physician. As we discussed 
in the proposed rule preamble, the types of behavioral health clinics 
within a State may vary, so we are not proposing to limit this 
exception to specific types of behavioral health clinics, and States 
that choose to adopt this exception would describe the types of 
behavioral health clinics to which the exception applies in their 
Medicaid State plans. All such clinics would have to be primarily 
organized to treat outpatients with behavioral health disorders 
regardless of the patient mix of the clinic. Additionally, per Sec.  
440.90, Medicaid clinic services must be furnished by a facility that 
is not part of a hospital but that is organized and operated to provide 
medical care to outpatients.
    Comment: Many commenters expressed support for including behavioral 
health clinic types that are recognized nationally, such as Community 
Mental Health Centers (CMHCs), and other behavioral health clinics 
organized in a State as behavioral health clinics at Sec.  440.90(d).
    Response: We remind the commenters that the States implementing 
this exception will determine which clinics are subject to it. As we 
discussed in the proposed rule preamble, States that choose to adopt 
this exception would describe the types of behavioral health clinics to 
which the exception applies in their Medicaid State plans, provided 
that such clinics are primarily organized to treat outpatients with 
behavioral health disorders. However, as we indicated in the proposed 
rule preamble, we expect all States that opt to implement this 
exception to include behavioral health clinic types that are recognized 
nationally.
    Comment: Many commenters expressed support for CMS's proposal to 
allow the behavioral health clinic exception at Sec.  440.90(d) to 
apply to any services furnished by behavioral health clinics and not 
just behavioral health services.
    Response: We appreciate the comments in support of our proposal to 
allow the exception to the four walls for behavioral health clinics to 
apply to any services furnished by behavioral health clinics.
    Comment: Many commenters agreed with CMS that the behavioral health 
population meets more of the four criteria we described in the proposed 
rule than other groups that are not the focus of an exception in this 
rulemaking and that an exception to the four walls requirement is 
justified for behavioral health clinics. One commenter noted that there 
is evidence that individuals with behavioral health conditions have 
increased difficulties establishing trust relationships with 
practitioners, which leads to a mistrust of the health care system. In 
addition, the commenter explained that behavioral health conditions can 
make navigating public transit more difficult, which creates 
transportation barriers for individuals with behavioral health 
conditions.
    Response: We appreciate the comments in support of the evidence we 
presented that the behavioral health population meets more of the four 
criteria we described in the proposed rule than other groups that are 
not the focus of an exception in this rulemaking and that an exception 
to the four walls requirement is justified for behavioral health 
clinics.
    Comment: Two commenters recommended that CMS not limit the 
exception for behavioral health clinics at Sec.  440.90(d) to only 
include clinics that are primarily organized for the treatment of 
outpatients with behavioral health disorders. One commenter recommended 
that CMS consider an application or appeals process to allow clinics 
which serve a behavioral health population that meets the four criteria 
we described in the proposed rule (but do not fall under the proposed 
exception) to also furnish services outside of the four walls.
    Another commenter expressed that in rural and frontier areas, 
individuals with behavioral health disorders may

[[Page 94452]]

have access to behavioral health services only through primary care 
clinics or other clinics that are not primarily organized for the care 
and treatment of outpatients with behavioral health disorders. The 
commenter recommended that the proposed exception at Sec.  440.90(d) 
include any clinic that furnishes behavioral health services.
    Response: We decline to expand the exception to include non-
behavioral health clinics that furnish behavioral health services. As 
we noted in section XVIII.B of the proposed rule (89 FR 59186), 
behavioral health clinics can serve as a proxy for a patient population 
that is more likely to have a behavioral health disorder--and thus, 
that includes people who are more likely to meet more of the four 
criteria we described in the proposed rule. It is our understanding 
that non-behavioral health clinics do not generally serve a patient 
population that consists primarily of individuals with behavioral 
health disorders. We do not believe that non-behavioral health clinics 
that furnish behavioral health services can serve as a proxy for such a 
population. We would also note that we included an exception at Sec.  
440.90(e) for clinics located in rural areas and are not limiting the 
types of services that those clinics may furnish outside of the four 
walls under that exception.
    Comment: One commenter encouraged CMS to require States to 
establish a robust referral system, including ongoing transportation 
support, to ensure that individuals who receive services from 
behavioral health clinics can get connected to and receive care for any 
additional health needs outside of the clinic.
    Response: We decline to amend the regulation to require States to 
establish a referral system. Federal Medicaid regulations governing 
transportation and case management services are beyond the scope of 
this rulemaking. However, we understand the critical role that 
transportation to services can play in improving the health outcomes of 
Medicaid beneficiaries, and note that per section 1902(a)(4)(A) of the 
Act and 42 CFR 431.53, State Medicaid plans must specify that the 
Medicaid agency will ensure necessary transportation for beneficiaries 
to and from providers. CMS issued guidance on the Medicaid 
transportation assurance in the form of a State Medicaid Director 
letter (SMD) 23-006 that introduces the Medicaid Transportation 
Coverage Guide. Case management services are optional in the Medicaid 
program under sections 1905(a)(19) and 1915(g) of the Act and 42 CFR 
440.169, and States may choose to implement case management services 
under a variety of authorities. We acknowledge the role that case 
management can play in linking individuals to needed medical, 
behavioral health, and other services.
    Comment: Two commenters recommended that CMS implement the proposed 
exception at Sec.  440.90(d) at the beneficiary level (in addition to 
the clinic level) to ensure that the entire behavioral population that 
meets the four criteria we described in the proposed rule is able to 
access clinic services outside the four walls.
    Response: We understand the commenters to be recommending 
application of this exception to any Medicaid beneficiary with a 
behavioral health condition, regardless of the type of clinic. We thank 
the commenters for their recommendation that we implement the proposed 
exception at Sec.  440.90(d) at the beneficiary level (in addition to 
the clinic level) to ensure that the entire behavioral health 
population that meets the four criteria we described in the proposed 
rule is able to access clinic services outside the four walls; however, 
we will not be making changes in the final rule to allow States to 
apply the exception at Sec.  440.90(d) at the beneficiary level. As we 
noted in section XVIII.B of the proposed rule (89 FR 59186), behavioral 
health clinics can serve as a proxy for a patient population that is 
more likely to have a behavioral health disorder--and thus, that 
includes people who are more likely to meet more of the four criteria 
we described in the proposed rule. In addition, we believe that 
requiring clinics or States to verify that a clinic patient has a 
behavioral health disorder and to deny coverage of Medicaid clinic 
services provided outside the four walls if the patient does not, would 
be too operationally burdensome.
    After consideration of the public comments we received, we are 
finalizing, without modification, an exception to the Medicaid clinic 
services four walls requirement at Sec.  440.90(d) for clinics that are 
primarily organized for the care and treatment of outpatients with 
behavioral health disorders, including mental health and substance use 
disorders.
5. Clinics Located in Rural Areas
    We proposed to add a new paragraph (e) to Sec.  440.90 to authorize 
an exception to the four walls requirement for clinic services provided 
outside the four walls by personnel of clinics located in rural areas, 
but that are not RHCs as referenced in section 1905(a)(2)(B) of the Act 
and Sec.  440.20(b). This exception would not be mandatory in States 
that opt to cover the clinic services benefit, but could be implemented 
at State option. Just like our proposed exception for IHS/Tribal 
clinics and behavioral health clinics, we proposed to include language 
in this exception specifying that services subject to the exception 
would have to be under the direction of a physician.
    Per SAMHSA data, rates of mental illness and substance use 
disorders are similar in rural and urban areas.\559\ However, 
individuals in rural areas with a mental illness or substance use 
disorder are less likely to receive treatment than individuals in urban 
areas due to more limited access to providers, as rural areas are more 
likely to lack trained and specialized behavioral health 
providers.\560\ For example, in 2021 the number of psychologists per 
100,000 people in rural counties was less than half of the number in 
urban counties.\561\ A recent study found that rural individuals on 
average are 22 percent less likely than urban individuals to utilize 
primary and specialty clinic services.\562\ Studies have found that 
lack of transportation and distance to providers is a common barrier to 
rural individuals accessing health care services.\563\ Furthermore, a 
recent Government Accountability Office (GAO) report found that rural 
individuals need to travel 40 miles on average to access specialty 
services.\564\ With regards to mistrust of the health care system, 
research has found that rural individuals have historically mistrusted 
the health care at higher

[[Page 94453]]

rates, and that some of this mistrust comes from a perception that the 
health care system prioritizes urban communities over rural 
communities.\565\ Per the CDC, rural individuals are at greater risk of 
poor health outcomes as they tend to be older and sicker than urban 
individuals.\566\ Finally, according to a CDC National Center for 
Health Statistics (NCHS) study, age-adjusted mortality rates are higher 
for rural individuals, with the mortality gap increasing since 1999 
between rural and urban individuals.\567\
---------------------------------------------------------------------------

    \559\ SAMHSA, ``2022 NSDUH Detailed Tables,'' SAMHSA, November 
13, 2023, https://www.samhsa.gov/data/report/2022-nsduh-detailed-tables.
    \560\ Morales, Dawn A., Crystal L. Barksdale, and Andrea C. 
Beckel-Mitchener. 2020. ``A Call to Action to Address Rural Mental 
Health Disparities.'' Journal of Clinical and Translational Science 
4 (5): 1-20. https://doi.org/10.1017/cts.2020.42.
    \561\ WWAMI Rural Health Research Center, University of 
Washington. Changes in the Supply and Rural-Urban Distribution of 
Psychologists in the U.S., 2014-2021. 2022. https://familymedicine.uw.edu/rhrc/wp-content/uploads/sites/4/2022/10/RHRC_DBOCT2022_PSYCHOLOGIST_Andrilla.pdf.
    \562\ Nuako, Akua, Jingxia Liu, Giang Pham, Nina Smock, Aimee 
James, Timothy Baker, Laura Bierut, Graham Colditz, and Li-Shiun 
Chen. 2022. ``Quantifying Rural Disparity in Healthcare Utilization 
in the United States: Analysis of a Large Midwestern Healthcare 
System.'' Edited by Nickolas D. Zaller. PLOS ONE 17 (2): e0263718. 
https://doi.org/10.1371/journal.pone.0263718.
    \563\ Arcury, Thomas A., John S. Preisser, Wilbert M. Gesler, 
and James M. Powers. 2005. ``Access to Transportation and Health 
Care Utilization in a Rural Region.'' The Journal of Rural Health 21 
(1): 31-38. https://doi.org/10.1111/j.1748-0361.2005.tb00059.x.
    \564\ GAO, Rural Hospital Closures, GAO-21-93, (Washington, DC, 
2020), https://www.gao.gov/assets/gao-21-93.pdf.
    \565\ Lister, Jamey J., and Paul J. Joudrey. 2022. ``Rural 
Mistrust of Public Health Interventions in the United States: A Call 
for Taking the Long View to Improve Adoption.'' The Journal of Rural 
Health 39 (1): 18-20. https://doi.org/10.1111/jrh.12684.
    \566\ CDC, ``About Rural Health,'' CDC, May 16, 2024, https://www.cdc.gov/rural-health/php/about/?CDC_AAref_Val=https://www.cdc.gov/ruralhealth/about.html.
    \567\ CDC, NCHS, Trends in death rates in urban and rural areas: 
United States, 1999-2019, by Sally C. Curtin and Merianne Rose 
Spencer, NCHS Data Brief No. 417, (Hyattsville, MD, 2021), https://dx.doi.org/10.15620/cdc:109049.
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    State-specific circumstances may affect the degree to which a 
State's population of individuals in rural areas meets the four 
criteria described in the proposed rule. A study found that 21 percent 
of adults without access to a vehicle or public transit reported 
skipping needed medical care compared to only 9 percent who did not own 
a vehicle but had access to public transit.\568\ According to a Federal 
Highway Administration publication, just under 90 percent of passenger 
trips in rural areas occur in personal vehicles.\569\ For the rural 
individuals who lack access to a personal vehicle, public transit is 
generally less available, with an approximate 40 percent of rural 
individuals living in an area without public transit.\570\ However, 
some States establish rural public transit systems that guarantee 
service coverage to all residents.\571\ This variation between States 
in their rural populations' access to public transit may suggest that 
the degree to which a State's rural population is able to access 
transportation to medical services may differ from State to State. 
There may also be significant variability between States with regards 
to health outcomes and mortality. For example, a CDC report found that 
the percentage of excess mortality from heart disease in rural counties 
varied significantly between States in the northeast and the south with 
a 13 percent excess rate for the northeast States and 56 percent for 
the southern States.\572\ These differences between State populations 
of individuals in rural areas may suggest that the degree to which a 
State's rural population meets the four criteria may be variable.
---------------------------------------------------------------------------

    \568\ Smith, Laura Berrie, Michael Karpman, Dulce Gonzalez, and 
Sarah Morriss, ``More than One in Five Adults with Limited Public 
Transit Access Forgo Health Care Because of Transportation 
Barriers,'' Robert Wood Johnson Foundation, April 26, 2023, https://www.rwjf.org/en/insights/our-research/2023/04/more-than-one-in-five-adults-with-limited-public-transit-access-forgo-healthcare-because-of-transportation-barriers.html.
    \569\ U.S. Department of Transportation (DOT), Federal Highway 
Administration (FHWA), Chapter 11: Rural America, Status of the 
Nation's Highways, Bridges, and Transit Conditions and Performance 
Report, 24th Edition (Washington, DC, 2021), https://www.fhwa.dot.gov/policy/24cpr/pdf/Chapter11.pdf.
    \570\ Id.
    \571\ Id.
    \572\ CDC, Potentially Excess Deaths from the Five Leading Cause 
of Death in Metropolitan and Nonmetropolitan Counties--United 
States, 2010-2017, by Macarena C. Garcia, Lauren M. Rossen, Brigham 
Bastian, Mark Faul, Nicole F. Dowling, Cheryll C. Thomas, Linda 
Schieb, Yuling Hong, Paula W. Yoon, and Michael F. Iademarco, 
Morbidity and Mortality Weekly Report Vol. 68, No. 10, (Atlanta, GA, 
2019), https://www.cdc.gov/mmwr/volumes/68/ss/pdfs/ss6810a1-H.pdf.
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    This evidence indicates that an exception to the clinic services 
four walls requirement could be warranted, based on State-specific 
circumstances, for services furnished by clinics located in rural areas 
that are not RHCs, as these clinics might primarily serve a patient 
population that may be more likely than other groups to meet more of 
the four criteria we identified in the proposed rule. The evidence also 
suggests that this patient population is less likely to meet as many of 
the criteria as consistently nationwide as patients served by IHS/
Tribal clinics. Under the proposal, a State could determine that 
individuals who reside in rural areas in that State should be engaged 
where they are located by personnel of a clinic located in a rural 
area, due to their challenges accessing behavioral health services, 
overall health care access challenges stemming from lack of 
transportation and distance from providers, historic mistrust of the 
health care system, and poor health outcomes. We note that clinics 
located in rural areas providing optional services as authorized under 
sections 1902(a)(10) and 1905(a)(9) of the Act and 42 CFR 440.90 are 
distinct from RHCs providing mandatory services as authorized under 
sections 1902(a)(10) and 1905(a)(2)(B) of the Act and 42 CFR 440.20(b). 
RHC services are a separate Medicaid benefit provided by a type of 
facility that is referenced in section 1905(a)(2)(B) of the Act and 42 
CFR 440.20(b), and a four walls requirement does not apply to that 
benefit under Federal Medicaid law.
    We considered proposing that, to qualify for the proposed 
exception, clinic services would have to be provided specifically to 
individuals who reside in rural areas, in addition to being provided by 
personnel of a clinic located in a rural area. However, we believe 
clinics located in rural areas can serve as a proxy for a population 
that generally consists of individuals who reside in rural areas, and 
that such a requirement would be too operationally burdensome. We 
recognize there may be circumstances in which a clinic located in a 
rural area furnishes services to an individual who does not reside in a 
rural area, but it is our understanding that clinics located in rural 
areas generally serve a patient population that consists primarily of 
individuals who reside in rural areas. Thus, these clinics can serve as 
a proxy for a patient population that is more likely to reside in a 
rural area--and thus, that includes people who are more likely to meet 
more of the four criteria. In addition, we believe that requiring 
clinics or States to verify that a clinic patient lives in a rural 
area, and to deny coverage of Medicaid clinic services provided outside 
the four walls if the patient does not, would be too operationally 
burdensome. For example, an individual's address might change 
frequently, an individual might refuse to provide their address, or the 
clinic might be located in a rural area that borders a non-rural area. 
Because we believe that clinics located in rural areas can serve as a 
proxy for individuals who reside in rural areas, and because we do not 
want to make this exception too operationally burdensome, we did not 
propose that to qualify for the proposed exception, clinic services 
must be provided by a clinic located in a rural area specifically to an 
individual who resides in a rural area.
    We did not include a definition of ``rural'' in our proposed rule 
text, but we considered defining that term in the final rule and we 
considered various approaches to doing so, on which we sought comment. 
There are many Federal and State definitions of rural for various 
programs, and no single definition precisely identifies all rural 
areas. The Rural Health Information Hub provides a non-official tool 
that could be used to help identify if a specific location is 
considered a rural location based on various definitions.\573\ Some 
rural definitions may categorize areas that are generally recognized as 
suburban as rural, while other

[[Page 94454]]

definitions may classify sparsely populated remote areas as urban. For 
example, the population residing in rural areas identified by a more 
limited rural definition may more closely meet more of the four 
criteria identified in the proposed rule than the population residing 
in rural areas identified under a broader definition. Definitions of 
rural adopted and used by Federal governmental agencies for 
programmatic purposes include the definition used by the Census Bureau, 
the definition used by the Office of Management and Budget (OMB), and 
the definition used by HRSA's Federal Office of Rural Health Policy 
(FORHP).574 575 In addition, we believe that State-level 
variations may also affect whether certain ways of defining rural are 
appropriate in specific States. States may have their own definitions 
of rural under State law or regulation for various programmatic 
purposes, such as definitions adopted by State primary care offices or 
State Offices of Rural Health.
---------------------------------------------------------------------------

    \573\ ``Am I Rural?--Tool,'' Rural Health Information Hub, 
accessed May 7, 2024, https://www.ruralhealthinfo.org/am-i-rural. 
This tool is not official and should not be relied upon as a formal 
Federal determination that a location is rural.
    \574\ HRSA, ``Defining Rural Population,'' Health Resources & 
Services Administration, January 2024, https://www.hrsa.gov/rural-health/about-us/what-is-rural.
    \575\ Response to Comments on Revised Geographic Eligibility for 
Federal Office of Rural Health Policy Grants, 86 FR 2418 (January 
12, 2021). See, https://www.federalregister.gov/documents/2021/01/12/2021-00443/response-to-comments-on-revised-geographic-eligibility-for-federal-office-of-rural-health-policy.
---------------------------------------------------------------------------

    Under any definition of rural, the specific areas identified as 
rural may change over time and that would have a direct impact on the 
scope of clinics eligible for this four walls exception. For example, 
areas identified as rural under the Census definition may change after 
the decennial census, which may result in some clinics no longer being 
located in rural areas under that updated definition.
    We considered the following approaches to defining rural: adopting 
one of the commonly used definitions of rural adopted by the Federal 
governmental agencies referenced previously, permitting a State to 
adopt a definition of rural that is adopted and used by a Federal 
governmental agency for programmatic purposes, permitting a State to 
adopt a definition of rural that is adopted and used by a State 
governmental agency with a role in setting State rural health policy, 
or not adopting any definition of rural.
    We note that the research, data, and reports cited earlier in this 
section do not all use the same definition of rural, and for four of 
the citations it is unclear what definition of rural was used. The 
SAMHSA data, the study on primary and specialty care utilization, and 
NCHS study use the OMB definition while the CDC health outcomes 
research uses the Census Bureau definition and the GAO report uses the 
FORHP definition of rural.
    We explained that if we were to adopt a Federal definition, we 
would finalize in rulemaking that for the purposes of this exception 
rural is defined as the definition of rural adopted or used by the 
Census Bureau, OMB, or FORHP (we would adopt only one of these 
definitions). The benefits to adopting a Federal definition include 
that the definition would be consistent for all States electing to 
implement the exception and all clinics located in rural areas in such 
States. However, if we adopted a specific Federal definition of rural 
then States could not consider the variation in which their rural 
populations under different rural definitions meet the four criteria we 
describe in the proposed rule. In addition, CMS does not directly 
control any of these Federal definitions, so if we adopted a specific 
Federal definition then future rulemaking might be necessary to align 
our rule with another Federal agency's changes to that Federal 
definition.
    The Census Bureau does not specifically define rural but considers 
any area that is not urban as rural. An urban area must meet certain 
density standards and contain at least 2,000 housing units or at least 
5,000 people. There are 2,644 urban areas defined by the Census Bureau 
following the 2020 Census. Over 80 percent of the Census-defined urban 
areas (2,134 urban areas) have populations of less than 50,000 people 
while the remaining 19 percent (510 urban areas) have populations of 
50,000 people or more.\576\ Following the 2020 Census, the Census 
Bureau does not sub-categorize urban areas as Urbanized Areas or Urban 
Clusters.\577\ If we adopted the Census Bureau definition, then we 
would finalize in rulemaking that a rural area is defined as an area 
identified by the Census Bureau in ``Urban Area Criteria for the 2020 
Census-Final Criteria,'' 87 FR 16706, as not being an urban area. The 
advantage to the Census Bureau definition of rural is that it is a 
widely recognized definition, which may make it an easier definition to 
implement for purposes of an exception to the clinic services four 
walls requirement. A disadvantage to the Census Bureau definition is 
that the Census Bureau's urban area boundaries do not follow other 
administrative units, such as county or municipality borders, and may 
be complex to operationalize. The Census Bureau provides TIGERweb 
Decennial online mapping tools for urban area boundaries at https://tigerweb.geo.census.gov/ that may be helpful for interested parties 
considering what it would have meant for CMS to finalize a rule that 
defines rural according to the U.S. Census Bureau's definition. The CDC 
research on health outcomes we cite elsewhere in this section used the 
Census Bureau definition, which demonstrates that this definition can 
be linked to the four criteria described in the proposed rule. However, 
the Census Bureau definition is broad, and some policy experts point 
out that the definition classifies many suburban areas as rural while 
also classifying towns and small cities with populations of less than 
50,000 people as non-rural.\578\
---------------------------------------------------------------------------

    \576\ Census Bureau, ``Urban and Rural,'' United States Census 
Bureau, September 2023, https://www.census.gov/programs-surveys/geography/guidance/geo-areas/urban-rural.html.
    \577\ Urban Area Criteria for the 2020 Census-Final Criteria, 87 
FR 16706 (Mar. 24, 2022). See, https://www.federalregister.gov/documents/2022/03/24/2022-06180/urban-area-criteria-for-the-2020-census-final-criteria.
    \578\ Revised Geographic Eligibility for Federal Office of Rural 
Health Policy Grants, 85 FR 59806 (Oct. 23, 2020). See, https://www.federalregister.gov/documents/2020/09/23/2020-20971/revised-geographic-eligibility-for-federal-office-of-rural-health-policy-grants.
---------------------------------------------------------------------------

    OMB also does not specifically define rural, but designates areas 
as metropolitan, micropolitan, or neither (also known as noncore).\579\ 
A metropolitan area consists of an urban core of 50,000 or more 
individuals, a micropolitan area consists of an urban core of 10,000 to 
49,999 individuals, and all other areas are considered neither. Areas 
that are micropolitan or neither are considered rural while 
metropolitan areas are considered urban.\580\ If we adopted the OMB 
definition, then we would finalize in regulation text that a rural area 
is defined as an area not identified as metropolitan by OMB, as 
described in ``2020 Standards for Delineating Core Based Statistical 
Areas,'' 86 FR 37770. Like the Census Bureau definition of rural, the 
OMB definition is a widely recognized definition that may be an easier 
definition to implement for purposes of an exception to the clinic 
services four walls requirement. For example, the study on primary and 
specialty care utilization and the NCHS study on mortality we cite 
elsewhere in this section use the OMB definition, which demonstrates 
that this definition

[[Page 94455]]

can be linked to the four criteria described in the proposed rule. In 
addition, the NCHS Urban-Rural Classification Scheme for Counties 
follows the OMB definition of rural and is widely used in health 
research.\581\ However, the OMB definition is considered by some policy 
experts to be too narrow as areas OMB defines as metropolitan include 
areas that are often considered to be rural, like for example the Grand 
Canyon.\582\
---------------------------------------------------------------------------

    \579\ 2020 Standards for Delineating Core Based Statistical 
Areas, 86 FR 37770 (July 16, 2021). See, https://www.federalregister.gov/documents/2021/07/16/2021-15159/2020-standards-for-delineating-core-based-statistical-areas.
    \580\ HRSA, Defining Rural Population.
    \581\ CDC, NCHS, ``NCHS Urban-Rural Classification Scheme for 
Counties,'' CDC, June 1, 2017, https://www.cdc.gov/nchs/data-analysis-tools/urban-rural.html?CDC_AAref_Val=https://www.cdc.gov/nchs/data_access/urban_rural.htm.
    \582\ Revised Geographic Eligibility for Federal Office of Rural 
Health Policy Grants, 85 FR 59806 (Oct. 23, 2020).
---------------------------------------------------------------------------

    The last Federal definition of rural we considered was the FORHP 
definition, which consists of all non-metropolitan counties, all 
metropolitan census tracts with Rural-Urban Commuting Area (RUCA) codes 
four through ten, large area census tracts of at least 400 square miles 
in area with population density of 35 or less per square mile with RUCA 
codes two to three, and all outlying metropolitan counties without an 
Urbanized Area.583 584 If we adopted the FORHP definition, 
then we would finalize in regulation text that a rural area is defined 
as an area identified as rural by FORHP, as described in ``Response to 
Comments on Revised Geographic Eligibility for Federal Office of Rural 
Health Policy Grants,'' 86 FR 2418. We recognized that the FORHP 
definition uses terminology that has not yet been updated to align with 
the latest Census Bureau terminology, that is, FORHP currently refers 
to urbanized area, but we still considered the FORHP definition, as is, 
based on its wide use and the benefits described in this paragraph. We 
noted that FORHP is proposing to update the FORHP definition to 
incorporate the U.S. Department of Agriculture's Economic Research 
Service (ERS) Road Ruggedness Scale (RRS) measure of rugged terrain 
into the existing definition, specifically for census tracts of at 
least 20 square miles in area in metro counties with RRS 5 and RUCA 
code 2 or 3. In addition, if finalized, the update would have aligned 
the FORHP definition's use of Census Bureau terminology with the 
current Census Bureau definition.585 586 We explained that 
if the proposed update to the FORHP definition were finalized, we would 
then consider the updated FORHP definition for the final rule over the 
existing FORHP definition. The advantage to the FORHP definition is 
that it is more precise, as it is narrower than the Census Bureau 
definition and broader than the OMB definition. In addition, as 
described elsewhere in this section, the GAO report that identified 
rural individuals needing to travel 40 miles on average to access 
specialty care used the FORHP definition in effect at the time of the 
report, which demonstrates that this definition can be linked to the 
four criteria we describe in the proposed rule. However, some have 
criticized the FORHP definition for excluding some areas that used to 
be considered rural while others consider the definition to be too 
expansive.\587\
---------------------------------------------------------------------------

    \583\ Response to Comments on Revised Geographic Eligibility for 
Federal Office of Rural Health Policy Grants, 86 FR 2418 (January 
12, 2021).
    \584\ HRSA, Defining Rural Population.
    \585\ Proposed Inclusion of Terrain Factors in the Definition of 
Rural Area for Federal Office of Rural Health Policy Grants, 89 FR 
32451 (April 26, 2024). See, https://www.federalregister.gov/documents/2024/04/26/2024-08931/proposed-inclusion-of-terrain-factors-in-the-definition-of-rural-area-for-federal-office-of-rural.
    \586\ As of November 27, 2024, HRSA has not finalized these 
proposed changes to FORHP's definition of rural.
    \587\ Response to Comments on Revised Geographic Eligibility for 
Federal Office of Rural Health Policy Grants, 86 FR 2418 (January 
12, 2021).
---------------------------------------------------------------------------

    Instead of specifying a uniform definition of rural nationwide for 
this exception, we also considered allowing States to adopt a 
definition of rural that has been adopted by a Federal governmental 
agency. If we permitted States to adopt a definition of rural that is 
adopted by a Federal governmental agency for programmatic purposes, 
then we would finalize in regulation text that a rural area is defined 
by the State based upon a reasonable definition adopted by a Federal 
governmental agency for programmatic purposes. We would not 
specifically list out the Federal definitions of rural that we consider 
reasonable in the regulation text. In addition to the Census, OMB, and 
FORHP definitions, we would consider rural definitions developed by the 
U.S. Department of Agriculture's Economic Research Service (ERS) to be 
reasonable definitions for a State to select if we adopted this option 
in the final rule (this would include RUCAs, Rural-Urban Continuum 
Codes, Urban-Influence Codes, and Frontier and Remote Area Codes).\588\ 
We did not consider adopting any of the ERS definitions as one of the 
Federal definitions we considered (as described previously) because it 
is our understanding that the ERS definitions are less commonly used on 
their own (that is, not in conjunction with other Federal definitions) 
in identifying rural areas in health care. However, the ERS definitions 
could be used by States if we opted to permit States to identify a 
Federal definition. While we do not believe that any of the ERS 
definitions should be adopted as one definition for all States to 
follow, if we provided States with the flexibility to adopt a Federal 
definition, then we wanted to ensure that we are not too prescriptive 
in the definitions they may choose from. It is possible that a State 
could determine that one of the ERS definitions better captures the 
population of rural individuals that meets the four criteria described 
in the proposed rule. Under such an approach, States that elect this 
exception would identify the specific Federal definition of rural (that 
is, Census Bureau, OMB, FORHP definition, or one of the ERS 
definitions) they are adopting in their State plan and attest that the 
selected definition best captures the population of rural individuals 
that meets more of the four criteria described in the proposal. The 
benefits to this approach include that each State can consider which 
Federal definition of rural best captures the population of rural 
individuals that meet more of the four criteria described in the 
proposed rule for that State (and States would attest to this in their 
State plan), while also being required to adopt a rural definition 
commonly accepted as a legitimate definition for programmatic purposes 
at the national level. Requiring the State to attest that the selected 
Federal definition best captures the population of rural individuals 
that meets more of the four criteria would help to ensure that there is 
an explanation for any variations in the definitions selected by 
different States. However, even if the variations in the definitions 
chosen by different States can be explained, it might burden or cause 
confusion for some beneficiaries if the States that elect this 
exception have different definitions of rural. For example, a 
beneficiary that moves from a State that has adopted this exception 
with a broader definition of rural to another State that has adopted 
the exception but has a narrower definition of rural might lose access 
to clinic services provided outside of the four walls. In addition, if 
we finalized the proposal, clinics that operate in different States 
that have adopted this exception might find it confusing or burdensome 
to track each such State's definition of rural.
---------------------------------------------------------------------------

    \588\ U.S. Department of Agriculture (USDA), Economic Research 
Services (ERS), ``Rural Classifications,'' USDA, September 8, 2023, 
https://www.ers.usda.gov/topics/rural-economy-population/rural-classifications/.
---------------------------------------------------------------------------

    If we permitted States to adopt a definition of rural that is 
adopted by a State governmental agency with a role

[[Page 94456]]

in setting State rural health policy, then we would finalize in 
regulation text that a rural area is defined by the State based upon a 
rural definition adopted by a State governmental agency with a role in 
setting State rural health policy. Under such an approach, a State that 
elects this exception would describe in its State plan the specific 
definition of rural that it is adopting, attest that this definition 
has been adopted by a State governmental agency with a role in setting 
State rural health policy (such as a State primary care office or State 
Office of Rural Health), and attest that the selected definition best 
captures the population of rural individuals that meets more of the 
four criteria described in the proposal. The benefits to this approach 
include that States may consider a State definition of rural that best 
identifies the population of rural individuals that meet more of the 
four criteria described in the proposed rule, and attest to in their 
State plan that the definition does so. Requiring the State to attest 
that the selected definition best captures the population of rural 
individuals that meets more of the four criteria would help to ensure 
that there is an explanation for any variations in the definitions 
selected by different States. In addition, under this approach to 
defining rural, the State would adopt a rural definition commonly 
accepted and used to manage State programs, which thus may be a more 
familiar definition to providers and be easier for a State to implement 
since that definition is also used for other health policy purposes in 
that State. However, even if the variations in the definitions chosen 
by different States can be explained, it might burden or cause 
confusion for some beneficiaries if the States that elect this 
exception have different definitions of rural. For example, a 
beneficiary that moves from a State that has adopted this exception 
with a broader definition of rural to another State that has adopted 
the exception but has a narrower definition of rural may lose access to 
clinic services provided outside of the four walls. In addition, if we 
finalized the proposal, clinics that operate in different States that 
have adopted this exception might find it confusing or burdensome to 
track each such State's definition of rural.
    Finally, we explained that if we chose not to define rural in the 
final rule, then we would finalize proposed regulation text with no 
definition of rural. Under this approach, a State that elects this 
exception would choose any definition of rural that can be linked to 
the four criteria we describe in the proposed rule and meets its 
program needs, but would not identify the definition in the State plan 
or submit it to CMS for review and approval. We would require and 
finalize in rule text that the State would publish its rural definition 
on a website maintained by the State that is accessible to the public. 
The benefits to not adopting a definition of rural under the final rule 
would include that States can consider which definition of rural best 
captures the population of rural individuals that meets more of the 
four criteria described in the proposed rule. This approach also 
recognizes that States may have the best information and data to 
determine the definition of rural that best meets their operational 
needs. However, under this approach CMS would not be reviewing State 
definitions of rural, and a State might adopt a definition of rural 
that could be considered to be overly broad or overly narrow. For 
example, a State might adopt a definition of rural that encompasses 
large urban areas, such as a populous city. As we stated in the 
proposed rule, we are aware that there are many definitions of rural, 
so the other approaches we considered could potentially leave out 
reasonable definitions of rural, although we are not currently aware of 
any such reasonable definitions. In our proposed rule, we invited 
comment on which approach to defining rural we should adopt if the rule 
were finalized.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: Most commenters expressed support for our proposed 
exception to the Medicaid clinic services benefit four walls 
requirement for clinics located in rural areas at Sec.  440.90(e). Many 
commenters indicated that rural areas are experiencing provider 
shortages and that an exception to the four walls requirement for 
clinics located in rural areas would improve access to care for 
individuals in rural areas. Several commenters noted that in rural 
areas experiencing provider shortages individuals often have to travel 
long distances to receive services, and that initiatives aimed at 
meeting individuals in rural areas where they are located have found 
success in improving access to care. In addition, a few commenters 
noted that an exception to the four walls requirement for clinics 
located in rural areas could alleviate transportation barriers, reduce 
missed appointments, and lead to more timely care.
    Response: We appreciate the comments in support of our proposed 
exception to the Medicaid clinic services benefit four walls 
requirement for clinics located in rural areas. We agree that this 
exception may improve access to care for the population served by 
clinics located in rural areas.
    Comment: Many commenters agreed with CMS that the rural population 
meets more of the four criteria we described in the proposed rule than 
other groups that are not the focus of an exception in this rulemaking 
and that an exception to the four walls requirement is justified for 
clinics located in rural areas.
    Response: We appreciate the comments in support of the evidence we 
presented that the rural population meets more of the four criteria we 
described in the proposed rule than other groups that are not the focus 
of an exception in this rulemaking and that an exception to the four 
walls requirement is justified for clinics located in rural areas.
    Comment: Two commenters recommended that CMS implement the proposed 
exception at Sec.  440.90(e) at the beneficiary level (in addition to 
the clinic level) to ensure that the entire rural population that meets 
the four criteria we described in the proposed rule is able to access 
clinic services outside the four walls.
    Response: We understand the commenters to be recommending 
application of this exception to any Medicaid beneficiary who resides 
in a rural area, regardless of the type of clinic. We thank the 
commenters for their recommendation that we implement the proposed 
exception at Sec.  440.90(e) at the beneficiary level (in addition to 
the clinic level) to ensure that the entire rural population that meets 
the four criteria we described in the proposed rule is able to access 
clinic services outside the four walls; however, we will not be making 
changes in the final rule to allow States to apply the exception at 
Sec.  440.90(e) at the beneficiary level. As we noted in section 
XVIII.B of the proposed rule (89 FR 59186), clinics located in rural 
areas can serve as a proxy for a patient population that is more likely 
to live in a rural area--and thus, that includes people who are more 
likely to meet more of the four criteria we described in the proposed 
rule. In addition, we believe that requiring clinics or States to 
verify that a clinic patient lives in a rural area and to deny coverage 
of Medicaid clinic services provided outside the four walls if the 
patient does not, would be too operationally burdensome.
    Comment: Many commenters recommended that CMS not adopt a 
definition of rural at Sec.  440.90(e) in the final rule in response to 
CMS's

[[Page 94457]]

solicitation of comments on the best approach to defining rural in the 
final rule. However, many other commenters recommended that CMS allow 
States to choose any State or Federal definition of rural. These 
commenters believed States were best equipped to determine the extent 
to which a specific definition best captures the rural population that 
meet the four criteria we described in the proposed rule and that this 
would recognize each States' unique geographic needs. Several of these 
commenters expressed concerns that if CMS were to adopt a Federal 
definition of rural, that this would create a one-size-fits-all 
approach that would create barriers for beneficiaries and providers. A 
few of the commenters indicated that in other instances where a Federal 
program adopted a single definition of rural that it created barriers 
and hardships for them by not recognizing their States' unique 
geographic differences. Finally, one commenter explained that under 
some of the Federal definitions of rural a small city with no access to 
roads and that is surrounded by rural areas was classified as urban.
    Three commenters recommended that CMS define rural with a 
definition that is adopted and used by a Federal governmental agency 
for programmatic purposes. One of the two commenters recommended CMS 
adopt the Census definition of rural in the final rule, as they 
believed the Census definition is the broadest definition, and that CMS 
should adopt a definition of rural that is applied consistently. 
Another commenter recommended that CMS adopt the FORHP definition of 
rural, as they believed this definition best captures the rural 
populations that meet the four criteria we described in the proposed 
rule. Finally, the third commenter recommended that CMS adopt a Federal 
definition of rural, although they did not specify which definition, as 
they were concerned that if a State adopted a definition of rural that 
it might adopt a definition of rural that arbitrarily excludes certain 
clinics.
    Another commenter recommended CMS adopt a definition of rural that 
is adopted by a State governmental agency with a role in setting rural 
health policy.
    Finally, one commenter, in addition to recommending that CMS adopt 
a broad definition of rural, recommended that any clinic that furnishes 
services to individuals in rural areas under a range of definitions be 
allowed to qualify for the exception.
    Response: We thank the commenters for sharing their recommendations 
on how we should approach defining rural in the final rule. As we noted 
in section XVIII.B of the proposed rule (89 FR 59186), there are many 
Federal and State definitions of rural for various programs, no single 
definition precisely identifies all rural areas, and different 
definitions might more accurately target a population meeting more of 
the criteria described in the proposed rule in different States. Some 
rural definitions may categorize areas that are generally recognized as 
suburban as rural, while other definitions may classify sparsely 
populated remote areas as urban. We believe that State-level variations 
may also affect whether certain ways of defining rural are appropriate 
in specific States. Further, under any definition of rural, the 
specific areas identified as rural may change over time and that would 
have a direct impact on the scope of clinics eligible for our proposed 
four walls exception.
    We solicited comments on the following approaches to defining rural 
in the final rule: adopting one of the commonly used definitions of 
rural adopted by the Federal governmental agencies referenced 
previously, permitting a State to adopt a definition of rural that is 
adopted and used by a Federal governmental agency for programmatic 
purposes, permitting a State to adopt a definition of rural that is 
adopted and used by a State governmental agency with a role in setting 
State rural health policy, or not adopting any definition of rural. We 
appreciate all the different perspectives that commenters shared with 
us. We note, however, that the overwhelming majority of commenters 
recommended that CMS either not adopt a definition of rural or allow 
States to choose either a State or Federal definition of rural that 
best captures the rural population that meets the four criteria we 
described in the proposed rule.
    Taking these comments into account, we believe that the best 
approach is to permit States to choose either a State or Federal 
definition of rural that best captures the State's rural population 
that meets the four criteria. Specifically, under the final rule, 
States implementing the exception must include in their State plans a 
definition of rural area. This definition must be either a definition 
adopted and used by a Federal governmental agency for programmatic 
purposes, or a definition adopted by a State governmental agency with a 
role in setting State rural health policy. As part of their State plan 
submission, States will need to attest that the selected definition 
falls into one of the two described categories and that it best 
captures the population of rural individuals that meets more of the 
four criteria described in this final rule. This approach gives States 
the flexibility to choose a definition that best targets the exception 
to a rural population that meets more of the four criteria we describe 
in this final rule. It also helps to ensure that States are using a 
definition that is commonly accepted and used in relevant contexts and 
generally accepted as a legitimate definition. States will be more 
likely to adopt a definition that may be more familiar to providers and 
be easier for a State to implement, since these definitions are also 
used for other purposes. We also agree with the concerns that 
commenters raised about how adopting a single Federal definition of 
rural could create barriers for beneficiaries and providers. This 
approach also recognizes that States may have the best information and 
data to determine the definition of rural that best meets the goals 
identified in the final rule, as well as the definition that best meets 
their operational needs. If, as some commenters requested, we instead 
finalized a Federal definition of rural that would apply in every State 
opting to implement this exception, that would not have accounted for 
State-specific variations in the degree to which different definitions 
might be better at targeting rural populations that meet more of the 
four criteria identified in the proposed rule in different States. 
Finally, because the definition will be identified in the State plan, 
it will be changed through the State plan amendment process, which 
gives CMS and the public notice of the change.
    In the proposed rule, we did not include among the discussed 
options for defining rural an option under which any clinic that 
furnishes services to individuals in rural areas under a range of 
definitions would qualify for the exception, and are thus not including 
such an approach in this final rule. It is not clear to us how such an 
approach would effectively target a population that meets more of the 
criteria described in the proposed rule. Under the approach we are 
finalizing, in contrast, States will attest that the Federal or State 
definition of rural area that they are adopting best captures the 
population of rural individuals that meets more of the four criteria we 
described in the proposed rule.
    After consideration of the public comments we received, we are 
finalizing an exception to the Medicaid clinic services four walls 
requirement at Sec.  440.90(e) for clinics located in rural areas, with 
a modification that a State must include a definition of rural area in 
its State plan that must be either a definition adopted and used by a

[[Page 94458]]

Federal governmental agency for programmatic purposes, or a definition 
adopted by a State governmental agency with a role in setting State 
rural health policy.
6. Additional Four Walls Considerations
    We proposed that the proposed exception to the four walls 
requirement for IHS/Tribal clinics would be a mandatory component of 
the clinic services benefit for States electing to cover that benefit. 
We proposed that the proposed exceptions for behavioral health clinics 
and clinics located in rural areas would be optional for States 
covering that benefit. In addition, we proposed to codify in regulation 
text our longstanding interpretation (discussed in section XVIII.A of 
the proposed rule) that existing Sec.  440.90(a) and (b) are mandatory 
components of the clinic services benefit for States that elect to 
cover that benefit. Finally, we proposed to delete the word 
``eligible'' from existing regulation text at Sec.  440.90(b) because 
there is no Federal authority for States to provide Medicaid-covered 
services to individuals who are ineligible for Medicaid, so we believe 
it is unnecessary to specify that the individuals who would receive 
services under this exception are eligible.
    We proposed to make the exception for IHS/Tribal clinics mandatory 
because the population served by IHS/Tribal clinics more consistently 
meets the four criteria described previously, both within and across 
States, than the populations targeted by the optional exceptions, 
especially given the degree of State variability in whether the 
populations targeted by the optional exceptions meet those criteria. 
Further, Medicaid is the largest source of third-party payment for 
services billed by IHS facilities, accounting for nearly two-thirds of 
health coverage payments to these facilities.\589\ Given the 
significant role of Medicaid as a payer for IHS/Tribal clinic services, 
any reduction in the Medicaid payments IHS/Tribal clinics receive for 
services (such as a reduction in payment from the AIR to a professional 
services rate for services furnished outside the four walls by the 
clinic) might uniquely burden IHS/Tribal clinics. These clinics might 
need to curtail their available services, or no longer provide services 
outside the four walls, which could significantly impede their ability 
to serve their patients. For these reasons, we proposed a mandatory 
exception to the clinic services four walls requirement for IHS/Tribal 
clinics.
---------------------------------------------------------------------------

    \589\ Assistant Secretary of Planning and Evaluation (ASPE), How 
Increased Funding Can Advance the Mission of the Indian Health 
Service to Improve Health Outcomes for American Indians and Alaska 
Natives, Report No. HP-2022-21, (Washington, DC, 2022), https://aspe.hhs.gov/sites/default/files/documents/e7b3d02affdda1949c215f57b65b5541/aspe-ihs-funding-disparities-report.pdf.
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    In contrast to the exception for IHS/Tribal clinics, we believe 
that the exceptions for behavioral health clinics and clinics located 
in rural areas should be optional because there may be geographic 
variability in the degree to which the populations served by these 
clinics meet the four criteria we described previously, and thus there 
may be State-specific variation in the degree to which these 
populations have the four characteristics described in the proposed 
rule. For example, the populations served by behavioral health clinics 
and clinics located in rural areas may not as consistently face 
transportation challenges nationwide, to the extent that Tribal 
populations do. In addition, it is our understanding that Medicaid 
funding is less often the largest source of payment for behavioral 
health clinics and clinics located in rural areas, compared to IHS/
Tribal clinics. We believe it best to let each State assess the degree 
to which these two exceptions might be warranted based on the State's 
specific circumstances. In making this assessment, each State should 
consider the degree to which individuals located in rural areas of the 
State and/or individuals with behavioral health disorders in the State 
meet the four criteria described in the proposed rule. We solicited 
comment on the arguments made in the CY 2025 OPPS/ASC proposed rule in 
support of the mandatory and optional exceptions, and on whether the 
optional exceptions should also be mandatory for States opting to cover 
the clinic services benefit.
    We explained that if we finalized the exceptions as proposed, then 
upon the effective date of the final rule, services qualifying for the 
exception for IHS/Tribal clinics must be paid for as Medicaid clinic 
services in States that opt to cover that benefit. Accordingly, we 
would require States that cover the clinic services benefit to submit a 
State plan amendment (SPA), as applicable, to attest to coverage of 
IHS/Tribal clinic services under the exception. Similarly, we explained 
that if we finalized the proposed rule as proposed, then no earlier 
than the effective date of a SPA or SPAs implementing one or both of 
the optional exceptions, services provided outside the four walls under 
the exceptions may be paid for as Medicaid clinic services. Under any 
of the exceptions, the excepted services could be paid for using a 
facility-based Medicaid clinic services payment methodology, which for 
most IHS/Tribal clinics is the AIR.
    We did not propose any additional exceptions to the clinic services 
four walls requirement. It is our understanding that other populations 
are better able than those targeted by the proposed exceptions to 
access services through Medicaid benefits to which a four walls 
requirement does not apply under Federal Medicaid law (for example, 
FQHC services, RHC services, outpatient hospital services, etc.). As 
described in the proposed rule, States have considerable discretion 
regarding the types of clinics they opt to cover under the clinic 
services benefit. There are no specific Federal Medicaid credentialling 
requirements, such as licensure or certification, for providers of the 
Medicaid clinic services benefit like there are for other Medicaid 
facility State plan benefits, such as hospitals and nursing facilities. 
This leads to considerable variability in the types of clinics 
providing services that a State may cover under the clinic services 
benefit. We invited comment on whether there are additional populations 
that are likely to meet the four criteria described in the CY 2025 
OPPS/ASC proposed rule and that have no alternative access to services 
through Medicaid benefits not subject to a four walls requirement under 
Federal Medicaid law, and on whether there are additional types of 
clinics that might serve as a proxy for such a population.
    We did not receive any comments on our proposal to codify in 
regulation text our longstanding interpretation that existing Sec.  
440.90(a) and (b) are mandatory components of the clinic services 
benefit for States that elect to cover that benefit or on our proposal 
to delete the word ``eligible'' from existing regulation text at Sec.  
440.90(b). We received public comments on the following proposals: that 
the exception to the four walls requirement for IHS/Tribal clinics 
would be a mandatory component of the clinic services benefit for 
States electing to cover that benefit; that the exceptions for 
behavioral health clinics and clinics located in rural areas would be 
optional for States covering that benefit; and that we would not 
propose any additional exceptions to the clinic services four walls 
requirement. The following is a summary of the comments we received and 
our responses.
    Comment: Most commenters expressed support for CMS's proposal at 
Sec.  440.90 to make the IHS/Tribal clinic four walls exception 
mandatory for States that cover the clinic services benefit. In 
addition, many commenters supported CMS's proposal at Sec.  440.90

[[Page 94459]]

for the exceptions to the four walls requirement for behavioral health 
clinics at Sec.  440.90(d) and clinics located in rural areas at Sec.  
440.90(e) to be at State option. Commenters noted that this would allow 
States to meet each State's unique populations, provider landscape, and 
program needs. A few commenters noted that States are in the best 
position to assess the extent to which their behavioral health and 
rural populations meet the four criteria we described in the proposed 
rule. In addition, one commenter noted that behavioral health services 
can be covered under several benefit categories under section 1905(a) 
of the Act; and that CMS's proposal that an exception for behavioral 
health clinics at Sec.  440.90(d) be at State option would allow States 
to cover behavioral health services in a tailored way to recognize the 
unique needs of each States' behavioral health population.
    However, many commenters also urged CMS to make the exception for 
behavioral health clinics at Sec.  440.90(d) mandatory rather than 
optional for States that cover the clinic services benefit. The 
commenters explained that making the exception to the four walls 
requirement for behavioral health clinics mandatory would make services 
more accessible, strengthen States' behavioral health workforces, and 
more effectively enable providers to meet individuals where they are in 
need. Several commenters noted that the behavioral health provider 
shortage is at a crisis point nationally and therefore, an exception to 
the four walls requirement for behavioral health clinics should be 
mandatory.
    Finally, two commenters recommended that CMS amend Sec.  440.90 to 
make the exception for clinics located in rural areas at Sec.  
440.90(e) mandatory for States that cover the clinic services benefit. 
The commenters indicated that individuals in rural areas experience 
barriers in accessing health care within and across States, and they 
disagreed that there was State variation.
    Response: We thank the commenters for their support for our 
proposal at Sec.  440.90 to make the IHS/Tribal clinic four walls 
exception mandatory for States that cover the clinic services benefit. 
In addition, we thank the commenters who shared their recommendations 
on whether the exceptions for behavioral health clinics and clinics 
located in rural areas should be at State option or mandatory.
    As we noted in section XVIII.B of the proposed rule (89 FR 59186), 
our proposal to make the IHS/Tribal clinic four walls exception 
mandatory and the exceptions for behavioral health clinics and clinics 
located in rural areas optional was based on the population served by 
IHS/Tribal clinics more consistently meeting the four criteria 
described in the proposed rule, both within and across States, than the 
populations served by behavioral health clinics or clinics located in 
rural areas. We indicated that this is especially true given the degree 
of State variability in whether the populations served by behavioral 
health clinics or clinics located in rural areas meet those criteria. 
Medicaid is the largest source of third-party payment for services 
billed by IHS/Tribal facilities; it is our understanding that Medicaid 
funding is less often the largest source of payment for behavioral 
health clinics and clinics located in rural areas compared to IHS/
Tribal clinics.
    While we appreciate the evidence and information that some 
commenters shared that there is a national behavioral health provider 
shortage and that a mandatory exception to the four walls requirement 
for behavioral health clinics could make services more accessible, 
strengthen States' behavioral health workforces, and more effectively 
enable providers to meet individuals where they are in need, we do not 
believe that the evidence or information included in some public 
comments contradicts our assumptions described in the preceding 
paragraph. The evidence and information shared by the commenters did 
not contradict our understanding that the population served by IHS/
Tribal clinics more consistently meets the four criteria described in 
the proposed rule, that there is considerable State variability in the 
degree to which the behavioral health population meets the four 
criteria, and that Medicaid is less often the largest source of payment 
for behavioral health clinics than for IHS/Tribal clinics. The 
commenters supporting a mandatory exception to the four walls 
requirement for clinics located in rural areas did not share any data 
or evidence in support of their recommendation. We continue to believe, 
based on the information available to us, that the assumptions we 
describe in the preceding paragraph are accurate. We are therefore 
finalizing our proposal at Sec.  440.90 to make the IHS/Tribal clinic 
four walls exception mandatory and the exceptions for behavioral health 
clinics and clinics located in rural areas at State option for States 
that cover the clinic services benefit.
    Comment: Many commenters recommended CMS consider additional 
exceptions to the four walls requirement at Sec.  440.90 in response to 
CMS's solicitation of comments on whether there are additional 
populations that are likely to meet the four criteria described in the 
proposed rule and that have no alternative access to services through 
Medicaid benefits not subject to a four walls requirement under Federal 
Medicaid law, and on whether there are additional types of clinics that 
might serve as a proxy for such a population. Most of the commenters 
that recommended additional exceptions to the four walls requirement at 
Sec.  440.90 indicated that CMS's current interpretation of how the 
four walls requirement applies to Medicaid clinic services delivered 
via telehealth creates access to care issues for these populations.
    Most of the commenters recommending that CMS include additional 
exceptions to the four walls requirement at Sec.  440.90 advocated for 
exceptions for underserved and high-risk populations including racial 
and ethnic minorities, individuals with disabilities, LGBTQ+ 
individuals, low-income individuals, women, and individuals who are 
elderly; the commenters indicated they believed that these populations 
also meet the four criteria described in the proposed rule. A few 
commenters noted that transportation and access to care issues are also 
experienced in suburban and urban areas and that the populations served 
by clinics in these areas may also benefit from an exception from the 
four walls requirement.
    One commenter recommended additional exceptions for specific types 
of services including maternity care, behavioral health care, urgent 
care, and emergency care, regardless of the type of clinic or 
population.
    A few commenters requested that CMS include additional exceptions 
in the final rule for populations served by specific types of clinics. 
One commenter requested that CMS include an exception for school-based 
services that are covered in Medicaid as clinic services. Another 
commenter requested that CMS include a mandatory exception for 
essential community providers that operate as clinics and furnish 
services to underserved populations; the commenter indicated that they 
believe these underserved populations meet the four criteria described 
in the proposed rule, are more likely to meet the four criteria than 
other populations, and that Medicaid is a significant payer for 
essential community providers. A commenter requested that CMS include 
an additional exception to the four walls for clinics that are 
grandfathered by section 6411(g) of the Omnibus Budget Reconciliation 
Act of 1989 to provide

[[Page 94460]]

habilitation services under the clinic services benefit, to help 
individuals in hard-to-serve areas.
    Finally, two commenters recommended an additional exception to the 
four walls requirement for UIOs and indicated they believe the 
population served by UIOs meets the four criteria described in the 
proposed rule. One of the commenters agreed with CMS's understanding 
that most UIOs participate in Medicaid as FQHCs while the other 
commenter disagreed with CMS and indicated that most UIOs do not 
participate in Medicaid as FQHCs.
    Response: We thank the commenters that shared their recommendations 
for additional exceptions to the clinic services benefit four walls 
requirement at Sec.  440.90 and acknowledge the concerns commenters 
raised regarding our current interpretation of how the four walls 
requirement applies to Medicaid clinic services delivered via 
telehealth. We also thank the commenters that took the time to describe 
why they believe additional exceptions may be warranted based on the 
four criteria described in the proposed rule.
    As we noted in section XVIII.B of the proposed rule (89 FR 59186), 
it was our understanding that other populations are better able than 
those targeted by the proposed exceptions to access services through 
Medicaid benefits to which a four walls requirement does not apply 
under Federal Medicaid law (for example, FQHC services, RHC services, 
outpatient hospital services, etc.). We invited comment on whether 
there are additional populations that are likely to meet the four 
criteria described in the proposed rule and that have no alternative 
access to services through Medicaid benefits not subject to a four 
walls requirement under Federal Medicaid law, and on whether there are 
additional types of clinics that might serve as a proxy for such a 
population.
    At this time, we believe that including additional exceptions to 
the four walls requirement would require additional consideration and 
discussion with the public beyond what could be finalized in this 
current rule. We will take these recommendations into consideration 
when determining whether possible future rulemaking on additional 
exceptions to the four walls requirement is warranted. We continue to 
believe that most UIOs participate in Medicaid as FQHCs, based on the 
information available to us, including the information shared by the 
two commenters. Finally, we will take these comments into consideration 
as we contemplate issuing sub-regulatory guidance regarding our 
interpretation of how the four walls requirement applies when Medicaid 
clinic services are delivered via telehealth.
    After consideration of the public comments we received, we are 
finalizing, without modification, our proposals at Sec.  440.90 that 
the exception to the four walls requirement for IHS/Tribal clinics 
would be a mandatory component of the clinic services benefit for 
States electing to cover that benefit, and that the exceptions for 
behavioral health clinics and clinics located in rural areas would be 
optional for States covering that benefit. In addition, we are 
finalizing that the existing regulation text at Sec.  440.90(a) and (b) 
are mandatory components of the clinic services benefit for States that 
elect to cover that benefit and the deletion of the word ``eligible'' 
from existing regulation text at Sec.  440.90(b).

XIX. Changes to the Review Timeframes for the Hospital Outpatient 
Department (OPD) Prior Authorization Process

    The CMS Interoperability and Prior Authorization final rule (89 FR 
8758) (Medicare and Medicaid Programs; Patient Protection and 
Affordable Care Act; Advancing Interoperability and Improving Prior 
Authorization Processes for Medicare Advantage Organizations, Medicaid 
Managed Care Plans, State Medicaid Agencies, Children's Health 
Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, 
Issuers of Qualified Health Plans on the Federally-Facilitated 
Exchanges, Merit-Based Incentive Payment System (MIPS) Eligible 
Clinicians, and Eligible Hospitals and Critical Access Hospitals in the 
Medicare Promoting Interoperability Program) creates, improves, or 
shortens prior authorization timeframes for certain payers such as 
Medicare Advantage organizations and applicable integrated plans, CHIP 
FFS programs, Medicaid managed care plans, and CHIP managed care 
entities to respond to prior authorization requests for covered items 
and services, excluding drugs (89 FR 8878). The final rule requires 
impacted payers (excluding Qualified Health Plan issuers on the 
Federally-Facilitated Exchanges) to send prior authorization decisions 
as expeditiously as the enrollee's health condition requires or as the 
beneficiary's health condition requires but no later than 72 hours for 
expedited (that is, urgent) requests and 7-calendar days for standard 
(that is, non-urgent) requests.
    As part of the CY 2020 OPPS/ASC final rule with comment period (84 
FR 61446 through 61456), CMS established a nationwide prior 
authorization process and requirements for certain OPD services. OPD 
providers must submit to the Medicare Administrative Contractor (MAC) a 
prior authorization request for any service on the list of outpatient 
department services that require prior authorization. CMS currently 
requires prior authorization for the following services: 
blepharoplasty, rhinoplasty, botulinum toxin injections, 
panniculectomy, vein ablation, cervical fusion with disc removal, 
implanted spinal neurostimulators, and facet joint interventions. Upon 
receipt of the prior authorization request, the MAC should review it 
and issue a decision within specific timeframes, which are listed in 
the regulation text at Sec.  419.82(d)(1)(iii) and (d)(2). These 
timeframes ensure providers receive timely responses and beneficiaries 
get appropriate care.
    While Medicare FFS is not an impacted payer under the CMS 
Interoperability and Prior Authorization final rule, we proposed to 
align our Medicare FFS prior authorization review timeframe for 
standard review requests for hospital outpatient department services 
with the timeframe in this final rule. This change would not only 
streamline the prior authorization processes so that they are the same 
across payers but would also help to reduce provider burden by having 
the same timeframe and reducing the potential for delays in care by 
decreasing the time beneficiaries and providers wait for prior 
authorization decisions on standard requests in FFS Medicare. We 
proposed to change the current review timeframe for provisionally 
affirmed or non-affirmed standard review requests for these services 
from 10-business days to 7-calendar days in Sec.  419.82(d)(1)(iii). 
For example, if a standard request is submitted on a Tuesday, June 2, 
under the new timeframe, a decision must be rendered by the next 
Monday, June 8, whereas under the old timeframe, the decision must be 
rendered by Monday, June 15.
    We are still considering the impact of aligning our expedited 
review decision timeframe with the expedited review decision timeframe 
in the CMS Interoperability and Prior Authorization final rule because, 
depending on when the expedited request is submitted, it may take 
longer for OPD provider to receive a decision using the 72-hour 
timeframe than our current expedited timeframe of 2-business days. The 
goal of changing the standard review timeframe is not only to align the 
timeframe across the prior authorization programs but also to reduce 
the time

[[Page 94461]]

beneficiaries wait to access the care they need. Since changing the 
expedited review decision timeframe from 2-business days to 72 hours 
would not reduce beneficiaries' wait time in all circumstances, we did 
not propose to conform that timeframe with the one in the CMS 
Interoperability and Prior Authorization final rule at this time, but 
we may address this issue in future rulemaking.
    We received 94 comments on the proposal, including comments from 
healthcare providers, professional, and trade organizations. The 
following is a summary of the comments we received and our responses.
    Comment: We received comments in support of aligning the prior 
authorization review timeframe for the standard review requests with 
the timeframe in the Interoperability and Prior Authorization final 
rule.
    Response: We appreciate the positive responses. This change would 
not only streamline the prior authorization standard timeframe so that 
it is the same across payers but would also help to reduce provider 
burden and beneficiaries' waiting time to receive care in FFS Medicare.
    Comment: We received comments requesting that the standard 
timeframe and expedited timeframe be shorter than what we proposed. 
Another commenter asked CMS to clarify specific scenarios where it may 
take longer for an HOPD provider to receive an expedited decision using 
the CMS Interoperability and Prior Authorization final rule's 72-hour 
timeframe versus the current two-business day timeframe. Additionally, 
a commenter requested that CMS address prior authorization requests 
that occur immediately preceding a holiday or weekend.
    Response: We thank the commenters for the feedback. As noted above, 
our proposed change to the standard timeframe aligns with the timeframe 
regulated in the CMS Interoperability and Prior Authorization final 
rule, and we believe that the 7-day timeframe for obtaining a decision 
on a prior authorization request is reasonable, considering that these 
are non-emergency procedures that typically require the beneficiary to 
undergo conservative treatment prior to the procedure. Changing the 
expedited review decision timeframe from 2-business days to 72 hours 
would not reduce beneficiaries' wait time in all circumstances. If an 
expedited request is submitted on Monday, August 5, at 8 a.m., under a 
72-hour timeframe, a decision must be rendered by 8 a.m. on Thursday, 
August 8, whereas under the current timeframe of two business days, the 
decision must be rendered by the end of the business day on Tuesday, 
August 6. In contrast, when Monday is a Federal holiday and an 
expedited request is submitted on Saturday, August 10, at 8 a.m., under 
a 72-hour timeframe, the decision must be rendered by 8 a.m. on 
Tuesday, August 13, whereas under the current timeframe of 2-business 
days, the decision must be rendered by Wednesday, August 14. Our 
decision not to propose changes to the current timeframe for expedited 
requests was based on our recognition that a change to 72-hours will 
not always benefit beneficiaries.
    Comment: Several commenters suggested that ``gold carding'' be 
approved for providers that have a history of prior authorization 
approval. We also received comments from mental health organizations 
concerning prior authorization requirements for mental health and 
substance use services, specifically that their comprehensive treatment 
plan is more restrictive and complex compared to the assessment for 
medical-surgical healthcare services. These commenters suggested 
updating comprehensive treatment plans that would help to improve 
beneficiary access to services.
    Response: Thank you for the comment. We note that under the 
regulation at 42 CFR 419.83(c), we may elect to exempt a provider from 
the prior authorization process upon the providers' demonstration of 
compliance with Medicare coverage, coding, and payment rules. This 
exemption would remain in effect until we elect to withdraw the 
exemption. Providers who are exempt do not need to submit prior 
authorization requests. Additionally, mental health and substance use 
services do not require prior authorization under Medicare FFS. Also, 
and as we noted above, our prior authorization policy does not create 
any new documentation requirements.
    Comment: Some commenters suggested that we remove implanted spinal 
neurostimulators and facet joint interventions from OPD prior 
authorization as they are contrary to efforts to promote non-opioid 
alternatives to pain management. One commenter stated that trends 
showed that utilization for facet joint interventions was decreasing 
without need for prior authorization requirements.
    Response: We thank the commenters for their comments. We are 
committed to evaluating and adjusting our current guidelines and 
payment rules, if necessary, in order to ensure appropriate care for 
beneficiaries amid the current opioid epidemic. We acknowledge the 
benefits that implanted spinal neurostimulators and facet joint 
intervention services offer for chronic pain. At the same time, we 
reiterate the fact that these are non-emergency procedures that require 
the beneficiary to undergo conservative treatment prior to the 
procedure. Providers may also request expedited review of a prior 
authorization request, where the processing of the request must be 
expedited due to the beneficiary's life, health, or ability to regain 
maximum function being in jeopardy. To show the changes in the 
utilization of the services on the prior authorization list, we have 
posted statistics on the CMS OPD Prior Authorization and Pre-claim 
Review Initiatives website.\590\ The statistics show the total number 
of prior authorization requests received and reviewed, the number of 
requests affirmed or non-affirmed, appeals and accuracy rates. We 
continue to analyze data associated with the services that require 
prior authorization and hopes to share additional data in the future.
---------------------------------------------------------------------------

    \590\ https://www.cms.gov/research-statistics-data-systems/medicare-fee-service-compliance-programs/prior-authorization-and-pre-claim-review-initiatives/prior-authorization-certain-hospital-outpatient-department-opd-services.
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    We refer the commenters to the CY 2023 OPPS/ASC \591\ and CY 2021 
OPPS/ASC \592\ final rules with comment period for our rationale on 
requiring prior authorization for facet joint interventions and 
implanted spinal neurostimulators.
---------------------------------------------------------------------------

    \591\ See 87 FR 72225 and 72226.
    \592\ See 85 FR 86237 and 86238.
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    Comment: We received comments requesting that CMS do more to 
streamline and automate the prior authorization process.
    Response: Thank you for your comment. We recognize the value of 
automation in shortening the time between receipt of prior 
authorization requests and our responses. Finalizing the proposal to 
reduce the timeframe that beneficiaries wait to receive prior 
authorization decisions is one way to streamline the overall prior 
authorization process. We are aware that not all providers have the 
same level of technology and thus we allow various methods of 
submission of a prior authorization request. With regard to the 
hospital OPD prior authorization process, most providers submit 
requests and medical documentation to the MACs via individual MAC 
portals. Other providers submit the requests through the United States 
(U.S.) postal service, facsimile, or medical documentation (esMD) 
system. We continue to monitor and implement

[[Page 94462]]

other Federal and industry initiatives in order to improve the 
efficiency of our prior authorization processes, including increasing 
the number of requests submitted electronically in order to reduce 
provider burden, decrease delays in patient care, and promote high-
quality, affordable health care.
    Comment: Some commenters suggested that we eliminate outpatient 
hospital services prior authorization requirements as a way to improve 
patient access and reduce physician administrative burden. There were 
also concerns about prior authorization creating delays in patient 
care.
    Response: Thank you for your comment. We remain fully committed to 
the agency's initiative to reduce unnecessary burdens while protecting 
our programs' sustainability by serving as a responsible steward of 
public funds. We believe that we have structured the prior 
authorization processes to effectively account for concerns associated 
with processing timeframes, patient care, and other administrative 
concerns. Finalizing the new timeframe should further alleviate the 
providers' burden and enable hospitals to receive timely provisional 
affirmations. Additionally, our prior authorization policy does not 
create any new documentation or administrative requirements. Instead, 
it just requires the same documents that are currently required to be 
submitted earlier in the process. Therefore, hospital OPDs should not 
need to divert resources from patient care. We note that prior 
authorization has the added benefit of giving hospitals some assurance 
of payment for services for which they received a provisional 
affirmation. In addition, beneficiaries have information regarding 
coverage prior to receiving the service and benefit by knowing in 
advance of receiving the service if they will incur financial liability 
for non-covered services. CMS will continue tracking MAC timeliness 
metrics and is confident that the MACs will continue to meet the 
required review and decision timeframes so as not to cause an 
additional burden for OPD providers or delay medically necessary 
services.
    Comment: One commenter posed concerns about the time it takes to 
obtain prior authorization with Medicare Advantage plans, which often 
leads to delayed access to care.
    Response: Thank you for the comment. While Medicare Advantage plans 
are outside the scope of the proposal, under the CMS Interoperability 
and Prior Authorization final rule, beginning January 1, 2026, Medicare 
Advantage organizations and applicable integrated plans must provide 
notice of prior authorization decisions as expeditiously as a patient's 
health condition requires, but no later than 7-calendar days for 
standard requests.
    Comment: We received comments asking whether section 1833(t)(2)(F) 
of the Act grants CMS the authority to establish a prior authorization 
process.
    Response: As we conveyed in the CY 2020 OPPS/ASC, CY 2021 OPPS/ASC, 
and CY 2023 OPPS/ASC final rules with comment periods, section 
1833(t)(2)(F) of the Act gives us the discretion to determine the 
appropriate methods to control unnecessary increases in the volume of 
covered OPD services.
    Comment: We received comments with concerns about unclear reasons 
for denial, challenges in understanding the prior authorization 
process, and that prior authorization could be discriminatory and 
worsen health disparities.
    Response: CMS maintains a robust oversight process to ensure the 
accuracy and consistency of MACs' review decisions. In all Medicare 
Fee-for-Service medical review programs, we require that MACs utilize 
clinicians, specifically registered nurses when reviewing medical 
documentation. We also require the oversight of a medical director and 
additional clinician engagement if necessary to ensure that review 
decisions are accurate and written in plain language. We are committed 
to ensuring transparency of the prior authorization process. CMS 
publishes any changes to the prior authorization process, a list of 
services requiring prior authorization, an operational guide, 
frequently asked questions, and, as we already noted, program 
statistics on the CMS OPD Prior Authorization and Pre-Claim Review 
Initiatives website. Although specific data is not available to 
determine the actual impacts on underserved communities, CMS believes 
that finalizing the proposal to reduce the timeframe will help 
beneficiaries who meet Medicare requirements for services under prior 
authorization receive those services in a timelier manner. Also, CMS 
allows multiple methods to submit prior authorization requests to the 
MACs (for example, electronic, fax, mail) to account for differences in 
the utilization of technology among different providers. CMS continues 
to monitor to ensure that this OPD prior authorization program does not 
disproportionately impact underserved populations and works to advance 
health equity by operationalizing policies and programs that support 
health for all beneficiaries.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the current review timeframe for 
provisionally affirmed or non-affirmed standard review requests for 
covered OPD services subject to prior authorization from 10-business 
days to 7-calendar days and making this change in regulation text at 
Sec.  419.82(d)(1)(iii).

XX. Provisions Related to Medicaid and the Children's Health Insurance 
Program (CHIP)

A. Continuous Eligibility in Medicaid and CHIP (42 CFR 435.926 and 
457.342)

    Prior to January 1, 2024, States had the option to provide up to 12 
months of continuous coverage to children under age 19 enrolled in 
Medicaid or CHIP, regardless of changes in circumstances that otherwise 
would impact their eligibility for these programs. This option has been 
available to State Medicaid programs under section 1902(e)(12) of the 
Act and Federal regulations at Sec.  435.926; and to States' separate 
CHIP programs through Federal regulations at Sec.  457.342. Under this 
option, States had the option to elect an age limit under age 19 and/or 
continuous eligibility (CE) periods shorter than 12 months. However, 
except for the limited exceptions defined in the regulations, states 
could not terminate the coverage of children during a CE period.
    Section 5112 of Title V, subtitle B of the Consolidated 
Appropriations Act, 2023 (CAA, 2023) amended section 1902(e)(12) of the 
Act to make the previously optional CE policy a requirement under the 
state plan or waiver of the state plan for children enrolled in 
Medicaid. The CAA, 2023 also added a new paragraph (K) to section 
2107(e)(1) of the Act, adopting by reference Medicaid's CE policy into 
CHIP. Thus, effective January 1, 2024, States are required to provide a 
12-month period of CE that offers continuous coverage to children under 
the age of 19 in Medicaid and CHIP, with limited exceptions.

B. Summary of the Proposed Provisions, Public Comments and Responses to 
Comments on Medicaid and CHIP continuous eligibility

    We proposed to update the Medicaid regulations at Sec.  435.926 to 
conform to changes to the CE policy effectuated by the CAA, 2023 
amendments to section 1902(e)(12) of the Act, which are adopted by 
reference into the CHIP regulations at Sec.  457.342(a). Specifically, 
we proposed to revise Sec.  435.926(b) to specify that a State must 
provide CE for

[[Page 94463]]

the period specified in paragraph (c) (12 months). We also proposed to 
revise Sec.  435.926(b)(1) to remove the option to limit CE to an age 
younger than 19. We further proposed to revise Sec.  435.926(c)(1) to 
remove the option to limit CE to a period of time of less than 12 
months. Finally, we proposed to revise Sec.  435.926(d)(1) to remove 
the option of ending a CE period for a person when they reach the 
State-specified maximum age, as now all States must provide CE to 
children until they reach age 19. We also proposed to remove the option 
in Sec.  457.342(b) to disenroll children from separate CHIP coverage 
for failure to pay required premiums or enrollment fees during a 
continuous eligibility period.
    The existing Medicaid continuous eligibility regulation includes 
three exceptions that were unaffected by the CAA, 2023, and we did not 
propose changes to those exceptions. These exceptions permit States to 
terminate coverage for children during a CE period in specific 
circumstances that do not involve a re-determination of eligibility 
based on a change in the beneficiary's circumstances during the CE 
period. Those situations arise if the child or child's representative 
requests a voluntary termination of eligibility; the agency determines 
that eligibility was erroneously granted at the most recent 
determination, redetermination, or renewal of eligibility because of 
agency error or fraud, abuse, or perjury attributed to the child or the 
child's representative; or the child is deceased. The CAA, 2023 amended 
section 1902(e)(12) of the Act to make the CE option mandatory for 
state Medicaid programs, but it did not foreclose termination of 
coverage in these situations, which are important to maintain program 
integrity. The death or voluntary termination of a child does not 
involve the State's evaluation of eligibility at all, and therefore is 
not barred by the prohibition on reassessing eligibility based on 
changed circumstances during a CE period. Indeed, it is unclear how 
coverage could continue when the child has died or is voluntarily 
removed from the program. Similarly, a decision that coverage was 
improperly provided to begin with (based on mistake, fraud, abuse, or 
perjury) is a decision about eligibility before the CE period began, 
not a re-determination about eligibility based on changed circumstances 
during the CE period. We described our intention to retain these 
exceptions in CMS State Health Official (SHO) Letter #23-004, Section 
5112 Requirement for all States to Provide Continuous Eligibility to 
Children in Medicaid and CHIP under the Consolidated Appropriations 
Act, 2023, which was issued on September 29, 2023.
    For a full discussion of these proposals, please see the CY 2025 
OPPS/ASC proposed rule (89 FR 59487).
    We received over 70 timely comments on the proposals to require 12-
months of continuous eligibility in Medicaid and CHIP and to eliminate 
nonpayment of premiums as an optional exception to continuous 
eligibility in CHIP, in accordance with sections 1902(e)(12) and 
2107(e)(1)(K) of the Act as amended by CAA, 2023. A summary of the 
public comments and our responses is below.
1. Requiring 12 Months of Continuous Eligibility in Medicaid and CHIP
    Comment: The vast majority of commenters were supportive of the 
Medicaid and CHIP Continuous Eligibility proposal published in the CY 
2025 OPPS/ASC proposed rule. Commenters noted that individuals with 
continuous coverage experience fewer unmet health care needs and better 
health outcomes than individuals with gaps in coverage. In addition, 
commenters noted that uninterrupted health coverage may promote access 
to preventive care, necessary treatments for acute health needs, and 
continuity of care. Other commenters noted that individuals with 
chronic or serious health needs require consistent access to health 
care and that any gap in coverage, even for as little as 1 month, may 
put individuals at risk of delays in care and declining health. 
Commenters also noted that these provisions will reduce coverage gaps 
that may occur when individuals transition from Medicaid or CHIP to 
Marketplace coverage and reduce the rates of churning on and off 
coverage.
    Response: We appreciate the support from these commenters. We are 
finalizing the Medicaid and CHIP continuous eligibility provisions as 
proposed.
    Comment: One commenter suggested that CMS track rates of churn for 
children to help evaluate the effectiveness of the continuous 
eligibility policy.
    Response: We appreciate the commenter's suggestion. We currently 
utilize data from the Transformed Medicaid Statistical Information 
System (T-MSIS) Analytic Files (TAF) to monitor churn across several 
eligibility groups. We will continue to monitor churn to inform the 
impact of this continuous eligibility policy.
    Comment: A few commenters suggested that CMS extend the continuous 
eligibility requirements to populations not explicitly addressed by the 
CAA, 2023. Specifically, one commenter discussed the importance of 
continuous eligibility in ensuring that patients will not lose coverage 
mid-treatment or immediately following treatment. This commenter 
suggested that CMS finalize its proposal and consider future extensions 
of this policy for patients undergoing active treatment for serious 
illnesses. Another commenter suggested expanding continuous eligibility 
to vulnerable adults, including pregnant women or adults with 
disabilities. Another commenter suggested expanding continuous 
eligibility to all adults and children covered under any Medicaid 
eligibility category.
    Response: We thank the commenters for these suggestions. At this 
time, we are only codifying the requirements of the CAA, 2023 related 
to providing continuous eligibility to children up to age 19 in 
Medicaid and CHIP.
    We note that, with respect to continuing eligibility during acute 
care treatment, section 1902(e)(7) of the Act and Sec.  435.172 
currently protect children enrolled in the mandatory Medicaid 
eligibility group for infants and children under age 19 (described at 
Sec.  435.118) who are receiving inpatient services when they age out 
of coverage in their eligibility group and would otherwise remain 
eligible for coverage. This provision requires that states provide 
these children with continued eligibility, despite exceeding the 
maximum age for the group, until the end of their inpatient stay.
    For pregnant women, under section 1902(e)(6) of the Act and Sec.  
435.170(c), most pregnant Medicaid beneficiaries are eligible for 
coverage under the state plan through the end of the month in which a 
60-day period, beginning on the last day of pregnancy, ends (referred 
to as the ``60-day postpartum period''), regardless of changes in 
household income. States also have the option to extend CHIP 
eligibility to ``targeted low-income pregnant women'' through the end 
of the 60-day postpartum period, similar to Medicaid. States have the 
option under the state plan to provide 12 months of continuous 
postpartum coverage, regardless of any changes in circumstances, to all 
pregnant women in Medicaid and CHIP. Section 1902(e)(16) of the Act 
provides this authority in Medicaid, which is extended to CHIP through 
cross-reference at section 2107(e)(1)(J) of the Act. When the State 
elects this option in Medicaid, it must also make the same election in 
a separate CHIP, as required by section 1902(e)(16)(C) of the Act and 
cross-referenced in section 2107(e)(1)(J) of the

[[Page 94464]]

Act. As of September 2024, 46 States, the District of Columbia, and the 
U.S. Virgin Islands have elected to extend continuous postpartum 
coverage to 12 months. For more information on coverage options for 
pregnant women, please see the December 7, 2021 CMS State Health 
Official Letter #21-0007, ``Re: Improving Maternal Health and Expanding 
Postpartum Coverage in Medicaid and the Children's Health Insurance 
Program (CHIP).'' \593\
---------------------------------------------------------------------------

    \593\ https://www.medicaid.gov/federal-policy-guidance/downloads/sho21007.pdf.
---------------------------------------------------------------------------

    We encourage States that may be interested in extending continuous 
eligibility to other populations in Medicaid and CHIP or for children 
for longer than periods of 12 months to contact their section 1115 
demonstration project officers to discuss options for doing so.
    Comment: One commenter requested clarification regarding the start 
date of a child's continuous eligibility period and how the continuous 
eligibility period aligns with their renewal cycle. The commenter 
expressed concern that States may be setting renewal dates based on the 
date of the child's first approved application, rather than the 
application that led to the child's current coverage, which could 
result in a child losing coverage in under 12 months.
    Response: As discussed in the September 29, 2023, State Health 
Official Letter #23-004, under 42 CFR 435.926 and 457.342, the 12-month 
continuous eligibility period begins on the effective date of the 
child's eligibility or most recent renewal of eligibility.
    Because almost all children have 12-month eligibility periods and 
the 12-month CE period begins on the effective date of the child's most 
recent determination or redetermination of eligibility, a child's CE 
period generally will align with their renewal cycle, which is based on 
the child's current coverage period. Each time a child's eligibility is 
renewed in Medicaid or CHIP, the state must provide a new 12-month CE 
period. A child's coverage may not be terminated during the CE period, 
unless the child meets one of the exceptions to continuous eligibility 
enumerated at 42 CFR 435.926(d).
2. Removing Nonpayment of Premiums as an Optional Exception to 
Continuous Eligibility in CHIP
    Comment: The majority of commenters supported removing nonpayment 
of premiums as an optional exception to continuous eligibility in CHIP. 
Commenters noted that requiring financial contributions from 
individuals may be a barrier to care for lower-income populations. 
Other commenters noted that removing this exception to continuous 
eligibility will allow children to have access to health care when they 
need it, regardless of the financial hardships families may face month 
to month.
    Response: We appreciate the support from these commenters. We are 
finalizing this policy as proposed.
    Comment: Several commenters suggested that CMS monitor States' 
responses to the elimination of the option to disenroll individuals due 
to nonpayment of premiums, which could create incentives for States or 
health plans to increase CHIP premiums to make up for lost revenue due 
to nonpayment. Another commenter expressed concern that CHIP managed 
care organizations could potentially place families in collections for 
the outstanding premiums. Another commenter requested strong monitoring 
and enforcement mechanisms to prevent unauthorized disenrollment 
practices and to ensure state compliance with this requirement.
    Response: We appreciate the commenters' suggestions. We note that 
under section 2105(d)(3) of the Act, States shall not have in effect 
eligibility standards, methodologies, or procedures under a CHIP State 
plan or waiver of a State plan that are more restrictive than the 
eligibility standards, methodologies, or procedures under such plan (or 
waiver) as in effect on March 23, 2010. This requirement applies to 
children in families whose income does not exceed 300 percent of the 
Federal poverty level (FPL) and remains in effect through September 30, 
2029.\594\ These requirements are referred to as the ``maintenance of 
effort'' or MOE provisions. In the February 25, 2011, State Medicaid 
Director Letter #11-001,\595\ CMS clarified that for CHIP, increases to 
existing premiums or the imposition of new premiums to existing 
eligibility groups are not consistent with MOE. States may only adopt, 
through State plan or demonstration amendments, certain inflation-
related adjustments to premium levels. These adjustments must be based 
on (and no more than) the percentage increase in the Consumer Price 
Index (CPI) trended forward using the applicable CPI for Medical Care 
(or another State specific index submitted by the State and approved by 
CMS). Therefore, States may not increase their premiums to account for 
nonpayment of premiums, beyond the amounts charged on March 23, 2010, 
other than by an inflation-related adjustment, at least through 
September 30, 2029.
---------------------------------------------------------------------------

    \594\ The same requirement applies to state Medicaid agencies. 
1902(a)(74) and (gg)(2) of the Act.
    \595\ https://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/smd11001.pdf.
---------------------------------------------------------------------------

    We also note that the CHIP statute and these regulations do not 
prohibit States or health plans from pursuing the collection of past 
due premiums. However, States can prohibit the CHIP managed care 
organizations from placing families in collections for the outstanding 
premiums through their contractual arrangements with the plans, and 
attempt to collect any past due premiums through other means.
    With regards to enforcement, all States will be required to submit 
a CHIP State plan amendment (SPA) to demonstrate compliance with the 
provision of this final rule regarding removing nonpayment of premiums 
as an exception to continuous eligibility in CHIP. Most States are 
already in compliance with this provision and have submitted SPAs to 
demonstrate compliance. CMS will provide technical assistance to any 
State that needs assistance coming into compliance with the 
requirements of this provision. As noted above, we will also be using 
TAF data to monitor churn and expect to see modest drops in churn for 
states newly adopting continuous eligibility.
    Comment: One commenter suggested that CMS further reduce barriers 
to coverage by eliminating premiums or the ability to disenroll 
children due to nonpayment of premiums in Medicaid and CHIP.
    Response: For CHIP, Section 2103(e) of the Act allows for the 
imposition of premiums, subject to the limitations described in section 
2103(e)(3). For children with family income below 150 percent of the 
FPL, premiums may not exceed the maximum monthly charge permitted 
consistent with standards established to carry out section 1916(b)(1) 
of the Act (with respect to individuals described in such section). For 
children with family income above 150 percent of the FPL, total 
aggregate cost-sharing (including premiums) may not exceed 5 percent of 
the family's income for the year. In Medicaid, sections 1902(a)(14), 
1916, and 1916A of the Act permit States to require certain 
beneficiaries to share in the costs of providing medical assistance 
through premiums and cost sharing. Most premiums for children assessed 
in Medicaid are subject to the aggregate cost sharing limit of 5 
percent of family income.
    In the absence of a statutory requirement preventing disenrollment,

[[Page 94465]]

like the continuous eligibility requirement under section 1902(e)(12) 
and 2107(e)(1)(K) of the Act, we do not believe the Medicaid and CHIP 
statutes limit states' ability to disenroll children due to nonpayment 
of premiums at the end of a CE period provided required procedures are 
followed.
    Comment: A few commenters requested specific technical assistance 
from CMS regarding these policies. One commenter noted that CHIP health 
plans may collect premiums from beneficiaries and that CMS should 
release guidance for States on working with CHIP health plans that are 
collecting premiums, if there is an instance of non-payment during a 
continuous eligibility period. The commenter emphasized the importance 
of standardizing implementation across states and reducing 
administrative and financial burden for CHIP health plans. Another 
commenter suggested CMS provide States with template notices to send to 
beneficiaries in order to alleviate enrollee confusion and 
administrative burden for States. Another commenter requested that CMS 
provide outreach and education efforts to inform beneficiaries of these 
policy changes and provide technical assistance to states in 
implementing these changes.
    Response: We appreciate the suggestions and are working on 
additional guidance regarding implementation of the policies in this 
final rule. States with technical assistance needs regarding notices or 
other implementation areas should reach out to their Medicaid State 
leads or CHIP project officers for assistance.
    Comment: Two commenters were unsupportive of removing nonpayment of 
premiums as an optional exception to continuous eligibility in CHIP. 
Specifically, these commenters requested clarity regarding the 
authority under which CMS can remove this previously optional exception 
and cited concerns regarding the potential increased costs to states or 
health plans if premiums are unpaid. One commenter stated the CAA, 2023 
does not require CMS to remove nonpayment of premiums as an exception 
to continuous eligibility in CHIP. One commenter was concerned that 
removing nonpayment of premiums as an optional exception to continuous 
eligibility in CHIP would render CHIP an entitlement program.
    Response: Under prior law, the Medicaid statute gave States the 
option to include in their State plans a ``continuous eligibility'' 
period of up to 12 months for children under 19. During this period, a 
child ``determined to be eligible for benefits under'' a State plan 
generally had to remain ``eligible for those benefits.'' In 2016, CMS 
promulgated a regulation implementing this section of the Medicaid 
statute. The regulation specified that ``[a] child's [Medicaid] 
eligibility may not be terminated during a continuous eligibility 
period, regardless of any changes in circumstances, unless'' one of 
five exceptions was met: (1) the child attains the maximum age 
specified in accordance with Sec.  435.926(b)(1); (2) the child or 
child's representative requests a voluntary termination of eligibility; 
(3) the child ceases to be a resident of the State; (4) the agency 
determines that eligibility was erroneously granted at the most recent 
determination, redetermination or renewal of eligibility because of 
agency error or fraud, abuse, or perjury attributed to the child or the 
child's representative; or (5) the child dies. Notably, this regulation 
did not permit termination of Medicaid coverage for nonpayment of 
premiums during periods of continuous eligibility, consistent with 
then-applicable (and the amended) version of section 1902(e)(12) of the 
Act and preexisting Medicaid regulations in 42 CFR 435.930(b), which 
provides that states ``must . . . [c]ontinue to furnish Medicaid 
regularly to all eligible individuals until they are found to be 
ineligible.''
    At the same time, CMS also issued a regulation permitting states to 
include a similar period of continuous eligibility in their CHIP plans, 
under 42 CFR 457.342. This regulation stated that, ``[i]n addition to 
the reasons provided at Sec.  435.926(d) of this chapter''--that is, 
the five exceptions set forth above permitting termination of Medicaid 
eligibility--an additional exception applied in the CHIP context, where 
``a child may be terminated during the continuous eligibility period 
for failure to pay required premiums or enrollment fees required under 
the State plan,'' id. Sec.  457.342(b). This exception did not apply to 
Medicaid--it was unique to CHIP. Notably, prior to the amendments made 
by the CAA, 2023, there was no statutory provision specifically 
addressing provision of continuous eligibility under CHIP; this option 
was implemented through regulations only.
    The CAA, 2023 made two fundamental changes relevant to continuous 
eligibility. First, it amended section 1902(e)(12) of the Medicaid 
statute to provide that State plans ``shall'' include a 12-month 
continuous eligibility period, which had previously been optional. 
Second, it amended the CHIP statute to adopt this Medicaid continuous 
eligibility requirement by reference. As a result, the CHIP statute now 
reads that section 1902(e)(12) of the Medicaid statute, as amended by 
section 5112(a) of the CAA, ``shall apply to States under this 
subchapter [i.e., CHIP] in the same manner as [it] appl[ies] to a State 
under subchapter XIX [i.e., Medicaid].'' The sole exception to this 
``in the same manner'' directive is that CHIP coverage may end if a 
child ``becomes eligible for full benefits'' and is ``transferred to 
the [state's] Medicaid program . . . for the remaining duration of the 
12-month continuous eligibility period.''
    Accordingly, Congress made clear that the 12-month period of 
continuous eligibility under Medicaid must apply ``in the same manner'' 
with respect to CHIP coverage. And termination of coverage for 
nonpayment of premiums is not permitted during periods of continuous 
eligibility under Medicaid. Thus, termination for nonpayment of 
premiums is not permitted during a 12-month period of continuous 
eligibility under CHIP either. When Congress required that continuous 
eligibility be applied ``in the same manner'' in the two programs, 
Congress necessarily understood that CHIP beneficiaries would now 
receive uninterrupted coverage during the continuous eligibility 
period, as Medicaid beneficiaries already did. Therefore, the CAA, 2023 
compels CMS to remove nonpayment of premiums as an exception to 
continuous eligibility in CHIP, just as nonpayment of premiums 
previously did not serve as an exception to the continuous eligibility 
option provided under the Medicaid statute. We also note that 
continuous eligibility can lead to more efficient care and better 
health outcomes, by stabilizing health coverage. In order to achieve 
this, unnecessary exceptions to continuous eligibility that are not 
provided for by statute, such as the exception for nonpayment of 
premiums, must be eliminated.
    Regarding costs to States or managed care organizations (MCOs), 
States are not prohibited from entering or renegotiating contract `per-
member, per-month' (PMPM) amounts that take into consideration that 
supplemental MCO revenue could be reduced if the MCO is not able to 
collect 100 percent of premiums, which could result in an increase in 
state expenditures to cover the MCO's PMPM cost of care. However, the 
state may only claim FFP for the expenses set out in section 
2105(a)(1)(A) through (D) of the Act. Uncollected premiums are not 
themselves considered an `expense' within the meaning of section 2105. 
Although States may have decreased revenue due to unpaid premiums, 
States may find

[[Page 94466]]

administrative costs savings or reduced administrative burden, as a 
result of fewer children churning on and off coverage. Continuous 
eligibility, including eliminating disenrollment for failure to pay 
premiums, can reduce the need for repeatedly reviewing eligibility, 
disenrolling children, and then re-enrolling them.\596\
---------------------------------------------------------------------------

    \596\ Georgetown University. (2021). Advancing Health Equity for 
Children and Adults with a Critical Tool: Medicaid and Children's 
Health Insurance Program Continuous Coverage. Retrieved from https://ccf.georgetown.edu/wp-content/uploads/2021/10/continuity-of-coverage-final.pdf.
---------------------------------------------------------------------------

    Removing nonpayment of premiums as an exception to continuous 
eligibility in CHIP does not render CHIP an entitlement program. States 
are not prohibited from charging and pursuing the collection of past-
due premiums or from requiring an initial premium or enrollment fee to 
be paid prior to an individual enrolling in coverage. Rather, States 
simply may not disenroll individuals due to nonpayment of premiums 
during the continuous eligibility period.
    Comment: One commenter questioned if removing this optional 
exception conflicted with the CHIP premium grace period requirements. 
Another commenter asked if individuals can be disenrolled after 
nonpayment of one premium or multiple premiums.
    Response: Removing nonpayment of premiums as an exception to 
continuous eligibility does not conflict with the CHIP premium grace 
period requirements addressed in section 2103(e)(3)(C) of the Act. 
Under section 2103(e)(3)(C)(ii) of the Act, the State must provide the 
child with a grace period of ``at least 30 days from the beginning of a 
new coverage period to make premium payments before the individual's 
coverage'' may be terminated. Section 2103(e)(3)(C)(ii)(II) of the Act 
defines ``new coverage period'' as ``the month immediately following 
the last month for which the premium has been paid.'' Section 
2103(e)(3)(C)(ii) of the Act also requires the State to provide notice 
no later than 7 days after the first day of the grace period (typically 
7 days after the premium payment was due) that failure to make a 
premium payment within the grace period will result in termination of 
coverage and when such termination will be effective.
    Disenrollment may occur at the end of the continuous eligibility 
period after nonpayment of one or multiple premiums, depending on how 
the State has structured their premium policies. States may disenroll 
individuals at the end of the continuous eligibility period for 
nonpayment of premiums during the continuous eligibility period, 
provided the State has afforded the enrollee a minimum of 30 days to 
pay the past-due premiums. If a State requires monthly premiums that 
are due in advance of the month of coverage, it is possible that an 
individual may be disenrolled at the end of the continuous eligibility 
period after nonpayment of only one premium payment.
    Example: Jose is enrolled in CHIP with a 12-month continuous 
eligibility period of January 1, 2024, through December 31, 2024. The 
State requires that any unpaid premiums owed for one or more months in 
a child's current CE period must be paid prior to the end of the CE 
period in order to avoid termination at the end of the CE period. 
Jose's family paid the monthly premiums from January through November, 
due on the 1st of each respective month. However, the family did not 
pay the required premiums due for December.
    Consistent with its renewal process, the State initiates the ex 
parte process for Jose's renewal on October 1, 2024. The State is 
unable to determine Jose's eligibility based on available information. 
The State therefore sends the family a pre-populated renewal form on 
November 1 and provides the family with 30 days to respond. Jose's 
family returns the renewal form (along with any requested 
documentation) later that month, and the State begins to process the 
information received. On December 7, the State sends Jose's family the 
notice required under section 2103(e)(3)(C)(ii) of the Act that Jose's 
coverage will end on December 31, 2024, if the family does not pay the 
December premium by that date. On December 10, the State completes 
processing Jose's renewal and determines that Jose continues to meet 
the other eligibility requirements. However, because Jose's family 
failed to pay the December premium, the State will not send Jose's 
family a notice that his eligibility is being renewed. Rather, the 
State would send Jose's family a notice explaining that: (1) it has 
determined that Jose meets the other eligibility requirements to have 
his coverage renewed but; (2) in order for Jose's coverage to be 
renewed for another 12 months effective January 1, 2025, the family 
must pay the December premium by December 31. If the State requires 
that the premium for January 2025 be paid prior to renewing Jose's 
coverage, the notice must include this information as well.
    If the family pays the outstanding premium by December 31, 2024, 
Jose cannot be terminated due to failure to pay the premium. If Jose's 
coverage is erroneously terminated (for example, because the family did 
not submit the premium until December 31 and the State was unable to 
reverse the termination), the State must reinstate his coverage 
effective January 1, 2025. Conversely, if the family does not pay the 
outstanding premium by December 31, Jose can be terminated effective 
January 1, 2025, due to failure to pay the premium.
    Comment: One commenter questioned if States could require CHIP 
enrollees to pay an initial premium or enrollment fee prior to 
enrolling in coverage, given this is prohibited in Medicaid. This 
commenter suggested that if continuous eligibility is to apply in the 
same manner in CHIP as it does in Medicaid, this practice may be 
prohibited.
    Response: States have long had the option to require individuals 
who are determined eligible for separate CHIP coverage to pay an 
initial premium or enrollment fee prior to enrolling the individual in 
coverage. This rule does not preclude States from continuing this 
practice. Rather, this rule requires that once enrolled in coverage and 
the continuous eligibility period begins, States may not disenroll 
individuals from coverage due to nonpayment of premiums during the 
continuous eligibility period.
    In Medicaid, section 1916(c)(3) of the Act specifies that a state 
shall not require prepayment of a premium imposed. Additionally, 
section 1902(a)(8) of the Act specifies that the State must provide 
that all individuals wishing to make application for medical assistance 
under the plan shall have opportunity to do so, and that such 
assistance shall be furnished with reasonable promptness to all 
eligible individuals. These statutory requirements do not apply to 
CHIP, and thus, States may be permitted to require the payment of an 
initial premium or enrollment fee prior to enrolling a child in CHIP. 
Once the period of continuous eligibility begins, however, that period 
applies ``in the same manner'' as in Medicaid, and therefore coverage 
cannot be terminated for nonpayment of premiums.
    Comment: One commenter stated their State law requires 
disenrollment for failure to pay premiums. The commenter questioned if 
these regulations could apply to State programs that were grandfathered 
into CHIP, when it was created in 1997.

[[Page 94467]]

    Response: We recognize that certain changes in this final rule, 
including eliminating failure to pay premiums as an optional exception 
to continuous eligibility, may require updates to information 
technology systems or changes in State laws. However, the vast majority 
of States have already implemented the Medicaid and CHIP continuous 
eligibility provisions in this final rule as of January 1, 2024, the 
effective date of the provisions under the CAA, 2023. Moreover, these 
regulations will be effective January 1, 2025, which provides 
additional time for States to make necessary changes. As previously 
mentioned, CMS is available to assist States with any technical 
assistance needs related to implementation of these provisions.
    These regulations do apply to States whose programs were 
grandfathered into CHIP when it was created in 1997. CHIP regulations 
in Sec.  457.410(a)(3) specify that States may offer health benefits 
coverage in the form of an existing comprehensive State-based coverage, 
in accordance with Sec.  457.440. These two regulations describe the 
requirements regarding the benefits grandfathered health plans must 
provide but do not relieve States from complying with other 
programmatic requirements, such as requirements related to eligibility 
for coverage. As described above, CMS is available to provide technical 
assistance to States on these requirements.
    After consideration of the public comments we received, we are 
finalizing our proposed revisions to Medicaid and CHIP regulations to 
codify the requirement within the CAA, 2023 to require States to 
provide 12 months of continuous eligibility to children under the age 
of 19 in Medicaid and CHIP, with limited exceptions. We are also 
finalizing our proposal to remove nonpayment of premiums as an optional 
exception to continuous eligibility in CHIP.

XXI. Health and Safety Standards for Obstetrical Services in Hospitals 
and Critical Access Hospitals

A. Background and Statutory Authority

    CMS has broad statutory authority to establish health and safety 
regulations, which includes the authority to establish requirements 
that protect the health and safety of pregnant, postpartum, and 
birthing patients. Several statutes applicable to specific provider and 
supplier types explicitly give CMS the authority to enact regulations 
that the Secretary finds necessary in the interest of the health and 
safety of individuals who are furnished services in an institution, 
while others give CMS the authority to prescribe regulations as may be 
necessary to carry out the administration of the program.
    Sections 1861(e)(1) through (8) of the Social Security Act (the 
Act) provide that a hospital participating in the Medicare program must 
meet certain specified requirements. Section 1861(e)(9) of the Act 
specifies that a hospital also must meet such other requirements as the 
Secretary finds necessary in the interest of the health and safety of 
individuals furnished services in the institution. Under this 
authority, the Secretary has established regulatory requirements that a 
hospital must meet to participate in Medicare at 42 CFR part 482, 
``Conditions of Participation [CoPs] for Hospitals.'' Section 1905(a) 
of the Act provides that Medicaid payments from States may be applied 
to hospital services. Under regulations at 42 CFR 440.10(a)(3)(iii) and 
440.20(a)(3)(ii), Medicaid-participating hospitals are required to meet 
the Medicare CoPs in order to participate in Medicaid.
    Sections 1820 and 1861(mm) of the Act, as amended by section 4201 
of the Balanced Budget Act (BBA) of 1997, replaced the EACH/RPCH 
program with the Medicare Rural Hospital Flexibility Program (MRHFP), 
under which a qualifying facility can be designated and certified as a 
critical access hospital (CAH). CAHs participating in the MRHFP must 
meet the conditions for designation specified in the statute under 
section 1820(c)(2)(B) of the Act, and to be certified must also meet 
other criteria the Secretary may require, under section 1820(e)(3) of 
the Act. Under this authority, the Secretary has established regulatory 
requirements that a CAH must meet to participate in Medicare at 42 CFR 
part 485, subpart F.
    The CoPs for hospitals and CAHs are organized according to the 
categories of services a hospital or CAH may offer, and include 
specific, process-oriented requirements for each hospital or CAH 
service or department. The purposes of these CoPs are to protect 
patient health and safety and to ensure that quality care is furnished 
to all patients in Medicare-participating hospitals and CAHs. In 
accordance with section 1864 of the Act, State surveyors assess 
hospital and CAH compliance with the conditions as part of the process 
of determining whether a hospital qualifies for a provider agreement 
under Medicare. However, under section 1865 of the Act, hospitals and 
CAHs can elect to be reviewed instead by private accrediting 
organizations approved by CMS as having standards that meet or exceed 
the applicable Medicare standards and survey procedures comparable to 
those CMS requires for State survey agencies.

B. The U.S. Maternal Health Crisis

    The U.S. is currently facing a maternal health crisis which has not 
only led to a maternal mortality rate that is among the highest in 
high-income countries, but also disproportionately affects racial and 
ethnic minorities. In 2022, the most recent year for which there is 
data, there were 22 maternal deaths for every 100,000 live births in 
the U.S. which is more than double the rate for most other high-income 
countries. For example, in 2022, Canada, France, the United Kingdom, 
Germany, and Japan had maternal death rates of 8.6 deaths per 100,000 
live births or lower.\597\ Over 80 percent of pregnancy-related deaths 
are considered preventable.\598\ Approximately 13 percent of all 
pregnancy-related deaths (a death during pregnancy or within 1 year of 
the end of pregnancy from a pregnancy complication, a chain of events 
initiated by pregnancy, or the aggravation of an unrelated condition by 
the physiologic effects of pregnancy) occur at the time of delivery, 
and nearly 12 percent occur between 1 and 6 days after the end of 
pregnancy.\599\
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    \597\ Munira Gunja et al., Insights into the U.S. Maternal 
Mortality Crisis: An International Comparison (Commonwealth Fund, 
June 2024). https://doi.org/10.26099/cthn-st75.
    \598\ https://www.cdc.gov/maternal-mortality/media/pdfs/Pregnancy-Related-Deaths-Data-MMRCs-2017-2019-H.pdf.
    \599\ https://www.cdc.gov/maternal-mortality/media/pdfs/Pregnancy-Related-Deaths-Data-MMRCs-2017-2019-H.pdf.
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    Native Hawaiian and Pacific Islander women, Black women, and 
American Indian/Alaska Native (AI/AN) women are two to four times more 
likely to suffer a pregnancy-related death than non-Hispanic White 
women.\600\ Black and AI/AN women experience severe maternal morbidity 
rates that are more than two times higher than their White 
counterparts.601 602 Systemic societal barriers, including a 
patient's social determinants of health, have meant that these 
individuals experience a greater

[[Page 94468]]

share of these poor maternal health outcomes.603 604 605
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    \600\ https://www.cms.gov/files/document/maternal-health-may-2022.pdf.
    \601\ Centers for Disease Control and Prevention. Pregnancy 
Mortality Surveillance System. Available at: https://www.cdc.gov/maternal-mortality/php/pregnancy-mortality-surveillance/index.html/ 
Accessed June 5th, 2024.
    \602\ https://www.commonwealthfund.org/publications/issue-
briefs/2021/oct/severe-maternal-morbidity-united-states-
primer#:~:text=Approximately%20140%20of%2010%2C000%20women,severe%20m
aternal%20morbidity%20every%20year.
    \603\ https://www.whitehouse.gov/wp-content/uploads/2022/06/Maternal-Health-Blueprint.pdf.
    \604\ Taylor, J., Novoa, C., Hamm, K., & Phadke, S. (2021, 
December 3). Eliminating Racial Disparities in Maternal and Infant 
Mortality. Center for American Progress. https://www.americanprogress.org/article/eliminating-racial-disparities-maternal-infant-mortality/.
    \605\ Hoffman KM, Trawalter S, Axt JR, Oliver MN. Racial bias in 
pain assessment and treatment recommendations, and false beliefs 
about biological differences between blacks and whites. Proc Natl 
Acad Sci U S A. 2016;113(16):4296-4301. doi:10.1073/pnas.1516047113 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4843483/.
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    Pregnant women who live in rural communities are about 60 percent 
more likely to die before, during, or following birth than women in 
urban communities.\606\ Pregnant women with disabilities receive lower 
quality maternity care, experience a higher risk of pregnancy and 
birth-related complications, and are eleven times more likely to 
experience maternal death than people without 
disabilities.607 608
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    \606\ White House Fact Sheet: Vice President Kamala Harris 
Announces Call to Action to Reduce Maternal Mortality and Morbidity. 
https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/07/fact-sheet-vice-president-kamala-harris-announces-call-to-action-to-reduce-maternal-mortality-and-morbidity/.
    \607\ Gleason JL, Grewal J, Chen Z, Cernich AN, Grantz KL. Risk 
of Adverse Maternal Outcomes in Pregnant Women With Disabilities. 
JAMA Netw Open. 2021;4(12):e2138414.doi:10.1001/
jamanetworkopen.2021.38414.
    \608\ Willi Horner-Johnson et.al. Perinatal Health Risks and 
Outcomes Among US Women With Self-Reported Disability, 41 Health 
Aff. 2011 (September. 2022), https://doi.org/10.1377/hlthaff.2022.00497.
---------------------------------------------------------------------------

    Based on the issues regarding the delivery of maternity care 
referenced, we proposed a new OB services CoP, including proposed 
requirements for the organization, staffing, and delivery of OB 
services and staff training. We also proposed revisions to the current 
hospital and CAH QAPI requirements, hospital and CAH emergency services 
requirements, and hospital discharge planning requirements. We also 
solicited comments on whether these proposed requirements should also 
apply to REHs.

C. Summary of the Proposed Provisions, Public Comments and Responses to 
Comments on Health and Safety Standards for Obstetrical Services in 
Hospitals and Critical Access Hospitals

    In response to these proposals, we received 153 total comments. A 
broad range of individuals, groups, and organizations responded to the 
proposed rule. Commenters included hospitals, healthcare systems, 
hospital associations, medical associations and societies, professional 
trade organizations, patient advocacy organizations, and individuals, 
among others.
    Our goal is to establish new requirements for the provision of 
obstetrical services to protect the health and safety of pregnant, 
birthing, and post-partum patients. These requirements are designed to 
establish baseline standards for obstetrical care and, in many cases, 
mirror existing optional services in other areas of the Conditions of 
Participation for hospitals, which helps to minimize burden. These 
requirements do not dictate standards of care or otherwise require 
hospitals to offer any specific type of care to patients. We believe 
that these requirements are balanced and will drive improved care for 
pregnant, birthing, and post-partum patients.
    In this final rule, we provide a summary of each proposed 
provision, a summary of the public comments received and our responses 
to them, and an explanation for changes in the policies that we are 
finalizing.
1. General Comments
    Comment: Many commenters expressed strong support for the proposed 
CoPs and CMS' efforts to improve maternal health with many commenters 
acknowledging the importance of addressing health disparities and 
social determinants of health. These commenters largely supported the 
overall goal of the proposed requirements and applauded these 
requirements as a major and historic step to improving maternal health 
outcomes. Some commenters also stated that these requirements were 
essential in addressing maternal health disparities. A few commenters 
also observed that these requirements will improve health equity by 
establishing standards and procedures across all hospitals, ensuring 
that facilities are held to a consistent standard of high-quality care. 
Additionally, a commenter noted that these requirements are a crucial 
step to transforming the health care system to be more responsive to 
the peri-natal needs of high-risk patients and communities. A few 
commenters also expressed support for the use of standardized practices 
for health care, quality measures, training, and assessments. Further, 
a commenter recommended future continuous evaluation of the standards 
to further positively impact patient care.
    Response: We thank commenters for their support. We believe these 
requirements are an important component of the agency's efforts to 
improve maternal health and advance health equity. CMS routinely 
reviews new evidence, research, and information and may consider the 
possibility of revising the standards in the future if additional 
updates would be appropriate to improve quality and further protect the 
health and safety of patients.
    Comment: Some commenters expressed support for these proposals, 
indicating their beliefs that the new requirements would promote 
consistent, high-quality maternal health care across the country, 
especially following the Dobbs v. Jackson Women's Health Organization 
(597 U.S. 215 (2022)) decision and related State policy changes 
restricting access to reproductive health care and its impact on the 
provision of emergency services. With this, many commenters recommended 
that CMS strengthen or reinforce the Emergency Medical Treatment and 
Labor Act (EMTALA) protections for patients experiencing pregnancy-
related emergencies to reduce maternal morbidity and mortality. A 
commenter expressed concern that there is lack of clarity between the 
Federal requirements under EMTALA and State abortion restrictions. This 
commenter expressed concern that without EMTALA protections patients 
may face delays in accessing medically necessary emergency care. In 
addition, other commenters recommended that CMS remind hospitals of 
their legal responsibility to provide stabilizing treatment to pregnant 
women and requested that CMS work with policymakers and stakeholders to 
uphold EMTALA protections related to maternity care, especially in 
States with laws restricting women's health care. Further, commenters 
stated that these requirements were urgently needed given the 
nationwide shortage in OB providers, particularly in rural areas and 
southern States and would ensure timely and effective treatment for 
pregnant women regardless of their geographic location.
    Response: We appreciate support for these requirements. With these 
requirements, we aim to support the provision of timely, effective, and 
high-quality maternal care. Of note, these requirements do not dictate 
standards of care or otherwise require hospitals to offer any specific 
type of care to patients. Rather, we proposed to require hospitals to 
have appropriate protocols and adequate provisions in place to meet the 
needs of patients with emergency conditions, including but not limited 
to patients who are experiencing obstetrical emergencies, 
complications, and immediate post-delivery care in alignment with the 
facility's complexity

[[Page 94469]]

and scope of services. Hospitals will have the flexibility to develop 
their own protocols consistent with evidence-based, nationally 
recognized guidelines.
    Other laws, such as the Emergency Medical Treatment and Labor Act 
(EMTALA), require certain facilities with emergency departments to 
provide an appropriate medical screening exam and, if an emergency 
medical condition exists, offer stabilizing treatment or, under certain 
circumstances, appropriate transfer for a patient to receive 
stabilizing care. HHS reaffirmed its commitment supporting hospitals in 
complying with Federal requirements under EMTALA, consistent with 
binding court orders, and enforcing these requirements as recently as 
July 2, 2024.\609\ Following the Supreme Court's decision in Moyle v. 
United States, HHS and CMS leadership jointly sent a letter to 
hospitals and provider associations reminding them of relevant 
facilities' legal responsibilities under EMTALA.\610\ HHS will continue 
to partner with hospital and provider associations to disseminate 
training on facilities' obligations under EMTALA and maintain a team of 
HHS experts to support hospitals in complying with EMTALA.\611\ 
Further, HHS and CMS also introduced a new EMTALA complaint form in 
both English and Spanish and issued updated model signage for 
hospitals, to help further educate patients about their rights under 
EMTALA.612 613 The electronic EMTALA form is also now 
available on the CMS website.\614\ We emphasize that EMTALA 
requirements are separate and distinct from these requirements. Rather, 
these rules will require hospitals to adopt protocols and procedures so 
as to be adequately prepared to meet both the emergency and non-
emergency needs of all patients, including those with obstetrical 
emergencies.
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    \609\ https://www.hhs.gov/about/news/2024/07/02/biden-harris-administration-reaffirms-commitment-emtala-enforcement.html.
    \610\ https://www.hhs.gov/about/news/2024/07/02/biden-harris-administration-reaffirms-commitment-emtala-enforcement.html.
    \611\ CMS, CMS Announces New Actions to Help Hospitals Meet 
Obligations under EMTALA, January 22, 2024. Available at: https://
www.cms.gov/newsroom/press-releases/cms-announces-new-actions-help-
hospitals-meet-obligations-under-
emtala#:~:text=Today%2C%20the%20Department%20of%20Health,meet%20their
%20obligations%20under%20the.
    \612\ https://www.cms.gov/priorities/your-patient-rights/emergency-room-rights/complaint-form.
    \613\ https://www.cms.gov/medicare/health-safety-standards/quality-safety-oversight-general-information/policy-memos-states/updated-model-signage-emergency-medical-treatment-and-labor-act-emtala.
    \614\ https://www.cms.gov/priorities/your-patient-rights/
emergency-room-rights/how-to-file-
complaint#:~:text=There%20are%202%20ways%20to%20file%20a%20complaint,
complaint%20and%20might%20share%20it%20with%20the%20state.
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    Comment: Many commenters recommended that CMS withdraw the proposed 
CoPs for OB services and the proposed revisions to the current CoPs. 
Some stated that CMS should engage in additional public outreach, such 
as working with hospitals and other interested parties to adopt 
guidelines, prior to developing policies for improving maternal health. 
Many commenters did not support the adoption of CoPs related to 
maternal health because of the belief that CoPs are not the appropriate 
mechanism to achieve change, and their view that the potential risk of 
losing Medicare certification for not meeting the proposed CoPs is 
excessively punitive for hospitals. These commenters stated that 
adoption of CoPs may limit flexibility for hospitals to address the 
needs of their patient populations. Some of these commenters suggested 
alternative mechanisms to achieve change including technical assistance 
programs, learning collaboratives, and well-tested quality metrics 
within the CMS Quality Reporting programs. Commenters stated that by 
engaging interested parties, CMS will have an opportunity to better 
understand the positive and negative impacts of potential policies. 
Lastly, a commenter stated that because the number of Medicare patients 
seeking maternity care is low, a more targeted approach through 
Medicaid would be more appropriate to implement these changes.
    Response: As we previously noted, the U.S. is currently facing a 
maternal health crisis which has not only led to a maternal mortality 
rate that is amongst the highest in high-income countries, but also 
disproportionately affects racial and ethnic minorities. After 
analyzing the issue of high rates of maternal mortality and morbidity 
in the U.S., receiving feedback from various stakeholders on improving 
maternal health care, and reviewing available resources and current 
requirements, we believe that it is necessary to establish new baseline 
requirements for the provision of obstetrical services to protect the 
health and safety of pregnant, birthing, and postpartum patients. Doing 
so would be part of a multi-pronged HHS-wide approach to address the 
maternal health crisis and would hold hospitals and CAHs accountable to 
a consistent set of high-quality requirements that would improve 
outcomes for pregnant, birthing, and postpartum patients. We therefore 
are finalizing our proposals, with the modifications discussed below.
    We also note that the role of the CoPs is to establish health and 
safety standards that health care providers and suppliers (in this case 
hospitals and CAHs) must meet to participate in the Medicare and 
Medicaid programs. These standards are foundational for improving 
quality and protecting the health and safety of all patients seeking 
care from these facilities including pregnant, postpartum, and birthing 
patients. As noted above, these requirements do not dictate standards 
of care or otherwise require hospitals to offer any specific type of 
care to patients. As discussed in the CY 2025 OPPS/ASC proposed rule 
(89 FR 59488) some of these patients are currently not receiving 
consistent high quality, safe care. Therefore, it is appropriate to 
expand the CoPs to ensure that the care provided to these patients 
meets minimum quality standards, in alignment with the facility's 
complexity and scope of services. We note that the CoPs apply to all 
patients in facilities, not only those covered by Medicare and 
Medicaid.
    We appreciate commenters' suggestions regarding other channels for 
improving the quality and safety of obstetric services. We recognize 
that updating the CoPs for hospitals and CAHs is not a complete 
solution to the maternal health crisis and that updating the CoPs for 
hospitals and CAHs is one element of the HHS-wide approach to 
strengthening maternal health, among other activities.\615\ Across the 
Department, other relevant activities include developing and 
implementing a strategy to improve maternal mental health care,\616\ to 
extend postpartum coverage,\617\ and to support innovative programs to 
address racial equity for postpartum patients enrolled in 
Medicaid.\618\ Within CMS, as part of our

[[Page 94470]]

Maternity Care Action Plan,\619\ we have established the ``birthing 
friendly'' designation \620\ for hospitals and have established funding 
through CMS' Innovation Center model (the Transforming Maternal Health 
Model) focused developing whole-person approaches to pregnancy, 
childbirth, and postpartum care.\621\ In addition, the Maternal 
Morbidity Structural Measure requires hospitals participating in the 
Hospital Inpatient Quality Reporting Program (IQR) to assess whether or 
not a hospital participates in a statewide or national Perinatal 
Quality Improvement (QI) Collaborative initiative, and implements 
patient safety practices and/or bundles related to maternal morbidity 
from that QI Collaborative.\622\ We note in our current QAPI proposal 
that participating in Perinatal QI Collaborative would be consistent 
with meeting this new requirement. Other specific hospital IQR maternal 
health quality measures include: (1) measurement of severe obstetric 
complications (which describes the number of inpatient hospitalizations 
for patients with severe complications occurring during the delivery 
hospitalization, such as hemorrhage), and (2) measurement of low-risk 
Cesarean section rates, which describes the share of patients with low-
risk pregnancies who give birth via a Cesarean section.\623\ Given that 
a significant portion (42 percent) of U.S. births are covered by the 
Medicaid, the Medicaid program has also prioritized improving maternal 
and infant health care quality. This includes the Maternal and Infant 
Health Initiative (MIHI), which has supportive tools such as a webinar 
series, affinity groups, and a quality improvement resource list.\624\
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    \615\ U.S. Department of Health and Human Services, 
Strengthening Maternal Health. Available at: https://www.hhs.gov/healthcare/maternal-health/index.html.
    \616\ Task Force on Maternal Mental Health, National Strategy to 
Improve Maternal Mental Health Care. Available at: https://www.samhsa.gov/sites/default/files/mmh-strategy.pdf.
    \617\ U.S. Department of Health and Human Services, December 
2021, HHS Announces Efforts to Help Expand Nationwide Access and 
Coverage for High-quality Maternal Health Services. Available at 
https://www.cms.gov/newsroom/press-releases/hhs-announces-efforts-help-expand-nationwide-access-and-coverage-high-quality-maternal-health.
    \618\ U.S. Department of Health and Human Services, February 14, 
2024, HHS Announces Final Phase Winners in Challenge to Address 
Racial Equity in Postpartum Care. Available at: https://www.hhs.gov/about/news/2024/02/14/hhs-announces-final-phase-winners-challenge-address-racial-equity-postpartum-care.html.
    \619\ CMS, July 26, 2022, CMS Releases Maternity Care Action 
Plan to Implement Biden-Harris Maternal Health Blueprint; Launches 
Industry Call to Action. Available at: https://www.cms.gov/files/document/cms-maternity-care-action-plan.pdf.
    \620\ CMS, August 1, 2022, New CMS Rule Increases Payments for 
Acute Care Hospitals and Advances Health Equity, Maternal Health. 
Available at https://www.cms.gov/newsroom/press-releases/new-cms-rule-increases-payments-acute-care-hospitals-and-advances-health-equity-maternal-health.
    \621\ CMS, Transforming Maternal Health (TMaH) Model. Available 
at: https://www.cms.gov/priorities/innovation/innovation-models/transforming-maternal-health-tmah-model.
    \622\ https://www.cms.gov/files/document/maternal-morbidity-structural-measure-specifications.pdf.
    \623\ https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2022-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-0.
    \624\ Medicaid.gov, Maternal & Infant Health Care Quality. 
Available at: https://www.medicaid.gov/medicaid/quality-of-care/quality-improvement-initiatives/maternal-infant-health-care-quality/index.html.
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    While we understand commenters' concern that failure to comply with 
the Medicare CoPs may result in loss of certification, we note that if 
a surveyor identifies deficiencies during their survey, the initial 
step is for the hospital or CAH to develop a Plan of Correction (PoC) 
to remedy the deficiency. This activity is intended to ensure that the 
hospital or CAH becomes compliant with the CoPs instead of requiring 
that CMS terminate the hospital from its programs. CMS remains 
committed to collaborating with hospitals and CAHs, including by 
providing technical assistance and issuing interpretive guidance to 
help hospitals and CAHs come into compliance with the CoPs.
    With regards to comments on public outreach, we note that public 
outreach is a vital element of understanding the potential impacts of 
policies on facilities and their patients, and we did so when 
developing these proposed updates to the CoPs. As part of that 
outreach, in 2022 we solicited public input on a wide range of maternal 
health issues (86 FR 44774) and published the responses in the FY 2023 
IPPS/LTCH PPS final rule (87 FR 49290 through 49292). We then conducted 
a systematic literature review to inform development of the proposed 
CoPs. We also held listening sessions with industry groups, patient 
advocacy groups, and health care professionals to further understand 
the potential impacts of possible updates to the CoPs, including an 
obstetrical services CoP. Finally, we issued an RFI in the FY 2025 IPPS 
proposed rule (89 FR 35934) and included a summary of these comments in 
the CY 2025 OPPS/ASC proposed rule (89 FR 59186, 59490). We evaluated 
input from a wide range of interested parties including advocacy 
groups, industry associations, State health departments, labor unions, 
professional organizations, among others who responded to this RFI in 
developing our current requirements. Commenters who provided feedback 
in prior rulemaking were supportive of CoPs for obstetrical care 
services noted that establishing CoPs for obstetrical care would 
enhance the quality and safety of maternal care. These commenters also 
stated that obstetrical services CoPs regarding organization and 
staffing would promote multi-disciplinary, team-based care with 
specialists, among others providing care to pregnant women. Other 
commenters stated that establishing obstetrical training standards for 
hospitals and CAHs could improve maternal health outcomes and also 
supported staff training on equitable-person centered care, cultural 
competency, and trauma-informed care. Some commenters supported 
requiring facilities to report directly to the Maternal Mortality 
Review Committee (MMRC) and others supported specific transfer protocol 
requirements. Because we have engaged in extensive public outreach as 
part of developing our plan for improving maternal health, we do not 
believe that it would be appropriate to further delay these important 
updates. However, we continually monitor the effectiveness of the CoPs 
and we will continue to collaborate with interested parties and make 
any necessary updates in the future if new information warrants 
revisions or additional requirements.
    Comment: Several commenters recommended monitoring the impact of 
these CoPs to ensure that hospitals can effectively implement the new 
requirements while maintaining high-quality care and essential 
services. A commenter recommended establishing minimum baseline 
standards, in accordance with State regulations, to reduce hardships 
small or under-resourced facilities experience in meeting these 
requirements.
    Response: We continually monitor the effectiveness of the CoPs on 
advancing patient health and safety. We understand the commenters' 
concerns regarding small and under-resourced facilities and have opted 
to provide additional time for facilities to come into compliance with 
these requirements to reduce any potential implementation burden or 
unintended consequences (see section XXI.A.7 of this final rule with 
comment period). We acknowledge that these requirements will require a 
robust review of existing programs and would necessitate changes to 
ensure full compliance with the new requirements. We anticipate that 
additional time will be needed to develop revised interpretive guidance 
for surveyors and survey processes, conduct surveyor training on the 
changes, and implement the software changes in the Quality Indicator 
Survey (QIS) system. We believe that these updates to the CoPs will 
ensure that providers deliver care that is consistent with evidence-
based standards, which is a vital part of providing high quality, safe 
care.
    Comment: A few commenters recommended that CMS collaborate with 
affected parties, including providers and communities, in the 
development of subregulatory guidance for compliance with the CoPs.
    Response: As discussed in the CY 2025 OPPS/ASC proposed rule, we 
engaged in public collaboration and outreach while developing these

[[Page 94471]]

policies (89 FR 59489). As with all regulations regarding the CoPs, the 
interpretive guidance will be updated once this final rule is 
published. The development of the interpretive guidance is a 
subregulatory process intended to clarify the regulatory requirement as 
described in the preamble of the final rule. However, CMS will consult 
with clinical subject matter experts in developing the subregulatory 
process and notify the public as we move forward with the guidance 
process.
    Comment: A few commenters expressed concern that there has been 
insufficient time and analysis to adopt what they characterize as far-
reaching CoPs. These commenters stated that there was insufficient time 
to properly analyze public input on the RFI published in the FY 2025 
IPPS final rule. Several commenters stated that there is a lack of 
evidence that the specific structures and associated processes in the 
proposed CoPs will contribute to improved patient outcomes.
    Response: As discussed previously, we engaged in extensive public 
outreach and information collection and worked with the public as we 
developed these updated requirements; This research and outreach 
included analyzing and evaluating the evidence base for each proposal. 
We also conducted a thorough analysis of the comments on the most 
recent RFI on maternal health to determine whether the concerns 
expressed by commenters offset the benefits of adopting CoPs to reduce 
maternal morbidity and mortality and improve care for patients. As 
discussed in the CY 2025 OPPS/ASC proposed rule, commenters supportive 
of CoPs for obstetrical care services noted that establishing CoPs for 
obstetrical care would enhance the quality and safety of maternal care 
and provide the opportunity to standardize services across various 
health care settings. On prior rulemaking, these commenters also stated 
that obstetrical services CoPs regarding organization and staffing 
would promote multi-disciplinary, team-based care with specialists, 
among others providing care to pregnant women. Other commenters stated 
that establishing obstetrical training standards for hospital and CAHs 
can help improve maternal health outcomes and also supported staff 
training on equitable person-centered care, cultural competency, and 
trauma-informed care. Some commenters supported requiring facilities to 
report directly to the MMRC and others supported specific transfer 
protocol requirements. Following that evaluation and discussed 
throughout this final rule, we determined that there was sufficient 
information to develop and support finalization of these requirements. 
To the extent possible, we allow hospitals and CAHs flexibility to 
adopt evidence-based structures and processes consistent with 
nationally recognized standards. We address more specific concerns 
related to the evidence base for individual requirements in the 
respective section of these comment responses. The obstetrical services 
CoPs are just one component of a multipronged approach to addressing 
the maternal health crisis and are complementary to other HHS maternal 
health initiatives.
    Comment: Many commenters expressed concern that the burden of 
complying with new CoPs could potentially cause hospitals to choose to 
no longer offer OB services which would exacerbate disparities and 
increase access challenges as hospitals do not have sufficient 
resources to implement some best practices. Commenters cited ongoing OB 
staff shortages and provider burnout, particularly in rural areas, for 
these reasons, the commenter urged CMS to delay implementing these 
requirements. Additionally, a commenter stated that there would be 
additional burden for hospitals to meet these proposed standards even 
if the hospitals were already meeting the accreditation standards set 
by organizations such as the Joint Commission (TJC). These commenters 
recommended that CMS provide monetary assistance to hospitals to meet 
the proposed CoPs or implement other financial incentives or supports. 
Many commenters also recommended that CMS offer technical assistance, 
resource guides, and a FAQ document to help hospitals improve OB care 
explaining that these resources would help hospitals comply with the 
proposed CoPs. Conversely, other commenters recommended offering these 
resources as a more supportive way to improve OB care without updating 
the CoPs.
    Some commenters stated that because these services are optional, 
and some of the proposed new CoPs only apply to hospitals with OB 
services, hospitals may choose to close these units as opposed to 
complying with new regulations. Other commenters stated that even for 
hospitals that do not close their OB units, there is the potential for 
resources to be drawn away from providing care to focus on complying 
with regulations. These commenters stated that this would worsen 
outcomes for patients. Some commenters stated that these closures could 
have a disproportionate effect on rural communities or communities of 
color. Some commenters recommended that CMS exempt rural hospitals and 
CAHs to ensure that access is not limited due to potential closures. A 
few commenters recommended that CMS conduct a study of OB unit closures 
and their impact on equity and revise the proposed CoPs based on the 
results of that study to ensure CoPs do not strain OB units.
    Response: We thank commenters for expressing their concerns and we 
understand the challenges that new requirements may present for some 
facilities. We are implementing these requirements in response to the 
ongoing maternal health crisis, which has led to a U.S. maternal 
mortality rate that is among the highest across high-income countries 
and disproportionately affects racial and ethnic minorities as well as 
those living in rural areas and those with disabilities. Ensuring that 
all hospitals and CAHs participating in the Medicare and Medicaid 
programs meet or exceed evidence-based standards of care will lead to 
an overall improvement in care for all patients. We also note that we 
proposed these CoPs to provide flexibility to hospitals and CAHs, 
recognizing that hospitals and CAHs already adhere to complementary 
accrediting organization requirements and may also utilize guidelines 
from expert organizations. We believe that these requirements are 
balanced and would drive improved care for pregnant and post-partum 
women. Moreover, these proposed CoPs are only one component of an HHS-
wide strategy to address the maternal health crisis. To alleviate 
burden, we have revised some of our requirements and will also allow 
for a phased-in implementation. Please refer to section XXI.A.7 of this 
final rule with comment period for more information on the 
implementation delay.
    HHS has taken a comprehensive approach to addressing health care 
worker staffing shortages. For example, HRSA has several programs that 
support women's health, including the National Health Service 
Corps.\625\ The National Health Service Corps uses both Health 
Professional Shortage Areas (HPSAs) and designated Maternity Care 
Target Area (MCTA) scoring to distribute maternity care health 
professionals.\626\ In addition, HRSA recently announced nearly $100 
million in awards to grow, support, and strengthen the health

[[Page 94472]]

workforce and improve access to quality care in high-need areas across 
the country. These awards will enhance and expand the number of nurses 
and primary care physicians.\627\ In 2023, HHS launched the HHS Health 
Workforce Initiative with the goal of supporting, strengthening, and 
growing the health workforce by leveraging programs across the 
Department. The Initiative includes a coordinated Department-wide 
effort to identify opportunities to improve health workforce 
recruitment and retention, and career advancement, with equity at the 
center of its work.\628\ We discuss organization, staffing, and 
delivery of services requirements further in section XXI.A.2 of this 
final rule with comment period.
---------------------------------------------------------------------------

    \625\ https://bhw.hrsa.gov/data-research/projecting-health-
workforce-supply-
demand#:~:text=Women's%20health,future%20shortage%20of%20OB%2DGYNs.
    \626\ https://nhsc.hrsa.gov/loan-repayment/nhsc-loan-repayment-program.
    \627\ https://www.hhs.gov/about/news/2024/09/17/biden-harris-administration-announces-nearly-100-million-grow-health-workforce.html.
    \628\ https://www.hhs.gov/about/news/2023/07/06/new-hhs-initiative-aims-strengthen-nations-health-workforce.html.
---------------------------------------------------------------------------

    While payment policy is not within the scope of the CoPs we agree 
with commenters regarding the importance of providing resources to 
support hospitals in improving OB care. We note that HHS generally, and 
CMS specifically, are engaged in a long-term, multi-agency effort to 
improve the quality of maternal health care across the full continuum 
of care. For example, some specific resources we refer readers to 
include the HHS resources on Strengthening Maternal Health,\629\ the 
CMS Maternity Care Action Plan,\630\ and the Medicaid Maternal and 
Infant Health Initiative resources.\631\ Additionally as we implement 
these new requirements, we will continue to provide resources for 
hospitals, State survey agencies, and accreditation organizations, 
including subregulatory guidance. We note that accreditation 
organizations (such as the Joint Commission) \632\ and expert 
organizations (such as ACOG) \633\ have resources available to support 
maternal health quality improvement efforts. Further, CMS will 
collaborate with HHS partners to monitor the impact of OB unit closures 
and consider further analysis and evaluation of this issue.
---------------------------------------------------------------------------

    \629\ U.S. Department of Health and Human Services, 
Strengthening Maternal Health. Available at: https://www.hhs.gov/healthcare/maternal-health/index.html.
    \630\ CMS, July 26, 2022, CMS Releases Maternity Care Action 
Plan to Implement Biden-Harris Maternal Health Blueprint; Launches 
Industry Call to Action. Available at: https://www.cms.gov/files/document/cms-maternity-care-action-plan.pdf.
    \631\ Medicaid.gov, Maternal & Infant Health Care Quality. 
Available at: https://www.medicaid.gov/medicaid/quality-of-care/quality-improvement-initiatives/maternal-infant-health-care-quality/index.html.
    \632\ The Joint Commission, Focus on Maternal Health to Help 
Reduce Mortality and Morbidity, January 17, 2023. Available at: 
https://www.jointcommission.org/resources/news-and-multimedia/news/2023/01/new-alerts-from-the-joint-commission-focus-on-maternal-health-to-help-reduce-mortality-and-morbidity/.
    \633\ See, for example, ACOG, Levels of Maternal Care. Available 
at: https://www.acog.org/programs/lomc.
---------------------------------------------------------------------------

    Comment: Many commenters stated that the CoPs do not address the 
underlying issues with high quality maternity and neonatal care. Some 
commenters stated that many of the reasons for poor maternal outcomes 
are not associated with obstetrical care that patients receive in the 
hospital but are associated with social determinants of health (SDOH) 
or non-obstetric health concerns such as substance use disorder (SUD) 
or mental health conditions. These commenters recommended that CMS 
consider solutions that address the continuum of maternal health care 
rather than focus on inpatient OB care.
    Response: We agree with commenters that improving maternal health 
outcomes is a complex, multifaceted issue. While the proposed updates 
to the CoPs for hospitals and CAHs are only one element of our multi-
agency effort to improve the quality of maternal health care across the 
health care continuum, we believe these new standards will advance 
patient health and safety and compliment the activities of other 
agencies. There are currently no minimum care standards that hospitals 
and CAHs must comply with pertaining to emergency readiness, transfer 
protocols, and organization, staffing, and delivery of services. These 
requirements hold hospitals and CAHs to minimum, baseline standards to 
ensure facilities are held accountable for delivering care that meets 
or exceeds evidence-based standards of care. Examples of specific 
resources include HHS' resources on Strengthening Maternal Health,\634\ 
the CMS Maternity Care Action Plan,\635\ the Medicaid Maternal and 
Infant Health Initiative resources,\636\ and the Alliance for 
Innovation on Maternal Health (AIM) bundles.\637\ Some of these 
initiatives are focused on maternal mental health \638\ and others 
involve financial support to address maternal health equity.\639\ We 
appreciate the comments on funding resources and payment policy, though 
they are beyond the scope of the CoPs.
---------------------------------------------------------------------------

    \634\ U.S. Department of Health and Human Services, 
Strengthening Maternal Health. Available at: https://www.hhs.gov/healthcare/maternal-health/index.html.
    \635\ CMS, July 26, 2022, CMS Releases Maternity Care Action 
Plan to Implement Biden-Harris Maternal Health Blueprint; Launches 
Industry Call to Action. Available at: https://www.cms.gov/files/document/cms-maternity-care-action-plan.pdf.
    \636\ Medicaid.gov, Maternal & Infant Health Care Quality. 
Available at: https://www.medicaid.gov/medicaid/quality-of-care/quality-improvement-initiatives/maternal-infant-health-care-quality/index.html.
    \637\ For example, Alliance for Maternal Health. Available at: 
https://mchb.hrsa.gov/programs-impact/programs/alliance-innovation-
maternal-
health#:~:text=AIM%20%E2%80%9C%20patient%20safety%20bundles%20%E2%80%
9D%20are%20sets,reduce%20preventable%20deaths%20and%20severe%20matern
al%20morbidity%20%28SMM%29.
    \638\ For example, the Maternal Mental Health Strategy. 
Available at: https://www.samhsa.gov/sites/default/files/mmh-strategy.pdf.
    \639\ For example, the Challenge to Address Racial Equity in 
Postpartum Care. Available at: https://www.challenge.gov/?challenge=hhs-postpartum-equity-in-care-challenge.
---------------------------------------------------------------------------

    Comment: Many commenters stated that the proposed CoPs would 
duplicate existing regulations and guidelines including existing CoPs 
(specifically the QAPI requirements), State regulations, and clinical 
guidelines produced by expert organizations. A commenter recommended 
allowing States to regulate OB care.
    Response: We disagree that the proposed requirements duplicate 
existing CoPs. While the updates have similarities to the existing 
CoPs, there are currently no CoPs specific to the organization, 
staffing, and delivery of OB services; to staff training on evidence-
based best practices to improve the delivery of maternal care within a 
facility; emergency services readiness; or to OB transfer protocols. We 
also note that we proposed these CoPs to provide flexibility to 
hospitals and CAHs, recognizing that hospitals and CAHs already adhere 
to complementary State regulations and may also utilize guidelines from 
expert organizations. By establishing a baseline through the CoPs, we 
will ensure that all hospitals and CAHs meet a minimum standard of 
quality and safety.
    We acknowledge that these CoPs may include new requirements beyond 
those currently adopted by the Joint Commission (TJC) and other CMS-
approved accrediting organizations. In the CY 2025 OPPS/ASC proposed 
rule, we also stated that we are aware that accrediting organizations 
may also have additional requirements that exceed the Medicare CoP 
requirements as part of their CMS-approved deeming program (89 FR 
59533), so there would not be a significant burden for hospitals that 
are accredited by these other organizations. In our cost estimates, we 
did not assume that TJC-accredited facilities would already be meeting 
any of the proposed requirements beyond the requirement

[[Page 94473]]

that if a hospital or Critical Access Hospital (CAH) provides OB 
services, such services must be well-organized and in accordance with 
nationally recognized acceptable standards of practices for physical 
and behavioral health of pregnant, birthing, and postpartum patients 
and included the costs for TJC-accredited facilities to meet the other 
requirements for the purposes of our impact analysis.
    It is the role of CMS to ensure access to high quality, safe care 
for patients seeking care in facilities that participate in our 
programs across the nation. We note that rates of maternal mortality 
vary significantly across States by as much as four times as many 
maternal deaths per 100,000 live births as the best performing 
State.\640\ By establishing uniform baseline requirements we aim to 
improve access to high quality care for all patients, regardless of 
State residence.
---------------------------------------------------------------------------

    \640\ CDC, Maternal Mortality from 2018 through 2022. Available 
at: https://www.cdc.gov/nchs/maternal-mortality/mmr-2018-2022-state-data.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters expressed concern about the potential 
unintended consequences of new OB CoPs following the Supreme Court's 
decision in Dobbs v. Jackson Women's Health Organization (597 U.S. 215 
(2022)), stating that State restrictions on abortion may potentially 
compound the existing maternal health crisis. For example, a commenter 
noted that training and educational curricula will suffer due to the 
limited scope of patient care being administered. In addition, a 
commenter expressed concern that the CoPs related to OB services, may 
enable inappropriate monitoring and scrutiny of hospitals' reproductive 
and obstetrical care standards and activities as well as additional 
undue oversight of OB providers and patients.
    Response: As previously noted, we believe that the proposed CoPs 
are a critical step in addressing the maternal health crisis and part 
of HHS's comprehensive strategy to improve the quality of maternal 
health services. The CoPs require hospitals and CAHs to have 
appropriate protocols and adequate provisions and structures in place 
to meet the needs of obstetrical and emergency services patients. 
Hospitals have the flexibility to develop their own protocols 
consistent with evidence-based, nationally recognized guidelines and 
with the complexity and scope of services offered by the facility. The 
CoPs do not dictate specific standards of care or otherwise require 
hospitals to offer any specific type of care to patients or stock 
particular medications or supplies. HHS has no reason to expect 
inappropriate monitoring and scrutiny because of these CoPs. HHS will 
monitor for and investigate any concerns about inappropriate monitoring 
and scrutiny of hospitals' reproductive and obstetrical care standards 
and activities. We note that the vast majority of hospitals participate 
in the Medicare program through deemed status with an accrediting 
organization \641\ and are therefore surveyed by their accrediting 
organization rather than a State agency, which in any case would survey 
for Federal, not State standards. We further note that patients' 
reproductive care protected health information (PHI) is protected under 
the recently finalized Privacy Rule (89 FR 32976).
---------------------------------------------------------------------------

    \641\ https://www.jointcommission.org/resources/news-and-multimedia/fact-sheets/facts-about-hospital-accreditation/.
---------------------------------------------------------------------------

    Comment: Several commenters expressed that, in trying to maintain 
flexibility, the CoPs are vague which may contribute to implementation 
and compliance burden. A few commenters specifically noted that words 
including ``protocol,'' ``practice,'' ``staff,'' ``training'' and 
``equipment'' are all subject to interpretation. A few commenters 
recommended that CMS define what services fall under the term 
``obstetric services.''
    Response: As commenters noted, we have intentionally not defined 
some terms or requirements to allow hospitals and CAHs to meet the 
requirements while addressing the needs of their patient population and 
adhering to State regulations or other requirements. To maintain this 
flexibility, we will provide interpretive guidance through 
subregulatory channels, including updates to the State Operations 
Manual (SOM), with respect to these new requirements and how facilities 
can achieve compliance. As noted in the CY 2025 OPPS/ASC proposed rule, 
CMS considers a facility to ``offer obstetrical services'' when the 
facility ``[holds itself] out to the public (by name, posted signs, 
advertising, or other means) as a place that provides care for 
obstetrical medical conditions.'' (89 FR 59496) This is similar to how 
emergency departments are defined in EMTALA (42 CFR 489.24(b), 
definition of ``dedicated emergency department'', paragraph (2)).
    Comment: Several commenters recommended that CMS collaborate with 
AHRQ to establish a Consumer Assessment of Healthcare Providers & 
Systems (CAHPS) survey that specifically focuses on prenatal and 
childbirth care.
    Response: We thank commenters for their feedback and will continue 
to collaborate with our HHS partners to improve maternal health care.
    Comment: A commenter recommended that CMS promote alternative 
delivery sites, such as birthing centers, for low-risk pregnancies. 
Another commenter recommended that CMS ensure safety standards at these 
sites.
    Response: In alignment with our National Quality Strategy (NQS) 
goals, we seek a person-centered approach to improving quality.\642\ 
Therefore, we encourage patients to work with their clinicians to make 
the most appropriate choice for their individual situation, including 
selecting the delivery site most appropriate to their personal values 
and clinical needs. We understand that there are a variety of 
regulations that apply to alternative delivery sites, however CMS does 
not currently have the statutory authority under the CoPs to regulate 
entities such as birthing centers.
---------------------------------------------------------------------------

    \642\ CMS, The CMS National Quality Strategy: A Person-Centered 
Approach to Improving Quality, June 06, 2022. Available at: https://www.cms.gov/blog/cms-national-quality-strategy-person-centered-approach-improving-quality.
---------------------------------------------------------------------------

    Comment: A few commenters recommended that CMS expand the CoPs to 
reduce the risk to patients of pregnancy criminalization. These 
commenters stated that by ensuring informed consent for drug testing 
and educating providers about treatment for pregnant patients with 
SUDs, the CoPs could be enhanced to increase patient trust in the 
health care system and increase use of prenatal care.
    Response: We appreciate commenters' concern, however potential 
criminalization related to OB care with respect to drug testing and 
mandatory reporting and note that this is outside the scope of this 
final rule with comment period. We remind facilities that patients' 
reproductive care PHI is protected under the recently finalized Privacy 
Rule (89 FR 32976).
    Comment: A few commenters recommended that CMS clarify policies 
related to telehealth for maternal health services, the use of which 
increased during the COVID-19 pandemic. These commenters stated 
telehealth has improved access to care without detrimental effects on 
care quality.
    Response: Revisions to telehealth regulations are beyond the scope 
of these requirements, and we refer readers to HHS' Telehealth for 
Maternal Health Services guide \643\ to support providers

[[Page 94474]]

in using telehealth for maternal health services. We note that for each 
State's Medicaid program, the State determines which services that can 
be provided through telehealth.\644\
---------------------------------------------------------------------------

    \643\ HHS, Telehealth for maternal health services. Available 
at: https://telehealth.hhs.gov/providers/best-practice-guides/telehealth-for-maternal-health-services.
    \644\ CMS, State Medicaid & CHIP Telehealth Toolkit, February 
2024. Available at: https://www.medicaid.gov/medicaid/benefits/downloads/telehealth-toolkt.pdf.
---------------------------------------------------------------------------

2. Organization, Staffing, and Delivery of Services (Sec. Sec.  482.59 
and 485.649)
    We proposed at new Sec. Sec.  482.59 and 485.649 new CoPs for 
hospitals and CAHs offering obstetrical services outside of an ED. 
Specifically, we proposed to require that if a hospital or a CAH offers 
obstetrical services, the services must be well organized and provided 
in accordance with nationally recognized acceptable standards of 
practice for physical and behavioral health care of pregnant, birthing, 
and postpartum patients (inclusive of both mental health and substance 
use disorders). We proposed that, if outpatient obstetrical services 
are offered, the services must be consistent in quality with inpatient 
care in accordance with the complexity of services offered. We noted 
that nationally recognized acceptable standards of practice may be 
based on medical professional society and/or accrediting organization 
standards and that, while these CoPs would not require adherence to a 
specific organization's guideline or recommendations, we would expect 
that facilities be able to articulate their standards and the source(s) 
and demonstrate that their standards are based on evidence and 
nationally recognized sources. This overarching requirement for 
obstetric services is consistent with other hospital and CAH CoPs and 
is foundational to ensuring high-quality safe care.
    At new Sec. Sec.  482.59(a) and 485.649(a), we proposed that the 
organization of the obstetrical services be appropriate to the scope of 
services offered by the facility and integrated with other departments 
of the facility. At Sec. Sec.  482.59(a)(1) and 485.649(a)(1), we 
proposed that the OB patient care units (that is, labor rooms, delivery 
rooms, including rooms for operative delivery, and post-partum/recovery 
rooms whether combined or separate) be supervised by an individual with 
the necessary education and training, and specified that that person be 
an experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a doctor of medicine or 
osteopathy.
    At Sec. Sec.  482.59(a)(2) and 485.649(a)(2), we proposed that 
obstetrical privileges be delineated for all practitioners providing 
obstetrical care in accordance with the competencies of each 
practitioner. The obstetrical service would be required to maintain a 
roster of practitioners specifying the privileges of each practitioner. 
We noted that all hospitals are already required, at Sec.  
482.22(c)(6), to have medical staff bylaws that include criteria for 
determining the privileges to be granted to individual practitioners 
and a procedure for applying the criteria to individuals requesting 
privileges. Our proposed CoP would add additional specificity for an 
obstetrics service. The proposed obstetric services CoPs at Sec. Sec.  
482.59(a)(2) and 485.649(a)(2) recognize that practitioners other than 
physicians are important to delivering obstetric services. We again 
remind hospitals that existing CoPs allow for the privileging and 
credentialling of practitioners other than physicians, including nurse 
midwives (Sec.  482.12(a) and (c); Sec.  482.22).
    At new Sec. Sec.  482.59(b) and 485.649(b), ``Delivery of 
services'', we proposed to require that OB services must be consistent 
with the needs and resources of the facility and that policies 
governing obstetrical care be designed to assure the achievement and 
maintenance of high standards of medical practice and patient care and 
safety. We additionally proposed at Sec. Sec.  482.59(b)(1) and 
485.649(b)(1) that labor and delivery room suites have certain basic 
equipment readily available, including a call-in-system, cardiac 
monitor, and fetal doppler or monitor. We welcomed public comment on 
what is an appropriate minimum set of equipment that takes into account 
the varied levels of services provided for all hospitals offering 
obstetric services.
    At Sec. Sec.  482.59(b)(2) and 485.649(b)(2) we proposed that the 
service ensure that it has protocols, consistent with evidence-based, 
nationally recognized guidelines, that equipment and personnel be 
``readily available'' (that is, necessary supplies and equipment are on 
the unit or are in close proximity and easily accessed by unit 
personnel) for obstetrical emergencies, complications, immediate post-
delivery care, and other patient health and safety events as identified 
as part of the facility's QAPI program. While this requirement does not 
require any specific items, we would expect provisions to include, in 
addition to the equipment required under Sec. Sec.  482.59(b)(1) and 
485.649(b)(1), equipment, supplies, blood, and medication used in 
treating emergency cases. As discussed in section XXI.B.2 of this final 
rule with comment period, obstetric readiness is a concern in avoiding 
preventable maternal morbidity and mortality. Provisions and protocols, 
as we proposed to require, are one step towards addressing those 
concerns and improving perinatal outcomes.
    We solicited public comments on these proposals, including whether 
these proposed requirements should be applicable to REHs. We address 
those comments, and our responses below:
    Comment: Many commenters generally supported the establishment of 
CoPs for the organization, staffing, and delivery of obstetrical 
services. These commenters also supported the requirement that OB 
services be provided in accordance with nationally recognized standards 
of practice for maternal health care. A commenter supported the 
proposed CoPs to require obstetrical services to be organized 
appropriate to the scope of the services offered. The commenter stated 
that the proposed policy would also allow flexibility for hospitals and 
CAHs without creating undue burden. Other commenters also recommended 
that the standards cover the full continuum of maternity care, 
including prenatal, labor, delivery, and postpartum periods. Commenters 
also stated that it is necessary to integrate OB services with other 
departments to address chronic conditions such as cardiovascular 
disease, hypertension, substance use, mental health conditions, and 
kidney disease.
    Response: We appreciate the commenters support of these proposals. 
We continue to believe that establishing standards for obstetrical 
services supports the provision of high-quality maternity care and 
protects the health and safety of patients. We agree that it is 
important for all Medicare and Medicaid participating hospitals and 
CAHs that offer these services to be held to a consistent set of 
requirements. With regard to the commenters recommendation that the 
standards cover the full continuum of maternity care, as previously 
noted in the CY 2025 OPPS/ASC proposed rule at 89 FR 59490, for the 
purposes of these requirements, obstetrical services include labor and 
delivery, prenatal and post-partum care, and care for newborn infants. 
This care may be provided in obstetrical units, inpatient units, 
emergency departments, hospital outpatient departments. We specifically 
require at Sec. Sec.  482.59 and 485.649 that, if the hospital or CAH 
offers obstetrical services, and if outpatient obstetrical services are 
also offered, the outpatient services must be consistent in quality

[[Page 94475]]

with inpatient care in accordance with the complexity of services 
offered. In facilities that do not provide inpatient obstetric 
services, but rather only outpatient prenatal, maternity, and/or 
postpartum care, those hospital or CAH outpatient departments remain 
subject to all applicable existing hospital and CAH CoPs, including the 
hospital CoP for Outpatient Services at Sec.  482.54. We remind 
facilities that the existing QAPI standards at Sec. Sec.  482.21 (for 
hospitals) and 485.641 (for CAHs) require that the QAPI program involve 
``all hospital/CAH departments and services.'' Finally, with regard to 
comments on the integration of OB services with other departments or 
services, we also agree that this is essential in order to provide 
quality, comprehensive care and ensure good communication and 
collaboration with other services. We included specific requirements 
for the integration of OB services at Sec. Sec.  482.59(a) and 
485.649(a).
    Comment: We received several comments that did not support the 
establishment of CoPs related to organization, staffing, and delivery 
of obstetrical services. Some commenters stated that they did not 
believe that adopting new CoPs would be the most appropriate method to 
improve maternal health. A few commenters stated that the organization, 
staffing, and delivery of maternity services should be organized at a 
regional or state level, and that Federal regulations would be 
duplicative or conflict with existing regulations. Commenters also 
expressed concerns regarding enforcement actions, including potential 
loss of Medicare certification program if facilities are unable to 
comply with the proposed requirements.
    Response: We thank the commenters for this input. As previously 
noted, we believe that the establishment of CoPs for the organization, 
staffing, and delivery of obstetric services is a critical step in 
addressing the maternal health crisis that the country continues to 
face. It is one part of a comprehensive strategy that HHS is 
undertaking to improve the quality of maternal health services. We 
agree that it is important for States and regions to develop standards 
and guidance for OB services that takes into account the unique 
circumstances of their respective environments, in ways that do not 
conflict with the national minimum requirements set forth in this rule. 
However, we continue to believe that establishing national minimum 
requirements for OB services helps to ensure that all patients 
receiving obstetrical care in Medicare and Medicaid participating 
hospitals and CAHs are receiving safe, quality care. We believe that 
the proposed standards are achievable, and we have provided 
flexibilities, including additional time to come into compliance, and 
clarifications in this final rule to facilitate compliance with these 
requirements. In addition, as noted above, if a surveyor identifies 
deficiencies during their survey, the initial step is for the hospital 
to develop a Plan of Correction (PoC) to remedy the deficiency. This 
activity is intended to ensure that the hospital or CAH becomes 
compliant with the CoPs prior to the loss of certification.
    Comment: Some commenters requested that we provide clarification 
regarding the term ``well organized'' in reference to the proposed 
condition statement for hospitals and CAHs at Sec. Sec.  482.59 and 
485.649, respectively, that if the hospital or CAH offers obstetrical 
services, the services must be well organized and provided in 
accordance with nationally recognized acceptable standards of practice 
for the health care (including physical and behavioral health) of 
pregnant, birthing, postpartum patients.
    Response: As stated in the CY 2025 OPPS/ASC proposed rule, the 
requirements that we proposed for the organization, staffing, and 
delivery of obstetrical services, are similar to or consistent with the 
current requirements for other services that hospitals and CAHs may opt 
to provide, such as surgical services. The interpretive guidance, 
published in the State Operation Manual (SOM), provides further detail 
regarding the expectations for ``well-organized'' surgical services 
that we believe can provides additional context for the proposed 
obstetrical services requirements. Similar to the description of the 
organization of surgical services provided in Appendix A of the SOM at 
A-0940,\645\ obstetrical services should be organized and staffed in 
such a manner to ensure the health and safety of patients. 
Additionally, similar to the interpretive guidance provided in the SOM, 
acceptable standards of practice for obstetrical services would also 
include maintaining compliance with applicable Federal and State laws, 
regulations and guidelines governing obstetrical services or 
obstetrical service locations, as well as any standards and 
recommendations promoted by or established by nationally recognized 
professional organizations. We maintain that this overarching 
requirement for obstetrical services in hospitals and CAHs is 
foundational to ensuring high-quality, safe care. We also believe that 
providers need the flexibility to determine how to organize the 
obstetrical services in their facility in a way that best aligns with 
the services provided, characteristics of their facility, and needs of 
their patient population and therefore we do not require adherence to a 
specific set of standards. Lastly, we also expect to provide 
interpretive guidance specific to obstetrical services in the SOM in 
the future which would further detail how providers can assure 
compliance with these regulations.
---------------------------------------------------------------------------

    \645\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_a_hospitals.pdf.
---------------------------------------------------------------------------

    Comment: A commenter stated that the proposed requirement that 
outpatient obstetrical services offered be consistent in quality with 
inpatient obstetrical care in accordance with the complexity of 
services offered would be difficult for some organizations to achieve 
because they believe that the proposal is ambiguous. The commenter 
stated that treatment could be very different between patients. The 
commenter provided an example, stating that gestational diabetes is not 
the same as type two diabetes, and treatment of hyper- and hypo-
glycemic episode in a pregnant patient versus and 85-year-old male 
patient generally, cannot be treated similarly and may have different 
outcomes.
    Response: The proposed requirement is specific to the provision of 
obstetrical services. If a hospital or CAH elects to provide inpatient 
obstetrical services, we will require that any obstetrical services 
provided in the outpatient setting must be consistent in quality with 
any obstetrical services that the hospital or CAH provides to hospital 
inpatients. While we understand that there may be some variation in the 
method or duration of treatment provided when an individual receives 
outpatient treatment versus inpatient treatment, we would expect that 
the quality of the services provided in either setting would be 
equivalent.
    Comment: With regard to standards of practice for OB staffing, a 
few commenters recommended that CMS structure the obstetrical service 
requirements to ensure adequate staffing levels. These commenters 
suggested resources for establishing recommended staffing levels 
(specifically the resources developed by the Association of Women's 
Health, Obstetric and Neonatal Nurses or the ANA). A commenter 
recommended that staffing models include community health workers and 
care coordinators.
    A commenter recommended that CMS ensure that the requirements do 
not

[[Page 94476]]

become overly burdensome, citing physician shortages and burnout as 
particular challenges. A few commenters urged CMS to study and 
understand barriers to implementing existing staffing standards prior 
to finalizing the proposal. A commenter recommended that CMS not refer 
to the ACOG 2019 Levels of Maternal Care when developing subregulatory 
guidance, maintaining that the requirement regarding anesthesiologists 
as opposed to CRNAs will cause negative effects and that CRNAs are 
proven to be the most cost-effective model for anesthesia delivery. A 
few commenters expressed concern with the lack of specificity regarding 
the appropriate guidelines to follow to meet the proposed CoPs, stating 
that some guidelines and standards will be overly burdensome and 
mandatory staffing ratios could cause undue hardship.
    Response: We thank the commenters for their input. We note that we 
did not propose any specific standards for staffing levels for OB units 
in hospitals or CAHs. Both hospitals (at Sec.  482.23(b)) and CAHs (at 
Sec.  485.635(d)) are already required to provide nursing care to meet 
patient needs. We strive to balance the need for hospitals and CAHs to 
tailor the organization, staffing and policies and equipment for 
delivery of service of their obstetrical service to the unique 
populations, capabilities, and constraints of that hospital or CAH, 
while still meeting the overarching health and safety standards 
established by the CoPs. We agree that the standards mentioned by the 
commenters are the types of standards that we would expect hospitals 
and CAHs to reference in meeting these new CoPs. However, as we have 
done in other CoPs, CMS is not mandating a specific set of standards. 
We reference the recommended standards of practice for OB services, 
including OB staffing, in the CY 2025 OPPS/ASC proposed rule as 
examples (89 FR 59490).
    Comment: Another commenter stated that the proposed requirement 
that obstetrical services be integrated with other departments would be 
challenging because effective coordination with other departments is 
not fully within the control of the OB department and that 
communication challenges often occur when pregnant or postpartum 
patients are admitted in another unit or department. The commenter 
recommended that CMS provide best practices and resources to help 
hospitals improve internal communications across departments.
    Response: We thank the commenters for their input. We continue to 
believe that, while potentially challenging, in order to provide high 
quality and safe care, it is essential that the OB unit be integrated 
with other departments in the hospital as applicable. The integration 
with other departments must be such that the facility can make 
available the full extent of its patient care resources, such as 
laboratory, surgery, or anesthesia, to assess and render appropriate 
care for a patient receiving obstetrical services, particularly in 
emergency situations. We note that such integration is already 
specifically required of some of the services that an OB unit would be 
expected to coordinate with. For example, it is required for hospital 
outpatient services at Sec.  482.54(a) and emergency services at Sec.  
482.55(a)(2). With respect to best practices, in the CY 2025 OPPS/ASC 
proposed rule, we provide references to the recommended standards for 
practice for OB services developed by several accrediting bodies and 
professional medical specialty societies, such as ACOG and Society of 
Maternal Fetal Medicine (SMFM), which also includes discussions of 
strategies related to collaboration and communication within the 
facility as well as with external facilities in order to best treat the 
patient.\646\ We also refer the reader to our HHS resources on 
Strengthening Maternal Health,\647\ the CMS Maternity Care Action 
Plan,\648\ the Medicaid Maternal and Infant Health Initiative 
resources,\649\ and HRSA's Maternal & Child Health Bureau 
resources.\650\
---------------------------------------------------------------------------

    \646\ https://www.acog.org/-/media/project/acog/acogorg/clinical/files/obstetric-care-consensus/articles/2019/08/levels-of-maternal-care.pdf.
    \647\ https://www.hhs.gov/healthcare/maternal-health/index.html.
    \648\ https://www.cms.gov/files/document/cms-maternity-care-action-plan.pdf.
    \649\ https://www.medicaid.gov/medicaid/quality-of-care/quality-improvement-initiatives/maternal-infant-health-care-quality/index.html.
    \650\ https://mchb.hrsa.gov/.
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    Comment: A few commenters supported the proposed requirements at 
Sec. Sec.  482.59(a)(1) and 485.649(a)(1) for labor and delivery rooms/
suites (including labor rooms, delivery rooms (including rooms for 
operative delivery), and post-partum/recovery rooms whether combined or 
separate) to be supervised by an experienced registered nurse, 
certified nurse midwife, nurse practitioner, physician assistant, or a 
doctor of medicine or osteopathy. These commenters appreciated that we 
included a broader range of providers to supervise OB units, noting 
that these providers play an integral role in providing high quality 
reproductive health care and improving outcomes. A commenter supported 
inclusion of other caregivers, such as certified nurse midwives, direct 
entry midwives, Tribal midwives, and doulas in the staffing of labor 
and delivery units as allowed by State law. Some commenters stated that 
expanding the role of midwives and doulas could reduce disparities in 
maternal health outcomes. Another commenter stated that only physicians 
should supervise OB units.
    Other commenters did not support the proposal and stated that CMS 
underestimated the difficulties involved with recruiting, training, and 
retaining qualified clinicians to supervise OB units at the proposed 
levels, particularly for rural hospitals and CAHs, adding that these 
costs are likely to disproportionately impact facilities most at risk 
for eliminating labor and delivery services. These commenters stated 
that the difficulty in retaining staff could result in the closure of 
OB units and the loss of OB services.
    Other commenters suggested that CMS provide an exemption for 
community hospitals, CAHs, and other small hospitals to the 24/7 
supervision requirement and that CMS allow supervision of maternity 
departments or units as opposed to rooms and suites. A commenter stated 
that the proposed requirement for having an OB/GYN physically present 
at all times would reduce their facility's designation from an OB Level 
III Unit to an OB Level II Unit which could increase the risk of having 
to transfer high-risk patients.
    Response: We appreciate the comments provided. We understand the 
staffing challenges experienced by a number of facilities, particularly 
with regard to recruitment and retention in rural and other underserved 
areas. We note that the proposed requirement does not alter any of the 
current requirements related to supervision of services in hospitals 
and CAHs. We also expect that many hospitals and CAHs that currently 
opt to provide obstetrical services and would therefore be required to 
comply with these obstetrical services requirements. Additionally, they 
would have to have practitioners on staff that would perform 
supervision duties for the OB unit such as overseeing staff, training, 
overall patient care, and supporting communications within the unit and 
across the facility. This requirement was intended to recognize that 
practitioners other than physicians are important to delivering 
obstetric services and that we considered them when developing these 
provisions. Also, to clarify, we did not propose a requirement for an 
OB/GYN or any other practitioner to be physically present at all times, 
that is, 24/7, in a hospital or CAH to provide supervision of 
obstetrical services. The current CAH

[[Page 94477]]

CoPs at Sec.  485.618(e), however, require CAHs to establish 
procedures, in coordination with emergency response systems in the 
area, under which a doctor of medicine or osteopathy is immediately 
available by telephone or radio contact on a 24-hours a day basis to 
receive emergency calls, provide information on treatment of emergency 
patients, and refer patients to the CAH or other appropriate locations 
for treatment.
    We reiterate that if not otherwise prohibited by State law, a 
hospital may elect to include advanced practice providers, such as 
advanced practice registered nurses, clinical nurse specialists, 
physician assistants, and nurse midwives) as part of their medical 
staff. Moreover, the hospital CoPs prohibit a hospital from granting 
staff membership or professional privileges in the hospital solely upon 
certification, fellowship, or membership in a specialty body or society 
(Sec.  482.12(a)(7)). In States that permit nurse midwives to admit 
patients (in accordance with hospital policy and practitioner 
privileges), section 1861(e)(4) of the Act requires only Medicare 
hospital patients of a nurse midwife to be under the care of an MD or 
DO (Sec.  482.12(c)(2)). The statute does not require Medicaid nor 
other non-Medicare patients admitted by a nurse midwife to be under the 
care of an MD or DO.\376\ For CAHs, CMS does not have the authority to 
remove the physician oversight requirement for inpatients at Sec.  
485.631(b)(1)(iv), as this is a statutory requirement and the physician 
oversight requirement for outpatients at Sec.  485.631(b)(1)(v) is only 
applicable if required by State law.
    With regard to including doulas in the staffing of an obstetrics 
unit, evidence demonstrates that doulas can improve outcomes, including 
reducing c-section frequency and improving the patient experience for 
mothers.\651\ Nothing in these CoPs would restrict a hospital from 
utilizing doulas to support its obstetric patients, consistent with 
State law and acceptable standards of practice.
---------------------------------------------------------------------------

    \651\ See for example, Sobczak A, Taylor L, Solomon S, Ho J, 
Kemper S, Phillips B, Jacobson K, Castellano C, Ring A, Castellano 
B, Jacobs RJ. The Effect of Doulas on Maternal and Birth Outcomes: A 
Scoping Review. Cureus. 2023 May 24;15(5):e39451. doi: 10.7759/
cureus.39451. PMID: 37378162; PMCID: PMC10292163.
---------------------------------------------------------------------------

    Comment: A few commenters requested clarification regarding the 
terms included in the proposed requirement. Specifically, commenters 
questioned what the term ``supervision'' means, including what minimum 
experience, education, or training is required for practitioners to 
supervise OB units. A few commenters stated that the term 
``experienced'' clinician is not clearly defined and could create an 
arbitrary standard that small rural hospitals and CAHs may be unable to 
meet. One commenter recommended CMS provide more clarity, especially 
for smaller hospitals where staff often work in multiple specialties. 
Another commenter asked CMS to further define what is meant by ``OB 
patient care unit supervisor,'' noting that this role could include 
personnel from a shift-by-shift informal role to a formal unit 
supervisor or director role.
    Response: We appreciate the commenters' input. We recognize that 
meeting this requirement may vary somewhat from facility to facility, 
based on the scope and complexity of the services offered. Similar to 
what is expected for surgical services, we would expect an OB unit to 
be supervised by an experienced registered nurse, certified nurse 
midwife, nurse practitioner, physician assistant, or a doctor of 
medicine or osteopathy. The individual supervising the obstetrical unit 
must demonstrate appropriate education, background working in 
obstetrical services, and specialized training in the provision of 
obstetrical services/management of obstetrical service operations. As 
noted above, we understand that this may vary somewhat based on the 
complexity and scope of the services offered by the facility. Thus, the 
hospital should address its required qualifications for the supervisor 
of the hospital's obstetrical unit in its policies and the supervisor's 
personnel file should contain information demonstrating compliance with 
the hospital's established qualifications.
    Comment: Some commenters specifically opposed the proposed 
requirement at Sec. Sec.  482.59(a)(2) and 485.649(a)(2) that 
obstetrical privileges be delineated for all practitioners providing 
obstetrical care in accordance with the competencies of each 
practitioner. Commenters also opposed the requirement for the 
obstetrical service to maintain a roster of practitioners and their 
specific obstetrical privileges, noting that a statement of the duties 
and privileges of medical staff are currently required in the CoPs 
regarding medical staff bylaws.
    Response: The intent of the proposed regulation was to ensure that 
practitioners have the necessary education, training, and experience to 
provide safe, effective obstetrical care and appropriately perform 
specific procedures. We believed that the proposed CoP would provide 
additional specificity for obstetric service regarding the privileges 
of each practitioner on the service. While we anticipated that the 
proposed requirement would result in minimal additional burden, we 
appreciate the comments regarding the redundancy of this requirement 
with the medical staff bylaws at Sec.  482.22(c) that require the 
inclusion of a statement of the duties and privileges of each category 
of medical staff as well as the inclusion of criteria for determining 
the privileges to be granted to individual practitioners and a 
procedure for applying the criteria to individuals requesting 
privileges. We agree that the information currently required in the 
medical staff bylaws meets the intended purpose of the proposed 
regulations. Therefore, we are finalizing the proposed CoP with a 
modification that references the requirements of the medical staff 
bylaws at Sec.  482.22(c) for hospitals and the requirements for 
agreements for credentialing and quality assurance at Sec.  485.616 for 
CAHs as opposed to finalizing a new requirement for the delineation of 
obstetrical privileges for all practitioners providing obstetrical care 
and the maintenance of a roster of practitioners and their specific 
privileges.
    Comment: Some commenters supported the proposals at Sec. Sec.  
482.59(b)(1) and 485.649(b)(1) to require labor and delivery rooms to 
have certain basic equipment available to the room, including a call-
in-system, cardiac monitor, and fetal doppler or monitor and recognized 
it as an effort to standardize equipment and supplies across facilities 
providing obstetrical care. One commenter specifically supported the 
requirements published in the Guidelines for Perinatal Care, 8th 
Edition, a joint publication by the American Academy of Pediatrics 
(AAP) and the American College of Obstetricians and Gynecologists 
(ACOG), in regards to equipment, in addition to the capabilities and 
equipment recommendations defined in the Levels of Maternal Care 
Consensus statement first published in 2015 by the American College of 
Obstetricians and Gynecologists (ACOG) and the Society for Maternal-
Fetal Medicine (SMFM).
    However, other commenters stated concerns about the proposal. 
Specifically, commenters requested clarity regarding what it means to 
have this equipment ``available'' and the evidence for proposing to 
require this equipment. These commenters noted concerns regarding the 
financial burden of providing the proposed equipment in every room, 
when it may not be necessary for the patient's treatment. They also 
stated that smaller or rural

[[Page 94478]]

hospitals and CAHs with lower patient volume may have this equipment 
available to the unit, but not in every labor and delivery room, and 
suggested that CMS instead allow facilities to have the flexibility to 
provide equipment in accordance with the scope, volume and complexity 
of services they offer. Commenters were particularly concerned with the 
requirement to have a cardiac monitor in each room, stating that 
cardiac monitors are not typically clinically necessary in all labor 
and delivery settings and that this requirement would impose 
significant costs for purchasing the devices and for additional staff 
training, as not all staff are trained in their use. A commenter also 
asked for clarification as to whether a call-in system described a call 
button or a telemetry system, stating that a telemetry system in each 
room would be overly burdensome.
    Lastly, other commenters recommended expanding the proposed 
requirement to include specific additional emergency equipment such as 
adult and newborn oxygen supplies, infant resuscitation equipment, 
crash carts, hemorrhage carts, limited obstetric ultrasonography, and 
equipment that facilitates quantification of blood loss.
    Response: We appreciate the comments regarding the proposed 
requirement for the availability of equipment for the care of 
obstetrical patients. We understand commenters' concerns regarding 
financial investment and potential burden associated with providing the 
proposed equipment to each labor and delivery room or suite, if the 
facility does not currently have it available. We also understand that 
certain facilities, particularly smaller facilities or those in 
underserved areas, including rural areas, may not have the volume of 
obstetric patients or provide the level or scope of obstetrical care to 
necessitate the availability of this equipment in every labor and 
delivery room in order to safely and effectively care for their 
patients. We would, however, expect that facilities that treat a large 
volume or high acuity obstetrical patients would have the 
aforementioned equipment available in every labor and delivery room to 
meet the needs of their patient population.
    Based on these comments and our review of the proposed requirement, 
we believe that, as a minimum standard, facilities offering OB services 
must have basic equipment for the care of OB patients readily available 
to meet the patients' needs. Therefore, we are finalizing Sec. Sec.  
482.59(b)(1) and 485.649(b)(1) with a modification to clarify that 
basic equipment for treating OB patients (including a call-in-system, 
cardiac monitor, and fetal doppler/monitor) must be kept at the 
facility and be readily available to meet the needs of OB patients in 
accordance with the scope, volume, and complexity of services offered 
by the facility. This means a large-volume high-acuity OB unit may have 
this equipment in every L&D room, while a rural hospital with a low-
volume of births may have this equipment readily available within the 
hospital. Of note, by ``call-in system'', we mean a mechanism by which 
a patient and/or caregiver can alert staff of any emergencies or 
concerns. Examples may include a call-bell, alarm, or other 
notification device.
    Additionally, at Sec. Sec.  482.59(b)(2) and 485.649(b)(2), we will 
finalize the requirement that there must be adequate provisions and 
protocols, consistent with nationally recognized and evidence-based 
guidelines, for obstetrical emergencies, complications, immediate post-
delivery care. Provisions include equipment (in addition to the 
equipment required under Sec. Sec.  482.59(b)(2) and 485.649(b)(1)), 
supplies, and medication used in treating emergency cases. Such 
provisions must be kept in the hospital or CAH and be readily available 
for treating emergency cases. While this requirement does not require 
specific items, we would expect provisions to include equipment, 
supplies, blood, and medication used in treating emergency cases. In 
the proposed rule preamble, we provided examples of such supplies 
including: resuscitator, defibrillator, aspirator, and airways, 
endotracheal tubes, ambu bag/valve/mask, oxygen, tourniquets, 
nasogastric tubes, IV therapy supplies, suction machine, and 
defibrillator. Example emergency medications could include analgesics, 
local anesthetics, anti-arrhythmic, cardiac glycosides, 
antihypertensives, antiepileptics, uterotonics, anticoagulants, 
antifibrinolytics, electrolytes and replacement solutions. We note that 
hospitals and CAHs may maintain these and other obstetrical emergency 
supplies in ``crash carts'', ``obstetrical emergency carts/bags/boxes/
kits'',\652\ ``OB hemorrhage carts'',\653\ or other readily accessible 
method for use when and where needed.
---------------------------------------------------------------------------

    \652\ https://saferbirth.org/aim-obstetric-emergency-readiness-resource-kit/.
    \653\ https://saferbirth.org/wp-content/uploads/3-FINAL_AIM_OERRK_Readiness.pdf.
---------------------------------------------------------------------------

    In response to commenters asking for additional specific emergency 
equipment, we believe the above finalized emergency supply requirement 
is comprehensive while allowing facilities flexibility to provide care 
in line with their scope, volume, and complexity of services. CMS is 
not prohibiting hospitals from stocking commenters' suggested supplies, 
but likewise is not mandating specific items given facilities' diverse 
practice settings and scope of services. Rather CMS will require 
facilities to stock provisions necessary for the care their obstetrical 
and neonate patient populations consistent with (1) nationally 
recognized and evidence-based guidelines as well as (2) the facilities' 
scope, volume, and complexity of services. This approach is consistent 
with the new requirement for emergency services readiness (Sec.  
482.55; Sec.  485.618) and existing CAH (Sec.  485.618(b) and (c)) and 
REH (Sec.  485.516(c)(2)) emergency supply standards.
    Comment: A commenter requested clarification regarding whether 
delivery rooms in hospitals and CAHs, specifically rooms for operative 
delivery, would be required to meet the obstetrical services CoP or 
continue to be required to meet the surgical services CoPs. The 
commenter noted that their facility already complies with the surgical 
services CoPs at Sec.  482.51 for their operative delivery rooms. We 
note there are also requirements for surgical services provided at CAHs 
at Sec.  485.639.
    Response: In the CY 2025 OPPS/ASC proposed rule, we included 
proposals for requirements for operative delivery rooms. Specifically, 
at Sec. Sec.  482.59(a)(1) and 485.649(a)(1), we proposed to require OB 
patient care units, described as labor rooms, delivery rooms, including 
rooms for operative delivery, and post-partum/recovery rooms whether 
combined or separate, to meet specific requirements regarding 
supervision. At Sec. Sec.  482.59(b)(1) and 485.649(b)(1) we proposed 
that hospitals and CAHs must have specific equipment available to the 
labor and delivery room suite. The finalized policy requires this 
equipment to be kept at the hospital and be readily available for 
treating obstetrical cases to meet the needs of patients. As noted in 
the interpretive guidance provided in the SOM (A-0940), if a hospital 
provides any degree of surgical services to its patients, the hospital 
must comply with all the requirements of the surgical services CoP. 
Therefore, we expect hospitals and CAHs to continue to comply with the 
surgical services CoP. Additionally, we expect hospitals and CAHs to 
meet any requirements specific to obstetrical services that are not 
delineated in the surgical services CoP. For example, we would expect 
that

[[Page 94479]]

hospitals and CAHs providing obstetrical services would ensure that the 
OB patient care unit, including operative delivery rooms, have the 
basic equipment relevant to maternal care available in the unit.
    Comment: There were supportive comments for the proposed 
requirement that the obstetric service have protocols and provisions to 
address obstetrical emergencies, complications, immediate post-delivery 
care, and other patient health and safety events as identified as part 
of the facility's QAPI program. One commenter recommended expanding the 
current list of equipment used in life-saving procedures to include an 
incubator and another commenter noting that equipment should be 
available for prenatal as well as neonatal emergencies. A few 
commenters recommended including protocols for transport as an 
important part of addressing emergencies, including transfer to a 
hospital with sufficient blood supply to address significant maternal 
hemorrhage and the capability to transport neonatal patients.
    One commenter did not support the proposal stating that multiple 
protocols would be appropriate for complex patients, and it would be 
challenging to identify the appropriate protocol.
    Response: We appreciate these recommendations. We reiterate that 
the proposed requirements at Sec. Sec.  482.59(b)(2) and 485.649(b)(2) 
do not require hospitals and CAHs to have any specific items on the 
unit or in close proximity. The list of emergency equipment and 
supplies provided in the CY 2025 OPPS/ASC proposed rule (89 FR 59492) 
included examples of provisions that we would expect facilities to have 
available in order to quickly and effectively address obstetrical 
emergencies and other issues. Therefore, at this time, we do not 
believe that it is necessary to include any additional supplies or 
medications in this list. Additionally, while we acknowledge that some 
facilities may experience challenges in establishing protocols to 
address these issues that anticipate the complexities involved in this 
care, we believe that these protocols are an important step towards 
avoiding preventable maternal morbidity and mortality and improving 
maternal health outcomes. We believe this is an achievable minimum 
standard. We note that we discuss the policies regarding transfer 
protocols in section A.XXI.6 of this final rule with comment period.
    Comment: In response to our comment solicitation regarding whether 
the proposed requirements for the organization, staffing, and delivery 
OB services should be applicable to REHs, we received a variety of 
comments. A commenter encouraged CMS to apply the organization, 
delivery, and training requirements to REHs. A few commenters stated 
that an REH should be staffed by an emergency medicine physician with 
experience and continuing education requirements in obstetric medicine, 
and a commenter suggested that emergency physicians who are competent 
in OB care should be credentialed to perform deliveries.
    Response: With respect to applying these proposed requirements to 
REHs, we appreciate commenters insights and recommendations, as noted 
above. We will take these comments into consideration for future 
potential rulemaking.
    Final Rule Action: After consideration of the public comments we 
received, we are finalizing these provisions as discussed below.
    For hospitals, we are finalizing the following CoPs as proposed:
    Section 482.59 (Condition of participation: Obstetrical services):
     Section 482.59(a) (Standard: Organization and staffing);
     Section 482.59(a)(1);
     Section 482.59(b) (Standard: Delivery of service); and
     Section 482.59(b)(2).
    We are finalizing the following CoPs with modifications:
     Section 482.59(a)(2) with a modification to reference the 
requirements of the medical staff bylaws at Sec.  482.22(c) for 
hospitals.
     Section 482.59(b)(1) with a modification to clarify that 
basic equipment, including a call-in-system (we note that for the 
purposes of this regulation, call-in system describes a call button), 
cardiac monitor, and fetal doppler or monitor must be kept at the 
hospital and be readily available for treating obstetrical cases to 
meet the needs of patients.
    For Critical Access Hospitals, we are also finalizing the following 
CoPs as proposed:
    Section 485.649 (Condition of participation: Obstetrical Services):
     Section 485.649(a) (Standard: Organization and staffing);
     Section 485.649(a)(1);
     Section 485.649(b) (Standard: Delivery of service); and
     Section 485.649(b)(2)
    We are finalizing the following CoPs with modifications:
     Section 485.649(a)(2) with a modification to reference the 
requirements for agreements for credentialing and quality assurance at 
Sec.  485.616 for CAHs.
     Section 485.649(b)(1) with a modification to clarify that 
basic equipment, including a call-in-system (we note that for the 
purposes of this regulation, call-in system describes a call button), 
cardiac monitor, and fetal doppler or monitor must be kept at the 
hospital and be readily available for treating obstetrical cases to 
meet the needs of patients.
3. Training for Obstetrical Staff in Hospitals and CAHs (Sec. Sec.  
482.59(c), 485.649(c))
    We proposed at new Sec. Sec.  482.59(c) and 485.649(c) that 
hospitals and CAHs with OB services would be required to develop 
policies and procedures that would ensure that relevant obstetrical 
services staff would be trained on select topics that reflect the scope 
and complexity of services offered, including but not limited to 
facility-identified evidence-based best practices and protocols to 
improve the delivery of maternal care within the facility. We also 
proposed that any additions, revisions, or updates to topics be 
informed by the hospital and CAH's QAPI program findings. Additionally, 
we proposed that governing body to identify and document which staff 
must complete annual training and that the hospital and CAH must 
document in the staff personnel records that the training was 
successfully completed. Further, we proposed that the hospital and CAH 
be able to demonstrate staff knowledge on the topics identified at 
Sec. Sec.  482.59(c)(1) and 485.649(c)(1), respectively. We solicited 
public comment on these proposals, including whether these proposed 
staff training requirements should be applicable to REHs. We also 
solicited public comment on whether CMS should require specific 
training on person-centered care, trauma-informed care, cultural 
competency, and/or other topics as part of the evidence-based training.
    In the following section we discuss the public comments received 
and our responses on proposed Sec. Sec.  482.59(c) and 485.649(c), 
which would require hospitals and CAHs to train OB staff on key 
maternal health topics.
    Comment: Several commenters supported requiring evidence-based 
trainings for staff at hospitals with OB services, noting that if 
properly implemented the proposal will likely lead to significant 
improvements in health outcomes by ensuring staff are well-trained and 
that a consistent minimum standard of care is delivered nationwide.
    Many commenters also supported the requirement to train OB staff on 
select topics aimed at improving the delivery of maternal care and 
recommended several specific topics that OB staff

[[Page 94480]]

should be trained on. Several commenters supported requirements for 
training related to cultural competency, highlighting the negative 
health outcomes and health inequities that result from a lack of 
culturally competent care. For example, commenters shared that the lack 
of cultural competency among non-Tribal providers has contributed to 
poor quality care for pregnant and birthing Native women. Another 
commenter underscored the importance of combatting medical 
misinformation as it contributes to health inequities. For example, the 
commenters noted that it is still a common belief among medical 
professional students that Black patients have a higher pain tolerance 
than white patients. Because of this, Black patients often do not 
receive proper main management.
    A few commenters also supported trauma-informed care (TIC) as a 
training topic, explaining that TIC training prepares staff to support 
patients who have experienced trauma. A commenter also supported 
inclusion of person-centered care training topics because these care 
models are associated with increased patient satisfaction and trust. 
Some commenters also recommended training on substance use disorders 
and related topics including neonatal abstinence, perinatal mood 
disorders, and managing substance use disorder within pregnant 
patients. Various other topics included health disparities, care for 
people with disabilities, and pregnancy criminalization. A few 
commenters also recommended clinical topics including severe 
hypertension/preeclampsia, hemorrhage, fetal monitoring, shoulder 
dystocia, and neonatal resuscitation.
    Conversely, a few commenters recommended that CMS not specify 
training topics within the CoPs, explaining that because hospitals 
serve diverse patient populations, it is more appropriate for hospitals 
to determine the most relevant training topics.
    Response: We thank commenters for their support and highlighting 
the improved health care outcomes staff training will lead to as well 
as providing recommendations on additional topics to improve the 
delivery of maternal care. These requirements will support clinicians 
in performing vital tasks consistently through evidence-based 
standardized practices, which can ultimately reduce errors.\654\
---------------------------------------------------------------------------

    \654\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2019/10/clinical-guidelines-and-standardization-of-practice-to-improve-outcomes.
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    While CMS encourages facilities to train staff on the 
aforementioned topics, we also recognize that hospitals and CAHs serve 
diverse populations with unique needs. Therefore, we are providing 
facilities with the flexibility to select which evidence-based best 
practices and protocols to train on that reflect the scope and 
complexity of the services offered within their facility and the needs 
of their specific patient population. Based on the findings from a 
facility's QAPI program, a facility may determine that some of the 
aforementioned topics are important for staff to be trained on in order 
to improve patient outcomes or address disparities. For example, a 
CAH's QAPI program may reveal that a significant portion of their 
obstetrical patients have diagnosed substance use disorders (SUD). 
Subsequently, this CAH may decide to pursue training for their OB staff 
on behavioral health and/or medications for opioid use disorder. 
Another hospital's QAPI findings may reveal that a large percentage of 
their patient population does not speak English as their first 
language. To address this, the hospital may pursue training relevant 
staff on the culturally and linguistically appropriate care and/or 
person-centered care. While not required, facilities that wish to learn 
more about culturally competent care and person-centered care may wish 
to review the following resources among others:
     Think Cultural Health. Health and Human Services. Office 
of Minority Health, Department of Health and Human Services. https://thinkculturalhealth.hhs.gov/clas.
     Addressing Health Literacy. Health Resources and Services 
Administration. https://www.hrsa.gov/about/organization/bureaus/ohe/health-literacy/culture-language-and-health-literacy.
     Behavioral Health Implementation Guide for the National 
Standards for Culturally and Linguistically Appropriate Services in 
Health and Health. Office of Minority Health, Department of Health and 
Human Services. https://thinkculturalhealth.hhs.gov/assets/pdfs/resource-library/clas-standards.pdf.
     Fundamentals of the National Standards for Culturally and 
Linguistically Appropriate Services in Maternal Healthcare, Office of 
Minority Health, Department of Health and Human Services. https://thinkculturalhealth.hhs.gov/resources/presentations/1/fundamentals-of-the-national-standards-for-culturally-and-linguistical.
     Culturally and Linguistically Appropriate Services in 
Maternal Health Care, Department of Health and Human Services. https://thinkculturalhealth.hhs.gov/education/maternal-health-care.
    Comment: A few commenters stated that requiring the governing body 
to identify and document which staff must complete annual training is 
inconsistent with governing body activities, which typically focus on 
oversight. Another commenter stated that hospitals' governing bodies 
may lack the medical expertise to identify which staff must complete 
annual training. These commenters noted that regulation implementation 
details are generally determined by service line leadership, and 
therefore, medical leadership should guide training decisions to ensure 
effective and relevant instruction.
    Response: The hospital governing body performs a broad array of 
functions and is responsible for a variety of tasks, including but not 
limited to planning and budgeting, care of patients, managing 
contracted services, and participating in the QAPI program. Section 
482.12(a)(10) requires the hospital governing body to consult directly 
with the individual assigned the responsibility for the organization 
and conduct of the hospital's medical staff. In addition, governing 
bodies have experience appointing individuals for certain roles and 
also have the ability to grant clinical privileges. For example, Sec.  
485.639 states, ``If a CAH provides surgical services, surgical 
procedures must be performed in a safe manner by qualified 
practitioners who have been granted clinical privileges by the 
governing body.'' The governing body is also responsible for appointing 
an individual or individuals to serve as the infection preventionist/
infection control professional (Sec. Sec.  482.42(a)(1), 
485.640(a)(1)). Thus, we believe that determining which relevant staff 
must be trained on maternal health topics is not outside the scope of 
their capabilities and standard activities. Further, we note that the 
governing body has the ability to delegate tasks and responsibilities, 
including to medical staff, but maintains overall responsibility for 
compliance.
    Comment: Some commenters requested CMS provide additional guidance 
regarding which staff will be required to complete OB training and 
provided further recommendations for staff that may require additional 
training. For example, a commenter requested clarification on training 
for staff without specific maternity credentials and privileges for 
midwives who do not have formal educational training, while another 
commenter

[[Page 94481]]

recommended that CMS develop guidance for the training of Nurse 
Practitioners, Physician Assistants, and direct entry midwives. Some 
commenters also suggested implementing standards that are developed for 
non-obstetrical staff, as appropriate, as they may still have 
interactions with OB patients. The commenter noted that these staff 
should have basic knowledge on the leading causes of maternal deaths 
(e.g., hemorrhage, hypertension, and mood disorders).
    Response: As outlined in the introductory paragraph of Sec. Sec.  
482.59 and 485.649, ``Condition of participation: Obstetrical 
services,'' if a hospital or CAH offers OB services, the services must 
be well organized and provided in accordance with nationally recognized 
acceptable standards of practice for the health care of pregnant, 
birthing, and postpartum patients. At Sec. Sec.  482.59(c)(3) and 
485.649(c)(3), we are requiring the governing body of hospitals and 
CAHs to identify and document which relevant staff must complete the 
training. While we are providing hospitals and CAHs with the 
flexibility to determine training topics based on the scope and 
complexity of their services and also with the flexibility to determine 
the format to administer the training, we expect facilities to provide 
high-quality training, consistent with, and tailored to the staff's 
expected role, with the goal of improving the delivery of obstetrical 
care.
    We recognize that staff outside of OB units may also interact with 
OB patients. Thus, we are also requiring staff to be trained on 
transfer protocols (Sec.  482.43(c)) and emergency services readiness 
(Sec. Sec.  482.55(c)(3), 485.618(e)(2)). We refer readers to sections 
A.XXI.5 and A.XXI.6 of this final rule with comment period for 
additional details on training on emergency services readiness transfer 
protocol training, respectively. This requirement does not preclude 
hospitals or CAHs from training additional staff on maternal health 
topics.
    Comment: Some commenters supported that findings from QAPI programs 
should be used to inform training needs and updates on an ongoing 
basis. A commenter requested CMS more clearly define ``ongoing basis'' 
and instead suggested we incorporate different terminology, such as 
``annually.''
    Response: Stratified data can produce meaningful measures that can 
be used to expose health disparities, develop interventions to reduce 
them, and monitor performance to ensure interventions aimed at 
improving care do not have unintended consequences for certain patients 
and improve patient outcomes.\655\ Continuous quality improvement 
depends on a disciplined and well-defined data-driven process that 
constantly is monitored and improved.\656\ Facilities must review 
findings from their QAPI programs on an ``ongoing basis'' to determine 
any additions, revisions, or updates to training concepts. That is, 
facilities should be able to verify that data analyses and collection 
are occurring over time and are not just one-time events. Hospitals and 
CAHs should perform follow-up analyses on its remedial actions to 
determine if its actions were effective in improving performance and 
quality. We also expect hospitals and CAHs to continuously study and 
improve their processes and service delivery and take a proactive 
approach to improve their performance (QSO-23-09-Hospital).\657\ We 
refer readers to section A.XXI.3 of this final rule with comment period 
for further details on the updated QAPI requirements.
---------------------------------------------------------------------------

    \655\ https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2011.0617
    \656\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2019/10/clinical-guidelines-and-standardization-of-practice-to-improve-outcomes.
    \657\ https://www.cms.gov/files/document/qso-23-09-hospital.pdf
---------------------------------------------------------------------------

    Comment: Some commenters provided recommendations regarding the 
modality in which staff be trained on pertinent maternal health topics. 
For example, a commenter recommended that training should be completed 
in an active learning style which involves staff collaboration. Another 
commenter recommended against requiring simulation training. Lastly, a 
few commenters recommended that staff be trained upon hire or complete 
an orientation program.
    Response: While we acknowledge the benefits of training in a 
collaborative environment that encourages increased staff engagement, 
we are not requiring the training to be completed in a specific manner 
or format. These requirements permit facilities with the flexibility to 
determine the manner in which staff are trained on evidence-based best 
practices and protocols to advance the delivery of maternal care and 
other training topics as identified by the facilities' QAPI program. 
This flexibility allows facilities to test different approaches to 
conducting training over time, which could be informed by post-training 
evaluations or monitoring of outcomes.
    High-quality orientation of trainees entering a new health care 
setting is imperative to support education and patient safety.\658\ 
Therefore, we are revising the staff training requirements and will 
require staff to complete training when hired. Specifically, at new 
Sec. Sec.  482.59(c)(2) and 485.649(c)(2) we are requiring hospitals 
and CAHs to provide relevant new staff with initial training. We are 
also requiring the governing body to identify and document what staff 
must complete the initial training and subsequent biannual training on 
evidence-based best practices at Sec. Sec.  482.59(c)(3) and 
485.649(c)(3). Research has demonstrated that a practical and well-
structured nursing orientation program can have a positive impact on 
new nurses who are joining health care organizations, including 
improved competence.659 660 Another study demonstrated that 
effective new employee orientation reduces role ambiguity and role 
conflict. Role ambiguity is negatively correlated to task performance 
and role conflict reflects job attitudes.\661\ The Joint Commission 
describes an orientation program, ``as an introductory program and/or 
activities intended to guide a person in adjusting to new surroundings, 
employment, policies/procedures, essential job functions, etc.\662\ The 
hospital or CAH will be responsible for determining when and how long a 
person is considered to be in orientation.
---------------------------------------------------------------------------

    \658\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8760640/.
    \659\ https://www.sciencedirect.com/science/article/pii/S2666142X24000419#bib0028.
    \660\ https://www.sciencedirect.com/science/article/pii/S2352013221000028.
    \661\ https://www.sciencedirect.com/science/article/pii/S0278431920304096.
    \662\ https://www.sciencedirect.com/science/article/pii/S2666142X24000419#bib0028.
---------------------------------------------------------------------------

    Comment: Several commenters stated that financial, staffing, and 
infrastructure limitations would make training requirements burdensome 
for facilities. Commenters recommended modifying the proposed 
provisions to accommodate the specific needs of each facility and 
provide resources, technical assistance, and financial support/funding, 
particularly for hospitals in rural and/or underserved areas, to help 
facilities effectively implement the provisions. To ensure high-quality 
training, some commenters recommended specific resources that 
facilities may use as a guide to implement these requirements. Some 
examples include the HHS training ``Culturally and Linguistically 
Appropriate Services (CLAS) in

[[Page 94482]]

Maternal Health Care \663\ and ACOG's ``Guidelines for Perinatal Care, 
8th Edition.'' \664\
---------------------------------------------------------------------------

    \663\ https://thinkculturalhealth.hhs.gov/education/maternal-health-care.
    \664\ https://www.acog.org/store/products/clinical-resources/guidelines-for-perinatal-care.
---------------------------------------------------------------------------

    Response: We understand the commenter's concerns about the 
potential burden that these training requirements could place on 
facilities. We therefore are revising the staff training requirements 
and reduced the frequency to every two years to ease any financial 
strain this requirement may place on facilities. While facilities will 
have upfront costs to implement these requirements, the benefits for 
patient outcomes outweighs the burden. Additionally, hospitals and CAHs 
have the flexibility to identify which evidence-based best practices 
and protocols they will train on to improve the delivery of maternal 
care within their facility. We are not prescribing a specific format 
the training be conducted in, allowing facilities to carry out the 
training in a manner that best fits their needs. In addition, we are 
also allowing for a staggered implementation. Further details on the 
implementation timeframe can be found in section A.XXI.7 of this final 
rule with comment period. During this time period, facilities will be 
able to gather resources and support to be prepared for the effective 
date.
    To further mitigate burden concerns, we refer facilities to several 
resources facilities that may be utilized to achieve compliance with 
these requirements (although others may be used). For example, 
facilities will have support from Quality Improvement Organizations 
(QIOs), which serve people with Medicare, health care providers, and 
communities. The QIO Program data-driven initiatives bring stakeholders 
together at the local, community, and tribal levels to improve care 
coordination and the quality-of-care transitions and increase patient 
safety.\665\ Perinatal quality collaboratives (PQCs) are State or 
multistate networks of teams that work to identify health care 
processes in need of improvement in order to advance the quality of 
care for mothers and babies.\666\ Additionally, the Health Resource and 
Services Administration (HRSA) funds the Alliance for Innovation on 
Maternal Health (AIM) to establish patient safety 
bundles.667 668 Perinatal quality collaboratives often 
support the implementation of maternal safety bundles, which have 
documented success in driving improvements, particularly with regards 
to obstetric hemorrhage, severe hypertension in pregnancy, and non-
medically indicated Cesarean deliveries.669 670 671 672
---------------------------------------------------------------------------

    \665\ https://www.cms.gov/medicare/quality/quality-improvement-organizations.
    \666\ https://www.cdc.gov/reproductivehealth/maternalinfanthealth/pqc.htm.
    \667\ https://saferbirth.org/about-us/.
    \668\ https://www.ihi.org/insights/what-is-a-bundle.
    \669\ Jennifer A. Callaghan-Koru et al. Implementation of the 
Safe Reduction of Primary Cesarean Births safety bundle during the 
first year of a statewide collaborative in Maryland. Obstet Gynecol 
2019;134:109-19.
    \670\ Elliott K. Main et al. Reduction of severe maternal 
morbidity from hemorrhage using a state perinatal quality 
collaborative. Am J Obstet Gynecol 2017;216(3):298.e1-298.e11.
    \671\ Patricia Lee King et al. Reducing time to treatment for 
severe maternal hypertension through statewide quality improvement. 
Am J Obstet Gynecol 2018;218:S4.
    \672\ https://www.cms.gov/files/document/qso-22-05-hospitals.pdf.
---------------------------------------------------------------------------

    As commenters outlined, facilities may use the credentialing 
published in the ``Guidelines for Perinatal Care, 8th Edition'' \673\ 
or the HHS ``Culturally and Linguistically Appropriate Services (CLAS) 
in Maternal Health Care'' \674\ training as a resource. Of note, these 
CoPs do not require adherence to a specific organization's guidelines 
or recommendations. We expect that facilities will be able to 
articulate their standards and the source(s) and to demonstrate that 
their staff training requirements are based on evidence-based best 
practices. As previously discussed in sections XXIA.1 and XXI.A.2 of 
this final rule with comment period, HHS and HRSA have established 
several initiatives to address the health care workforce shortage; CMS 
is not mandating a specific staffing standard.
---------------------------------------------------------------------------

    \673\ https://www.acog.org/store/products/clinical-resources/guidelines-for-perinatal-care.
    \674\ https://thinkculturalhealth.hhs.gov/education/maternal-health-care.
---------------------------------------------------------------------------

    Comment: Multiple commenters discussed existing staff training 
requirements that may be required through either accreditation 
standards and/or continuing education requirements. Some commenters 
recommended that CMS maintain flexibility in the training requirements 
to accommodate existing training requirements from national 
accreditation and credentialing bodies and to align with best practices 
from accreditation agencies (for example, TJC) which require a biannual 
training cycle. Other commenters questioned if the staff training 
requirement is in addition to continuing education requirements for 
clinical staff.
    Response: We are aware that the majority of hospitals participate 
in the Medicare program through deemed status with an accrediting 
organization \675\ and that accrediting organizations may have 
additional requirements that exceed Medicare CoP requirements as part 
of their CMS-approved deeming program. If a facility is in compliance 
with those requirements, this may also facilitate compliance with this 
requirement. Continuing medical education (CME) from local, State, 
hospital, specialty society, and accrediting organizations may be used 
by providers and facilities to meet these new requirements, subject to 
(1) facility's choice of ``evidence-based best practices and protocols 
to improve the delivery of maternal care within the facility and (2) 
facility QAPI findings. For example, a specialty society may require 
that providers complete CME on maternal hypertension (HTN). If the 
hospital chooses maternal HTN as a training topic and identifies the 
same specialty society training, then it would align, and the provider 
may only have to do one training to meet both requirements. Conversely, 
if the hospital does not choose maternal HTN or creates its own 
training/protocol, then the provider would have to complete two 
trainings in this case.
---------------------------------------------------------------------------

    \675\ https://www.jointcommission.org/resources/news-and-multimedia/fact-sheets/facts-about-hospital-accreditation/.
---------------------------------------------------------------------------

    Comment: A few commenters cautiously supported including REHs in 
the requirements for OB staff training, to the extent such training 
fits with the REH's scope of practice. A commenter explained that 
because these requirements allow for flexibility in designing the 
training curriculum and selecting appropriate trainers, this 
requirement should apply to REHs. However, another commenter expressed 
the concern that the ability to provide training would be diminished 
for REHs because of lack of experience with OB emergencies.
    Response: While we recognize that OB staff training is important 
for REHs as patients utilizing these services may be some of the most 
high-risk populations, we are not extending the OB staff training 
requirement to REHs at this time. While not required, we still 
encourage REHs to train their staff on evidence-based best practices to 
improve the delivery of maternal care to their patients, within the 
scope and complexity of the services offered in their facility, to the 
extent the REH has the resources/capacity to do so. We acknowledge that 
some REHs may have already implemented these practices. We expect 
facilities to utilize organizations or individuals that are properly 
qualified or credentialed to

[[Page 94483]]

oversee the training and have demonstrated knowledgeable on the 
subjects.
    Final Rule Action: After consideration of the public comments we 
received, we are finalizing the staff training requirements with 
modifications as outlined below.
    For hospitals, we are finalizing the following CoPs as proposed:
     Section 482.59(c)(1).
     Section 482.59(c)(1)(i).
     Section 482.49(c)(1)(ii).
     Section 482.49(c)(4).
     Section 482.49(c)(5).
    For hospitals, we are finalizing the following CoPs with 
modifications:
     Section 482.59(c) with a modification to clarify that the 
effective date of the staff training requirements for hospitals is 
January 1, 2027 (two years are the effective date of the final rule).
     Section 482.59(c)(2) with a modification to require the 
hospital to provide relevant staff with initial training.
     Section 482.59(c)(3) with a modification to require the 
governing body to identify and document which staff must complete an 
initial training and subsequent biannual training.
    For CAHs, we are finalizing the following CoPs as proposed:
     Section 485.649(c).
     Section 485.649(c)(1)(i).
     Section 485.649(c)(1)(ii).
     Section 485.649(c)(4).
     Section 485.649(c)(5).
    For CAHs, we are finalizing the following CoPs with modifications:
     Section 485.649(c) with a modification to clarify that the 
effective date of the staff training requirements for CAHs is January 
1, 2027 (two years after the effective date of the final rule).
     Section 485.649(c)(2) with a modification to require the 
CAH to provide relevant staff with initial training.
     Section 485.649(c)(3) with a modification to require the 
governing body to identify and document which staff must complete an 
initial training and subsequent biannual training.
4. Quality Assessment and Performance Improvement (QAPI) Program (Sec.  
482.21; Sec.  485.641)
    We proposed revisions to the existing QAPI standards (Sec.  482.21; 
Sec.  485.641) for hospitals and CAHs that offer obstetrical 
services.\676\ First, we proposed that a hospital or CAH that offers OB 
services would be required to use its QAPI program to assess and 
improve health outcomes and disparities among OB patients on an ongoing 
basis (Sec.  482.21(b); Sec.  485.641(e)(2)). Specifically, the 
facility at a minimum must: (1) analyze data and quality indicators 
collected for the QAPI program by diverse subpopulations as identified 
by the facility among OB patients; (2) measure, analyze, and track 
data, measures, and quality indicators on patient outcomes and 
disparities in processes of care, services and operations, and outcomes 
among OB patients; (3) analyze and prioritize patient health outcomes 
and disparities, develop and implement actions to improve patient 
health outcomes and disparities, measure results, and track performance 
to ensure improvements are sustained when disparities exist among OB 
patients; and (4) conduct at least one performance improvement project 
focused on improving health outcomes and disparities among the 
hospital's population(s) of OB patients annually.
---------------------------------------------------------------------------

    \676\ For purposes of the proposal, CMS considers a facility to 
``offer obstetrical services'' when the facility ``[holds itself] 
out to the public (by name, posted signs, advertising, or other 
means) as a place that provides care for obstetrical medical 
conditions.'' This is similar to how emergency departments are 
defined in EMTALA (42 CFR 489.24(b), ``Dedicated emergency 
department'', paragraph (2)).
---------------------------------------------------------------------------

    Next, under a new standard for Maternal Health QAPI activities for 
hospitals (Sec.  482.21(e)(1)) and CAHs (Sec.  485.641(d)(4)(i)), we 
proposed to require that for hospitals and CAHs that offer OB services, 
leadership must be engaged in the facility's QAPI activities. For 
purposes of this provision, leadership is defined as facility 
leadership, obstetrical services leadership, or their designate(s).
    We further proposed that if a MMRC is available at the State or 
local jurisdiction in which the facility was located, hospitals (at 
Sec.  482.21(e)(2)) and CAHs (at Sec.  485.641(d)(4)(ii)) that offer OB 
services must have a process for incorporating MMRC data and 
recommendations into the facility's QAPI program.
    Finally, we solicited public comments and evidence related to these 
proposals, including how these proposals would impact maternal health 
and safety, how facilities currently use their QAPI programs to address 
maternal health, best practices for data analysis and stratification in 
QAPI programs, best practices for sharing QAPI findings with impacted 
communities, and whether these proposed requirements should be 
applicable to REHs.
    We received several comments on these proposals. We address those 
comments and our responses below:
    Comment: Many commenters supported encouraging the use of QAPI 
programs to collect data, evaluate disparities, and address gaps in 
maternal health care to improve equity and outcomes for OB patients. 
Specifically, several commenters supported the QAPI revisions for OB 
patients related to data analysis, describing such QAPI work as 
important for improving maternal health. Several commenters stated that 
targeted data collection and analysis by diverse subpopulations is 
important for identifying disparities and enabling data-driven 
interventions. A few commenters also appreciated the CMS' permitting 
flexibility for hospitals to use the data analysis methodology most 
appropriate for their patient population.
    However, other commenters expressed concern regarding the potential 
burden of these standards in terms of staff, technology, and data 
expertise, which could cause more hospitals to eliminate OB services 
and contribute to worse access to OB care and higher risks of maternal 
and infant morbidity and mortality, especially in rural and underserved 
communities. Multiple commenters recommended a phased implementation of 
the requirements to ensure facilities can successfully meet the new 
standards. Multiple commenters recommended that CMS offer resources 
(including financial) and technical assistance to support 
implementation, especially in rural facilities.
    Response: We appreciate all input received on this topic. We agree 
that data analysis by diverse subgroup can drive improvements in 
maternal health and reduce associated disparities. As discussed in the 
CY 2025 OPPS/ASC proposed rule preamble, this new standard builds on 
other CMS quality improvement and data analysis initiatives, such as 
the ``Birthing-Friendly'' hospital designation and complements existing 
work by State Perinatal Quality Collaboratives.\677\ Such initiatives 
can reduce the burden on facilities in meeting these revised 
requirements. Facilities may also choose to partner with QIOs as well 
as leverage integrated health system resources (as described in 42 CFR 
482.21(f)) in order to reduce any burden of compliance. In addition to 
the resources cited in the CY 2025 OPPS/ASC proposed rule, CMS will 
develop guidance for facilities to support compliance with these new 
standards. We note that financial assistance or issues pertaining to 
payment policy are beyond the scope of

[[Page 94484]]

the CoPs. CMS will also allow for a phased in implementation timeline 
for these QAPI standards as further discussed in section XXI.A.7 of 
this final rule with comment period.
---------------------------------------------------------------------------

    \677\ https://www.cdc.gov/maternal-infant-health/pqc/index.html.
---------------------------------------------------------------------------

    Comment: Multiple commenters noted concern for duplication and 
overlapping Federal quality efforts related to maternal health and 
these new CoPs. One commenter stated that the existing QAPI CoP 
requirements are comprehensive, making any new QAPI requirements 
unnecessary and duplicative.
    Instead of the CoPs, several commenters suggested CMS use other 
policy levers, such as existing quality reporting and performance 
improvement programs, to incentivize improvements in maternal health 
care. Another commenter noted that hospitals are already involved in 
multiple OB quality efforts, including already having a QAPI program in 
their OB department, pursuing the ``Birthing-Friendly'' designation, 
and adopting maternal health focused quality measures. Additionally, a 
few commenters noted hospitals are already working to comply with CMS 
IQR program's new ``Hospital Commitment to Health Equity'' 
measure,\678\ and that other programs exist to report data related to 
cesarean rates stratified by race and ethnicity. One commenter 
expressed concern that multiple projects addressing stratification may 
lead to confusing or duplicative requirements, which could increase 
burden on safety net hospitals which are already resource limited. 
Another commenter stated that the HHS Perinatal Improvement 
Collaborative is an existing example of using data to drive clinical 
quality improvement and advance health equity.
---------------------------------------------------------------------------

    \678\ https://www.cms.gov/newsroom/fact-sheets/fy-2023-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-hospital-prospective.
---------------------------------------------------------------------------

    Commenters also flagged that the Federal Government is currently 
implementing new policies for the collection and use of race and 
ethnicity data. A few commenters recommended postponing requirements on 
the collection, reporting, and use of race and ethnicity data until 
OMB's revised race and ethnicity data collection standards are fully 
implemented. These commenters recommended focusing instead on other 
activities, such as implementation of HHS's Action Plan on Race and 
Ethnicity Data in preparation for the revised data collection 
standards.\679\
---------------------------------------------------------------------------

    \679\ https://www.govinfo.gov/content/pkg/FR-2024-03-29/pdf/2024-06469.pdf.
---------------------------------------------------------------------------

    Overall, these commenters recommended that CMS support providers in 
these existing quality initiatives, as well as State Perinatal Quality 
Collaboratives, that foster the sharing of innovations and best 
practices, rather than pursue new CoPs. Multiple commenters recommended 
allowing hospitals flexibility to determine their own priorities for 
data collection, tracking, and analysis rather than new CoPs. A few 
commenters suggested that CMS provide incentives to facilities that 
demonstrate participation in evidence-based initiatives to improve 
maternal and infant health.
    Response: CMS has developed a robust number of quality initiatives 
to spur improvements in maternal health, including the ``Birthing-
Friendly'' designation \680\ and hospital IQR measures \681\ related to 
maternal health. We appreciate commenters highlighting CMS' ongoing 
efforts related to quality metrics and maternal health. CMS considers 
the new QAPI standards for OB services to be complementary to these 
quality initiatives, rather than duplicative. CMS is not seeking to 
create new burden nor have facilities repeat existing work, but rather 
ensure facilities' participation in quality initiatives in order to 
improve maternal morbidity and mortality while preserving flexibility 
for facilities in how they choose to go about doing so. Facilities may 
choose to develop their own quality initiatives/projects or join other 
local/state/Federal maternal health quality efforts as part of their 
QAPI program. As discussed in the CY 2025 OPPS/ASC proposed rule 
preamble, facilities may use data from State Perinatal Quality 
Collaboratives, CMS IQR maternal health quality measures, or other 
Federal or State maternal health quality initiatives in order to meet 
these new QAPI standards at reduced burden. CMS has also provided 
facilities with the flexibility to choose which maternal health topics 
and data analysis methods to use in meeting these standards so that 
their QAPI programs may be tailored to their unique patient 
populations.
---------------------------------------------------------------------------

    \680\ https://data.cms.gov/provider-data/birthing-friendly-hospitals-and-health-systems.
    \681\ https://www.cms.gov/newsroom/fact-sheets/fy-2023-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-hospital-prospective.
---------------------------------------------------------------------------

    Comment: Commenters also questioned whether new QAPI standards for 
OB services could cause unintended consequences due to low data quality 
and/or lack of data expertise. Specifically, a few commenters expressed 
concerns that analyses based on data which has not been validated may 
cause health care systems and hospitals to expend resources to identify 
trends or establish policies that fail to address the root cause of 
poor maternal health outcomes and inequities. A few commenters 
cautioned that misclassification or aggregation of data across diverse 
populations can mask disparities or inflate trends, leading to faulty 
conclusions, and that failing to account for systemic biases in data 
collection or analysis can perpetuate existing inequities. Another 
commenter expressed concern that many hospitals do not have staff 
sufficiently skilled in analyzing complex datasets to understand the 
relationship of SDOH data to clinical outcomes.
    Response: As discussed in the preamble, hospitals are encouraged to 
utilize the data analysis methods that best fits their patient 
population and data analysis resources, and to utilize best practices 
in conducting their QAPI work. Partnering with QIOs, joining existing 
local/state/Federal quality efforts, and leveraging integrated health 
system resources can all be potential options for allowing facilities 
to comply with these new standards and access data analysis expertise 
and staff support, while being mindful of burden.
    Comment: While several commenters appreciated CMS' permitting 
flexibility for hospitals to use the data analysis methodology most 
appropriate for their patient population, other commenters recommended 
that CMS consider the needs of providers with limited data collection 
resources or capabilities (staff, technology, data). Specifically, a 
few commenters stated that it is difficult to conduct statistically 
valid analyses of subpopulations due to the small number of deliveries 
in many rural hospitals, and that these data challenges complicate the 
efforts of smaller hospitals to assess and address disparities. Several 
commenters were concerned that smaller healthcare facilities may face 
privacy concerns due to the small size of certain subgroups. 
Additionally, another commenter recommended CMS ensure EHR vendors can 
support the required subpopulation analyses prior to adopting these 
requirements.
    Response: CMS is committed to ensuring that all mothers, regardless 
of facility size or size of their patient demographic group within a 
particular facility, have access to high quality care. CMS is not 
requiring specific data analysis nor stratification methods. Rather, 
hospitals are encouraged to utilize the data analysis method that best 
fits their patient population and resources and to utilize best 
practices in conducting their QAPI work. Facilities

[[Page 94485]]

also have the flexibility to define diverse populations and set the 
time period for their analyses that best supports robust QAPI 
evaluations and patient privacy. The proposal does not require that 
facilities utilize EHRs to conduct their QAPI work, though CMS 
recognizes that electronic systems can greatly aid this work. We 
encourage facilities to adopt the analysis method that best suits their 
available resources, and leverage partnerships with QIOs, existing 
local/state/Federal quality efforts, and integrated health system 
resources in order to reduce burden and mitigate data challenges.
    Comment: CMS received mixed comments regarding the effectiveness of 
quality improvement projects to address the maternal health crisis. 
Several commenters noted that targeted data collection and analysis by 
diverse subpopulations is important for identifying disparities and 
enabling data-driven interventions. In contrast, one commenter stated 
that CMS has not provided evidence that the proposed data analysis 
requirements are likely to improve maternal health outcomes. Another 
commenter stated that some hospitals have been working to improve 
maternal health outcomes without relying on regulatory requirements and 
have found that disparities persist. These commenters suggest that CMS 
consider policies addressing non-clinical factors (meaning the social 
determinants of health (SDOH), such as transportation access, housing 
quality, and insurance coverage), which have a significant impact on 
maternal mortality and morbidity, rather than establish new CoPs. On 
the other hand, several other commenters recommended CMS address the 
root causes of the maternal health crisis by requiring facilities to 
prioritize identifying and addressing unmet social needs in their QAPI 
programs.
    Response: CMS recognizes the profound impact of the SDOH on 
maternal health outcomes. As discussed in the preamble, research 
indicates data stratification and analyses can allow facilities to 
identify when disparities occur and develop tailored interventions. 
Facilities have the flexibility to design their QAPI efforts to address 
SDOH, clinical factors, or both based on the needs of their patients 
and facility resources. While the proposal does not require facilities 
to do so, CMS believes facilities can play a critical role in 
connecting patients to resources that can address SDOH and improve 
outcomes. We encourage facilities to partner with existing community 
resources to assist patients with SDOH needs.
    Comment: CMS received multiple comments regarding concerns from 
rural providers regarding the QAPI requirements. Specifically, several 
commenters urged CMS to exclude REHs and CAHs from the new QAPI 
requirements due to concerns regarding additional burden and compliance 
challenges faced by rural and low-volume providers compared to larger/
urban facilities. A commenter recommended providing technical 
assistance to support these rural providers in effectively implementing 
QI initiatives, including integrating quality measurement with data 
reporting within their EHRs.
    Response: CMS is committed to ensuring high quality OB care for all 
mothers regardless of geographic location, but is also sensitive to the 
burden concerns of rural providers. As will be discussed in section 
XXI.A.7 of this final rule with comment period, CMS will allow for a 
phased in implementation timeline for these QAPI standards in order to 
reduce burden. We will also issue subregulatory guidance regarding how 
surveyors will assess compliance with these requirements after 
publication of the final rule. We encourage facilities to utilize the 
data analysis method that best suits their available resources and 
leverage partnerships with QIOs, existing local/state/Federal quality 
efforts, and integrated health system resources in order to reduce 
burden and mitigate data challenges. While the proposal does not 
require that facilities use EHRs in their QAPI work, providers 
interested in doing so may wish to review the following resources from 
the Office of the National Coordinator for Health Information 
Technology (ONC) resources among others:
     ONC. ``Clinical Quality and Safety.'' https://www.healthit.gov/topic/clinical-quality-and-safety.
     ONC. ``Quality Improvement Briefs.'' https://www.healthit.gov/resource/quality-improvement-briefs.
     ONC. ``Continuous Quality Improvement.'' https://www.healthit.gov/faq/what-continuous-quality-improvement.
    ONC. ``Section 8: Quality and Patient Safety.'' Health IT Playbook. 
https://www.healthit.gov/playbook/quality-and-patient-safety/.
    Comment: We received several comments regarding the proposal to 
require facilities to conduct at least one maternal health performance 
improvement project (PIPs) annually. A few commenters supported the 
proposal, noting its potential to spur improvements in maternal 
morbidity and mortality. However other commenters stated that such 
projects may take longer than one year to implement and evaluate, and 
suggested CMS allow PIPs over a longer period (such as two or three 
years). A commenter supported allowing providers to choose PIPs that 
align with State or Federal quality initiatives and are specific to the 
needs of their facility or community but expressed concern that 
providers that do not participate in statewide maternal health 
initiatives may struggle to meet the new requirements. Two commenters 
suggested CMS allow hospitals to fulfill the goal of the PIP 
requirement through their participation in statewide quality 
improvement initiatives, such as the Perinatal Quality Collaboratives 
and the AIM patient safety bundles.
    Response: We agree that PIPs can take longer than one year to fully 
implement and evaluate. We did not propose to require that facilities 
conduct a new/different maternal PIP each year. Rather facilities must 
be actively performing at least one PIP on maternal health a year, but 
this can be the same PIP over multiple years. As discussed in the 
preamble, facilities may choose to join existing local/state/Federal 
quality initiatives and utilize resources such as Perinatal Quality 
Collaboratives and the AIM patient safety bundles in order to comply 
with this requirement and reduce burden.
    Comment: CMS received mixed comments regarding the proposal to 
require OB leadership to engage in QAPI. Several commenters stated that 
QAPI activities would be more successful with buy-in from facility 
leadership, which would ensure alignment with organizational goals and 
allocation of necessary resources. One commenter stated that the 
proposal is redundant because existing CoPs already outline who is 
responsible and accountable for ensuring the implementation of QAPI 
activities. One commenter recommended delaying the requirement to 
ensure leadership is engaged in QAPI activities by 12 months to allow 
time to train OB providers in quality improvement methods.
    Response: We agree with commenters that leadership engagement is 
often a key ingredient for successful QAPI efforts. While the existing 
CoPs do set certain expectations for QAPI oversight, they do not 
specifically require OB leadership involvement as these requirements 
do. We believe this level of detail is needed in order to address the 
maternal health crisis. As discussed in section XXI.A.7 of this final 
rule with comment period, we will allow for a phased in implementation 
timeline for

[[Page 94486]]

these QAPI standards in order to reduce burden.
    Comment: Many commenters supported the incorporation of MMRC data 
into facilities' QAPI programs. Commenters noted that MMRC data can 
inform hospital policies and patient safety practices and improve 
disparities. A commenter highlighted that the California Maternal 
Quality Care Collaborative (CMQCC) \682\ already engages in these 
activities and is achieving success in targeting complications which 
disproportionately affect Black patients to drive better perinatal 
outcomes.
---------------------------------------------------------------------------

    \682\ https://www.cmqcc.org/.
---------------------------------------------------------------------------

    A few commenters did not support the proposal. One commenter said 
the proposal would be unnecessarily burdensome, particularly for rural 
hospitals with low volumes of births. Another noted lack of support for 
the proposal given that maternal deaths are rare, especially those that 
occur within the hospital. These commenters recommended allowing 
hospitals to focus on internal morbidity data instead of statewide 
data.
    Several commenters also expressed concern regarding MMRC data 
itself, specifically that these data may not be relevant to all 
hospitals (particularly rural hospitals), that recommendations from 
MMRCs may be inconsistent across States, and that data collection is 
slow. These commenters recommended allowing flexibility. In particular, 
these commenters suggested allowing collaborations with other hospitals 
on performance improvement projects to satisfy the requirements, 
instead of relying on MMRCs.
    Response: As discussed in the CY 2025 OPPS/ASC proposed rule 
preamble, evidence shows that data from MMRCs has been central in 
driving improvements in maternal morbidity and mortality across the 
country. While CMS is sensitive to concerns from rural providers, CMS 
disagrees that exclusion or modification of this MMRC proposal for 
rural providers is appropriate. CMS notes that State MMRCs often assess 
maternal deaths by region and/or by rurality. In this way, MMRC data 
can be relevant and specific to rural areas. Additionally, MMRC 
recommendations are written to allow facilities flexibility in their 
implementation rather than a one-size-fits-all approach, which allows 
rural facilities to adapt MMRC recommendations to their circumstances. 
Lastly, CMS notes that rural areas are not the only areas with limited 
resources or OB access. Urban hospitals, especially those in certain 
historically underserved communities, may also experience these 
challenges. CMS agrees that collaboration on QAPI work across different 
facilities and entities can enhance results and reduce burden. The 
proposal permits facilities to engage in such collaboration but does 
not require it. In particular, facilities may wish to join ongoing 
existing State Perinatal Quality Collaboratives, partner with QIOs, 
and/or leverage integrated health system resources (as described in 42 
CFR 482.21(f)) in order to reduce any burden of compliance.
    Comment: One commenter recommended that Tribal MMRCs be included 
alongside State and local MMRCs. This commenter noted that though 
Tribal MMRCs are not currently operating, their inclusion in the 
proposal could support their development. The commenter further asked 
that facilities be required to report data to any relevant Tribal MMRCs 
as requested by the Tribal MMRC.
    Response: We appreciate this comment. To clarify, the current 
proposal does not include any requirement for facilities to report data 
to MMRCs (in deference to existing State laws on this subject).\683\ We 
will not amend the proposal at this time related to data reporting, 
however we will amend the requirement on utilizing data from MMRCs to 
recognize Tribal MMRCs.
---------------------------------------------------------------------------

    \683\ https://www.cdc.gov/maternal-mortality/php/mmrc/index.html.
---------------------------------------------------------------------------

    Comment: One commenter stated that requirements in the proposal are 
too vague and could be subject to disparate interpretations by CMS 
surveyors, suggesting CMS engage in provider listening sessions to add 
more specificity to the requirements before finalizing them.
    Response: We will be issuing interpretive guidance following this 
final rule in order to assist facilities in complying with these new 
CoP standards.
    Comment: Several commenters suggested CMS add specific additional 
topics and detail to the QAPI proposals. One commenter suggested a 
focus on pre-natal counseling and through post-partum follow-up as 
areas for the greatest potential to impact quality and safety. Another 
commenter recommended that CMS require stratification of maternal 
sepsis and neonatal infection as critical patient safety outcomes. This 
commenter stated that rates of sepsis during pregnancy are higher for 
Black patients, Asian/Pacific Islander patients, and Native American 
patients and stated that understanding maternal sepsis data, including 
time to initiation of appropriate therapy, through stratified data 
could inform performance improvement strategies. Another commenter 
stated that improving evidence-based best practices for C-section 
births could reduce surgical site infections, which are an area with 
potential care disparities due to lack of access to proven care, 
especially for patients with obesity. Another commenter recommended 
that QAPI work include mental health and substance use disorder metrics 
and require that QAPI data be made publicly available.
    Response: We appreciate commenters sharing their expertise and 
highlighting key maternal health topics that facilities may wish to 
address in QAPI work. The proposal does not require facilities to 
address specific maternal health topics for quality improvement. 
Instead, facilities are free to choose the topic that best aligns with 
their patient populations and resources. Given that the current 
proposal did not include any requirement for facilities to report their 
maternal QAPI data nor make such data publicly available,\684\ we are 
not revising the requirement at this time related to data reporting.
---------------------------------------------------------------------------

    \684\ https://www.cdc.gov/maternal-mortality/php/mmrc/index.html.
---------------------------------------------------------------------------

    Comment: Several commenters recommended that CMS address a major 
cause of the maternal health crisis by requiring facilities to 
prioritize identifying and addressing unmet mental health and substance 
use disorders among OB patients. A commenter suggested that facilities 
collect data on maternal mental health and substance use disorder (SUD) 
specific metrics to evaluate the effectiveness of evidence-based 
practices, such as postpartum depression screening, follow-up, and 
initiation and engagement of SUD treatment. A few commenters further 
suggested that hospitals be required to collect, report, and 
incorporate data on rates of drug testing of pregnant people, medical 
justification for drug testing, demographic makeup of those who are 
drug tested, and health outcomes of both mother and fetus. A few 
commenters suggested that facilities further engage with stakeholders 
with lived experience in mental health and substance use disorder to 
determine which data and quality indicators are collected.
    Response: We appreciate commenters sharing their expertise. CMS 
recognizes mental health and SUD as a critical area for maternal 
health. While the proposal does not require facilities to address 
specific maternal health topics for quality improvement, facilities 
that

[[Page 94487]]

wish to work on maternal health, SUD, and behavioral health within 
their QAPI programs may wish to review the following resources among 
others:
     SAMHSA. ``Taskforce on Maternal Mental Health.'' https://www.samhsa.gov/about-us/advisory-councils/acws/task-force-maternal-mental-health.
     SAMHSA. ``Advisory: Evidence-Based, Whole Person Care of 
Pregnant People Who Have Opioid Use Disorder.'' https://store.samhsa.gov/product/advisory-evidence-based-whole-person-care-pregnant-people-who-have-opioid-use-disorder.
     Alliance for Innovation on Maternal Health. ``Perinatal 
Mental Health Conditions.'' https://saferbirth.org/psbs/perinatal-mental-health-conditions.
     Alliance for Innovation on Maternal Health. ``Maternal 
Mental Health.'' https://saferbirth.org/psbs/archive-maternal-mental-health/.
     Alliance for Innovation on Maternal Health. ``Care for 
Pregnant and Postpartum People with Substance Use Disorder.'' https://saferbirth.org/psbs/care-for-pregnant-and-postpartum-people-with-substance-use-disorder/.
    SAMHSA also has provided funding opportunities for a variety of 
maternal behavioral health initiatives.685 686 687
---------------------------------------------------------------------------

    \685\ https://www.samhsa.gov/newsroom/press-announcements/20240708/biden-harris-administration-announces-funding-opportunities-enhancing-women-behavioral-health.
    \686\ https://www.samhsa.gov/grants/grant-announcements/sm-24-013.
    \687\ https://www.samhsa.gov/newsroom/press-announcements/20230126/grant-opportunities-preventing-substance-misuse-treating-sud-pregnant-postpartum-women.
---------------------------------------------------------------------------

    Comment: For CMS' questions on best practices for QAPI data 
analysis and stratification by diverse subgroup and as well as which 
data stratifications/subgroups/categories are key to ensuring the 
health and safety of all pregnant, birthing, and postpartum patients, 
we received several responses. One commenter recommended that CMS 
incorporate and share best practices to promote accuracy in demographic 
data collection, such as the ability for patients to self-identify, and 
to support privacy protections in the collection and reporting of 
aggregated demographic data. One commenter recommended accounting for 
patient preferences regarding sharing demographic data when adopting 
data collection requirements.
    A commenter noted that current stratification practices vary 
according to site and are often impacted by resource constraints. 
Several commenters recommended CMS identify a minimum set of 
standardized data elements that impact maternal health outcomes, such 
as race, ethnicity, disability status, language, age, sexual 
orientation and gender identity (SOGI), geographic location (including 
rural versus urban; distance traveled), socioeconomic status (such as 
income level), immigration status, zip code, payor, gender identity, 
among other SDOH factors. A few commenters requested additional 
guidance to support SDOH Z-codes. Another commenter added that CMS 
should work with stakeholders to identify these common data elements. A 
few commenters recommended that CMS work with organizations that have 
already created comprehensive data processes to effectively design data 
collection practices that hospitals can use to meet nationally 
recognized standards. Specifically, one commenter further recommended 
collaboration with the private sector to adopt meaningful measures of 
maternal health outcomes and disparities such as demographic factors. 
One commenter suggested that CMS could identify disparities early by 
promoting the uniform collection of demographic data and consistent 
stratification of metrics by using the updated OMB Standards for 
Maintaining, Collecting, and Presenting Federal Data on Race and 
Ethnicity.
    In terms of best practices for QAPI work, one commenter stated that 
multidisciplinary collaboration is necessary for effective QAPI 
processes, including the review of maternal health outcomes. This 
commenter recommended ensuring that QAPI meetings are led by physician 
and nurse leadership in collaboration with a range of other disciplines 
and services throughout the hospital system. Another commenter 
recommended including practicing OB-GYNs, other OB unit providers, non-
medical staff, and patients in QAPI activities to ensure initiatives 
are practical, address working conditions, and minimize burden.
    Response: We thank the commenters for their expertise and feedback 
on this comment solicitation. Following finalization of this rule, we 
will issue subregulatory guidance regarding how compliance with this 
requirement will be assessed. CMS is committed to providing technical 
assistance to support hospitals in coming into compliance with these 
requirements, including data analysis by diverse subpopulation. While 
CMS is requiring that ``obstetrical services leadership'' be involved 
in facility QAPI work (at Sec. Sec.  482.21(e)(1) and 
485.641(d)(4)(i)), facilities have flexibility regarding additional 
staff involvement in QAPI work. We agree with commenters that 
multidisciplinary collaboration is often critical to the success of 
QAPI activities. Payment policies (such as Z codes) are outside the 
scope of the CoPs, but we will share this feedback with the appropriate 
component within CMS.
    Comment: Related to CMS' question on best practices for sharing 
QAPI findings with impacted communities, we received several responses. 
A commenter stated that community engagement is important to ensuring 
initiatives are leading to improvements in the community's actual 
needs. One commenter recommended using patient advisory councils to 
ensure patient involvement in QAPI initiatives.
    A few commenters recommended sharing results of QAPI initiatives 
with the medical and scientific community, with other providers, and 
with the public that they serve. Other commenters recommended using 
existing communication channels, including Patient and Family Advisory 
Councils, websites, newsletters, community forums, and media outlets 
(including newspapers and television) to share these data. A few 
commenters recommended that the Federal Government collect these data 
and make them publicly available at a single central location.
    A few commenters stated that engaging community members, especially 
in under-resourced communities, can be challenging and recommended 
establishing technical assistance to help hospitals with this 
engagement. One commenter stated that technical assistance could 
include strategies such as addressing power and knowledge 
differentials, providing materials accessible to lay audiences, 
incorporating community members from the outset, and compensating 
community members for their contributions.
    Response: We thank the commenters for their input and will consider 
this feedback in possible future rulemaking. CMS encourages facilities 
to collaborate with communities to ensure the facility's QAPI work 
meets patients' needs, and to share QAPI outcomes with communities as 
applicable.
    Comment: Related to CMS' question whether these proposed 
requirements should be applicable to REHs, we received several 
responses. A few commenters stated that all hospitals, including REHs, 
should meet consistent health and safety standards and suggested that 
CMS find ways to support REHs in providing quality care, including for 
QAPI. A commenter stated that requiring all levels of care, including 
REHs, to have baseline requirements regarding OB care delivery is 
critical to reducing disparities. A few

[[Page 94488]]

commenters suggested providing phase-in timelines as well as financial 
and technical support for REHs.
    However, many commenters were opposed to applying these QAPI 
proposals to REHs. Several commenters remarked that several of the 
proposals are not applicable to REHs, and that coming into compliance 
would be overly burdensome. Several commenters stated that REHs have 
their own payment methodology and CoPs and should not be required to 
comply with CoPs meant for other hospital types. Some commenters 
expressed concern that requiring REHs to comply with these proposals 
would result in additional closures. A commenter stated that REHs 
should not be required to have a QAPI due to the resources required.
    Response: We thank the commenters for their input. In light of the 
concerns raised, we will not extend these QAPI standards to REHs at 
this time.
    Final Policy Decision: After consideration of the public comments 
we received, we are finalizing the proposals, without modification for 
hospitals and CAHs. CMS is not extending the new QAPI standards to REHs 
at this time.
5. Emergency Services Readiness (Sec.  482.55; Sec.  485.618)
    We proposed a new standard entitled ``Emergency Services 
Readiness'' within the existing Emergency Services CoP for hospitals 
(Sec.  482.55) and CAHs (Sec.  485.618) to set clear expectations as 
well as improve facility readiness in caring for emergency services 
patients, including pregnant, birthing, and postpartum patients. 
Notably, these requirements would apply to all hospitals and CAHs 
offering emergency services,\688\ whether or not a hospital/CAH offers 
an additional specialty service line (such as OB services). This is 
done with the intention of ensuring baseline health, safety, and 
training standards for the care of patients with emergency conditions.
---------------------------------------------------------------------------

    \688\ For purposes of the proposal, CMS considered a facility to 
``offer emergency services'' when it met the definition of 
``dedicated emergency department'' as defined in EMTALA (42 CFR 
489.24(b), ``Dedicated emergency department'').
---------------------------------------------------------------------------

    First for hospitals (Sec.  482.55(c)) and CAHs (Sec.  485.618(e)) 
that offer emergency services, we proposed that these facilities would 
be required to have adequate provisions and protocols to meet the 
emergency needs of patients in accordance with the complexity and scope 
of services offered. For protocols, hospitals (Sec.  482.55(c)(1)) and 
CAHs (Sec.  485.618(e)(1)) must have protocols consistent with 
nationally recognized and evidence-based guidelines for the care of 
patients with emergency conditions. While these CoPs would not require 
adherence to a specific organization's guideline or recommendations, we 
expect that facilities would be able to articulate their standards and 
the source(s) and to demonstrate that their standards are based on 
evidence and nationally recognized sources.
    For hospitals (Sec.  482.55(c)(3)) and CAHs (Sec.  485.618(e)(2)) 
that offer emergency services, applicable emergency services personnel, 
as determined by the facility, must be trained on these protocols and 
provisions annually. Once staff are identified, hospitals and CAHs must 
document that applicable staff have successfully completed such 
facility-identified training and demonstrate staff knowledge on these 
topics.
    For hospitals that offer emergency services, we further proposed at 
Sec.  482.55(c)(2) that provisions include equipment, supplies, and 
medication used in treating emergency cases. Such provisions must be 
kept at the hospital and be readily available for treating emergency 
cases. The available provisions must include: (1) drugs, blood and 
blood products, and biologicals commonly used in life-saving 
procedures; (2) equipment and supplies commonly used in life-saving 
procedures; and (3) a call-in-system for each patient in each emergency 
services treatment area. These supply requirements are similar to 
existing CAHs (at Sec.  485.618(b) and (c)) and REHs (at Sec.  
485.516(c)(2)) supply standards for emergency services, as well as the 
surgical services CoP supply requirements (Sec.  482.51(b)(3)). We did 
not propose any new emergency services equipment, supplies, or 
medication requirements for CAHs or REHs.
    Finally, we solicited public comments and requested evidence 
related to these proposals, including how these proposals would impact 
patient (including maternal) health and safety, and whether these 
proposed requirements should be applicable to REHs.
    We received several comments on these proposals. We address those 
comments and our responses below:
    Comment: We received mixed comments on the proposal overall. 
Several commenters supported adopting requirements that address care in 
non-obstetric settings, such as emergency departments (EDs). One 
commenter stated that they felt that existing courses (such as Advanced 
Cardiovascular Life Support, Advanced Trauma Life Support, and 
Pediatric Advanced Life Support) are insufficient emergency training, 
noting that newly graduated NPs and PAs may be working in rural 
hospitals and CAHs with no or extremely limited emergency training, 
including in management of OB emergencies. This commenter supported 
additional training in OB emergencies for all rural hospital and CAH 
emergency services providers. One commenter stated high quality OB care 
in the ED is especially important in areas that are resource limited 
and do not have access to OB care. Another commenter added that 
training emergency clinical staff on obstetrical and gynecological 
emergencies would enhance patient safety in rural hospitals and CAHs 
because emergency providers often provide care in these settings due to 
a lack of OB specialists. One commenter further stated that ensuring 
EDs are equipped to treat OB emergencies can promote access even in 
areas without OB units. Another commenter noted that these requirements 
are particularly important as restrictions on reproductive care are 
exacerbating shortages of OB services in some locations.
    In contrast, multiple commenters expressed opposition to the 
proposal. Several commenters stated that these requirements are 
duplicative to other CoPs. Specifically, a few commenters stated that 
emergency services protocols for OB patients are redundant of existing 
requirements because hospitals manage OB patients according to existing 
protocols and other relevant Conditions of Participation. Another 
commenter stated that emergency personnel are already trained in a 
breadth of diagnoses and recommended allowing hospitals flexibility to 
identify appropriate training based on their patient populations. 
Several commenters recommended that CMS implement the regulations 
carefully to avoid detrimental effects, especially for rural hospitals.
    Response: We appreciate commenters' support for the proposal. The 
proposal aims to ensure the health and safety of all emergency services 
patients, including obstetrical patients, by requiring hospitals and 
CAHs to have appropriate emergency protocols and provisions in place. 
We agree that declines in obstetrical access across the country, 
including in rural areas, increase the importance of training in 
obstetrical and gynecological emergencies for emergency clinical staff.
    We disagree that the proposal duplicates existing CoPs. There are 
currently no requirements related to emergency provisions (including 
for

[[Page 94489]]

obstetrical patients) under the existing hospital emergency services 
CoP. In contrast, CAHs (at Sec.  485.618(b) and (c)) and REHs (at Sec.  
485.516(c)(2)) do have supply requirements under their emergency 
services CoP. The proposal therefore brings hospitals' emergency 
provisions expectations into alignment with the CAH and REH CoPs on 
this topic. Similarly for protocols, the existing hospital requirement 
(42 CFR 482.55(a)(3)) that ``the policies and procedures governing 
medical care provided in the emergency service or department are 
established by and are a continuing responsibility of the medical 
staff'' offers little detail of CMS' expectations for emergency 
readiness. The CAH emergency services CoP lacks such a provision 
entirely. For staff training, the hospital emergency services CoP 
requires that ``there must be adequate medical and nursing personnel 
qualified in emergency care to meet the written emergency procedures 
and needs anticipated by the facility'' (Sec.  482.55(b)(2)). The CAH 
standard (Sec.  485.618(d)) currently requires its personnel to have 
``training and experience in emergency care.'' CMS believes clearer 
expectations surrounding ``qualified/training and experience in 
emergency care'' and maintenance of qualifications (that is, training) 
would improve facilities' readiness to care for patients with emergency 
conditions, enhancing patient health and safety.
    The proposal therefore offers clarity regarding CMS' expectations 
for emergency readiness including protocols, provisions, and training 
for emergency staff. In response to providers' concerns, especially 
rural facilities, related to burden, CMS will institute an 
implementation delay as discussed in section A.XXI.7 of this final rule 
with comment period.
    Comment: A few commenters stated that it is unclear whether the 
proposed updates were intended to be specific to OB emergencies or 
apply more broadly.
    Response: We appreciate the opportunity to offer further clarity. 
The proposal is written broadly to ensure hospitals and CAHs meet the 
needs of all emergency services patients, including, but not limited 
to, patients with obstetrical emergencies, complications, and immediate 
post-delivery care needs. Specifically, the proposal requires that 
hospitals and CAHs develop protocols consistent with nationally 
recognized and evidence-based guidelines for the care of patients with 
emergency conditions. We further specify that these protocols must 
address obstetrical emergencies, complications, and immediate post-
delivery care (in accordance with the complexity and scope of services 
offered at the facility), but the protocol requirement is not limited 
to these conditions. CMS offers hospitals and CAHs flexibility in 
determining what other protocols are needed to meet the needs of their 
specific emergency services patient populations. The same applies for 
the emergency provisions requirement for hospitals.
    Comment: A commenter inquired regarding the scope of CMS' 
expectations regarding emergency protocols. In particular, this 
commenter asked if the proposal required facilities to develop 
protocols for all possible emergency conditions.
    Response: We appreciate the opportunity to offer further clarity. 
We are not requiring that facilities develop a protocol or have 
provisions for every possible emergency scenario, but facilities should 
develop protocols and have available provisions to meet the emergency 
needs of their patients consistent with (1) the complexity and scope of 
services offered by the facility; and (2) nationally recognized and 
evidence-based guidelines. The final rule we are adopting specifies 
that protocols must address obstetrical emergencies, complications, and 
immediate post-delivery care, but are not limited to these conditions. 
CMS offers hospitals and CAHs flexibility in determining what other 
protocols are needed to meet the needs of their specific emergency 
services patient populations. For example, the American College of 
Emergency Physicians has issued multiple guidelines for best practices 
in managing common and critical emergency conditions and has developed 
a Geriatric Emergency Department Accreditation Program, which provides 
best practice standards for this at-risk population.689 690 
For obstetrical emergencies, the Alliance for Innovation on Maternal 
Health's (AIM; a partnership between HRSA and American College of 
Obstetricians and Gynecologists (ACOG) and other stakeholders) has 
developed resources which include example protocols and training 
resources for responding to obstetrical hemorrhage, severe 
hypertension, perinatal mental health conditions, sepsis, substance use 
disorder, and cardiac conditions, among others.\691\ ACOG has also 
developed resources for Obstetric Emergencies in Nonobstetric 
Settings.\692\ Similarly, the HRSA-supported Emergency Medical Services 
for Children (EMSC) Innovation and Improvement Center has resources for 
emergency departments seeking to improve ``pediatric readiness.'' \693\ 
We expect hospitals to be able to identify the source of the nationally 
recognized and evidence-based guidelines utilized in their protocols.
---------------------------------------------------------------------------

    \689\ https://www.acep.org/patient-care/clinical-policies.
    \690\ https://www.acep.org/geda.
    \691\ https://saferbirth.org/.
    \692\ https://www.acog.org/programs/obstetric-emergencies-in-nonobstetric-settings.
    \693\ https://emscimprovement.center/domains/pediatric-readiness-project/.
---------------------------------------------------------------------------

    Comment: EMTALA's relationship to the proposal was brought up by 
multiple commenters. One commenter supported the proposed rule and 
emphasized the requirement for hospitals with EDs to comply with EMTALA 
and Federal civil rights laws. In contrast, several commenters stated 
that these requirements duplicate requirements for hospitals under 
EMTALA.
    Response: EMTALA requirements are separate and distinct from these 
requirements. As noted elsewhere, CMS expects that all Medicare-
participating facilities with emergency departments comply with the 
EMTALA statute (42 U.S.C. 1395dd) and its implementing regulations (42 
CFR 489.24). Specifically, under EMTALA, Medicare-participating 
hospitals and CAHs with emergency departments must provide individuals 
presenting to the emergency department with an appropriate medical 
screening exam and, if an emergency medical condition exists, offer 
stabilizing treatment or, under certain circumstances, appropriate 
transfer to receive stabilizing care.
    However, EMTALA does not directly address emergency department 
readiness, which may have exacerbated gaps in access to care, including 
for obstetrical, geriatric, and pediatric 
populations.694 695 696 697 698 699 This final rule 
therefore offers clarity regarding CMS' expectations for emergency 
readiness for all patients, inclusive of protocols, provisions, and 
training for emergency staff. The proposed rule preamble included 
multiple example

[[Page 94490]]

resources facilities may utilize to assist in compliance with the 
proposal.700 701 702 703 704
---------------------------------------------------------------------------

    \694\ https://www.acog.org/news/news-articles/2022/01/commitment-to-action-eliminating-preventable-maternal-mortality.
    \695\ https://rhrc.umn.edu/wp-content/uploads/2021/09/UMN-emOB-Training-Needed_11.12.20_508.pdf.
    \696\ https://www.cdcfoundation.org/sites/default/files/files/ReportfromNineMMRCs.pdf.
    \697\ https://emscimprovement.center/domains/pediatric-readiness-project/.
    \698\ https://publications.aap.org/pediatrics/article/142/5/e20182459/38608/Pediatric-Readiness-in-the-Emergency-Department.
    \699\ https://forms.ihi.org/hubfs/Guide%20to%20Recognition%20for%20GEDA%20Sites_FINAL.pdf.
    \700\ https://www.acep.org/patient-care/clinical-policies.
    \701\ https://www.acep.org/geda.
    \702\ https://saferbirth.org/.
    \703\ https://www.acog.org/programs/obstetric-emergencies-in-nonobstetric-settings.
    \704\ https://emscimprovement.center/domains/pediatric-readiness-project/.
---------------------------------------------------------------------------

    Comment: We received several questions requesting further guidance 
on the proposal. One commenter recommended that CMS provide technical 
resources that would facilitate identification and adoption of 
nationally recognized and evidence-based guidelines. This commenter 
also recommended adoption of guidance on the essential provisions 
required for emergency services or to allow hospitals to tailor their 
provisions to their specific needs. One commenter recommended that CMS 
compile a list of resources, including low-cost training resources, 
that could be used in complying with this regulation. A few commenters 
recommended allowing hospitals flexibility in selecting which resources 
and nationally recognized standards to use to meet the requirements, 
including QAPI and QA activities. Another commenter recommended 
ensuring that our policies not be prescriptive, which could limit 
flexibility during a surge beyond typical patient volume.
    Response: We are not requiring that facilities adhere to a specific 
organization's guidelines or recommendations for emergency protocols 
and provisions. Facilities have flexibility to utilize national medical 
professional society, accrediting organization, credentialling body, or 
other national guidelines when determining appropriate protocols and 
provisions for their emergency services patient populations. We provide 
examples of such resources in the proposed rule 
preamble.705 706 707 708 709 CMS encourages facilities to 
further inform their protocols and provisions choices based on the 
facility's QAPI program as appropriate. We agree that facilities should 
consider how their protocols may need to be adapted during surge 
periods. Following publication of this final rule with comment period, 
we will issue subregulatory guidance on how surveyors will assess 
compliance with this requirement, which can further assist facilities.
---------------------------------------------------------------------------

    \705\ https://www.acep.org/patient-care/clinical-policies.
    \706\ https://www.acep.org/geda.
    \707\ https://saferbirth.org/.
    \708\ https://www.acog.org/programs/obstetric-emergencies-in-nonobstetric-settings.
    \709\ https://emscimprovement.center/domains/pediatric-readiness-project/.
---------------------------------------------------------------------------

    Comment: Several comments requested that CMS provide funding to 
support compliance with these new requirements. One commenter expressed 
concern regarding the initial cost to comply with these requirements, 
especially given the potential consequences for being non-compliant 
with CoPs. A few commenters recommended providing resources (such as 
funding and technical assistance).
    Response: Funding resources are beyond the scope of the CoPs, but 
CMS continues to welcome stakeholder feedback on this topic and will 
share any such feedback with relevant CMS components as applicable. 
Following finalization of this rule, we will issue subregulatory 
guidance regarding how compliance with this requirement will be 
assessed. CMS is committed to providing technical assistance to support 
hospitals in coming into compliance with these requirements.
    Comment: A few commenters supported flexibility for hospitals to 
define equipment used in lifesaving procedures. A few commenters 
expressed concern that requiring hospitals to have drugs, blood, blood 
products, and biologicals commonly used in emergency procedure could 
create a shortage of drugs and blood supplies.
    Response: We are not requiring that facilities have any specific 
equipment, supplies, nor medication for emergency conditions. 
Facilities must determine (in accordance with the complexity and scope 
of services offered) what provisions are necessary to meet the 
emergency needs of their patients. Facilities may also want to consider 
what a resilient supply of specific equipment, supplies, and medication 
would be given their needs. We disagree that these polices would cause 
a shortage of drugs or blood supplies. In industry stakeholder 
listening sessions, stakeholders indicated hospitals already routinely 
have these provisions available. Moreover, CAHs (at Sec.  485.618(b) 
and (c)) and REHs (at Sec.  485.516(c)(2)) already have equipment, 
supplies, blood, and medication requirements under their emergency 
services CoP. The proposal therefore brings hospitals' emergency 
provisions expectations into alignment with the CAH and REH CoPs on 
this topic.
    Comment: A few commenters requested interpretive guidance on the 
term ``call-in system.'' A commenter expressed concern that a call-in 
system would add financial and operational burden to hospitals.
    Response: We proposed that each emergency services treatment area 
must have a call-in-system for each patient. The proposal is similar to 
the existing surgical services CoP (Sec.  482.51(b)(3)). By ``call-in 
system'', we mean a mechanism by which a patient and/or caregiver can 
alert staff of any emergencies or concerns. Examples may include a 
call-bell, alarm, or other notification device. Following publication 
of this final rule with comment period, we will issue subregulatory 
guidance regarding how compliance with this requirement will be 
assessed. Given commenters' concern regarding burden, CMS will 
institute an implementation delay for this requirement as discussed in 
section A.XXI.7 of this final rule with comment period.
    Comment: Several commenters noted the importance of behavioral 
health emergencies. One commenter recommended that hospitals and CAHs 
be required to develop evidence-based, person-centered, trauma-informed 
policies for the identification, treatment, and follow-up care of 
patients who present with an SUD-related condition, including 
medications for opioid use disorder and referrals to treatment and 
support services. The commenter recommended ensuring these protocols 
include policies to help address health disparities, as well as person-
centered and trauma-informed care. Specific to maternal mental health, 
one commenter stated that evidence shows that mental health conditions 
(including substance use disorders and suicide) are the leading cause 
of pregnancy-related deaths. A few commenters recommended that CMS 
specifically address emergency readiness for OB patients having mental 
health or substance use emergencies.
    Response: We appreciate commenters sharing their expertise and 
highlighting the importance of behavioral health emergencies, in 
particular as it relates to maternal health. The proposal does not 
require facilities to have protocols and provisions specific to 
behavioral health emergencies. Rather facilities may determine the 
protocols and provisions that best align with their patient 
populations. While not required, facilities that wish to work on 
behavioral health emergency services (including for OB patients) may 
wish to review the following resources among others:
     American College of Emergency Physicians. ``Psychiatric 
Patient.'' https://www.acep.org/patient-care/clinical-policies/Psychiatric-Patient.
     American Psychiatric Association. ``Clinical Practice 
Guidelines.'' https://

[[Page 94491]]

www.psychiatry.org/psychiatrists/practice/clinical-practice-guidelines.
     Alliance for Innovation on Maternal Health. ``Perinatal 
Mental Health Conditions.'' https://saferbirth.org/psbs/perinatal-mental-health-conditions.
     Alliance for Innovation on Maternal Health. ``Maternal 
Mental Health.'' https://saferbirth.org/psbs/archive-maternal-mental-health.
     Alliance for Innovation on Maternal Health. ``Care for 
Pregnant and Postpartum People with Substance Use Disorder.'' https://saferbirth.org/psbs/care-for-pregnant-and-postpartum-people-with-substance-use-disorder.
     SAMHSA. ``Taskforce on Maternal Mental Health.'' https://www.samhsa.gov/about-us/advisory-councils/acws/task-force-maternal-mental-health.
     SAMHSA. ``Advisory: Evidence-Based, Whole Person Care of 
Pregnant People Who Have Opioid Use Disorder.'' https://store.samhsa.gov/product/advisory-evidence-based-whole-person-care-pregnant-people-who-have-opioid-use-disorder.
     SAMHSA. ``Trauma and Violence.'' https://www.samhsa.gov/trauma-violence.
     SAMHSA. ``Clinical Guidance for Treating Pregnant and 
Parenting Women With Opioid Use Disorder and Their Infants.'' https://store.samhsa.gov/product/clinical-guidance-treating-pregnant-and-parenting-women-opioid-use-disorder-and-their.
     SAMHSA. ``Improving Cultural Competence.'' https://store.samhsa.gov/sites/default/files/sma16-4931.pdf.
    Comment: In offering their support for this new CoP, several 
comments also offered more specific recommendations for training and 
resources. One commenter specifically recommended addressing the risk 
of hemorrhage as part of OB emergency care. This commenter recommended 
ensuring a standard of assessing Quantitative Blood Loss (QBL) as part 
of early detection of maternal hemorrhage. One commenter recommended 
topics for training for non-OB emergency staff, including routine 
screening for risk factors and signs of complications in perinatal 
patients, stabilizing perinatal patients, and transfer protocols. The 
commenter noted that Association of Women's Health, Obstetric and 
Neonatal Nurses (AWHONN) has the courses ``OB Triage'' and ``Maternal 
Fetal Triage Index'' that can educate staff on common perinatal 
complications and appropriate escalation. A few commenters recommended 
using the regulations to encourage simulation-based training because 
this modality allows staff to practice decision-making and teamwork in 
a controlled environment.
    Response: We thank the commenters for their expertise regarding 
best practices and resources. While the proposal does require 
facilities to ensure that relevant staff (as identified by the 
hospital) are trained annually on the emergency services protocols and 
provisions, facilities are not required to utilize any specific 
training modality, resources, nor metrics as part of training efforts. 
Rather facilities may determine the protocols, provisions, and training 
resources that best align with their specific situation. This is 
designed to enhance flexibility and reduce provider burden.
    Comment: A commenter recommended that CMS adopt a requirement for 
hospitals to have protocols in place to reduce ED boarding, which the 
commenter defined as a ``dangerous health system overload that puts 
patients in a holding pattern as they wait for an inpatient bed or 
transfer after their initial care.''
    Response: We thank the commenter for this input. While ED boarding 
is beyond the scope the CY 2025 OPPS/ASC proposed rule, we will 
consider this input for possible future rulemaking.
    Comment: We received comments regarding CAHs' standard for 
``Coordination with emergency response systems.'' Some commenters 
expressed concern that these requirements for CAHs would require having 
a physician available on a 24/7 basis, which would be difficult to 
accomplish than the current requirement to have a practitioner 
available 24/7. A few commenters stated that the proposal to have a 
physician immediately available is more restrictive than a similar 
requirement for CAHs to have a practitioner available and would be more 
difficult for CAHs to meet.
    Response: For clarity, we are not proposing any new standards or 
revisions to CAHs' ``Coordination with emergency response systems'' CoP 
(currently found at 42 CFR 485.618(e)). The text on this topic in this 
final rule is solely for amendatory purposes (that is, moving the 
current regulations text down to new 42 CFR 485.618(f)). We are not 
proposing any new staffing standards within CAHs' emergency services 
CoP.
    Comment: We solicited comment on ways to reduce any burden 
associated with these proposals. One commenter recommended that the 
Federal Government create technical assistance programs for rural 
hospitals. These programs would be housed in the Health Resources and 
Services Administration (HRSA) and would support facilities with 
purchasing equipment and providing training and access to tele-
consultation.
    Response: We thank the commenter for their input. While directly 
providing financial support for equipment purchases and training is 
beyond the scope of the CoPs, we have shared this feedback with 
relevant CMS and HHS components.
    Comment: To our question on whether these proposed requirements 
should apply to REHs, we received mixed responses. A few commenters 
supported adoption of emergency services readiness requirements for 
REHs. These commenters stated that many individuals giving birth may 
initially present to an REH and therefore these facilities should be 
able to recognize and address emergency situations to stabilize 
patients prior to transfer. Another commenter supported extending the 
proposed CoPs to REHs because these facilities should be prepared to 
provide high-quality care despite workforce and resource challenges, 
especially for REHs in rural, Black, and Indigenous communities which 
are most likely to be impacted by maternity ward closures. One 
commenter recommended that CMS use caution when extending the proposed 
updates to REHs.
    Response: We thank the commenters for their input. In light of the 
mixed responses, CMS will not extend these new Emergency Services 
standards to REHs at this time.
    Final Policy Decision: After consideration of the diversity of 
perspectives in public comments received, we are finalizing as proposed 
for hospitals and CAHs. CMS is not extending these new Emergency 
Services standards to REHs at this time.
6. Transfer Protocols (Sec.  482.43)
    We proposed revisions to the hospital discharge planning 
regulations to include requirements for transfer protocols. We proposed 
at Sec.  482.43(c) to require that hospitals have written policies and 
procedures for transferring patients under their care. This would be 
inclusive of hospital inpatients (for example, transfers from the 
emergency department to inpatient admission, transfers between 
inpatient units in the same hospital, as well as transfers between 
inpatient units at different hospitals). This would ensure that 
patients are transferred to the appropriate level of care promptly and 
without undue delay, in order to meet their needs. We also proposed to 
require the hospital to provide training to the relevant staff (as 
determined by the

[[Page 94492]]

facility) regarding the hospital policies and procedures for 
transferring patients under its care.
    We received the following comments in response to this 
solicitation:
    Comment: Some commenters supported the transfer protocols 
requirement. They stated requiring that hospitals have effective 
transfer processes was important for ensuring continuity of care, 
reducing the risks associated with care transitions, as well as 
ensuring that patients are transferred to the appropriate level of care 
in a timely manner. Some commenters stated that the transfer protocols, 
aligned with nationally recognized and evidence-based guidelines, will 
ensure that all pregnant women will receive timely and effective 
treatment.
    However, some commenters opposed the transfer protocols 
requirement. A few commenters stated that the proposed requirement was 
duplicated existing transfer policies within the hospitals. One 
commenter suggested that CMS include only interhospital transfers 
(transfers between inpatient units at different hospitals) in the 
transfer protocols. Some commenters stated that the proposed 
requirement does not only focus on obstetrical or maternity care and 
there was insufficient evidence linking transfer protocols to better 
maternal outcomes. Additionally, a few commenters expressed concerns 
with the overly prescriptive nature of the proposed requirements, 
asserting that the proposal would not allow hospitals the flexibility 
to utilize clinical judgement to determine when and where a patient 
should be transferred. A few commenters suggested rather than 
implementing transfer protocols, hospitals should follow the guidelines 
for the transfers published in the Guidelines for Perinatal Care, 8th 
Edition. Numerous commenters expressed concerns that this would create 
additional burden and as a result, hospitals would close.
    Response: We thank commenters for their feedback. While this 
requirement does not just focus on obstetrical patients, we note that 
effective transfer processes can improve transitions of care, increase 
a hospital's ability to transfer patients promptly to facilities able 
to appropriately care for them, as well as protect the health and 
safety of all patients, including pregnant, birthing, and postpartum 
women.
    We also recognize that some hospitals might already have 
intrahospital (transfers within the same facility) policies in place, 
but hospitals that do not have an emergency department or are otherwise 
not covered by EMTALA, may also have a need to transfer patients to 
other facilities to receive needed services. Additionally, patients 
that are admitted as hospital inpatients may require transfer between 
facilities to meet the needs of the patient (for example, changing 
clinical condition, need for specialty and/or higher level of care). 
The transfer protocol requirement is meant to establish and standardize 
transfer protocol requirements of hospital inpatients (for example, 
transfers from the emergency department to inpatient admission, 
transfers between inpatient units in the same hospital, as well as 
transfers between inpatient units at different hospitals) for all 
hospitals.
    We do not agree that the transfer protocol requirement is overly 
prescriptive. The regulatory flexibility and framework of the 
requirement will allow each hospital to establish and/or tailor its own 
policy parameters for inpatient transfers according to its specific 
patient population, individual institutional needs and resources, and 
own medical staff recommendations as long as the policies and 
procedures established and implemented meet or exceed the requirements 
finalized in this rule. The requirement also allows the hospital 
flexibility in selecting which staff are required to complete annual 
training regarding the hospital policies and procedures for 
transferring patients under their care. Lastly, to mitigate some of the 
potential burden, professional organizations (such as the American 
College of Obstetricians and Gynecologists and American Academy of 
Pediatrics) have resources available to support hospitals as they 
develop their transfer protocols. Therefore, we are finalizing that 
hospitals must have written policies and procedures for transferring 
patients under its care (inclusive of hospital inpatients) to the 
appropriate level of care (including to another hospital) as needed to 
meet the needs of the patient.
    Comment: Multiple commenters suggested that staff be trained on 
transfer protocols annually. One commenter suggested that staff be 
trained upon hiring and then on an annual basis. This would ensure that 
staff are following the same procedures regarding patient transfers and 
are informed of any changes to the transfer policies and procedures.
    Response: We agree with the commenters that requiring annual 
training on transfer protocols is essential. This will promote 
consistency in transfer processes and ensure that transfers are 
conducted safely by minimizing errors. We are therefore finalizing that 
hospitals are required to provide annual training to the relevant staff 
(as determined by the hospital) regarding the hospital policies and 
procedures for transferring patients under their care.
    Comment: We did not receive any public comments regarding criteria 
for determining whether a transfer is carried out ``promptly and 
without delay''. One commenter requested interpretive guidance on the 
term ``promptly and without delay''. Another commenter stated that 
there are circumstances outside of a hospital's control that make it 
impossible to ensure that a transfer is carried out ``promptly and 
without undue delay''. For example, rural hospitals often have trouble 
finding other hospitals willing to accept patients. In addition, 
ambulance availability can delay patients being transferred between 
facilities. Therefore, this can cause unavoidable delays.
    Response: We thank commenters for their feedback We agree that 
transfers should be carried out as promptly as possible. Although it is 
not a requirement for the CoP finalized in this rule, CMS expects that 
hospitals are transferring patients as promptly as possible as staff 
and resources allow.
    Comment: Some commenters expressed support for hospitals creating 
policies regarding their standards for accepting patients. This would 
ensure prompt care coordination for transferring patients and emphasize 
the shared responsibility of both transferring and receiving hospitals 
to ensure transfers are carried out promptly. However, another 
commenter expressed concerns that having policies that require 
hospitals to specify the conditions under which transfers will be 
accepted or not will diminish the ability of facilities, such as rural 
hospitals from transferring their patients to the appropriate level of 
care. For example, if a patient fails to meet all the criteria set 
forth by the selected recipient facility, that patient would be forced 
to wait for placement with a hospital whose acceptance criteria 
permitted transfer; further delaying care. One commenter recommended 
that CMS provide clarification of the required documentation for 
policies and procedures related to accepting transfers.
    Response: We thank commenters for their feedback. We note that the 
comments we received may be taken into consideration in potential 
future rulemaking. To ensure that patients receive the care required 
for their medical conditions, we encourage hospitals to develop 
policies and

[[Page 94493]]

procedures regarding the acceptance of transfers.
    Comment: Multiple commenters supported requiring all hospitals to 
have a documented partnership with another hospital that both provides 
OB services, as well as has a Medical Fetal Medicine (MFM) specialist 
available for consultations in urgent situations, if such service(s) 
are not already offered directly by the hospital. The partnerships 
would help hospitals build connections and establish relationships 
between hospitals and support coordinated care handoffs. Furthermore, 
such partnerships could reduce burdens for hospitals that do not 
provide obstetrical services. For example, hospitals would be informed 
of where appropriate specialists are available, therefore ensuring 
transfers are appropriately carried out. Multiple comments stated that 
hospitals having access to a robust telehealth OB network could provide 
real time support for pregnant patients and neonates, facilitate 
transfers, as well as prevent unnecessary transfers. Other commenters 
stated that it would be burdensome to establish and maintain these 
partnerships. A commenter stated that due to the shortage of Maternal 
Fetal Medicine (MFM) specialists, adding this requirement would 
exacerbate workforce challenges and increase staff burnout, which could 
contribute to a reduction in obstetrical services. Another commenter 
stated that facilities in rural and underserved areas may find it 
difficult to find and partner with hospitals with MFM specialists due 
to their limited availability in the area. To mitigate the burden of 
developing these partnerships, several commenters recommended technical 
support, funding, interpretive guidance and resources (for example, 
ACOG's Levels of Maternal Care), to support hospitals' efforts to build 
relationships within a region.
    Response: We thank commenters for their feedback. We note that the 
comments we received may be taken into consideration in potential 
future rulemaking. We encourage hospitals to develop collaborative 
partnerships with other hospitals to improve transitions of care that 
will support better patient outcomes.
    Comment: One commenter recommended that transfer protocols 
requirement be applied to REHs and CAHs.
    Response: REHs provide outpatient services, emergency services, and 
observation care. They do not provide any acute inpatient hospital 
services, other than post-hospital extended care services provided in a 
distinct part unit licensed as a skilled nursing facility (SNF). The 
transfer protocols in this final rule are inclusive of hospital 
inpatients (for example, transfers from the emergency department to 
inpatient admission, transfers between inpatient units in the same 
hospital, as well as transfers between inpatient units at different 
hospitals). Furthermore, existing CoPs for CAHs and REHs include 
requirements related to the transfer of patients in the event that the 
facility is unable to furnish needed services for a patient or the 
patient requires a higher level of care. For example, the CAH CoPs at 
Sec.  485.616(a) require CAHs that are members of a rural health 
network to have an agreement in place with at least one hospital that 
is also a member of the network for patient transfer. Additionally, the 
discharge planning requirements at Sec.  485.642(b) require CAHs to 
discharge, transfer, or refer the patient, where applicable, with all 
necessary medical information pertaining to the patient's condition. We 
require similar actions regarding patient transfers for REHs at Sec.  
485.538. Therefore, the transfer protocols would not be necessary for 
REHs and CAHs, as similar requirements are already in place.
    Comment: One commenter recommended that CMS require hospitals to 
include transfers from community settings to such hospitals in their 
transfer policies. They stated that, in some cases, community providers 
have encountered difficulties when transferring patients due to 
hospitals refusing to accept patients' medical records. Another 
commenter suggested that CMS considered policies that would facilitate 
better collaboration between hospitals and birthing facilities. They 
stated that birthing facilities face challenges when transferring 
pregnant or postpartum individuals and newborns to hospitals, including 
limited payment for stabilizing and transferring the patients. 
Furthermore, this would ensure safe and seamless transition for 
pregnant and postpartum patients. Another commenter stated that 
hospitals should focus on referral programs that leverage community 
resources to offer comprehensive care and address non-medical factors.
    Response: While requiring hospitals to include transfers from 
community settings to the hospital in their transfer protocols is 
outside the scope of this rule, we encourage hospitals to foster 
relationships with local organizations in the community, including 
birthing facilities. By working together, hospitals, community 
organizations, and birthing facilities can share resources, enhance 
access to essential services, and improve maternal care.
    Comment: One commenter requested that CMS include a list of 
resources in its interpretive guidance, that facilities can use when 
developing their transfer protocol policies and procedures. The 
commenter recommended Society of Maternal Fetal Medicine (SMFM)'s 
maternal transport briefing form and checklist.
    Response: We thank the commenter for their recommendation. We agree 
there are a variety of resources to support hospitals in developing 
transfer protocol policies and procedures. For example, accreditation 
organizations (such as the Joint Commission) and professional 
organizations (such as the American College of Obstetricians and 
Gynecologists and Society for Maternal-Fetal Medicine) have such 
resources available. In addition, CMS will release interpretive 
guidance following the publication of the final rule.
    Comment: A commenter requested that CMS fund statewide 
transportation programs in rural States where they are not currently 
available. This would enable patients from rural hospitals to be 
transported to a facility offering a higher level of care.
    Response: We thank the commenter for their recommendation. However, 
funding for a statewide transportation program is outside the scope of 
this final rule with comment period.
    Comment: A commenter expressed concern that the transfer protocols 
could overlap or conflict with existing transfer and stabilization 
policies under EMTALA.
    Response: As noted above, EMTALA regulations are separate and 
distinct from these proposed CoPs. EMTALA (42 CFR 489.24) requires 
Medicare-participating hospitals with emergency departments to provide 
individuals presenting to the emergency department with an appropriate 
medical screening exam and stabilizing treatment if an emergency 
medical condition is found or under certain circumstances, 
appropriately transfer such individuals to receive stabilizing care. 
However, EMTALA does not address the transfer of hospital inpatients to 
a higher level of care. The proposed CoP require hospitals to develop 
policies and procedures for transferring patients under their care. The 
transfer protocols are inclusive of hospital inpatients (for example, 
transfers from the emergency department to inpatient ward, transfers 
between inpatient units in the same hospital, as well as transfers 
between inpatient units at different hospitals).

[[Page 94494]]

    Final Rule Action: After consideration of the comments, we are 
finalizing our proposal for transfer protocols with the following 
modification: Acute care hospitals are required to provide annual 
training to the relevant staff (as determined by the facility) 
regarding the hospital policies and procedures for transferring 
patients under its care. These requirements do not apply to CAHs and 
REHs.
7. Implementation Timeframe
    In the CY 2025 OPPS/ASC proposed rule, we did not propose to delay 
the implementation of the new and revised CoP requirements. However, we 
received many comments and recommendations with respect to the 
effective date and the date of implementation of the requirements in 
hospitals and CAHs.
    Comment: Given that the final requirements will be effective 60 
days after publication of the final rule, many commenters expressed 
concerns that this period would not allow facilities enough time to 
meet the new and revised CoP requirements. Some commenters stated that 
many of the provisions would require possible extensive changes (for 
example, hiring additional staff, and purchasing additional equipment 
and supplies) to ensure full compliance. Commenters also expressed 
concern that requiring hospitals, especially small, rural hospitals, to 
comply with these requirements will result in unintended consequences, 
such as the closure of labor and delivery units. This would only 
exacerbate the existing maternal health care access challenges.
    Some commenters recommended a period of discretionary enforcement 
to allow hospitals time to come into compliance. One commenter 
recommended postponing the implementation of the new CoPs until CMS had 
a better understanding of the potential impact of the proposed policies 
on providers and organizations. While some commenters recommended that 
we delay implementation until interpretive guidance was available to 
facilities, other commenters recommended that we delay implementation 
of the requirements for CAHs and other facilities with low-birth 
volumes.
    Some commenters suggested that we implement a phase-in timeframe 
for the requirements as to not impose burden on the facilities or 
obstetrical workforce. However, various implementation timeframes were 
suggested. A few commenters suggested that we implement a phase-in 
timeframe of 1 year to 2 years. A couple of commenters recommended a 
phase-in timeframe of 4 years. Other commenters suggested that we 
implement different phase-in timeframes for hospitals and CAHs.
    Response: We believe the new and revised OB services CoPs will help 
ensure that all pregnant, birthing, and postpartum women receive 
consistent, high quality maternal health care, regardless of their 
geographic location. However, we acknowledge that these proposed 
requirements would require a robust review of existing programs and 
would necessitate changes to ensure full compliance with the new and 
revised obstetrical CoP requirements. To reduce some of the burden of 
complying with these requirements, and to avoid any unintended 
consequences, we are finalizing an implementation approach in phases, 
that allows additional time for hospitals and CAHs to comply with the 
requirements of this rule.
    Final Rule Action: After consideration of the public comments, we 
are finalizing a phased-in implementation for hospitals and CAHs in 3 
phases, over a 2-year period. Specifically,
     Phase 1 would require facilities to comply with the 
following requirements 6 months following the effective date of the 
final rule:

[cir] Emergency services readiness for hospitals (Sec.  482.55) and 
CAHs (Sec.  485.618)
[cir] Transfer protocols for hospitals only (Sec.  482.43)

     Phase 2 would require facilities to comply with the 
following requirements 1 year following the effective date of the final 
rule:

[cir] Organization, staffing, and delivery of services for hospitals 
((Sec.  482.59(a) and (b)) and CAHs (Sec.  485. 649(a) and (b))

     Phase 3 would require facilities to comply with the 
following requirements 2 years following the effective date of the 
final rule:

[cir] OB staff training in hospitals (Sec.  482.59(c)) and CAHs (Sec.  
485.649(c))
[cir] QAPI program for OB services in hospitals (Sec.  482.21) and CAHs 
(Sec.  485.641)

    We note that the final regulations are effective 60 days following 
publication of this final rule with comment period in the Federal 
Register. The implementation date for the specific requirements is 
listed in Table 174.
[GRAPHIC] [TIFF OMITTED] TR27NO24.231

[[Page 94495]]

XXII. Modification to the Hybrid Hospital-Wide All-Cause Readmission 
and Hybrid Hospital-Wide All-Cause Risk Standardized Mortality Measures 
in the Hospital Inpatient Quality Reporting Program

A. Background

    We refer readers to the following final rules for detailed 
discussions of the history of the Hospital Inpatient Quality Reporting 
(IQR) Program, including statutory history, and for the measures we 
have previously adopted for the Hospital IQR Program measure set:
     The FY 2010 Hospital Inpatient Prospective Payment Systems 
for Acute Care Hospitals and the Long-Term Care Hospital Prospective 
Payment System (IPPS/LTCH PPS) final rule (74 FR 43860 through 43861);
     The FY 2011 IPPS/LTCH PPS final rule (75 FR 50180 through 
50181);
     The FY 2012 IPPS/LTCH PPS final rule (76 FR 51605 through 
61653);
     The FY 2013 IPPS/LTCH PPS final rule (77 FR 53503 through 
53555);
     The FY 2014 IPPS/LTCH PPS final rule (78 FR 50775 through 
50837);
     The FY 2015 IPPS/LTCH PPS final rule (79 FR 50217 through 
50249);
     The FY 2016 IPPS/LTCH PPS final rule (80 FR 49660 through 
49692);
     The FY 2017 IPPS/LTCH PPS final rule (81 FR 57148 through 
57150);
     The FY 2018 IPPS/LTCH PPS final rule (82 FR 38326 through 
38328 and 38348);
     The FY 2019 IPPS/LTCH PPS final rule (83 FR 41538 through 
41609);
     The FY 2020 IPPS/LTCH PPS final rule (84 FR 42448 through 
42509);
     The FY 2021 IPPS/LTCH PPS final rule (85 FR 58926 through 
58959);
     The FY 2022 IPPS/LTCH PPS final rule (86 FR 45360 through 
45426);
     The FY 2023 IPPS/LTCH PPS final rule (87 FR 49190 through 
49310);
     The FY 2024 IPPS/LTCH PPS final rule (88 FR 59144 through 
59203); and
     The FY 2025 IPPS/LTCH PPS final rule published on August 
28, 2024 (89 FR 69515 through 69577).
    We also refer readers to 42 CFR 412.140 for Hospital IQR Program 
regulations.

B. Updates to the Form, Time, and Manner Requirements for the Hybrid 
Hospital-Wide All-Cause Readmission (HWR) and Hybrid Hospital-Wide All-
Cause Risk Standardized Mortality (HWM) Measures for the FY 2026 and 
the FY 2027 Payment Determinations

1. Background of the Hybrid HWR and Hybrid HWM Measures in the Hospital 
IQR Program
    The Hospital IQR Program previously adopted two hybrid measures: 
(1) the Hybrid Hospital-Wide Readmission (HWR) measure; and (2) the 
Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (HWM) 
measure. Hybrid measures use more than one data source for measure 
calculation; specifically for the Hybrid HWR and Hybrid HWM measures, 
they use core clinical data elements (CCDEs), linking variables, and 
claims data (80 FR 49698). CCDEs are a set of clinical variables 
derived from electronic health records (EHRs) that can be used to risk 
adjust hospital outcome measures (80 FR 49699). Linking variables are 
administrative data that can be used to link or merge the CCDEs and 
administrative claims data for measure calculation (80 FR 49703). These 
measures are designed to enhance risk adjustment of administrative 
claims-based outcome measures by utilizing patient clinical data 
captured in EHRs (80 FR 49698).
    We initially solicited public comment on the potential future 
adoption of hybrid measures into the Hospital IQR Program in the FY 
2016 IPPS/LTCH PPS final rule adoption (80 FR 49698 through 49704). In 
subsequent years, we adopted both the Hybrid HWR measure and the Hybrid 
HWM measure with initial voluntary reporting periods. A discussion of 
the measure history for both measures follows.
    The Hybrid HWR was the first hybrid measure introduced into the 
Hospital IQR Program. The Hybrid HWR measure is designed to capture all 
unplanned readmissions that arise from acute clinical events requiring 
urgent rehospitalization within 30 days of discharge. The measure was 
adopted in a stepwise fashion starting with voluntary reporting 
periods. In the FY 2018 IPPS/LTCH PPS final rule, we finalized 6 months 
of voluntary reporting for the CY 2018 reporting period (82 FR 38350 
through 38355). In the FY 2020 IPPS/LTCH PPS final rule, we finalized 2 
additional years of voluntary reporting, followed by mandatory 
reporting impacting the FY 2026 payment determination (84 FR 42465 
through 42479). Then, in the FY 2024 IPPS/LTCH PPS final rule, we 
modified the Hybrid HWR measure cohort to include both Medicare fee-
for-service (FFS) patients and Medicare Advantage (MA) patients 65 
years and older for the FY 2027 payment determination and for 
subsequent years (88 FR 59161 through 59168).
    The Hybrid HWM measure was the second hybrid measure to be adopted 
into the Hospital IQR Program. The Hybrid HWM measure is an outcome 
measure that captures the hospital-level, risk-standardized mortality 
rate (RSMR) of unplanned, all-cause mortality within 30 days of 
hospital admission for any eligible condition. Like the Hybrid HWR 
measure, we adopted the Hybrid HWM measure in a stepwise fashion, 
starting with a period of voluntary reporting. We initially adopted the 
Hybrid HWM measure in the FY 2022 IPPS/LTCH PPS final rule and 
finalized one voluntary reporting period followed by mandatory 
reporting impacting the FY 2026 payment determination (86 FR 45365 
through 45374). Then in the FY 2024 IPPS/LTCH PPS final rule, we 
modified the Hybrid HWM measure cohort to include both Medicare fee-
for-service (FFS) patients and Medicare Advantage (MA) patients 65 to 
94 years old for the FY 2027 payment determination and for subsequent 
years (88 FR 59161 through 59168).
    As previously noted, these hybrid measures use data from claims in 
combination with CCDEs and linking variables pulled from hospital EHRs. 
We previously finalized that hospitals must submit linking variables on 
95 percent of hospital discharges (84 FR 42470; 86 FR 45371). The 
previously finalized linking variables are: (1) CMS Certification 
Number; (2) Health and Insurance Claims Number or Medicare Beneficiary 
Identifier; (3) Date of Birth; (4) Sex; (5) Admission date; and (6) 
Discharge date (84 FR 42469; 86 FR 45371). The previously finalized 
CCDEs are vital signs and laboratory results (84 FR 42469; 86 FR 
45371). We also previously finalized that hospitals would be required 
to report CCDEs on 90 percent of discharges in a given reporting period 
(84 FR 42469; 86 FR 45371). These submission requirements were 
finalized beginning with mandatory reporting for the FY 2026 payment 
determination (84 FR 42469 through 42470; 86 FR 45371). We refer 
readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42465 through 
42479) and FY 2022 IPPS/LTCH PPS final rule (86 FR 45365 through 45374) 
for more information regarding data sources, measure calculation, and 
risk adjustment requirements. We also refer readers to the FY 2020 
IPPS/LTCH PPS final rule (84 FR 42506 through 42508), the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58941), the CY 2021 PFS final rule (85 FR 
84472), and the FY 2022 IPPS/LTCH PPS final rule (86 FR 45421) for our 
previously adopted policies regarding certification, file format, and 
data submission requirements for hybrid measures in the Hospital IQR 
Program. For both hybrid measures, we previously finalized that 
hospitals must submit data for the mandatory reporting period impacting 
the FY 2026 payment

[[Page 94496]]

determination, based on performance data from July 1, 2023, through 
June 30, 2024, by October 1, 2024 (86 FR 45370). We finalized that data 
collected during the voluntary reporting periods would not be publicly 
reported (84 FR 42470; 86 FR 45371). We also finalized that we would 
begin public reporting of both hybrid measures' results, beginning with 
data collected from the July 1, 2023, through June 30, 2024, reporting 
period, impacting the FY 2026 payment determination (84 FR 42470 
through 42471; 86 FR 45371).
2. Extension of Voluntary Reporting of CCDE and Linking Variable Data 
for the Hybrid HWR and Hybrid HWM Measures
    Based on hospital performance during the most recent voluntary 
reporting period, it appeared that hospitals are unprepared for 
mandatory reporting of the Hybrid HWR and Hybrid HWM measures. As a 
part of measure maintenance, we routinely monitor hospital performance 
on the Hospital IQR Program's measures. We have been closely monitoring 
the results of voluntary reporting for both hybrid measures, including 
most recently the results of the second voluntary period for Hybrid HWR 
and the first voluntary period for Hybrid HWM. During these periods, 
approximately one-third of IPPS hospitals participated. The data 
indicated that three-fourths of the participating hospitals would not 
have met the reporting thresholds for the CCDEs and linking variables 
if the reporting requirement had been mandatory, and accordingly, would 
have been subject to a one quarter reduction to their annual payment 
update under the Hospital IQR Program for the given fiscal year.
    The hospitals that participated in the voluntary reporting were 
mostly large, non-rural, non-critical access, and non-safety net. Based 
on our experience with implementing new types of digital measures, we 
understand that small and rural hospitals, as well as hospitals with 
fewer financial resources, may need additional time and flexibility to 
successfully implement new measure reporting requirements relative to 
larger, non-rural hospitals (82 FR 38357). We therefore believe the 
reporting failure rate may have been even higher if all IPPS hospitals 
participated.
    In addition, we received feedback from hospitals (via email and 
help desk questions) raising various issues with reporting including 
issues related to CCDE collection timing and clinical workflow, issues 
with the types of units required for CCDE values, and achievability of 
the data submission requirement thresholds. We continued to investigate 
whether any of these issues or any other issues may be making it 
difficult for hospitals to meet CCDE and linking variable thresholds 
(that is, of 90 percent and 95 percent, respectively, of hospital 
discharges) and continued to analyze the root cause of these 
challenges.
    We appreciate that, in light of the information discussed above, 
hospitals participating in the Hospital IQR Program may need additional 
time to remediate the issues and develop experience with reporting of 
CCDEs and linking variables before being subject to the associated 
program payment adjustments for noncompliance. In the CY 2025 OPPS/ASC 
proposed rule, we therefore proposed that for the FY 2026 payment 
determination (based on performance data from July 1, 2023, through 
June 30, 2024), the submission of CCDEs and linking variables would 
remain voluntary (89 FR 59502). We proposed that for the FY 2027 
payment determination and subsequent years, the submission of CCDEs and 
linking variables would then become mandatory.
    We explained in the CY 2025 OPPS/ASC proposed rule, that under our 
proposal, a hospital's annual payment determination for FY 2026 would 
not be affected by the voluntary reporting of CCDEs and linking 
variables, although we would still evaluate and assess the claims data 
portion of these measures (89 FR 59502). We proposed that the Hybrid 
HWR and Hybrid HWM measures would be publicly reported based on claims 
data for the FY 2026 Hospital IQR Program. We explained that the 
proposal would allow the Hospital IQR Program to publicly display 
hospital information on these important clinical areas and provide 
patients with visibility into hospital performance, while providing 
hospitals with more time to improve reporting on CCDEs and linking 
variables. Under the proposal, hospitals would continue to receive 
confidential hospital-specific reports in the Spring as a preview of 
public reporting. We noted that the hospital-specific reports would 
reflect the CCDEs and linking variables, should hospitals choose to 
submit them. We also stated in the proposed rule that we would continue 
to evaluate potential changes to the reporting requirements related to 
CCDEs and linking variables.
    We invited public comment on our proposal.
    Comment: Many commenters supported the proposal to extend voluntary 
reporting of the CCDEs and linking variables for the Hybrid HWR and 
Hybrid HWM measures, for the performance period of July 1, 2023, 
through June 30, 2024, impacting the FY 2026 payment determination for 
the Hospital IQR Program due to reporting challenges.
    Response: We thank the commenters for their support.
    Comment: Some commenters supported the proposed extended voluntary 
reporting for the performance period of July 1, 2023, through June 30, 
2024, impacting the FY 2026 payment determination, but requested that 
voluntary reporting be extended further for both measures. The 
commenters' reasons for requesting additional years of voluntary 
reporting were due to challenges they identified with the current 
measure reporting requirements. Some of the challenges identified were:
     Many commenters noted issues specifically with capturing 
the weight value within the 24-hour timeframe as specified by the 
measure. Commenters noted challenges with this timeframe due to changes 
in patient status from observation to inpatient, data inconsistencies 
with patient transfers between facilities, labs being collected during 
pre-op appointments prior to the 24-hour timeframe for surgical 
patients, and prolonged emergency department stays. A few commenters 
noted while CMS has approved further revisions to the measure logic 
including updates to the timing of taking a patient's weight, these 
updates do not take effect until reporting that impacts the FY 2027 
payment determination due to the existing eCQM Annual Update process. 
These commenters therefore noted that voluntary reporting should be 
extended until the FY 2027 payment determination when changes to the 
timing requirements for capturing the weight value will be implemented;
     Many commenters also noted challenges with the reporting 
of some of the CCDE required laboratory results. These challenges 
include difficulties related to the timing of when labs were drawn, 
including labs drawn outside of the 24-hour period currently specified 
by the measures, noting that this 24-hour requirement also encourages 
unnecessary duplication of lab tests. Many commenters also stated that 
some of the required laboratory results appear as ``missing'' because 
they were unnecessary to draw for the patient;
     Many commenters expressed concern regarding the lack of a 
standard unit of measurement for required CCDE data elements, 
specifically platelet values. A few commenters noted that units of 
measurement commonly used for platelets were counted as ``missing'' in 
their performance reports. A few commenters suggested additional

[[Page 94497]]

guidance is needed on whether the result for a non-standard unit can be 
converted;
     A few commenters stated that they received data submission 
errors related to linking variables, such as sex and date of birth;
     A few commenters stated that they need additional time to 
develop processes to improve collection of Health Insurance Claims 
Number or Medicare Beneficiary Identifier (HICN/MBI) for Medicare 
Advantage patients, which is one of the required linking variables for 
both measures;
     Several commenters representing specialty hospitals 
requested that the measures be refined to include a minimum relevant 
population threshold exemption for other patient populations such as 
surgical, hospice, psychiatric, and orthopedic patients; and
     Many commenters expressed the need for a longer voluntary 
reporting period to address clinical workflow and improve data 
collection processes by working with their hospitals' vendors before 
requiring reporting on all elements of these hybrid measures. A few 
commenters noted that small and rural hospitals require more time and 
flexibility to successfully implement new measure reporting 
requirements. Another commenter stated that hospitals need time to 
adjust time and date of admission status, as they found issues with 
misalignment between the CMS claims data and their EHR vendor. A few 
commenters expressed that variations in EHR systems present challenges 
in meeting measure thresholds. A commenter stated that these hybrid 
measures have been especially challenging during times of limited 
resources following the COVID-19 public health emergency.
    Response: We thank the commenters for their feedback regarding the 
need for additional time before mandatory reporting of CCDEs and 
linking variables. Based on this feedback, in addition to finalizing 
our proposal to extend voluntary reporting of the CCDEs and linking 
variables for the Hybrid HWR and Hybrid HWM measures, for the 
performance period of July 1, 2023, through June 30, 2024, impacting 
the FY 2026 payment determination for the Hospital IQR Program, we will 
also finalize an additional year of voluntary reporting of the CCDEs 
and linking variables for these measures, for the performance period of 
July 1, 2024, through June 30, 2025, impacting the FY 2027 payment 
determination.
    Specific to comments about the current timing requirements for 
CCDEs, in the eCQM Annual Update that will be posted in Spring 2025, we 
will extend the anchor timestamp requirement for CCDEs from the first 
CCDE beginning 24 hours before to 24 hours after the start of the 
inpatient admission for laboratory results and 24 hours before to 2 
hours after the start of the inpatient admission for vital signs 
(except weight), to the first CCDE resulted after the start of the 
hospital encounter. This change may increase hospital success in 
reaching Hospital IQR Program threshold requirements, while maintaining 
the intent of the measure to collect the earliest laboratory test 
results and vital signs upon hospital arrival. The Spring 2025 Annual 
Update impacts the July 1, 2026, through June 30, 2027, performance 
period which is associated with the FY 2029 payment determination.
    Specific to commenter concerns that platelets counted as 
``missing'' in performance reports, we note that beginning with July 1, 
2023, through June 20, 2024, performance period data, which is 
associated with the FY 2026 payment determination, platelet laboratory 
test values with the unit of Femtoliter (fL) will be accepted. The 
current specifications request hospitals to submit CCDE in Unified Code 
for Units of Measure (UCUM) units. To reduce hospital burden, any unit 
may be submitted by hospitals, as we convert to standard units during 
data cleaning. When the reported unit is not able to be converted to 
the requested UCUM units, the value will be set to missing and the 
median value reported for that CCDE will be imputed. In analyzing the 
data from the voluntary periods, we observed a large proportion of 
platelet values that were marked as missing. Within the platelet values 
reported as missing, a large portion of submitted values were unusable 
in measure calculation due to a unit, Femtoliter (fL), that cannot be 
converted to the standard unit (10*3/uL) without additional lab values 
from hospitals. This means that reported fL values were set to missing 
and the submission did not count towards hospitals' 90 percent 
reporting threshold for CCDEs. In reviewing these results, we confirmed 
that we are able to convert the values and/or apply a data imputation 
method to utilize values for platelets using data that are submitted in 
Femtoliters.
    Regarding concerns about submitting sex and date of birth linking 
variables, we note that those linking variables are no longer required 
for submission.
    Regarding the request for a population threshold exemption, in the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49304), we stated that we do 
not believe that threshold exemptions are necessary for hybrid measures 
because the measures utilize the Initial Patient Population (IPP) and 
CMS confirms the measure cohort to determine whether a hospital has met 
the denominator criteria. However, we will continue to review hospital 
performance and consider ways to address the needs of specialty 
hospitals with a small number of relevant patients.
    Comment: Many commenters described challenges meeting the 90 
percent thresholds for CCDEs and the 95 percent thresholds for linking 
variables, and recommended reducing the required percentages. A few 
commenters recommended lowering the threshold of reporting laboratory 
results (included in the CCDEs) to no more than 80 or 85 percent for 
the first mandatory reporting period.
    Response: We understand that some hospitals experienced 
difficulties with the submission requirements for CCDEs and linking 
variables for these measures during the voluntary reporting periods. We 
thank commenters for providing details of those challenges. We will 
continue to monitor hospital performance of these measures and intend 
to propose to lower the reporting thresholds in the upcoming FY 2026 
IPPS/LTCH PPS proposed rule.
    Comment: One commenter recommended that CMS create a specific 
hybrid measure Extraordinary Circumstances Exception (ECE) 
consideration based on the use of Certified Electronic Health Record 
Technology (CEHRT). The commenter stated that electronic Clinical 
Quality Measures (eCQMs) and hybrid measures are the only two 
collection types in the Hospital IQR Program that require the use of 
CEHRT and that CMS has specific ECE considerations for eCQMs, including 
issues related to the use of CEHRT. The commenter stated that CMS 
should have ECE considerations in the same manner as eCQMs when it 
comes to the use of CEHRT.
    Response: We thank the commenter for this suggestion and will take 
it under consideration.
    Comment: A few commenters requested additional clarity within 
measure specification documents. These commenters stated that the 
definitions in the specifications are not clear, that the 
specifications do not clearly describe the percentage thresholds 
required for measure submission, and that the measure specifications do 
not clearly describe how the measure results will be calculated. A few 
commenters requested clarification within the specifications on the 
surgical specialty cohort of the Hybrid HWR measure and the surgical 
divisions of the Hybrid HWM measure and sought additional

[[Page 94498]]

information regarding what group of surgical patients might be 
excluded.
    Response: We thank the commenters for identifying topics within the 
measure specifications that could be clearer or where additional 
guidance would be useful. Regarding concerns that the specifications do 
not describe the percentage thresholds, we note that we do not 
typically include programmatic form, time, and manner requirements in 
the measure specifications.
    Regarding measure calculation, for the Hybrid HWR measure, index 
admissions are assigned to one of five mutually exclusive specialty 
cohort groups consisting of related conditions or procedures. For each 
specialty cohort group, the standardized readmission ratio (SRR) is 
calculated as the ratio of the number of ``predicted'' readmissions to 
the number of ``expected'' readmissions at a given hospital. This 
approach is analogous to a ratio of ``observed'' to ``expected'' used 
in other types of statistical analyses. The specialty cohort SRRs are 
then pooled for each hospital using a volume-weighted geometric mean to 
create a hospital-wide combined SRR. The combined SRR is multiplied by 
the national observed readmission rate to produce the RSRR. Similarly, 
for the Hybrid HWM measure, index admissions are assigned to one of 15 
mutually exclusive service-line divisions consisting of related 
conditions or procedures. For each service-line division, the 
standardized mortality ratio (SMR) is calculated as the ratio of the 
number of ``predicted'' deaths to the number of ``expected'' deaths at 
a given hospital. This approach is analogous to a ratio of ``observed'' 
to ``expected'' used in other types of statistical analyses. A 
hospital-wide composite SMR is then created by pooling the service-line 
SMRs for each hospital using an inverse variance-weighted mean. To 
produce the risk-standardized mortality rate (RSMR), the composite SMR 
is multiplied by the national observed mortality rate.
    Additional information regarding measure calculation, including the 
surgical cohort and surgical divisions, is available in the measures' 
methodology reports available at https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/measure-methodology. We also 
note that although data submission requirements may differ by cohort or 
division (i.e., hospitals must submit laboratory test results for at 
least 90 percent of discharges in non-surgical patients, meaning those 
not assigned to the surgical specialty cohort of the Hybrid HWR measure 
or the surgical divisions of the Hybrid HWM measure), no specialty 
cohort is excluded from the measure. We note that any updated guidance, 
or any future updates to measure specifications, will be made available 
at: https://qualitynet.cms.gov/inpatient/measures/hybrid/methodology.
    Comment: Many commenters stated that they experienced issues with 
the quality and timing of the feedback reports provided by CMS. Many 
commenters expressed concern regarding the timing in receiving 
Hospital-Specific Reports (HSRs), stating that it prevented hospitals 
from being able to make improvements and correct data before the 
submission period closes. A few commenters stated that the HSRs were 
difficult to interpret. Several commenters expressed concern that CCDE 
and linking variable requirement threshold results reported in the 
voluntary reporting HSRs did not accurately reflect the true results 
due to calculations including surgical cohort patients, Medicare fee-
for-service beneficiaries under the age of 65, and Medicare Advantage 
beneficiaries. One commenter noted that because the linking variables, 
vital signs, and laboratory test results are summated for all patients 
included in the initial population of the measure, patients that are 
excluded from the measure calculation are still being included in the 
summary Mandatory Reporting Data Submission Requirements table. The 
commenter stated that this makes it difficult to calculate whether 
their facility is meeting submission threshold requirements, as it is 
difficult to determine the specialty cohort the patient is in when they 
are excluded.
    Response: We thank the commenters for sharing their experiences 
during the most recent voluntary reporting period and appreciate the 
helpful feedback and suggestions regarding ways to improve the feedback 
process for reporting of the Hybrid HWM and Hybrid HWR measures. 
Regarding timing of HSRs, Hospital IQR Program HSRs are usually 
released in the spring, approximately 8 months after the end of the 
hybrid data submission deadline. This reflects the length of time 
needed for the production process (i.e., extracting and processing the 
data, updating the calculation code, running results, and updating and 
populating HSRs). We recognize that this year, the HSRs were not 
delivered until June 28, 2024, which was later than intended. We plan 
to release the HSRs in the spring next year. Regarding interpretation 
of the reports, we provided a HSR User Guide for the 2024 Voluntary 
Reporting to assist hospitals with interpreting the confidential HSR 
reports, available at: https://qualitynet.cms.gov/inpatient/measures/hybrid/reports, and the QualityNet Q&A tool \710\ is also available for 
assistance if there are questions in interpreting HSRs.
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    Regarding concerns that patients that are excluded from the measure 
calculation were included in the voluntary reporting HSRs, Medicare FFS 
beneficiaries under the age of 65 were erroneously included in the 
threshold calculations in the 2023 voluntary reporting HSRs, but the 
2024 voluntary reporting HSRs appropriately limited the age ranges. In 
the 2024 voluntary reporting HSRs, surgical cohort patients were 
erroneously included in the laboratory values thresholds, which should 
be based on the non-surgical patients only. The HSRs provided 
information that allowed hospitals to filter and remove these patients 
to derive their true laboratory values threshold result.
    Regarding commenter concerns that the calculation of the inpatient 
population was incorrect due to inclusion of Medicare Advantage 
beneficiaries in the measure cohort, we are not aware of any hybrid 
HSRs including Medicare Advantage beneficiaries or data. However, we 
note that Medicare Advantage beneficiaries will be included in 
calculations for measure cohorts with the discharge data from July 1, 
2024, through June 30, 2025 (88 FR 59161 through 59165 and 88 FR 59165 
through 59168). We will review the commenter's concerns and review the 
initial patient population included in the next HSR release, which will 
include Medicare Advantage patients, for any issues.
    Comment: Commenters provided many suggestions to improve the 
submission process. A few commenters recommended having a test 
submission process like that of eCQMs. One commenter recommended 
continuous monitoring and a formal feedback mechanism for ongoing 
improvement. A few commenters recommended CMS provide reports to 
support validation at the time of submission. Several commenters 
recommended providing technical assistance and resources to assist 
hospitals in meeting the thresholds. One commenter recommended best 
practice sharing and targeted support for small and rural hospitals. 
One commenter stated the style sheets used to evaluate the Quality 
Reporting Document Architecture (QRDA) I reports needed to be updated.

[[Page 94499]]

Additionally, a few commenters noted delayed or missing responses from 
CMS help desk and JIRA tickets.
    Response: Regarding a test submission process, we note that the 
annual hybrid measures submission period is similar to the annual eCQM 
submission periods. Once we announce the HQR system is open to accept 
hybrid measure data, hospitals and/or vendors can test their submission 
files as often as needed and until the deadline. Once hospitals and/or 
vendors have validated their files are properly formatted and errors 
corrected, they can submit their files to ``production.'' Both ``test'' 
and ``production'' file submissions may be submitted once the portal 
opens through the submission deadline. We note that CMS does not 
maintain a QRDA style sheet; however, the HL7 QRDA I and III standards 
zip files direct users to use the Clinical Document Architecture 
stylesheet available at: https://hl7.org/permalink/?CDAStyleSheet.
    We wish to note there are several additional ways for hospitals and 
EHR vendors to receive technical assistance to support implementation 
of these measures, which include CCSQ Support Central \711\ and ONC 
JIRA.\712\ Additional resources about the hybrid measures, including 
fact sheets, frequently asked questions, and webinar recordings, are 
available on our QualityNet website at: https://qualitynet.cms.gov/inpatient/measures/hybrid/resources. We will continue to identify 
opportunities to improve our responsiveness and quality of technical 
assistance.
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    Comment: One commenter did not support the proposal to delay 
mandatory reporting of the CCDEs and linking variables for the Hybrid 
HWR and Hybrid HWM measures for a year from the previously finalized FY 
2026 payment determination. The commenter stated that while they 
appreciated CMS' analyses from recent voluntary reporting that 75 
percent or more of hospitals are projected to not meet the reporting 
thresholds for key hybrid data elements, the commenter stated that CMS 
should not allow hospitals to delay mandatory reporting in these 
important measures due to the hospitals' own actions or inactions. The 
commenter stated that a reduction of annual payment update is a fair 
consequence given hospitals have had ample notification of CMS' plans 
for these measures. The commenter stated that allowing such delays sets 
a troubling precedent, as it implies that hospitals' actions or 
inactions during the voluntary reporting period can influence and 
potentially disrupt the established timeframes set by rulemaking.
    Response: We thank the commenter and agree that these measures are 
important. Hybrid measures are a new mode of data collection for 
quality measures. They are unique compared to other quality measures in 
that they use more than one source of data and calculation requires 
that hospitals submit administrative data elements along with the CCDEs 
extracted from hospital EHRs. We understand that hospitals have faced a 
myriad of challenges with this new form of submission, as discussed in 
the comment summaries, and need additional time to successfully adapt 
to this method of reporting. Additionally, we will benefit from 
additional time to analyze the issues hospitals are facing to determine 
whether further refinements to the measures are warranted to enable 
reasonable levels of successful reporting for hospitals.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue voluntary reporting of the CCDEs 
and linking variables for both the Hybrid HWR and Hybrid HWM measures, 
for the performance period of July 1, 2023, through June 30, 2024, 
impacting the FY 2026 payment determination for the Hospital IQR 
Program. We are also finalizing our proposal that the Hybrid HWR and 
Hybrid HWM measures will be publicly reported based on claims data for 
the performance period of July 1, 2023, through June 30, 2024, 
impacting the FY 2026 payment determination.
    Additionally, based on public comments regarding the need for 
additional time, we are further extending voluntary reporting of CCDEs 
and linking variables for the performance period of July 1, 2024, 
through June 30, 2025, impacting the FY 2027 payment determination for 
the Hospital IQR Program, for both the Hybrid HWR and Hybrid HWM 
measures. The Hybrid HWR and Hybrid HWM measures will be publicly 
reported using claims data for the performance period of July 1, 2024, 
through June 30, 2025, impacting the FY 2027 payment determination. We 
intend to make additional changes to the measures, including lowering 
the reporting thresholds, and will propose any substantive changes in 
future rulemaking.

XXIII. Individuals Currently or Formerly in the Custody of Penal 
Authorities

A. Medicare FFS No Legal Obligation To Pay Payment Exclusion and 
Incarceration (Revisions to 42 CFR 411.4)

1. Background
    Section 1862(a)(2) of the Act prohibits Medicare payment under Part 
A or Part B for any expenses incurred for items or services for which 
the individual furnished such items or services has no legal obligation 
to pay, and which no other person (by reason of such individual's 
membership in a prepayment plan or otherwise) has a legal obligation to 
provide or pay for, except in the case of Federally qualified health 
center services. We refer to this payment exclusion as the ``no legal 
obligation to pay'' payment exclusion. The no legal obligation to pay 
payment exclusion is codified in regulation at Sec.  411.4. The 
regulatory exclusion includes a general rule at Sec.  411.4(a) that 
applies to all services (except as provided in Sec.  411.8(b), which 
applies to services paid for by a government entity) and a special 
condition at Sec.  411.4(b) for services furnished to individuals in 
custody of penal authorities.
    In the 1989 final rule establishing the special condition at Sec.  
411.4(b) for services furnished to individuals in custody of penal 
authorities, we explained that the purpose of Sec.  411.4(b) is to 
clarify how the no legal obligation to pay payment exclusion applies to 
services furnished to prisoners (see 54 FR 41716, 41723 (Oct. 11, 
1989)) (``1989 final rule''). We explained that prisoners generally 
have the status of public charges and, as such, have no obligation to 
pay for the medical care they receive. Consequently, under the 
statutory no legal obligation to pay payment exclusion at section 
1862(a)(2) of the Act, Medicare is prohibited for paying for such care. 
We noted, however, that in certain circumstances prisoners could have a 
legal obligation to pay for health care items or services they receive, 
and in such circumstances, Medicare may pay for the items or services.
    As finalized in the 1989 final rule, the special rule at Sec.  
411.4(b) specifies the conditions that must be satisfied to establish 
that a prisoner has a legal obligation to pay for health care items or 
services and, thus, that Medicare may pay for such items or services. 
Specifically, Sec.  411.4(b) provides that Medicare may pay for 
services furnished to individuals in the custody of police or other 
penal authorities or in the

[[Page 94500]]

custody of a government agency under a penal statute only if the 
following conditions are met: (1) State or local law must require 
individuals in custody to repay the cost of the medical services they 
receive while in custody; and (2) the State or local government must 
enforce the requirement to pay by billing all such individuals, whether 
or not covered by Medicare or any other health insurance, and by 
pursuing collection of the amounts they owe in the same way and with 
the same vigor that it pursues the collection of other debts.
    In 2007, we added a description of ``custody'' to the special 
condition at Sec.  411.4(b) for services furnished to individuals in 
the custody of penal authorities (see 72 FR 47130, 47405 through 47406 
(Aug. 22, 2007)) (``2007 final rule''). We noted that CMS would not 
defer to a particular State or local government's definition or 
interpretation of what constitutes ``custody.'' Instead, we adopted a 
definition of ``custody'' that is consistent with how the term has been 
defined by Federal courts for purposes of the habeas corpus protections 
of the U.S. Constitution. As finalized, Sec.  411.4(b) provides that 
individuals who are in custody include, but are not limited to, 
individuals who are under arrest, incarcerated, imprisoned, escaped 
from confinement, under supervised release, on medical furlough, 
required to reside in mental health facilities, required to reside in 
halfway houses, required to live under home detention, or confined 
completely or partially in any way under a penal statute or rule. We 
explained that, under this description, individuals who are on parole, 
probation, bail, or supervised release may be in custody for purposes 
of the payment exclusion. We also stressed that individuals who are 
under supervised release for the purpose of receiving medical services 
on so-called ``medical furlough,'' and who are required to return to a 
State or local government facility after the medical services are 
furnished, are considered to be in custody for purposes of the no legal 
obligation to pay payment exclusion.
    In the 2007 final rule, we responded to several commenters who 
objected to the breadth of the description of custody that we adopted. 
The commenters maintained that the policy would place an unreasonable 
burden on hospitals, because hospitals often have no means of 
identifying whether an individual is in custody for purposes of Sec.  
411.4(b) if the individual is not physically confined in a correctional 
facility or brought to the hospital by government authorities. Another 
commenter added that a hospital has no way of knowing whether an 
individual who is in custody for purposes of Sec.  411.4(b) has a legal 
obligation to pay for his or her medical care. In response, we stated 
that hospitals are not required to seek criminal histories or do 
background checks on all patients being registered. We explained that, 
if Medicare denies payment because the individual receiving care is in 
custody of penal authorities, the provider or supplier will be directed 
to seek payment from the State or local government that has custody of 
the individual. We concluded that, if the State or local government 
believes in such circumstances that it is not responsible for the care 
provided to the individual, it should be prepared to prove to Medicare 
either that the individual would not be considered to be in custody 
under Federal habeas corpus law or that the State or local government 
has no legal obligation to pay for the services because the conditions 
in Sec.  411.4(b)(1) and (2) are satisfied.
    There have been no further revisions to Sec.  411.4 since it was 
revised in 2007.
2. Summary of the Proposed Provisions
    The special condition at Sec.  411.4(b) for services furnished to 
individuals in custody of penal authorities operates as a rebuttable 
presumption. The presumption is that individuals who are in custody, as 
the term is described in Sec.  411.4(b), have no legal obligation to 
pay for health care items or services they receive while in custody; 
therefore, Medicare is prohibited from paying for such health care 
items or services under the statutory no legal obligation to pay 
payment exclusion. The presumption can be rebutted by a showing that: 
(1) the State or local government requires individuals in custody to 
repay the cost of the medical services they receive while in custody; 
and (2) the State or local government enforces the requirement to pay 
by billing all such individuals, whether or not covered by Medicare or 
any other health insurance, and by pursuing collection of the amounts 
they owe in the same way and with the same vigor that it pursues the 
collection of other debts.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to narrow the 
description of ``custody'' in Sec.  411.4(b), because, as explained in 
greater detail below, we no longer believe that certain classes of 
individuals should be presumed to be in custody for purposes of the no 
legal obligation to pay payment exclusion. We also proposed to consider 
certain individuals who are required to reside in halfway houses not to 
be in custody for purposes of the no legal obligation to pay payment 
exclusion under specified conditions.
    We proposed to redesignate the description of ``custody'' as Sec.  
411.4(b)(3), to remove individuals who are on supervised release and 
home detention from the current description of ``custody,'' and to 
strike the phrase ``completely or partially in any way under a penal 
statute or rule.'' Under the proposal, individuals who have been 
lawfully released from confinement in jail, prison, penitentiary, or 
similar institution, or released following arrest (that is, the 
individuals are no longer physically detained by law enforcement or 
penal authorities) on bail, parole, probation, or home detention would 
not be presumed to be in custody for purposes of the no legal 
obligation to pay payment exclusion, even if such individuals have been 
conditionally released and may be required to return to jail, prison, 
penitentiary, or similar institution at some later time (for example, 
due to conviction or failure to satisfy the conditions of their 
supervised release). However, individuals who are on ``medical 
furlough'' or similar arrangements (that is, the individuals are under 
the control of law enforcement or penal authorities and required to 
return to jail or prison after medical services have been provided) 
would still be considered in custody for purposes of Sec.  411.4(b)(3). 
Given the differences in terminology used by various Federal, State, 
and local government penal authorities to refer to different levels of 
control and confinement in the criminal justice system, we invited 
comments on the appropriateness of the terminology in the existing 
description of ``custody'' in our regulations and whether additional or 
different terminology should be incorporated in the description of 
``custody'' at Sec.  411.4(b)(3). We also invited comment on whether we 
should explicitly state in regulatory text that individuals on bail, 
parole, probation, or home confinement are not considered to be in 
custody for purposes of proposed Sec.  411.4(b).
    In the CY 2025 OPPS/ASC proposed rule, we stated that we were 
proposing to narrow the description of custody in Sec.  411.4(b)(3) for 
several reasons. First, we believe that individuals who have been 
released from jail or prison on bail, parole, probation, or home 
detention, or who have been sentenced to probation or home detention in 
lieu of incarceration, typically have a legal obligation to pay for the 
health care items or services they receive. We do not believe that such 
individuals have

[[Page 94501]]

the status of public charges, and we do not believe that Federal, 
State, or local government law enforcement or penal authorities are 
typically responsible for providing for the health care of such 
individuals. We stated that we, therefore, no longer believe that such 
individuals (and the providers and suppliers who furnish services to 
them) should have the burden to prove that the special conditions in 
existing Sec.  411.4(b)(1) and (2) have been satisfied in order to 
receive payment from Medicare. We sought specific, detailed comments on 
the circumstances in which individuals who have been released from 
incarceration on bail, parole, probation, or home detention have a 
legal obligation to pay for some or all of the health care items or 
services they receive. We also sought comment on what specific health 
care items or services, if any, are typically furnished by Federal, 
State, or local governments at no cost to individuals who have been 
released from jail or prison on bail, parole, probation, or home 
detention.
    We also proposed to narrow the description of ``custody'' in Sec.  
411.4(b) to remove barriers to access to Medicare by individuals who 
are returning to the community after incarceration. According to 
advocates for individuals returning to the community from 
incarceration, confusion about the applicability of the payment 
exclusion has led individuals released from incarceration to not apply 
for Medicare, even if they are eligible, or to apply only for Medicaid, 
because they believe that Medicare will not pay for items or services 
that they receive under the payment exclusion. Advocates have also 
maintained that certain providers or suppliers may be hesitant or 
refuse to treat individuals who are on bail, parole, probation, or home 
detention because the providers or suppliers believe that Medicare 
payment is not available for items or services provided to such 
individuals. As a result, according to advocates such individuals may 
delay or forgo necessary treatment, including treatment for substance 
use disorders, upon release from incarceration. We stated that the 
proposed changes to the description of ``custody'' were intended to 
clarify that Medicare may pay for health care items and services 
furnished to an individual while on bail, parole, probation, or home 
detention, provided the individual has a legal obligation to pay for 
such items or services, without having to prove that the special 
conditions in Sec.  411.4(b)(1) have been satisfied. (See section XII.2 
of this final rule with comment period for a discussion of proposed 
modifications to the special enrollment periods (SEP) for formerly 
incarcerated individuals under Sec. Sec.  406.27(d) and 407.23(d) that 
would also increase access to Medicare for individuals returning to the 
community from incarceration.)
    We also explained in the CY 2025 OPPS/ASC proposed rule that our 
proposal to narrow the description of ``custody'' in Sec.  411.4(b) was 
intended to bring the Medicare no legal obligation to pay payment 
exclusion into greater alignment with certain related Social Security 
and Medicaid provisions. As we noted, CMS relies on data provided by 
the Social Security Administration to identify individuals who are in 
custody of penal authorities. However, under Social Security 
regulations, individuals who are released from incarceration on parole, 
probation, or home detention are generally not considered to be 
confined for purposes of a limitation on payment of certain benefits 
(see section 202(x)(1) of the Social Security Act (42 U.S.C. 402)), and 
the Social Security data do not track such individuals. Our proposal to 
narrow the description of ``custody'' was intended to improve the 
alignment between the no legal obligation to pay regulation at Sec.  
411.4(b) and the data that is used to help carry out the rule. In the 
proposed rule we also noted, however, that there would still be 
substantive differences between the Social Security definition of 
``confinement'' and the proposed description of ``custody'' at Sec.  
411.4(b)(3). Most notably, the Social Security Administration suspends 
benefits if the individual has been convicted of a criminal offense and 
sentenced to a period of confinement, and based on that conviction 
remains confined for more than 30 days. In contrast, under our proposed 
description of ``custody,'' an individual would be considered to be in 
custody of penal authorities for purposes of the Medicare no legal 
obligation to pay payment exclusion if the individual is under arrest; 
confined in jail, prison, penitentiary, or similar institution while 
awaiting trial (that is, the person has not yet been convicted); or 
confined in jail, prison, penitentiary, or similar institution 
following conviction for any period of time, including sentences of 
less than 30 days. We noted that these differences are a result of 
Medicare's statutory no legal obligation to pay payment exclusion. 
Specifically, in the proposed rule, we explained our belief that 
individuals who are confined to jail while awaiting trial typically do 
not have a legal obligation to pay for health care items or services. 
We invited comments on whether such individuals confined to jail while 
awaiting trial typically pay for health care items or services they 
receive or have a legal obligation to do so.
    Our proposal to narrow the description of ``custody'' in Sec.  
411.4(b)(3) was also intended to bring the Medicare no legal obligation 
to pay payment exclusion into closer alignment with Medicaid. As we 
explained in the CY 2025 OPPS/ASC proposed rule, under Medicaid 
regulations, Federal Financial Participation (FFP) is not available for 
services provided to individuals who are inmates of public institutions 
(see Sec.  435.1009), and an ``inmate of a public institution is 
defined generally as ``a person living in a public institution'' (see 
Sec.  435.1010). According to Medicaid State Health Official Letter 
(SHO) # 16-007, however, individuals who are on parole, probation, or 
home confinement are generally not considered to be inmates for 
purposes of Medicaid (see SHO # 16-007 (RE: To facilitate successful 
re-entry for individuals transitioning from incarceration to their 
communities) (April 28, 2016) available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/sho16007_41.pdf). 
By no longer including such individuals in the Medicare description of 
``custody'' at Sec.  411.4(b)(3), our proposal was intended to improve 
dually eligible individuals' access to both Medicare and, potentially, 
Medicaid, including accessing benefits for an already-enrolled 
individual. As explained in the proposed rule, advocates shared 
anecdotally that some Medicaid agencies automatically suspend payment 
for services to an individual whose Medicare benefits are suspended due 
to a presumption that the individual is in custody. In addition, 
according to advocates, some individuals who are recently released from 
jail or prison on bail, parole, probation, or home detention have only 
enrolled in Medicaid, because they believe, even where they have a 
legal obligation to pay, that Medicare will not pay for their health 
care under the no legal obligation to pay payment exclusion. Our 
proposal to narrow the description of ``custody'' in Sec.  411.4(b)(3) 
was intended to remove this real or perceived barrier to Medicare 
access.
    We cautioned in the CY 2025 OPPS/ASC proposed rule, and we 
reiterate and underscore in this final rule with comment period, that 
the generally applicable no legal obligation to pay payment exclusion 
at Sec.  411.4(a) continues to apply to services furnished to 
individuals on bail, parole, probation, or home detention in the same 
way it applies to any other Medicare

[[Page 94502]]

beneficiary who receives an item or service where there is no legal 
obligation to pay. The no legal obligation to pay payment exclusion in 
Sec.  411.4(a) is a general rule that is applicable to all health care 
items or services (except Federally qualified health center services 
and as provided in Sec.  411.8(b)) received by any Medicare 
beneficiary, regardless of whether the individual is in custody of 
penal authorities. Nothing in the proposed modification of the special 
condition at Sec.  411.4(b) and the description of ``custody'' that we 
are finalizing in this final rule with comment period affects the scope 
of the general rule at Sec.  411.4(a). Thus, if an individual on bail, 
parole, probation, or home detention has no legal obligation to pay for 
a health care item or service, the general rule at Sec.  411.4(a) would 
continue to prohibit Medicare from paying for such a service, 
regardless of the scope of the description of ``custody'' in Sec.  
411.4(b)(3). For example, if a State or local government requires 
substance use disorder counseling as a condition of parole, and the 
State or local government does not charge all parolees for such 
services, then the parolee has no legal obligation to pay for such 
service under Sec.  411.4(a); therefore, Medicare is prohibited under 
Sec.  411.4(a) from paying for the service. In the proposed rule, we 
invited comments on what types of medically necessary health care items 
or services, if any, are typically provided at no cost to individuals 
on parole, probation, or home detention.
    In addition to the proposed changes to the description of 
``custody,'' we also proposed to reorganize and renumber the regulation 
at Sec.  411.4(b). Currently, Sec.  411.4(b) includes both a 
description of ``custody'' and a statement of the conditions that must 
be satisfied for payment to be made under Medicare for items or 
services furnished to individuals in custody of penal authorities. We 
proposed to separately codify the description of ``custody'' and the 
special conditions for payments. Specifically, at proposed Sec.  
411.4(b)(1)(i) through (iii), we proposed to state the conditions that 
must be satisfied for Medicare to pay for items or services furnished 
to an individual in custody of penal authorities; we also proposed 
certain non-substantive edits to the regulatory language adopted from 
current Sec.  411.4(b). At proposed Sec.  411.4(b)(2), we proposed a 
definition of ``penal authority'' that would apply generally to Sec.  
411.4(b). At Sec.  411.4(b)(3), we proposed a description of 
``custody'' that is narrower in scope than the current description.
    To align the regulatory text with the statutory no legal obligation 
to pay payment exclusion at section 1862(a)(2) of the Act, we proposed 
certain non-substantive edits to Sec.  411.4(a). Specifically, the 
statute refers to items and services but the current regulation refers 
only to services. Consistent with the statute, we proposed to refer to 
both items and services in the regulatory text. We also proposed to add 
a reference to Federally Qualified Health Center services at Sec.  
411.4(a) to align with the statute. Also, the current regulatory text 
at Sec.  411.4(a)(2) states that no other person or organization has a 
legal obligation to pay, whereas the statute refers only to a person. 
Therefore, we proposed to delete ``organization'' from the regulation 
text because the term ``person'' includes both natural and non-natural 
persons, and the term ``organization'' is therefore superfluous. We 
also proposed to align the parenthetical in Sec.  411.4(a)(2) with the 
statutory parenthetical and to replace the term ``beneficiary'' in 
Sec.  411.4(a)(1) and (2) with ``individual'' to align with section 
1862(a)(2) of the Act.
    We also proposed to redesignate the special conditions that are 
specified in current Sec.  411.4(b)(1) and (2) as Sec.  411.4(b)(1)(i) 
through (iii). Under the proposal, the rebuttable presumption in Sec.  
411.4(b)(1) would apply to all items or services furnished to 
individuals in custody of penal authorities, regardless of who provides 
the items or services. We invited comments on whether the scope of the 
rebuttable presumption in proposed Sec.  411.4.(b)(1) should be limited 
to items or services furnished by the penal authority or by a third 
party with which the penal authority has arranged to provide the items 
or services, noting that, if we limit the scope of the rebuttable 
presumption in this way, the rebuttable presumption in proposed Sec.  
411.4(b)(1) would not apply to items or services furnished to 
individuals in custody of penal authorities by third parties who do not 
have an arrangement or contract with the penal authority to provide the 
items or services. We also invited comments on whether individuals in 
custody of penal authorities are permitted to arrange for their own 
health care with third parties who do not have an agreement with the 
penal authority to provide the items or services. Lastly, we proposed 
at proposed Sec.  411.4(b)(3)(v) to clarify that an individual who is 
required to reside in a mental health facility would only be considered 
to be in custody under the no legal obligation to pay payment exclusion 
if the individual is required to reside in such a facility under a 
penal statute or rule.
    In the CY 2025 OPPS/ASC proposed rule, we addressed our particular 
concerns with the application of the no legal obligation to pay payment 
exclusion to individuals residing in halfway houses. We noted that, 
according to the National Institute of Justice (NIJ), a research, 
development, and evaluation agency of the U.S. Department of Justice, 
the term ``halfway house'' usually refers to temporary housing, 
provided in a community-based residential facility, which uses around-
the-clock supervision and offers services to assist with the transition 
from incarceration to the community (see https://crimesolutions.ojp.gov/ratedpractices/90#1-0). The NIJ notes that, 
although the degree to which services are provided to residents varies 
significantly among halfway house programs, the following 
characteristics are common to most halfway houses: (1) constant 
supervision and daily contact between staff and returning individuals; 
(2) a requirement for participants to abide by rules (such as curfews 
and drug testing); and (3) access to employment, education, life skills 
training, and additional services as needed (such as substance use 
disorder treatment and counseling).
    As the name suggests, halfway houses occupy a middle ground between 
complete custodial incarceration and unconditional release, and there 
appears to be wide variation in the degree of control exercised over 
halfway house residents in various State, local, and Federal 
facilities. Given this variability, we solicited comments on whether 
halfway house residents typically have a legal obligation to pay for 
health care items and services, and if so, to what extent (that is, do 
they have a legal obligation to pay for all or most health care items 
or services, or only certain items or services) and under what 
conditions. In particular, we solicited detailed comments, with 
examples as appropriate, focusing specifically on the legal obligation 
that halfway house residents have to pay for the health care items and 
services they receive.
    To provide greater focus for our comment solicitation on halfway 
houses, we proposed regulatory text at Sec.  411.4(b)(3)(vi) that is 
drawn from the Medicaid payment exclusion rule at Sec.  435.1009. As 
explained in SHO # 16-007, FFP is available for services furnished to 
Medicaid-eligible individuals living in halfway houses, provided the 
following conditions are met: (1) residents are not precluded from 
working outside the facility in

[[Page 94503]]

employment available to individuals who are not under justice system 
supervision; (2) residents can use community resources (libraries, 
grocery stores, recreation, education, etc.) at will; and (3) residents 
can seek health care treatment in the broader community to the same or 
similar extent as other Medicaid enrollees in the state. SHO # 16-007 
adds that ``at will'' is consistent with certain house rule 
restrictions and travel limitations, and stipulates that the State 
Medicaid agency must ensure that the halfway house meets the 
requirements enumerated above.
    Consistent with Medicaid guidance, we proposed at Sec.  
411.4(b)(3)(vi) to consider an individual to be in custody for purposes 
of the special condition for payment at Sec.  411.4(b) if the 
individual is required to reside in a halfway house under any of the 
following conditions: residents are precluded from working outside the 
facility in employment that is available to individuals who are not 
under penal authority supervision; residents may not use community 
resources (for example, libraries, grocery stores, recreation, or 
educational institutions) at will; or residents may not seek health 
care items and services in the broader community to the same or similar 
extent as individuals who are not under penal authority supervision. 
Like Medicaid, we proposed to interpret ``at will'' to be consistent 
with certain house rule restrictions and travel limitations. Our 
proposal to align the Medicare no legal obligation to pay payment 
exclusion at Sec.  411.4(b) with Medicaid guidance was intended to 
facilitate access to Medicare for dually eligible individuals returning 
to the community from incarceration and residing in halfway houses.
    Consistent with our discussion regarding bail, parole, probation, 
and home detention, we noted in the proposed rule, and we reiterate and 
emphasize in this final rule with comment period, that the general no 
legal obligation to pay payment exclusion at Sec.  411.4(a) could apply 
to services furnished to individuals in halfway houses even if those 
individuals are not considered to be in custody for purposes of Sec.  
411.4(b). If an individual and the individual's insurance, if any, has 
no legal obligation to pay for a health care item or service, then 
Medicare may not pay for the item or service. In the CY 2025 OPPS/ASC 
proposed rule, we invited comments on whether individuals who reside in 
halfway houses under the conditions described in proposed Sec.  
411.4(b)(3)(vi) typically do not have a legal obligation to pay for 
health care items or services, or whether fewer, other, or additional 
factors compared to the factors described in the proposal would form a 
more appropriate basis for a presumption that the individual is in 
custody and has no legal obligation to pay for health care items or 
services.
    In the CY 2025 OPPS/ASC proposed rule, we proposed to define 
``penal authority'' at Sec.  411.4(b)(2) as a police department or 
other law enforcement agency, a government agency operating under a 
penal statute, or a State, local or Federal jail, prison, penitentiary, 
or similar institution. We are aware that private contractors in some 
circumstances may be responsible for operating certain penal 
institutions or halfway houses, and we sought comment on whether such 
contractors should explicitly be included in the proposed definition of 
``penal authority.'' As we stated in the CY 2025 OPPS/ASC proposed 
rule, the proposed definition was intended to be broad enough to 
include all agencies or institutions that might place or hold an 
individual in custody, as the term is described at proposed Sec.  
411.4(b)(3), regardless of whether the individual has been convicted of 
a crime. We stated in the proposed rule that the term ``penal 
authority'' does not appear to be commonly used outside of the Medicare 
context. We invited comments on whether other terminology would be more 
appropriate or would align more closely with terms commonly used in the 
criminal justice system. We also invited comments on whether the 
proposed definition of ``penal authority'' is too broad or narrow for 
purposes of the no legal obligation to pay payment exclusion.
    We received 67 comments on our proposal to narrow the description 
of ``custody'' in Sec.  411.4(b) and the other proposals described 
above. Commenters included advocacy organizations for justice involved-
individuals, States, local government and law enforcement 
organizations, providers and suppliers, and provider organizations. 
With one exception, all of the commenters supported our proposal to 
narrow the description of ``custody.'' A summary of the comments and 
our responses follows.
    Comment: With one exception, commenters unanimously supported our 
proposal to narrow the description of ``custody'' in Sec.  
411.4(b)(3)(i) by removing individuals who are on supervised release 
and home detention and striking the phrase ``confined completely or 
partially in any way under a penal statute or rule'' from the 
description. The vast majority of commenters agreed that individuals on 
supervised release, including individuals on bail, parole, probation, 
or home detention, are typically responsible for their own health care 
costs, including securing health insurance from an employer or 
Medicaid. One commenter representing an advocacy organization for 
justice-involved individuals surveyed its community-based partners in 
six states and reported that, universally, the people that they serve 
on pretrial release, probation, and parole do not receive health care 
from the justice system, prisons, or jails. Another commenter 
representing various law enforcement and correctional facility 
associations stated that, in almost all U.S. jurisdictions, individuals 
living under any form of community supervision are responsible for 
securing and paying for their own health care. Likewise, a commenter 
representing a State's community bail fund suggested that people living 
in the community under any form of supervised release are typically 
responsible for their own health care costs. A commenter representing 
hospitals explained that jails do not currently have an obligation to 
pay for care provided to formerly incarcerated individuals, so the care 
provided by hospitals to this population often is uncompensated. A 
commenter representing a State's department of corrections explained 
that, while people in their State living under supervised release 
(including bail, community supervision, re-entry centers, and 
electronic home monitoring) are responsible for their own health care 
costs, the department of corrections does pay for intensive inpatient 
substance use disorder treatment for people on community supervision 
and in partial confinement for a small number of individuals, and it 
also pays for this inpatient substance use treatment if an individual 
does not have insurance.
    Most commenters suggested that our proposal to narrow the 
description of ``custody'' would also promote successful reentry and 
community integration for people in the criminal legal system. For 
example, a commenter representing a State agency for public counsel 
services explained that its clients reentering the community who do not 
qualify for Medicaid often face significant health care costs, needing 
to either pay out-of-pocket or find other insurance, which may lead 
individuals to delay or forgo treatment. The commenter further 
explained that its clients are often unable to access treatment that is 
required by conditions of probation, parole, and bail, due

[[Page 94504]]

simply to lack of access to health insurance, and that this causes 
violations to occur, which can lead to the individuals being returned 
to custody. Other commenters representing addiction and mental health 
advocacy groups noted that an individual is at the highest risk for an 
overdose during the first 2 weeks following release from incarceration. 
According to these commenters, equipping individuals with timely access 
to substance use, mental health, and other health-related services 
before release would facilitate the transition to care that is 
necessary to mitigate the risk of recidivism and to prevent death and 
other avoidable harms. Another commenter representing a team of 
researchers, physicians, and community health workers noted that there 
are significant health and racial disparities between individuals with 
and without a history of incarceration, as well as between those on 
probation or parole or those who are not. Citing these substantial 
disparities and barriers to health care access, the commenter suggested 
that the proposed revisions are a crucial step towards alleviating 
these inequities and improving healthcare access and health outcomes. 
The commenter further stated that increasing Medicare access for 
individuals on probation and parole has the capacity to increase 
preventive care utilization, improve health outcomes, and enhance 
racial health and healthcare equity.
    Commenters also reported that the proposal to narrow the 
description of ``custody'' would improve dually eligible individuals' 
access to both Medicare and, potentially, Medicaid, including accessing 
benefits for already-enrolled individuals. One commenter provided an 
example of a dually enrolled individual on probation who was legally 
responsible for paying for his own medication and enrolled in Part D. 
According to the commenter, the individual was barred from submitting 
claims for the medication under Part D because the individual was 
considered to be in custody under the Medicare no legal obligation to 
pay payment exclusion, but was also denied coverage for the medication 
under Medicaid because the individual was enrolled in Part D. Another 
commenter, representing a nonpartisan research and policy organization, 
explained that some individuals who are recently released from jail or 
prison on bail, parole, probation, or home detention have only enrolled 
in Medicaid because they believe, even where they have a legal 
obligation to pay, that Medicare will not pay for their health care 
under the no legal obligation to pay payment exclusion.
    Response: Based on our review of the comments, we are persuaded 
that the overwhelming majority of individuals who are on bail, parole, 
probation, or home detention have a legal obligation to pay for most or 
all of the health care items or services that they receive. We 
therefore no longer believe it is reasonable to presume that such 
individuals have no legal obligation to pay for their health care. We 
also agree with the commenters that narrowing the description of 
``custody'' in the regulatory no legal obligation to pay payment 
exclusion will improve access to Medicare, including access by dually 
eligible individuals, thus facilitating the transition to the community 
for formerly incarcerated individuals, mitigating the risk of 
recidivism, and helping to prevent death and other avoidable harms. 
Therefore, using our authority in sections 1862(a)(2) and 1871 of the 
Act, we are finalizing our proposal to remove individuals who are on 
supervised release and home detention and to strike the phrase 
``confined completely or partially in any way under a penal statute or 
rule'' from the description of ``custody'' at final Sec.  
411.4(b)(3)(i). As explained in further detail below, we are also 
finalizing an illustrative list at Sec.  411.4(b)(3)(ii) of individuals 
who are not considered to be in custody for purposes of the payment 
exclusion.
    Although we are narrowing the description of ``custody'' to no 
longer include individuals on bail, parole, probation, or home 
detention (and, as explained below, individuals who are required to 
reside in halfway houses), we reiterate that the generally applicable 
no legal obligation to pay payment exclusion at Sec.  411.4(a) would 
continue to apply to services furnished to such individuals in the same 
way it applies to any other Medicare beneficiary who receives an item 
or service where there is no legal obligation to pay. The no legal 
obligation to pay payment exclusion in Sec.  411.4(a) is a general rule 
that is applicable to all health care items or services (except 
Federally qualified health center services and as provided in Sec.  
411.8(b)) received by any Medicare beneficiary, regardless of whether 
the individual is in custody of penal authorities. Thus, if a State 
furnishes an item or service (or arranges for an item or service to be 
furnished), such as intensive inpatient substance use disorder 
treatment, to non-Medicare individuals who are on bail, parole, 
probation, or home detention or who are required to reside in a halfway 
house, and the individuals and the individuals' insurance (if any) are 
not pursued for payment with the same vigor that the State pursues the 
collection of other debts, then Medicare payment may not be made for 
similar items or services, because the Medicare beneficiaries, like the 
non-Medicare individuals, have no legal obligation to pay for the items 
or services.
    Comment: One commenter did not support CMS' proposed changes for 
formerly incarcerated individuals. The commenter stated a concern that, 
under our proposal, Medicare would no longer pay for community health 
programs that support and assist individuals returning to the community 
from incarceration, in an effort to prevent recidivism. The commenter 
expressed concern that failure to pay for such medical services would 
cause more harm to communities, straining the healthcare system and 
leading to costly health care in emergency departments.
    Response: We believe that the commenter misunderstood our proposed 
revisions. By narrowing the description of ``custody'' at Sec.  
411.4(b)(3)(i), we were not proposing that we no longer pay for 
Medicare-covered items or services furnished to these individuals. 
Rather, we were proposing to narrow the description of ``custody'' in 
Sec.  411.4(b)(3)(i) because we no longer believe that certain classes 
of individuals should be presumed to be in custody for purposes of the 
no legal obligation to pay payment exclusion. We also proposed to 
narrow the description of ``custody'' to remove barriers to accessing 
Medicare by individuals who are returning to the community after 
incarceration. By adopting these revisions to the description of 
``custody,'' we believe that we are adequately addressing this 
commenter's concerns regarding policies that facilitate successful re-
entry for individuals transitioning from incarceration to their 
communities.
    Comment: Many commenters encouraged CMS to explicitly state in the 
regulatory text that individuals on bail, parole, probation, or home 
confinement are not considered to be in custody. Commenters stated that 
explicit regulatory text would provide much needed clarity to 
individuals, providers, and advocates who are navigating these 
circumstances. One commenter representing an advocacy organization 
suggested that regulatory language set in the affirmative is easier to 
understand and will help further align the approaches of Medicare and 
Medicaid. The commenter also noted that it can be hard for individuals 
with criminal legal histories to find health care providers, and 
affirmative

[[Page 94505]]

regulatory language can help address that issue by providing 
reassurance to providers that their services will be reimbursed by 
Medicare. Additionally, the commenter expressed concern that, without 
explicitly stating who is not considered to be in custody under the 
payment exclusion, providers may not attempt to submit claims to 
Medicare or may not encourage Medicare enrollment for patients under 
community supervision because it is too complicated or may refuse to 
provide services to people on community supervision, citing Medicare's 
payment exclusion as the reason. Another commenter representing a state 
Medicaid and CHIP office agreed that expressly specifying in regulation 
when an individual is not considered to be in custody of a penal 
authority would help achieve consistency and clarity, reduce potential 
ambiguity, and ensure fair treatment of these individuals.
    Response: We are persuaded by the commenters. Therefore, using our 
authority at sections 1862(a)(2) and 1871 of the Act, at Sec.  
411.4(b)(3)(ii), we are including in the regulatory text an 
illustrative list of individuals who are not considered to be in 
custody under the no legal obligation to pay payment exclusion, 
including individuals on bail, parole, probation, and home detention 
and individuals who are required to reside in halfway houses. We agree 
that this should help to achieve consistency and clarity, reduce 
potential ambiguity and uncertainty, and give providers and suppliers 
reassurance that their services may be reimbursed by Medicare. As 
finalized, Sec.  411.4(b)(3)(ii) provides that individuals who are not 
considered to be in custody under the payment exclusion include, but 
are not limited to, those individuals who are released to the community 
pending trial (including those in pretrial community supervision and 
those released pursuant to cash bail), on parole, on probation, on home 
detention or home confinement, or required to live in a halfway house 
or other community-based transitional facility. The list is intended to 
be illustrative, not exhaustive. An individual is not deemed to be in 
custody merely because the terminology used by a particular penal 
authority to denote that individual's status does not align with the 
terminology used in final Sec.  411.4(b)(3)(ii). Rather, the 
description of ``custody'' at Sec.  411.4(b)(3)(i) states the 
sufficient conditions for determining whether an individual is 
considered to be in custody for purposes of the no legal obligation to 
pay payment exclusion. (We note also that, under the qualification 
``including, but not limited to'' in final Sec.  411.4(b)(3)(ii), 
individuals who have no involvement with the criminal justice system or 
who have been unconditionally released from the custody of penal 
authorities are also not considered to be in custody under the Medicare 
payment exclusion rule.) As a reminder, if an individual in any of the 
circumstances listed in final Sec.  411.4(b)(3)(ii) does not have a 
legal obligation to pay for a health care item or service, the general 
rule at Sec.  411.4(a) would continue to prohibit Medicare from paying 
for such an item or service, regardless of the scope of the description 
of ``custody'' in Sec.  411.4(b)(3)(i), and regardless of the fact that 
such individuals are not considered to be in custody under Sec.  
411.4(b)(3)(ii).
    Comment: Most commenters addressing the breadth or appropriateness 
of the terminology in our proposed description of ``custody'' suggested 
that we remove the term ``under arrest.'' Some commenters stated that 
this term is imprecise and overly broad, and could prevent people who 
are on bail or pre-trial release and whose services are not covered or 
provided by a carceral setting from accessing Medicare. Another 
commenter noted that home detention is sometimes referred to as ``home 
arrest.'' One commenter explained that there are typically two 
different periods of confinement following arrest and prior to 
conviction. According to the commenter, when an individual is arrested, 
they are often confined on site or in a local police station before 
they are arraigned. After the individual is arraigned, they may be held 
in jail awaiting trial in pre-trial detention. The commenter stated 
that, during the pre-arraignment period, the provision of health care 
services is typically minimal and any health care items or services 
furnished are billed to the individual receiving them. In contrast, 
according to the commenter, individuals who are confined in jail during 
pre-trial detention typically do not have a legal obligation to pay for 
their health care. The commenter indicated that, to the extent that the 
term ``under arrest'' refers to pre-arraignment confinement, it should 
not be included in the description of ``custody,'' because these 
individuals typically have a legal obligation to pay for their own 
health care, whereas, to the extent that the term ``under arrest'' 
refers to pre-trial detention in jail, the term is not necessary, 
because the proposed description of ``custody'' already includes 
individuals incarcerated in jail. Many other comments agreed that the 
term ``incarcerated in jail'' sufficiently captures the subset of 
individuals who have been placed under arrest and have no legal 
obligation to pay for their own health care.
    Response: After reviewing the comments, we agree that the phrase 
``under arrest'' is imprecise and overly broad, and we are therefore 
removing the term from the description of ``custody'' at final Sec.  
411.4(b)(3)(i). Specifically, based on the information provided by 
commenters regarding the typical obligation of individuals who are 
under arrest to have a legal obligation to pay for the health care 
items or services that they receive before they are arraigned, we do 
not believe that it is appropriate to presume that such individuals 
have no legal obligation to pay for their own health care. We are also 
concerned that the term ``under arrest'' may cause confusion for 
individuals post-arraignment, because it may be applied in some 
jurisdictions to individuals that we are explicitly excluding from the 
description of ``custody,'' including individuals who have been 
released to the community pending trial and individuals who are on home 
detention or confinement. Lastly, we agree that, insofar as individuals 
who are under arrest are incarcerated or physically detained in a jail 
or similar institution, these individuals would be considered to be in 
custody under the description of ``custody'' at final Sec.  
411.4(b)(3)(i)(A). We reiterate that, if an individual who is under 
arrest has no legal obligation to pay for a health care item or 
service, the general rule at Sec.  411.4(a) would continue to prohibit 
Medicare from paying for such an item or service, regardless of the 
scope of the description of ``custody'' in Sec.  411.4(b)(3). Given the 
breadth and imprecision of the term ``under arrest,'' as identified by 
the commenters, we are similarly not including the term ``under 
arrest'' in the list of individuals who are presumed not to be in 
custody at final Sec.  411.4(b)(3)(ii).
    Comment: One commenter representing those with lived experience of 
the criminal justice system asserted that careful consideration should 
be given to individuals who experience a very short period of 
incarceration related to a violation of the conditions of their 
probation or parole. According to the commenter, the sanctions for such 
violations of probation or parole often fall in a gray area between a 
defined sentence and a pre-hearing holder. The commenter expressed a 
concern that individuals who are temporarily incarcerated for violating 
the conditions

[[Page 94506]]

of their probation or parole may be denied Medicare payment for health 
care items or services for even a short period of time.
    Response: An individual who is incarcerated is considered to be in 
custody of penal authorities under final Sec.  411.4(b)(3)(i)(A), even 
if the individual is not convicted of a crime and even if the time 
spent in incarceration is relatively short. While the individual is 
incarcerated, the special condition at Sec.  411.4(b) applies to health 
care items or services that the individual receives. We note, however, 
that once the individual is released to the community from 
incarceration for the probation or parole violation, the individual 
would no longer be considered to be in custody under final Sec.  
411.4(b)(3), and it would no longer be necessary to overcome the 
rebuttable presumption at Sec.  411.4(b)(1) for Medicare payment to be 
made for items or services furnished after the individual is released 
from incarceration.
    Similar principles apply to individuals who are intermittently 
incarcerated, such as individuals who are required to reside in jail 
over the weekend but are allowed to live at home during the week. For 
the time period when an individual is required to be in jail, the 
individual is considered to be in custody under Sec.  411.4(b)(3)(i), 
and there is a presumption that the individual has no legal obligation 
to pay for health care items or services that they receive during this 
period. On the other hand, the individual is not considered to be in 
custody under Sec.  411.4(b)(3)(i)(A) for those days in the week when 
the individual is not required to reside in jail, prison, penitentiary, 
or similar institution. Assuming the individual would also not be 
considered to be in custody under Sec.  411.4(b)(3)(i)(B) through (D) 
(that is, the individual is not temporarily outside of a jail, prison, 
penitentiary, or similar institution; on medical furlough or similar 
arrangement; escaped from confinement by a penal authority; or required 
to reside in a mental health facility under a penal statute or rule), 
the rebuttable presumption at Sec.  411.4(b) would not apply to health 
care items or services that the individual receives on those days that 
the individual is not in jail or prison.
    Comment: A few commenters stated that those on ``medical furlough'' 
should also be removed from the description of ``custody'' at Sec.  
411.4(b)(3)(i). One commenter representing a hospital association 
expressed concern that, without including the furlough class of 
individuals, hospitals will continue to provide services that remain 
unreimbursed and generally unbillable. A commenter representing local 
law enforcement agencies asserted that individuals on medical furlough 
are responsible for securing and paying for their own health care. 
Another commenter representing a State department of health asserted 
that individuals on medical or geriatric parole in its State have the 
freedom to choose their own medical care and are financially 
responsible for that care. The commenter expressed a concern that the 
phrase ``medical furlough or similar arrangements'' could be 
interpreted broadly to preclude coverage for those on medical and 
geriatric parole. The commenter also objected to the phrase 
``temporarily outside of a jail, prison, penitentiary, or similar 
institution on medical furlough or similar arrangement'' in the 
proposed description of ``custody'' because the commenter believed that 
bail, probation, parole, and home confinement, which we proposed to 
remove from the description of ``custody,'' are all instances where an 
individual is ``temporarily outside of a jail, prison, penitentiary, or 
similar institution.''
    Response: After considering the comments received, we do not 
believe it is appropriate to remove ``medical furlough or similar 
arrangement'' from the description of custody. The special condition at 
Sec.  411.4(b) helps prevent improper Medicare payments for items and 
services furnished to individuals in custody of penal authorities, 
because such individuals typically have no legal obligation to pay for 
their own health care. We are concerned that categorically excluding 
medical furlough from the description of ``custody'' in Sec.  
411.4(b)(3) may lead to improper payments, as a penal authority would 
have an incentive to place Medicare beneficiaries on medical furlough 
to receive health care items or services that the penal authority 
furnishes to similarly situated non-Medicare individuals at no cost 
(that is, the penal authority does not pursue payment from the non-
Medicare individuals and the individuals' insurance, if any). To 
prevent improper payments in such circumstances, we believe it is 
reasonable to require the penal authority to overcome the rebuttable 
presumption in Sec.  411.4(b)(1) in order for Medicare payment to be 
made for health care items or services furnished to an individual on 
medical furlough. And, as explained in our response to other comments, 
if a penal authority has established a program or policy permitting 
medical furloughs or similar arrangements, we do not believe it is 
unreasonably burdensome for the penal authority to overcome the 
rebuttable presumption in Sec.  411.4(b)(1).
    We note also that we are not sure of the precise meaning of the 
terms ``medical or geriatric parole'' as used by the second commenter. 
In our regulations, the term ``medical furlough or similar 
arrangement'' refers to a situation where an individual is temporarily 
released from incarceration for the purpose of receiving medical 
services, and is unconditionally required to return to the jail or 
prison after the medical services are furnished. In contrast, the term 
``parole,'' as we understand it, typically refers to a permanent 
release from incarceration, even if the individual has to meet certain 
conditions to retain their freedom. To the extent that ``medical or 
geriatric parole'' refers to ``parole'' in the latter sense, then, 
under final Sec.  411.4(b)(3)(ii)(B), individuals who are released on 
medical or geriatric parole are not considered to be in custody for 
purposes of the payment exclusion. We note that the list of individuals 
who are not considered to be in custody under Sec.  411.4(b)(3)(ii) is 
illustrative only and is not intended to apply only where penal 
authorities use specific terminology.
    Comment: One commenter suggested that CMS clarify the difference 
between ``medical furlough'' and the practice of ``compassionate 
release.'' According to the commenter, ``compassionate release'' occurs 
where an individual is released from incarceration due to extraordinary 
circumstances, such as a severe or terminal illness. The commenter 
added that, because such individuals have completed their sentences, 
they typically have a legal obligation to pay for their own health 
care.
    Response: As explained in our response to the previous comment, 
``medical furlough or similar arrangement'' refers to a temporary 
release from incarceration for the purposes of obtaining health care 
with a requirement that the individual return to incarceration after 
treatment. In contrast, as described by the commenter, individuals who 
have received compassionate release are considered to have completed 
their sentences, and they are legally responsible for paying for their 
own health care. Under the circumstances described by the commenter, we 
agree that ``compassionate release'' is not an example of ``medical 
furlough or similar arrangement,'' and individuals who have received 
compassionate release as described by the commenter are not considered 
to be in custody under the

[[Page 94507]]

no legal obligation to pay payment exclusion. Although we do not 
believe that it is necessary to state specifically in regulation that 
individuals who have received compassionate release are not considered 
to be in custody, we reiterate that the list of individuals who are not 
considered to be in custody at final Sec.  411.4(b)(3)(ii) is 
illustrative only, not exhaustive, and not intended to apply only where 
penal authorities use specific terminology.
    Comment: One commenter representing an advocacy organization 
suggested that, instead of the term ``bail'' in the regulations at 
Sec.  411.4(b), CMS use the phrase ``released to the community pending 
trial (including those in pretrial community supervision and those 
released pursuant to cash bail).'' This commenter expressed concern 
that, although bail technically refers to the process of pre-trial 
release, it is often used to only mean cash bail. According to the 
commenter, many individuals are released to the community prior to 
trial without cash bail and are responsible for paying for their health 
care.
    Response: After considering the comments, we agree that the term 
``bail'' may be too narrow, because it does not necessarily include 
individuals who have been released from jail prior to trial on their 
own recognizance. Therefore, we are using the phrase ``released to the 
community pending trial (including those in pretrial community 
supervision and those released pursuant to cash bail)'' rather than 
``bail'' in final Sec.  411.4(b)(3)(ii)(A).
    Comment: The commenters that addressed the issue of individuals who 
reside in halfway houses supported narrowing the description of 
``custody'' to exclude some or all individuals who are required to 
reside in halfway houses. We did not receive any comments in favor of 
considering all halfway house residents to be in custody for purposes 
of the no legal obligation to pay payment exclusion. Commenters 
reported that individuals who are required to reside in halfway houses 
are typically responsible for paying for their own health care. One 
commenter representing various law enforcement and correctional 
facility associations stated that, in almost all U.S. jurisdictions, 
individuals living in partial confinement facilities (such as halfway 
houses and work release facilities) are responsible for securing and 
paying for their own health care. Another commenter stated that most 
halfway house residents are responsible for their own health care, even 
when their freedom of movement is restricted, and gave as an example a 
person living in a halfway house with restricted freedom of movement 
setting up a mental health appointment with a therapist in the 
community as part of their re-entry plan. One commenter representing a 
State department of corrections stated that halfway house residents in 
its State are not responsible for their own health care if they are on 
``confined'' status, while residents on ``furloughed'' status are 
legally responsible for the costs of that health care. A commenter 
representing a different State's department of corrections noted, 
without using the term ``halfway house,'' that individuals in its State 
under ``partial confinement'' are responsible for their own health 
care, with the exception of intensive inpatient substance use disorder 
treatment, which the State provides to certain individuals without 
charge. A third commenter representing a different State reported that 
individuals in its State are not required to live in halfway houses, 
and that individuals residing in the community under the supervision of 
the State's department of corrections are responsible for their own 
medical costs.
    Response: We are persuaded by the commenters that individuals who 
are required to live in halfway houses typically have a legal 
obligation to pay for all or most of the health care items or services 
that they receive. Given this, we no longer believe that such 
individuals should be presumed to be in custody of penal authorities, 
with no legal obligation to pay for their own healthcare, and we no 
longer believe that the rebuttable presumption at Sec.  411.4(b)(1) 
must be overcome in order for Medicare to pay for health care items or 
services furnished to such individuals. Therefore, using our authority 
in sections 1862(a)(2) and 1871 of the Act, in this final rule with 
comment period, we are not including individuals who are required to 
live in halfway houses in the description of custody at Sec.  
411.4(b)(3)(i). The regulation text at final Sec.  411.4(b)(3)(ii)(E) 
expressly states that individuals who are required to reside in halfway 
houses or other community-based transitional facilities are not 
considered to be in custody for purposes of the no legal obligation to 
pay payment exclusion. We are using the phrase ``community-based 
transitional facility'' in the regulatory text at final Sec.  
411.4(b)(3)(ii) to make it clear that the residence where an individual 
resides need not be explicitly classified as a ``halfway house'' under 
State or local law for the exclusion from our description of 
``custody'' to apply. We reiterate that Sec.  411.4(b)(3)(ii), as 
finalized, is an illustrative, not exhaustive, list of individuals who 
are not considered to be in custody for purposes of the no legal 
obligation to pay payment exclusion.
    With respect to work release programs, we understand that these 
programs differ from jurisdiction to jurisdiction. In some 
jurisdictions, individuals in work release programs reside in halfway 
houses or other community-based transitional facilities and leave the 
facility for limited time periods to work. Under Sec.  
411.4(b)(3)(ii)(E), these individuals are not considered to be in 
custody for purposes of the payment exclusion, because they reside in a 
halfway house or similar institution. In other jurisdictions, 
individuals who participate in work release programs are required to 
reside in a jail, prison, or similar institution while not working, 
even if they are permitted to leave the jail, prison, or similar 
institution to work for limited periods. For purposes of the no legal 
obligation to pay payment exclusion, these individuals are considered 
to be in custody under Sec.  411.4(b)(3)(i)(A), even for the time 
period when they are outside of the jail or prison working, because 
they reside in, and remain inmates of, a jail, prison, or similar 
institution. We believe that the penal authority typically retains a 
legal obligation to pay for the health care of such individuals, even 
for the period when they are outside of the jail or prison working.
    Finally, we note that, although commenters stated that halfway 
house residents typically have a legal obligation to pay for their own 
health care, some commenters also reported that, in certain instances, 
halfway house residents are not responsible for paying for some or all 
of their health care. We remind parties that, under the general no 
legal obligation to pay payment exclusion at Sec.  411.4(a), if an 
individual who is required to live in a halfway house has no legal 
obligation to pay for a health care item or service, the general rule 
would continue to prohibit Medicare from paying for such an item or 
service, regardless of the scope of the description of ``custody'' in 
Sec.  411.4(b)(3)(i), and regardless of the fact that halfway house 
residents are not considered to be in custody under final Sec.  
411.4(b)(3)(ii)(E).
    Comment: Commenters generally supported our proposal to rely on 
Medicaid guidelines, drawn from SHO # 16-007, to determine if an 
individual who is required to reside in a halfway house should be 
considered to be in custody for purposes of the no legal

[[Page 94508]]

obligation to pay payment exclusion. Many commenters maintained that, 
if individuals have freedom of movement, then they should be entitled 
to have Medicare pay for their care. One commenter urged CMS to focus 
on freedom of movement and association as the determining factor, as 
opposed to focusing solely on the three factors drawn from SHO # 16-007 
that are intended to demonstrate that an individual has freedom of 
movement and association (that is, freedom to seek work outside of the 
facility, use community resources, and procure health care in the 
community). The commenter expressed a concern that some halfway house 
residents with relatively high degrees of freedom of movement and 
association may be inappropriately considered to be in custody under 
the Medicare no legal obligation to pay payment exclusion if the 
facility where the individual resides fails to meet one or more of the 
three enumerated factors. Some commenters reported that, in some 
instances, halfway house residents may have their movement restricted 
but still have a legal obligation to pay for the health care items and 
services that they receive.
    Many commenters explained that halfway houses are transitional 
facilities designed to support re-entry, where individuals typically 
only reside for a number of weeks. One commenter noted that a halfway 
house resident's degree of freedom of movement and association often 
increases over time as the individual advances through incentive-based 
phases. The commenter maintained that, under the proposed adoption of 
Medicaid guidelines from SHO # 16-007, on-going evaluation of an 
individual's degree of freedom of movement and association would be 
necessary to determine if the individual has the requisite degree of 
freedom necessary to no longer be considered in custody under the 
Medicare payment exclusion. The commenter recommended that CMS develop 
guidelines for individualized assessments of whether a halfway house 
resident is considered to be in custody, and include in the 
consideration a resident's access to health care both within and 
outside of the halfway house facility. Another commenter recommended 
that CMS focus on the reason for an individual's release to a halfway 
house--specifically, to facilitate successful reintegration into 
society--instead of the degree of freedom that the individual enjoys to 
determine whether the individual is in custody for purposes of the no 
legal obligation to pay payment exclusion.
    Response: The special condition at Sec.  411.4(b) for services 
furnished to individuals in custody of penal authorities is intended to 
clarify how the general no legal obligation to pay payment exclusion 
applies to services furnished to individuals in custody of penal 
authorities. Thus, the touchstone of our analysis is whether 
individuals who are required to live in halfway houses typically have a 
legal obligation to pay for the health care items or services that they 
receive. As noted in the response to comments above, we are persuaded 
that individuals who are required to reside in halfway houses typically 
have a legal obligation to pay for most or all of the health care items 
or services they receive. Therefore, we no longer believe that such 
individuals should be presumed to be in custody, with no legal 
obligation to pay for their own health care, under the Medicare no 
legal obligation to pay payment exclusion.
    Although the Medicaid guidelines in SHO #16-007 offer a more 
targeted approach to halfway house residents, based on the comments, we 
are not convinced that the freedom of movement and association standard 
employed by Medicaid overlaps in all cases with the legal obligation to 
pay standard that is central to the Medicare payment exclusion. Given 
the typically short duration of halfway house residency, and the fact 
that individuals' level of freedom may increase during their residency, 
we are also concerned that the guidelines in SHO # 16-007 may be 
difficult to administer in the Medicare context, potentially adding 
burden and barriers to accessing Medicare payment for health care items 
and services. Rather than incorporate Medicaid guidelines in SHO #16-
007, we are excluding halfway house residents from the description of 
``custody'' at Sec.  411.4(b)(3).
    Comment: Numerous commenters suggested that we exclude from the 
rebuttable presumption any items or services furnished by a third party 
not under arrangement or contract with the penal authority. In response 
to our comment solicitation regarding whether an individual in custody 
of a penal authority is permitted to arrange for their own health care 
with third parties that do not have an arrangement or contract with the 
penal authority to provide the items or services, one commenter 
reported that the practice of arranging care with outside third parties 
varies from jurisdiction to jurisdiction. The commenter stated that, 
both for security purposes and to streamline staff operations, most 
jails and prisons use a centralized provider--either contracted or 
through direct hire--that provides a set of health care services and 
items. A commenter representing local law enforcement agencies stated 
that individuals in custody may be permitted to arrange for their own 
health care with third parties other than the health care entity that 
normally provides care to the penal authority facilities' residents. 
This commenter further explained that the incarcerated individual is 
typically required to pay out of pocket, not only for the health care 
services but also for the costs to the facility to transport the 
individual to the visit, including the associated custody staff costs. 
The commenter supported Medicare paying for the costs of such visits, 
including the associated transportation costs. One commenter 
representing a State department of corrections explained that, in the 
commenter's State, incarcerated individuals can request and access any 
health care items or services not covered by the State's health plan, 
but individuals are responsible for all costs related to the medical 
care, including transport, custody escort, mileage, medications, and 
any complications or follow up care indicated. The commenter explained 
that prison staff arrange for and schedule the care. Another commenter 
requested that we not presume that an individual in the custody of a 
penal authority who receives items and services from a third party not 
contracted with a penal authority has no legal obligation to pay for 
such items and services. This commenter went on to state that, 
alternatively, if such a presumption does continue to apply in these 
circumstances, information about how to rebut such a presumption should 
be amended to include circumstances where a non-contracted third party 
has provided health care items and services. The commenter also 
expressed concern that providers may not understand that the burden of 
rebutting the presumption is on the State or local government, not on 
the individual.
    Several commenters representing mental health care providers 
requested that the rebuttable presumption not be limited to items or 
services furnished by the penal authority or by a third party with 
which the penal authority has arranged to provide the items or 
services. However, the commenters also suggested that the proposed 
regulatory description of when an individual is in ``custody'' and the 
requirements related to how to rebut the presumption that an individual 
has no legal obligation to pay

[[Page 94509]]

for their health care items and services would impose undue challenges 
to access and administrative burden for providers in confirming if 
someone is in custody, per the proposed definition. The commenters 
maintained that, by not finalizing our proposal, providers would be 
better positioned to serve individuals in what is often a particularly 
vulnerable and crucial time to access care, and individuals would have 
greater access to provider organizations, thereby strengthening their 
choice in the right treatment and care for them.
    Response: After carefully considering the comments, we are not 
limiting the scope of the rebuttable presumption at Sec.  411.4(b)(1) 
to only those items or services that are furnished by the penal 
authority or by a third party with which the penal authority has 
arranged to provide the items or services. The special condition at 
Sec.  411.4(b) helps prevent improper Medicare payments for items and 
services furnished to individuals in custody of penal authorities, 
because such individuals typically have no legal obligation to pay for 
their own health care. We are concerned that limiting the scope of the 
rebuttable presumption at Sec.  411.4(b)(1) to only items or services 
furnished by or on behalf of penal authorities may lead to improper 
payments, as penal authorities would have an incentive to arrange for 
Medicare beneficiaries to be treated by third party providers and 
suppliers, while furnishing similar items or services to similarly 
situated non-Medicare individuals without pursuing payment from the 
non-Medicare individual and the individual's insurance, if any.
    To prevent improper payments in such situations, we believe it is 
reasonable and not unduly burdensome to require the penal authority to 
overcome the rebuttable presumption in Sec.  411.4(b)(1). For example, 
assume that a penal authority has established a program or policy that 
permits individuals to receive health care items or services from third 
party providers or suppliers, and further that the health care items or 
services in question are not furnished to non-Medicare individuals at 
no cost (that is, the penal authority charges both Medicare 
beneficiaries and non-Medicare individuals for the items or services, 
and pursues payment in full for the items or services from both 
Medicare beneficiaries and non-Medicare individuals and the 
individuals' insurance, if any). To the extent that the penal authority 
is responsible for arranging such care and collecting amounts owed by 
incarcerated individuals for the health care items or services 
received, we do not believe it is unreasonably burdensome for the penal 
authority to overcome the rebuttable presumption in Sec.  411.4(b)(1).
    Comment: With respect to the terminology used to describe 
individuals who are required to reside in mental health facilities, one 
commenter requested that CMS replace ``under a penal statute or rule'' 
with ``as a result of violations of the penal code.'' According to the 
commenter, this terminology aligns with Medicare Part D guidance, which 
provides that individuals who are confined to mental health facilities 
as a result of violations of the penal code are considered to be 
incarcerated, while individuals who are confined to such facilities as 
a result of court orders not related to penal violations are not 
considered incarcerated.
    Response: We decline to make the suggested edit because we believe 
it would make the description of ``custody'' too narrow for individuals 
who are required to reside in a mental health facility. In particular, 
the term ``violation'' suggests that the individual must be convicted 
of a criminal violation in order to be considered to be in custody 
under the no legal obligation to pay payment exclusion. In contrast, 
our description of ``custody'' is intended to capture those individuals 
who do not have a legal obligation to pay for their health care, which 
we believe also includes individuals who are required to reside in a 
mental health facility under a penal statute prior to conviction, while 
the individual is awaiting trial.
    Comment: One commenter supported expanding the definition of 
``penal authority'' to include private parties operating correctional 
facilities of any kind. The commenter stated that expanding the 
definition would facilitate access to the special enrollment period for 
individuals returning from incarceration.
    Response: We are not persuaded that it is necessary to explicitly 
include private parties operating correctional facilities in the 
definition of penal authority at Sec.  4114(b)(2). The definition of 
``penal authority,'' as finalized, includes ``a State, local or Federal 
jail, prison, penitentiary, or similar institution.'' The definition 
does not specify that the facility must be owned and operated directly 
by a governmental authority in order to be a ``penal authority.'' 
Rather, under final Sec.  411.4(b)(2), a jail, prison, or other 
correctional facility qualifies as a ``penal authority'' regardless of 
whether it is owned or operated by a governmental entity or by a 
private entity on behalf of a governmental entity.
    Comment: Commenters variously suggested revising the term ``penal 
authority'' to ``correctional authority,'' ``correctional facility,'' 
``carceral facility,'' or ``correctional institution.'' However, most 
commenters recommended we use the term ``correctional facility,'' which 
the commenters maintained is commonly used terminology in the criminal 
justice system, including by Medicaid. One commenter suggested we seek 
alternatives to the term ``penitentiary.''
    Response: After consideration of the public comments we received, 
we are not persuaded to change the term ``penal authority'' in the 
regulation text. The definition is intended to be broad enough to 
include all agencies or institutions that might place or hold an 
individual in custody, as the term is described at final Sec.  
411.4(b)(3)(i), regardless of whether the individual has been convicted 
of a crime. The terms suggested by commenters are not broad enough to 
accomplish this. Similarly, to ensure that the definition is 
sufficiently broad, we are not striking the term ``penitentiary.'' We 
are aware that the term ``penal authority'' does not appear to be 
commonly used outside of the Medicare context but nonetheless believe 
that this is the best term to implement our policies.
    After consideration of the public comments we received, we are 
finalizing our proposal to narrow the description of custody at final 
Sec.  411.4(b)(3)(i), with one modification: we are striking the term 
``under arrest.'' We are also finalizing at Sec.  411.4(b)(3)(ii) an 
illustrative list of individuals who are not considered to be in 
custody for purposes of the no legal obligation to pay payment 
exclusion. In addition, we are not including halfway house residents in 
the description of ``custody'' in final Sec.  411.4(b)(3)(i), and we 
are clarifying at Sec.  411.4(b)(3)(ii)(E) that individuals who are 
required to live in a halfway house or other community-based 
transitional facility are not considered to be in custody for purposes 
of the no legal obligation to pay payment exclusion. We are also 
finalizing our proposed non-substantive edits to Sec.  411.4(a) and our 
proposal to reorganize and renumber the regulation at Sec.  411.4(b). 
Lastly, we are finalizing the definition of ``penal authority'' at 
Sec.  411.4(b)(2) as proposed.

[[Page 94510]]

B. Revision to Medicare Special Enrollment Period for Formerly 
Incarcerated Individuals

1. Background
    The Consolidated Appropriations Act, 2021 (Pub. L. 116-260) 
provided the authority to establish Medicare Part A and B special 
enrollment periods (SEP) for individuals due to exceptional conditions. 
In the final rule titled ``Medicare Program; Implementing Certain 
Provisions of the Consolidated Appropriations Act, 2021 and Other 
Revisions to Medicare Enrollment and Eligibility Rules,'' which 
appeared in the Federal Register on November 3, 2022 (87 FR 66454), CMS 
used this authority to establish an SEP for formerly incarcerated 
individuals. Individuals who use this SEP are able to enroll in 
Medicare Premium Part A and Part B and avoid potential gaps in coverage 
and late enrollment penalties (LEPs). As established in Sec. Sec.  
406.27(d)(1) and 407.23(d)(1), an individual is eligible to enroll in 
Medicare Parts A and/or B using this SEP so long as they demonstrate 
that they are eligible for Medicare and failed to enroll or reenroll in 
Parts A and/or B due to being in custody of penal authorities, and 
there is a record of release either through discharge documents or data 
available to the Social Security Administration (SSA). The SEP 
provisions at Sec. Sec.  406.27(d) and 407.23(d) incorporate the 
description of `in custody of penal authorities' from the payment 
exclusion parameters already established in Sec.  411.4(b). In the 
November 2022 final rule, we stated that it was important to align the 
scope of the SEP with the scope of individuals specified in Sec.  
411.4(b) as individuals in custody of penal authorities; alignment with 
Sec.  411.4(b) provides a measure of assurance that individuals who are 
no longer subject to the payment exclusion are able to enroll in 
Medicare (Part B and, if necessary, premium Part A). We also noted that 
we would continue to assess the impact of alignment of the SEP with the 
scope of the payment exclusion. (87 FR 66464)
2. Summary of the Proposed Provisions, Public Comments and Responses to 
Comments
    Section 202 of the Act generally provides the basis for SSA to 
determine an individual's eligibility for old age, survivors, and 
disability insurance (OASDI) benefits, also known as social security 
benefits, under Title II of the Act. For most Medicare beneficiaries, 
entitlement to Medicare Part A is based on entitlement to OASDI 
benefits under Title II per section 226 of the Act.\713\ In addition, 
the SSA is responsible for determining entitlement to Part A and 
eligibility for Part B of Medicare. (See Pub. L. 103-296, sec. 105.) 
Section 202(x) of the Act suspends payment of OASDI benefits to 
prisoners, certain other inmates of publicly funded institutions, 
fugitives, probationers, and parolees, including when an individual is 
confined in a jail, prison, or other penal institution or correctional 
facility pursuant to conviction of a criminal offense for a period of 
more than 30 days. We proposed to amend the SEP at Sec. Sec.  
406.27(d)(1) and 407.23(d)(1) to align the SEP triggering event more 
closely with the bases on which an individual's OASDI benefit is 
reinstated or initiated rather than on the scope of the Medicare 
payment exclusion in Sec.  411.4(b). We believe that these proposed 
amendments would streamline the administrative process for determining 
an individual eligible for this SEP and align eligibility for this SEP 
with an individual's obligation and ability to pay for services that 
would otherwise be covered by Medicare. Furthermore, we believe that 
the alignment of this SEP with the initiation or reinstatement of OASDI 
benefits is appropriate, as it allows a population facing many 
challenges reintegrating into society to enroll or reenroll in Medicare 
by having premiums deducted from their OASDI benefits, rather than 
paying out of pocket.
---------------------------------------------------------------------------

    \713\ For more detailed information about entitlement and 
eligibility for Medicare, please refer to sections 226, 226A, 1818, 
1818A, 1836, and 1881A of the Act and 42 CFR parts 406 and 407.
---------------------------------------------------------------------------

    The proposed amendments to Sec.  411.4(b), discussed in section 
XXIII.A of this final rule with comment period, would narrow the list 
of settings where an individual is presumed to have no obligation to 
pay for Medicare-covered items and services--and, thus, Medicare is 
prohibited from paying for those services--because the individual is in 
custody of a penal authority. The rebuttable presumption at Sec.  
411.4(b) provides the individual an opportunity to indicate to CMS that 
the other entity did not cover certain items or services and ask that 
Medicare provide payment, but this option is moot if the individual is 
not able to enroll in Medicare. (See section XXIII.A of this final rule 
with comment period for more information about the rebuttable 
presumption and operation of the payment exclusion.) Under the current 
version of this SEP, beneficiary advocate groups raised concerns about 
the possibility for scenarios where an individual is not able to enroll 
when their items and services could be covered by Medicare, or they are 
able to enroll (and pay monthly premiums) but Medicare is not able to 
pay for their services.
    In making determinations about the suspension of OASDI benefits due 
to an individual's incarceration, SSA uses data it collects from jails, 
prisons, other penal institutions or correctional facilities and 
certain mental health institutions regarding individuals confined in 
those and similar institutions for the reasons outlined in section 
202(x)(1)(A) of the Act. See SSA System of Records Notice: Prisoner 
Update Processing System 60-0269, at 64 FR 11076 (Mar. 8, 1999) and 
updated at 72 FR 69723 (Dec. 10, 2007), 78 FR 40542 (Jul. 5, 2013), and 
83 FR 54969 (Nov. 1, 2018). However, information about individuals 
within the full scope of the current provisions at Sec.  411.4(b), 
including not only individuals who are confined in certain institutions 
but also individuals who are under arrest but not yet convicted, on 
medical furlough, or residing in half-way houses may not be as 
extensively or reliably available. As a result, making eligibility 
determinations for the SEP for formerly incarcerated individuals as it 
is currently drafted is operationally difficult. In addition, the 
current SEP for formerly incarcerated individuals incorporates the 
rebuttable presumption that is included in Sec.  411.4(b) for 
situations where an individual (or healthcare provider seeking to bill 
Medicare for the services) can demonstrate that state or local law 
requires individuals to repay the cost of medical services while they 
are in custody and the state or local government entity enforces the 
requirement to pay by billing all such individuals, whether or not 
covered by Medicare or any other health insurance, and by pursuing 
collection of the amounts they owe in the same way and with the same 
vigor that it pursues the collection of other debts. However, SSA does 
not have a role in administering the Medicare payment exclusion in 
Sec.  411.4(b). Therefore, there is a high likelihood of potential 
inconsistency and administrative burden with tying the implementation 
of the SEP at Sec. Sec.  406.27(d)(1) and 407.23(d)(1) to the Medicare 
payment exclusion under Sec.  411.4(b). Although the proposed changes 
to Sec.  411.4(b) discussed in section XXIII.A to narrow the scope of 
the payment exclusion would flow through to Sec. Sec.  406.27(d) and 
407.23(d) without amendment to the SEP parameters, we believe that 
addressing the rebuttable presumption and potential administration 
burden is

[[Page 94511]]

appropriate and will reduce potential confusion.
    Further, since the establishment of the SEP in January 2023, we 
have received feedback that raised concerns about tying SEP eligibility 
to the Medicare payment definition at Sec.  411.4(b) and how SSA has 
begun administering the SEP using the data in SSA's systems. We have 
heard that the SEP eligibility parameters are confusing and potentially 
prevent or discourage eligible individuals from accessing the SEP. 
Conversely, situations may arise in which an individual is enrolled in 
Medicare using the SEP due to SSA data; however, due to the payment 
exclusion and limited exceptions for these settings, claims for health 
care may not be paid even if the specific state or local government 
does not provide health care in this type of setting.
    Under our proposal, we intend that SSA would make a determination 
of an individual's eligibility to enroll using the Medicare SEP at 
Sec. Sec.  406.27(d)(1) and 407.23(d)(1) based on the data SSA collects 
and keeps in its systems for determining OASDI benefit suspensions and 
any additional documentation provided by individuals to demonstrate 
that they have been released from incarceration. By more closely 
aligning the eligibility criteria for the SEP for formerly incarcerated 
individuals with the data used by SSA in applying the OASDI benefit 
suspension requirement in section 202(x)(1)(A) of the Act, we intend 
that the SEP can be more efficiently and accurately administered. With 
the proposed revisions, the SEP at Sec. Sec.  406.27(d) and 407.23(d) 
will provide an opportunity, beginning January 1, 2025, for an 
individual to enroll in Medicare under the new parameters if the 
individual was released from incarceration on or after January 1, 2023, 
failed to enroll in Medicare (Premium Part A or Part B) due to being 
incarcerated, and is still within the 12-month SEP described in 
Sec. Sec.  406.27(d) and 407.23(d).
    Overall, we proposed to revise the eligibility requirements at 
Sec. Sec.  406.27(d) and 407.23(d), beginning January 1, 2025, to 
remove the use of a release from the ``custody of penal authorities as 
described in Sec.  411.4(b)'' and instead tie the eligibility for this 
SEP to whether an individual is ``released from confinement in a jail, 
prison, or other penal institution or correctional facility,'' which is 
phrasing that is more consistent with section 202(x)(1)(A)(i) of the 
Act. However, we did not propose that a criminal conviction or formal 
sentencing be required for an individual to have been confined in a 
jail, prison, or other penal institution or correctional facility 
because conviction of crime is not required for the payment exclusion 
in Sec.  411.4(b) to apply. As this differs from the requirements under 
section 202(x)(1)(A) of the Act, we also solicited comment on what 
documentation an individual can provide to demonstrate they were 
confined and released without conviction to determine eligibility for 
the SEP for formerly incarcerated individuals under Sec. Sec.  
406.27(d) and 407.23(d). Further, individuals who have escaped 
confinement are not considered to be ``released'' from confinement. 
Under our proposal, both Sec. Sec.  406.27(d) and 407.23(d) would use 
the terms ``incarcerated'' and ``incarceration'' as a general reference 
for individuals who meet either standard. The proposed change in the 
eligibility criteria for the SEP for formerly incarcerated individuals 
would align more closely with the standards SSA uses to determine 
whether an individual is within the scope of the limitation on payment 
of OASDI benefits established by section 202(x)(1)(A)(i) of the Act.
    In the rulemaking to adopt and finalize Sec. Sec.  406.27(d) and 
407.23(d), we did not fully contemplate the implications of tying the 
SEP's eligibility criteria to the Medicare no legal obligation to pay 
payment exclusion (which includes a rebuttable presumption). A 
rebuttable presumption like the one available under the payment 
exclusion does not work well in enrollment context because although 
payment can be determined at the service level, an enrollment is either 
effectuated or not. It may be that for some services, the presumption 
that the individual has no legal obligation to pay can be rebutted 
while for other services it is not rebutted based on the scope of the 
state or local entity's policies and the individual's (or the 
healthcare providers) ability to provide sufficient evidence. However, 
enrollment in Medicare, including the obligation to pay Medicare 
premiums, would not vary with the specific service. While the proposed 
changes to Sec.  411.4(b) would narrow the range of settings in which 
an individual is presumed to be in custody and another entity is 
responsible for the individual's health care coverage, we believe that 
the proposed revisions to Sec. Sec.  406.27(d) and 407.23(d) would best 
address concerns about access to and confusion with the SEP for 
individuals who have been released from incarceration.
    We proposed several changes to Sec. Sec.  406.27(d) and 407.23(d) 
to significantly align the SEP eligibility criteria, beginning January 
1, 2025, with the criteria used by SSA to determine whether an 
individual is incarcerated. Throughout, our proposed changes are 
largely to replace references to an individual being in custody of 
penal authorities as described in Sec.  411.4(b) with references to an 
individual's confinement in a jail, prison, or other penal institution 
or correctional facility. First, we proposed to amend the introductory 
text in paragraph (d) of both Sec. Sec.  406.27 and 407.23 to state the 
general rule that there is an SEP for Medicare eligible individuals who 
are no longer incarcerated after January 1, 2023. We use 
``incarcerated'' and ``incarceration'' in this introductory language 
and in paragraph (d)(3), respectively, to include both being in custody 
of penal authorities as described in Sec.  411.4(b) (and in the 
proposed revisions to paragraph (d)(1) of each regulation regarding the 
current scope of the SEP) and being confined as described in our 
proposed amendments to paragraph (d)(2) of each regulation. Using the 
term ``incarcerated'' is consistent with how these regulations were 
originally established and leads to more streamlined and less 
repetitive regulation text. We invited comments on the proposal, 
especially its implications for people in halfway houses, to ensure 
access to the SEP for formerly incarcerated individuals.
    Second, we proposed to reorganize paragraphs (d)(1) and (2) to 
establish the rules for eligibility for and the duration of the SEP for 
releases from incarceration during the periods between (1) January 1, 
2023, through December 31, 2024, and (2) on or after January 1, 2025. 
We proposed to revise Sec. Sec.  406.27(d)(1) and 407.23(d)(1) to state 
the current parameters and duration for the SEP that are applicable to 
releases after January 1, 2023, and before January 1, 2025. The current 
eligibility requirements are proposed to be redesignated as paragraph 
(d)(1)(i) and the current duration of the SEP (from current Sec. Sec.  
406.27(d)(2) and 407.23(d)(2)) are proposed to be redesignated 
paragraph (d)(1)(ii), with clarifications that the date of release is 
used as part of the eligibility criteria. At Sec. Sec.  406.27(d)(2) 
and 407.23(d)(2) we proposed to establish new parameters and duration 
for the SEP that would be applicable beginning January 1, 2025. 
Specifically, we proposed at new Sec. Sec.  406.27(d)(2)(i) and 
407.23(d)(2)(i) that an individual is eligible for the SEP if they are 
released on or after January 1, 2025, from confinement in a jail, 
prison, or other penal institution or correctional facility would be 
eligible for the SEP. The existing parameters

[[Page 94512]]

(currently at Sec. Sec.  406.27(d)(1) and 407.23(d)(1)) that the 
individual must demonstrate that they are eligible for Medicare and 
failed to enroll or reenroll due to being incarcerated and there is a 
record of release either through discharge documents or data available 
to SSA would continue to be applicable and are therefore included in 
proposed Sec. Sec.  406.27(d)(2)(i) and 407.23(d)(2)(i). At new 
Sec. Sec.  406.27(d)(2)(ii) and 407.23(d)(2)(ii), we proposed that, 
beginning January 1, 2025, the SEP starts the day an individual is 
released from incarceration as determined by SSA and ends the last day 
of the 12th month after the month in which the individual is released. 
As noted above, individuals who use this SEP are able to enroll in 
Medicare Premium Part A and Part B without LEPs and this would continue 
to be the case whether individual uses this SEP before or after January 
1, 2025.
    Under the proposal, as originally intended with the SEP, 
individuals will have a clearer understanding for how to access this 
enrollment opportunity to ensure they do not have any gaps in coverage 
or any LEPs as they leave incarceration.
    We received a number of public comments on our proposals. Our 
summaries and responses to the comments we received are discussed 
below:
    Comment: Commenters unanimously supported our proposal to revise 
the eligibility requirements for the SEP for formerly incarcerated 
individuals. Commenters voiced appreciation for the changes and noted 
the health care access and continuity of care challenges facing 
formerly incarcerated individuals reintegrating into society and stated 
that CMS' proposal would reduce potential barriers to Medicare 
enrollment. Overall, commenters are pleased with the progress and 
dedication shown by CMS.
    Response: We thank the commenters for their support.
    Comment: CMS requested and received comments on the application of 
the SEP proposal for individuals residing in halfway houses. Commenters 
supported the extension of the SEP to individuals residing in halfway 
houses, noting that these individuals were responsible for paying for 
their health services and, while charity care may be available, it is 
often limited. Many commenters encouraged CMS to adopt the Medicaid 
program's approach to halfway houses, which extends Medicaid 
eligibility to individuals that have freedom of movement.
    Response: We appreciate the overwhelming feedback received on this 
request. Based on the feedback received, we are revising the proposal 
to allow for individuals who have been recently released from 
incarceration or confinement and are residing in halfway houses to be 
eligible for this SEP. Specifically, we are revising and adopting the 
regulations at Sec. Sec.  406.27(d)(2)(i) and 407.23(d)(2)(i) to 
explicitly state that individuals released from incarceration or 
confinement and transitioning to residence in halfway houses are not 
considered incarcerated or in confinement for the purposes of this SEP.
    We note that section 202(x) of the Social Security Act prohibits 
OASDI benefit payments to beneficiaries that are confined. SSA, at GN 
02607.001B.1, currently defines beneficiaries who are ``transferred 
from the facility to a halfway house'' as being confined, and therefore 
ineligible to receive OASDI benefits. Consequently, anyone utilizing 
this SEP and residing in a halfway house that falls under SSA's 
definition of confinement may be responsible for covering their 
Medicare premiums directly or through some other means such as Medicaid 
buy-in. We note that if an individual has Medicaid coverage, they will 
generally not use this SEP since states enroll most dually eligible 
individuals in Medicare and pay the premiums on their behalf under 
their state buy-in agreements with CMS. Further, as SSA systems may not 
identify individuals in halfway houses as no longer in confinement, 
these individuals will likely need to provide documentation of 
discharge to SSA proving that they have been released from 
incarceration to affirm eligibility for this SEP. However, as 
individuals in halfway houses are likely required to pay for their own 
healthcare and there are changes in this rule to Sec.  411.4(b) to 
remove the exclusion of Medicare payment to individuals residing in 
halfway houses, we believe that it is critical to also extend 
eligibility to enroll in this SEP to individuals in halfway houses.
    Comment: A few commenters recommended that CMS explicitly specify 
that individuals on parole, probation, under home confinement, or those 
in pre-trial status be eligible for the SEP.
    Response: We appreciate the commenters' suggestion to further 
specify the categories of individuals eligible for this SEP. However, 
we believe the rule is inclusive of individuals on parole, probation, 
or under home confinement and additional categorization is unnecessary. 
Individuals on parole, probation, or home confinement will be able to 
demonstrate that they have been released from confinement and, thus, 
will be eligible for this SEP.
    With respect to individuals in a pre-trial status, those 
individuals will have access to Medicare coverage and will not lose 
coverage due to a pending trial. Additionally, the current procedure 
for OASDI benefits provides that individuals in pre-trial status would 
not lose benefits, and therefore payment of Medicare premiums through 
their OASDI benefits would go uninterrupted. Therefore, we will not be 
making changes to extend the SEP to individuals on parole, probation, 
under home confinement, and those in pre-trial status.
    Comment: Many commenters requested that CMS provide an option for 
incarcerated individuals to enroll via the SEP prior to being released 
from incarceration, citing concerns with access to continuity of care 
and gaps of coverage. Several commenters pointed to CMS' Medicaid 
Reentry Section 1115 Demonstration Opportunity that allows for Medicaid 
enrollment and coverage prior to release from incarceration as an 
example.
    Response: We appreciate the feedback from commenters and understand 
the importance of mitigating the risk of gaps of coverage. However, we 
proposed changes specific to the eligibility requirements for the SEP 
for formerly incarcerated individuals and other changes to Sec. Sec.  
406.27(d)(2)(ii) and 407.23(d)(2)(ii), and as such, changing the 
duration of the SEP to allow for enrollment prior to release from 
confinement is not within the scope of this rulemaking.
    We considered enrollment prior to release in previous rulemaking 
(CMS-4199-F; 87 FR 6643), but believed that our policy of allowing 
individuals the option of choosing an entitlement date retroactive to 
the first day of the month of their release from incarceration (not to 
exceed 6 months) addressed this issue.
    In regard to the comment about applying a similar policy as the 
Medicaid Reentry Section 1115 Demonstration to Medicare, we note that 
individuals who are in confinement can enroll in Medicare during 
another available enrollment period, such as the IEP or GEP, and may 
maintain their enrollment if premium payments continue to be paid.
    Comment: A few commenters suggested that CMS revise ``discharge 
documents'' in proposed Sec. Sec.  406.27(d)(2)(i) and 407.23(d)(2)(i) 
to a more inclusive term, which would allow flexibility in the types of 
documentation accepted.

[[Page 94513]]

    Response: We thank the commenters for their suggestion and agree 
that the term can be revised to be more flexible. As a result, we are 
revising our language at proposed Sec. Sec.  406.27(d)(2)(i) and 
407.23(d)(2)(i) to replace the term ``discharge documents'' with 
``documentation of discharge.'' This will allow individuals who may not 
have specific discharge documents, but have other proof of their 
discharge, the ability to use the SEP.
    Comment: Many commenters supported the proposal to revise the SEP 
eligibility criteria and requested that CMS ensure that formerly 
incarcerated individuals who encountered barriers to accessing the 
current SEP prior to January 1, 2025, have an opportunity to enroll in 
Medicare coverage under equitable relief grounds or through applying 
overlapping effective dates of these SEP changes.
    Response: We thank the commenter for their support and suggestion. 
The parameters for equitable relief, which is a mechanism to correct or 
eliminate inequity to the individual when their Medicare enrollment 
rights are prejudiced because of the error, misrepresentation, or 
inaction of the Federal Government, are defined in statute (section 
1837(h) of the Social Security Act) and, as such, are out of scope for 
this regulation. We encourage individuals to contact SSA to determine 
the options available to them.
    Comment: Several commenters expressed support but also requested 
that CMS increase outreach measures specifically for this SEP. They 
recommended that CMS collaborate with stakeholders to distribute and 
engage in targeted outreach to communities with high rates of 
incarceration and reentry. One commenter also recommended that CMS put 
forth detailed educational resources for medical providers as well as 
guidance for states on these new policies. Another commenter requested 
that CMS coordinate directly with Medicaid to enroll dually eligible 
individuals.
    Response: We thank the commenters for their support and feedback. 
CMS plans to continue to collaborate with stakeholders to educate and 
inform the targeted populations. Since this Medicare SEP is relatively 
new CMS has been working on several initiatives to engage stakeholders 
and conduct outreach and education on the availability of this new 
enrollment opportunity. In collaboration with the Medicare Beneficiary 
Ombudsman, we have conducted multiple presentations to key groups and 
updated relevant CMS web pages and materials. We will continue to 
engage partners and coordinate in how best to reach this population.
    Comment: A commenter stated that requiring enrollment in person at 
an SSA office for the SEP can be challenging for individuals 
experiencing transportation challenges.
    Response: This comment does not pertain to the revision of the SEP 
eligibility criteria and, thus, is out of scope.
3. Technical Corrections
    In the November 2022 final rule that established the SEP for 
formerly incarcerated individuals, we provided at Sec. Sec.  
406.27(d)(3) and 407.23(d)(3) that, generally, entitlement would begin 
the first day of the month following the month of enrollment. We also 
provided that an individual had the option to choose a retroactive 
entitlement date for a period not to exceed 6 months, provided that the 
individual pays the monthly premiums for the period of coverage. Upon 
further examination of the regulations, we have identified a number of 
technical errors in Sec. Sec.  406.27(d)(3) and 407.23(d)(3) that we 
are taking this opportunity to propose to correct.
    First, the language in Sec.  407.23(d)(3)(ii) states that the 
individual has the option to request entitlement retroactive to the 
date of release from incarceration and this implies that coverage could 
start in the middle of the month. Entitlement for Medicare, regardless 
of the enrollment period being used or whether entitlement is 
prospective or retrospective, always begins on the first day of a 
month. As such, we proposed to revise the language above to state that 
coverage could begin retroactive to the beginning of the month of 
release from incarceration. We note that the payment exclusion in Sec.  
411.4(b) may continue to apply to any items and services furnished 
during the period between the first of that month and the actual date 
of release, provided that the individual or other person has no legal 
obligation to pay for such services as articulated in Sec.  411.4(a).
    Second, in Sec. Sec.  406.27(d)(3)(ii) and 407.23(d)(3)(ii), we 
erroneously cited Sec.  406.31 when referencing the requirement for 
individuals to pay monthly premiums for all periods of coverage. We 
proposed to correct the reference to Sec.  406.31 in Sec.  
406.27(d)(3)(ii) with Sec.  406.32(f) and the reference in Sec.  
407.23(d)(3)(ii) to Sec.  408.4.
    Third, we also stated at Sec.  407.23(d)(3)(ii) that if the 
individual requests retroactive enrollment and the application is filed 
within the first 6 months of the SEP, the effective date could be 
retroactive to the release from incarceration. If the individual 
requests retroactive enrollment and the application is filed in the 
last 6 months of the SEP, the coverage effective date could be 
retroactive to 6 months after the date of release from incarceration. 
This provision results in the same coverage effective date regardless 
of when the individual applies during the last 6 months of the SEP, 
which we do not think is consistent with our policy goal of providing 
formerly incarcerated individuals the ability to make the healthcare 
decisions best suited to their needs and provide them the opportunity 
to avoid or minimize gaps of coverage (87 FR 66463). We believe the 
best way to remedy this situation is to link the retroactive period of 
coverage to the date when the individual applies for Medicare coverage, 
not when they are released from incarceration. As such, we proposed to 
revise Sec.  407.23(d)(3)(ii) to state that if the individual requests 
retroactive enrollment and the application is filed in the last 6 
months of the SEP, the coverage effective date is retroactive to the 
6th month before the month of enrollment. We believe the proposed 
approach strikes an appropriate balance of reducing gaps in coverage 
without creating excessive (and potentially costly) retroactive periods 
of coverage. We also proposed to make similar changes at Sec.  
406.27(d)(3)(ii) for the sake of consistency and clarity.
    Comment: One commenter recommended that CMS add the phrase ``no 
earlier than'' before the description of when coverage begins in Sec.  
407.23(d)(3)(ii). The commenter stated that the inclusion of the 
proposed phrasing would further clarify an individual's ability to make 
the best decision about the length of retroactive coverage they need.
    Response: We appreciate the commenter's recommendation and 
understand the importance of clarifying language so that individuals 
can make the decision that best suits them. However, circumstances 
where enrollees have the ability to pick a length of retroactive 
Medicare coverage would be unprecedented and would provide additional 
options for this population that is not available for other retroactive 
Medicare enrollments. Further, it would lead to operational complexity 
for SSA and potential enrollees to select their retroactive coverage 
start time for only this SEP, which may generate unnecessary confusion 
for individuals using this SEP. Therefore, we are declining the 
commenter's suggestion and will be

[[Page 94514]]

adopting this technical amendment as proposed.
    After consideration of the public comments we received, and as 
discussed above, we are adopting our proposals with the following 
modifications:
     Sections 406.27(d)(2)(i) and 407.23(d)(2)(i) are being 
revised to explicitly state that individuals released from 
incarceration or confinement and transitioning to residence in halfway 
houses are not considered incarcerated or in confinement for the 
purposes of this SEP.
     Sections 406.27(d)(2)(i) and 407.23(d)(2)(i) are being 
revised to replace the term ``discharge documents'' with 
``documentation of discharge.''

XXIV. Overall Hospital Quality Star Rating Modification To Emphasize 
the Safety of Care Measure Group: Request for Information (RFI)

A. Summary

    In the CY 2025 OPPS/ASC proposed rule (89 FR 59509), we sought 
public input on potential methodologic modifications regarding the 
Safety of Care measure group within the Overall Hospital Quality Star 
Rating published on the provider comparison tool on Medicare.gov 
(https://www.medicare.gov/care-compare/). Patient safety constitutes a 
fundamental component of the CMS National Quality Strategy, 
representing a sustained commitment to fostering optimal health 
outcomes and ensuring the safest possible care for all patients.\714\ 
This RFI, hereinafter referred to as ``Overall Star Rating RFI,'' 
gathered broad public input on increasing the Safety of Care measure 
group's contribution to the Overall Hospital Quality Star Rating. We 
also noted our intention to potentially issue additional RFIs or 
undertake rulemaking on this topic in the future.
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    \714\ https://www.cms.gov/files/document/cms-national-quality-strategy-handout.pdf.
_____________________________________-

B. Background

    The Overall Hospital Quality Star Rating provides a summary of 
certain existing hospital quality information on Medicare.gov based on 
publicly available quality measure results reported through CMS' 
hospital quality measurement programs, by assigning hospitals between 
one and five stars, a way that is simple and easy for patients to 
understand (85 FR 86193). The Overall Hospital Quality Star Rating 
methodology was developed and is maintained according to the guiding 
principles of scientific validity, maximizing inclusion of hospitals 
and measure information, accounting for heterogeneity of available 
measures and hospital reporting, accommodating changes in the 
underlying measures, aligning with CMS hospital quality measure 
programs to the extent feasible, transparency of the methodology, and 
responsiveness to input from interested parties. The Overall Hospital 
Quality Star Rating was first introduced and reported on our Hospital 
Compare website in July 2016 (now reported on Medicare.gov) and has 
been refreshed multiple times, with the most current refresh in July 
2024.\715\
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    \715\ Placeholder for 2024 Stars QUS.
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    In the CY 2021 OPPS/ASC final rule with comment period (85 FR 
86193), we codified the Overall Hospital Quality Star Rating 
methodology, including several methodology refinements, intended to 
improve the simplicity and predictability of measure emphasis within 
the methodology over time, and comparability of ratings among 
hospitals. We also finalized the inclusion of Veterans Health 
Administration (VHA) hospitals and Critical Access Hospitals (CAHs) in 
the Overall Hospital Quality Star Rating. In the CY 2023 OPPS/ASC final 
rule with comment period (87 FR 72233), we provided additional 
information on the previously finalized policy to incorporate VHA 
hospitals and finalized a proposal to amend 42 CFR 412.190 to revise 
how we would refresh the Overall Hospital Quality Star Rating annually.

C. Current Overall Hospital Quality Star Rating Methodology

    Measures reported on the provider comparison tool on Medicare.gov 
(https://www.medicare.gov/care-compare/) that meet the criteria for 
inclusion in the Overall Hospital Quality Star Rating are organized 
into five conceptually coherent measure groups: Safety of Care, 
Mortality, Readmission, and Patient Experience (all of which include 
outcome measures), and Timely and Effective Care (which includes a 
selection of process measures).
    The current Overall Hospital Quality Star Rating methodology 
includes seven general steps. First, the direction of all included 
measures that indicate better performance with a lower score are 
reversed to uniformly indicate that a higher score indicates better 
performance for all the measures, and all measure scores are 
standardized to a single, common scale to account for differences in 
measure score units. Second, measures are arranged into measure groups. 
Each measure group contains a number of publicly reported measures to 
produce a robust measure group score, which are reflective of 
differences in hospital quality. Third, the measure group scores are 
calculated as a simple average of measure scores. Measure group scores 
are then standardized to a common scale making varying scores 
comparable. Fourth, the hospital summary score is calculated as a 
weighted average of measure group scores. Specifically, each measure 
group score is multiplied by the assigned weight for that group. The 
weighted measure group scores are then summated to generate the 
hospital summary score. If a hospital has no measure scores in a group 
(for example, by not achieving sufficient sample size in any of the 
measures), the weight is redistributed proportionally across the 
remaining groups. Fifth, minimum reporting thresholds are applied. To 
receive a Star Rating, hospitals must report at least three measures in 
at least three measure groups, one of which must be either the 
Mortality or Safety of Care measure groups. Sixth, peer grouping is 
applied. Hospitals are grouped into one of three peer groups based on 
the number of measure groups for which they report at least three 
measures: a three-measure peer group, a four-measure peer group, and a 
five-measure peer group. Seventh, a clustering algorithm is applied 
within each peer group to assign hospital summary scores to star 
ratings so that one star is the lowest and five stars is the highest.
    For additional details regarding the methodology, we refer readers 
to Sec.  412.190(d) and the Overall Hospital Quality Star Rating 
Methodology Reports, available at https://qualitynet.cms.gov/inpatient/public-reporting/overall-ratings/resources.

D. Safety of Care in Star Ratings

    A foundational commitment of providing healthcare services is to 
ensure safety, as embedded in the centuries-old Hippocratic Oath, 
``First, do no harm.'' Yet, the landmark reports ``To Err is Human'' 
and ``Crossing the Quality Chasm'' surfaced major deficits in 
healthcare quality and safety.716 717 These reports resulted 
in widespread awareness of the alarming prevalence of patient harm and, 
over the past two decades, healthcare facilities implemented various 
interventions and

[[Page 94515]]

strategies to improve patient safety, with some documented 
successes.\718\ Furthermore, the COVID-19 public health emergency (PHE) 
strained the healthcare system substantially, introducing new safety 
risks and negatively impacting patient safety in the normal delivery of 
care.719 720
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    \716\ Institute of Medicine (US) Committee on Quality of Health 
Care in America, Kohn, L.T., Corrigan, J.M., & Donaldson, M.S. 
(Eds.). (2000). To Err is Human: Building a Safer Health System. 
National Academies Press (US).
    \717\ Institute of Medicine (US) Committee on Quality of Health 
Care in America. (2001). Crossing the Quality Chasm: A New Health 
System for the 21st Century. National Academies Press (US).
    \718\ Agency for Healthcare Research and Quality. (February 
2021). National Healthcare Quality and Disparities Report chartbook 
on patient safety. Rockville, MD. Available at: https://www.ahrq.gov/sites/default/files/wysiwyg/research/findings/nhqrdr/chartbooks/patientsafety/2019qdr-patient-safety-chartbook.pdf.
    \719\ Lastinger LM, Alvarez CR, Kofman A, Konnor RY, Kuhar DT, 
Nkwata A, Patel PR, Pattabiraman V, Xu SY, Dudeck MA. Continued 
increases in the incidence of healthcare-associated infection (HAI) 
during the second year of the coronavirus disease 2019 (COVID-19) 
pandemic. Infect Control Hosp Epidemiol. 2023 Jun;44(6):997-1001. 
doi: 10.1017/ice.2022.116. Epub 2022 May 20. PMID: 35591782; PMCID: 
PMC9237489.
    \720\ Patel, PR, Weiner-Lastinger, LM, Dudeck, MA, et al. Impact 
of COVID-19 pandemic on central-line-associated bloodstream 
infections during the early months of 2020, National Healthcare 
Safety Network. Infect Control Hosp Epidemiol 2021. doi: 10.1017/
ice.2021.108.
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    Safety gaps and further risks in healthcare delivery were 
illuminated as a result of the COVID-19 PHE, revealing a lack of 
resiliency in the healthcare system.721 722 723 Therefore, 
we are increasing efforts to emphasize the importance of patient safety 
for both patients and healthcare workers. To accomplish these goals, 
the Federal Government is taking a multi-pronged inter-Agency approach 
to improve safety. The Agency for Healthcare Research and Quality 
(AHRQ) on behalf of the Department of Health & Human Services (HHS) 
established the National Action Alliance to Advance Patient and 
Workforce Safety as a public-private collaboration to improve both 
patient and workforce safety and move towards zero harm in 
healthcare.\724\ In September 2023, the President's Council of Advisors 
on Science and Technology (PCAST) published the ``Report to the 
President: A Transformational Effort on Patient Safety,'' with a call 
to action to renew ``our nation's commitment to improving patient 
safety.'' \725\ The report put forth a recommendation as part of the 
call to action to ``establish and maintain federal leadership for the 
improvement of patient safety as a national priority.'' We also 
acknowledged a noticeable decline in patient safety measure scores 
during the COVID-19 PHE which reinforces the emphasis on patient safety 
established in several CMS initiatives, including the National Quality 
Strategy and Universal Foundation.726 727 Additionally, 
hospitals report data on healthcare-associated infection (HAI) measures 
through a number of CMS quality programs, including the Hospital-
Acquired Condition (HAC) Reduction and Hospital Value-Based Purchasing 
Programs. These programs are designed to improve patient quality of 
care and safety, as well as reduce complications and mortality, by 
rewarding hospitals that achieve high scores on measures, including HAI 
measures, and penalizing those that do not meet or exceed established 
performance standards.\728\ However, it is possible in the current 
Overall Star Rating methodology for a hospital to score very low in the 
Safety of Care measure group yet still receive a high Star Rating due 
to their high performance in other measure groups. Therefore, in the CY 
2025 OPPS/ASC proposed rule (89 FR 59510), we noted that we seek to 
explore potential adjustments to the Overall Hospital Quality Star 
Ratings methodology that would more greatly emphasize the measures 
within the Safety of Care measure group, in alignment with other CMS 
and HHS efforts to improve patient safety across all programs.
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    \721\ Agency for Healthcare Research and Quality. (2021). AHRQ 
PSNet Annual Perspective: Impact of the COVID-19 Pandemic on Patient 
Safety. https://psnet.ahrq.gov/perspective/ahrq-psnet-annual-perspective-impact-covid-19-pandemic-patient-safety.
    \722\ Fleisher, L.A., Schreiber, M.D., Cardo, D., and 
Srinivasan, M.D. (2022). Health care safety during the pandemic and 
beyond--building a system that ensures resilience. N Engl J Med, 
386: 609-611. https://www.nejm.org/doi/full/10.1056/NEJMp2118285.
    \723\ Implications of the COVID-19 pandemic for patient safety: 
a rapid review. Geneva: World Health Organization; 2022. Licence: CC 
BY-NC-SA 3.0 IGO.
    \724\ AHRQ. (2023). National Action Alliance To Advance Patient 
and Workforce Safety. https://www.ahrq.gov/cpi/about/otherwebsites/action-alliance.html.
    \725\ https://www.whitehouse.gov/wp-content/uploads/2023/09/PCAST_Patient-Safety-Report_Sept2023.pdf.
    \726\ Fleisher, L.A., Schreiber, M., Cardo, D., Srinivasan, A. 
(2022). Health Care Safety during the Pandemic and Beyond--Building 
a System That Ensures Resilience. The New England Journal of 
Medicine, 386(7): 609-611. DOI: 10.1056/NEJMp2118285.
    \727\ https://www.cms.gov/aligning-quality-measures-across-cms-universal-foundation.
    \728\ https://www.cms.gov/blog/first-do-no-harm.
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    There are currently eight measures in the Safety of Care measure 
group, including six HAI measures (HAI-1 through HAI-6), one 
Complications measure after total hip or total knee replacement (Hip/
Knee), and one composite adverse event measure (Patient Safety and 
Adverse Events Composite (PSI-90)). While this group of measures has 
been the same since the inception of the Overall Hospital Quality Star 
Rating, the specific safety measures included may be subject to change 
in the future. Measures reported on the provider comparison tool on 
Medicare.gov (https://www.medicare.gov/care-compare/) undergo a 
rigorous development process which includes extensive measure testing, 
vetting by interested parties, evaluation by the Consensus-based Entity 
(which convenes the Partnership for Quality Measurement), and 
undergoing rulemaking for inclusion in CMS programs and public 
reporting. As such, the Overall Hospital Quality Star Rating 
methodology uses the measures as required under the CMS programs, with 
measure scores as reported on Medicare.gov at the time of the Overall 
Hospital Quality Star Rating calculation. Thus, any measures that are 
removed or suspended from one of the CMS hospital quality measure 
programs and not published on Medicare.gov would no longer be included. 
Similarly, any measures that are added to the CMS programs and 
displayed on Medicare.gov may be included in the Overall Hospital 
Quality Star Rating; for example, upcoming measures such as the Severe 
Obstetric Complication (87 FR 48780), Failure-to-Rescue (89 FR 35934), 
Hospital Harm-Severe Hypoglycemia (89 FR 35934), and Hospital Harm-
Opioid-related Adverse Events (87 FR 48780) measures may be considered 
for inclusion in the Safety of Care measure group. The assessment 
presented here is based only on the current group of eight measures as 
listed above, but the Overall Hospital Quality Star Rating methodology 
is designed with the flexibility to accommodate such changes in the 
future.
    The current methodology places the highest emphasis on the Safety 
of Care and Mortality measure groups. First, the measure group weights 
currently utilized in the Overall Hospital Quality Star Rating 
methodology are based on CMS policy and interested party feedback. 
Currently, the Safety of Care, Mortality, Readmission, and Patient 
Experience measure groups are each weighted 22 percent while the Timely 
and Effective Care measure group is weighted 12 percent (Table 177). 
Interested parties generally agreed that outcome measures should have 
more weight since they represent strong indicators of quality and are 
most important to patients in making healthcare decisions. Interested 
parties and stakeholders broadly considered the current weightings to 
be acceptable.
    The Safety of Care and Mortality groups are further emphasized in 
the reporting threshold to receive a Star Rating: hospitals must report 
at least three measures in each of at least three measure groups, one 
of which must specifically be Safety of Care or

[[Page 94516]]

Mortality (85 FR 86228). This decision was partially informed by 
interested party feedback on the relative importance of patient safety 
and prevention of mortality.
    Given the current ongoing efforts to advance patient safety, we 
investigated options to even further emphasize the patient safety 
measures in the Overall Hospital Quality Star Rating, above and beyond 
the emphasis of the current methodology.
    We conducted an internal analysis utilizing data from the July 2023 
refresh of the Overall Hospital Quality Star Rating to determine 
correlations between the Safety of Care measure group and performance 
in the Overall Hospital Quality Star Rating. There were 3,076 hospitals 
that met the criteria to receive a Star Rating. Among the 3,076 rated 
hospitals, 2,995 (97 percent) had at least one Safety of Care measure 
and therefore received a Safety of Care group score, while 2,615 (85 
percent) had at least three Safety of Care measures. Our analysis 
showed a strong relationship between the Safety of Care measure group 
and the Star Rating. Hospitals that did well in Safety of Care tended 
to also do well on the Star Rating; however, there were a few hospitals 
that performed in the bottom quartile (lowest performing 25 percent) of 
the Safety of Care measure group that still received a 5-star rating. 
Of the 3,076 hospitals that received a Star Rating, 658 hospitals with 
at least three Safety of Care measures scored in the lowest quartile of 
the Safety of Care measure group and 19 hospitals received a 5-star 
rating, representing 0.6 percent of all rated hospitals (Table 175). An 
additional 94 hospitals fell into the lowest quartile of Safety of Care 
when the analysis was based on hospitals that reported just one or two 
Safety of Care measures. In general, these hospitals attained 5-star 
ratings despite poor Safety of Care performance by achieving high 
performance scores across the other measure groups.
[GRAPHIC] [TIFF OMITTED] TR27NO24.232

    We assessed reporting of individual Safety of Care measures and 
performance in the Safety of Care measure group by various hospital 
characteristics. We observed significant variation in the number of 
Safety of Care measures reported across different types of hospitals, 
typically with fewer measures for hospitals that have generally lower 
volume and so are less likely to reach sufficient case volume for 
individual measurements. Specifically: non-teaching hospitals, safety 
net hospitals,\729\ critical access hospitals, smaller (https://www.cms.gov/newsroom/fact-sheets/data-brief-evaluation-national-distributions-overall-hospital-quality-star-ratings#_ftn3.
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BILLING CODE 4120-01-P

[[Page 94517]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.233

[[Page 94518]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.234

BILLING CODE 4120-01-C

E. Potential Future Options to Greater Emphasize Patient Safety in the 
Overall Hospital Quality Star Rating

    As part of the national commitment to improving patient safety, we 
sought feedback on whether hospitals that performed in the bottom 
quartile (lowest-performing 25 percent) in the Safety of Care measure 
group should be eligible to receive the highest 5-star rating. In the 
CY 2025 OPPS/ASC proposed rule, we noted that we are considering 
modifying the Overall Hospital Quality Star Rating methodology, 
specifically the Safety of Care measure group, to reinforce our 
dedication to emphasize patient safety across CMS. In this section, we 
discuss three options identified to modify the Overall Hospital Quality 
Star Rating methodology.
1. Reweighting the Safety of Care Measure Group
    We conducted an internal analysis to explore the impact of 
modifying the weighting system for measure groups in the Overall 
Hospital Quality Star Rating utilizing data from the July 2023 refresh. 
Specifically, we explored increasing the weight assigned to the Safety 
of Care measure group from the current 22 percent to 30 percent while 
proportionally reducing the weights assigned to the other measure 
groups to examine the isolated effect of reweighting while otherwise 
adhering to the current methodology. The exact weighting values noted 
in the Overall Star Rating RFI are not prescriptive and could be 
adjusted based on interested party feedback to be more easily 
interpretable (for example, to 30 percent, 20 percent, and 10 percent), 
however, the results reported reflect this preliminary reweighting 
scenario that preserves proportionality between the remaining groups. 
Current and potential new weights for each measure group are detailed 
in Table 177.

[[Page 94519]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.235

    Our analysis showed that by modifying the weight of the Safety of 
Care measure group to 30 percent, out of 3,076 hospitals, 213 hospitals 
would receive a higher Star Rating than when using the current 
weighting, while 233 hospitals would receive a lower Star Rating. 
Specifically, among the 752 rated hospitals in the lowest quartile of 
the Safety of Care measure group, 16 hospitals would achieve a higher 
Star Rating, while 133 hospitals would receive a lower Star Rating; 
only 3 of the 752 hospitals would receive a 5-star rating. Implementing 
this option would reduce the number of hospitals that perform poorly in 
Safety of Care yet still obtain the highest 5-star rating. However, 
reweighting the Safety of Care measure group would slightly reduce the 
influence of other measure groups on the Overall Hospital Quality Star 
Rating.
2. Policy-Based 1-Star Reduction for Poor Performance on Safety of Care
    In the CY 2024 OPPS/ASC proposed rule (89 FR 59514), we explained 
that we are considering a post hoc policy-based adjustment that would 
reduce the Star Rating of any hospital in the lowest quartile of Safety 
of Care (based on at least three measure scores) by one star. Using 
2023 Overall Hospital Quality Star Ratings data, applying a one-star 
reduction for all hospitals in the lowest quartile of Safety of Care 
with at least three safety measures would result in 530 hospitals, out 
of 3,076 hospitals, receiving a lower Star Rating. This option would 
emphasize safety through a new standard for all hospitals regardless of 
their Star Rating. Since the minimum Star Rating is one star, hospitals 
already getting one star would not get a further star reduction and 
therefore would effectively be exempt from this policy-based 
adjustment. Additionally, some hospitals that perform excellently in 
all other measure groups except the Safety of Care measure group would 
still receive a one-star reduction.
3. Reweighting the Safety of Care Measure Group Combined With a Policy-
Based Star Rating Cap
    In the CY 2024 OPPS/ASC proposed rule (89 FR 59514), we noted that 
we are also considering increasing the weight of the Safety of Care 
measure group to 30 percent (and proportionally reducing the weights 
assigned to the other measure groups, as described in Table 177) while 
also applying a policy that would limit hospitals in the lowest 
quartile of Safety of Care (based on at least three measure scores) to 
a maximum of four stars out of five. Using 2023 Overall Hospital 
Quality Star Ratings data, implementing a cap of four stars in the 
lowest quartile of Safety of Care with at least three safety measures 
combined with the reweighting for all hospitals would result in 235 
hospitals, out of 3,076 hospitals, receiving a lower Star Rating and 
the reduction by 1 star for two hospitals in the lowest quartile of 
Safety of Care that would otherwise still receive a 5-star rating if 
only the reweighting solution was applied. This option provides a more 
targeted solution to the issue of hospitals performing poorly in Safety 
of Care receiving a 5-star rating and applies equally to all hospitals, 
reserving the 5-star rating for hospitals achieving a minimum threshold 
in Safety of Care.
    We also explored alternative options for emphasizing patient 
safety, such as applying only the 4-star rating maximum or combining 
reweighting of the Safety of Care measure group with a policy-based 1-
star reduction, however, these options did not effectively reach our 
goal of emphasizing patient safety. In our analysis, applying a 4-star 
rating maximum to hospitals in the lowest quartile of Safety of Care 
with at least three safety measures would have less impact, resulting 
in only 19 out of 3,076 hospitals receiving a lower Star Rating from 
five stars to four stars. Conversely, applying a combination of 
reweighting the Safety of Care measure group with a 1-star reduction 
may be considered an `over-correction', resulting in 635 out of 3,076 
hospitals receiving a lower Star Rating with the greatest impact on 
hospitals already receiving two, three, or four stars in the current 
methodology.
    Feedback solicited during fall 2023 from interested parties, 
including patients, patient advocates, technical experts, and 
clinicians, supported the increasing emphasis on Safety of Care in the 
Overall Hospital Quality Star Rating methodology.\730\ However, there 
was varying feedback from interested parties on the methods to do so, 
with concerns including a decreased emphasis on the other measure 
groups, particularly Mortality, and the adequacy of the Safety of Care 
group measures as currently established to truly represent the 
experience of patient safety at a hospital.
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    \730\ https://mmshub.cms.gov/sites/default/files/Star-Ratings-TEP-Summary-Report-Oct23.pdf.
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F. Solicitation of Public Comment

    We sought comments on potential modifications to the Safety of Care 
measure group in the Overall Hospital Quality Star Rating methodology. 
We requested input from interested parties on the following options: 
(1) reweighting the Safety of Care measure group; (2) applying a 
policy-based adjustment that reduces the Star Rating of any hospital in 
the lowest quartile of Safety of Care (based on at least three measures 
in the group) by one star; (3) reweighting the Safety of Care measure 
group combined with a policy-based 4-star rating maximum on Star Rating 
of any hospital in the lowest quartile of Safety of Care (based on at 
least three measures in the group). Specifically, we requested comment 
on the following questions:
     Do you support reweighting the Overall Hospital Quality 
Star Rating measure groups to give greater weight to Safety of Care as 
described in option 1? Do you agree with the potential new weights for 
each measure group (as shown in Table 177)?

[[Page 94520]]

     Do you support reducing the Star Rating for hospitals with 
a low Safety of Care score as described in option 2? Do you agree with 
the potential policy to apply a 1-star reduction to all hospitals in 
the lowest quartile of Safety of Care?
     Do you support a combination of reweighting the Safety of 
Care measure group with a 4-star maximum on Star Rating as described in 
option 3?
     Do you have feedback or preference towards an approach of 
both up-scoring high performers and down-scoring poor performers as in 
options 1 and 3, or an approach of just down-scoring poor performers as 
in option 2?
     What are other methodological approaches that could be 
used to emphasize the Safety of Care measure group?
     With respect to the potential changes to the Overall 
Hospital Quality Star Rating methodology, are there any special 
considerations for small, rural or safety net hospitals (including 
Critical Access hospitals)?
    Any modification to the Overall Hospital Quality Star Rating 
methodology would be addressed through future notice-and-comment 
rulemaking.
    We received the following comments on this topic.
    Comments on option 1, reweighting the Overall Hospital Quality Star 
Rating measure groups to give greater weight to Safety of Care are:
    Several commenters supported the reweighting of the Safety of Care 
measure group, adding more emphasis on patient safety. One commenter 
supported the reweighting of the Safety of Care measure group and 
encouraged CMS to weigh it equally with the Mortality measure group. 
Another commenter also supported the reweighting of the Safety of Care 
measure group as it would allow the recalibration of this measure 
group, it would establish updated threshold benchmarks, and would 
better represent quality of care.
    A few commenters expressed concern that increasing the weight of 
the Safety of Care measure group would de-emphasize the importance of 
other measure groups, particularly Patient Experience, Readmission, or 
Mortality. A commenter stated that equal weighting of the Mortality and 
Safety of Care measure groups aligns with the HVBP weighting and 
suggested using alternative weighting for the Safety of Care measure 
group could send conflicting signals.
    A few commenters expressed concern that not all hospitals report on 
the same measures within the Safety of Care measure group. A commenter 
stated that hospitals that do not provide surgical services would not 
have the opportunity to report on certain measures within the measure 
group therefore, their score would rely solely on a few of the HAI's. 
The commenter stated increasing the weight of the Safety of Care 
measure group could reduce comparability between hospitals and produce 
less reliable ratings. Another commenter expressed concern that CMS did 
not take into consideration the consequences to hospitals that do not 
have data to report on the required number of safety measures.
    Comments on option 2, reducing the Star Rating for hospitals with a 
low Safety of Care score with the potential policy to apply a 1-star 
reduction to all hospitals in the lowest quartile of Safety of Care 
are:
    A commenter supported the removal of one star for low Safety of 
Care scores, and suggested hospitals with Safety of Care ratings in the 
lowest percentile be capped at no more than 4-stars. Another commenter 
agreed with the approach but believed hospitals with a 4-star rating 
still hold merit and only taking away one star does not significantly 
downgrade the ratings. Another commenter supported option 2, but 
suggested CMS add the new Patient Safety Structural Measure and assess 
if the current measures in the Safety of Care measure group truly 
captures the hospital's safety culture.
    A few commenters stated that lowering the Star Rating by one star 
was unfair and overly punitive as well as oversimplified and would lead 
to hospitals receiving a double penalty. A few commenters noted that 
reducing the hospitals' Star Rating by one star would have negative 
impacts to the Star Rating distribution nationwide. Commenters noted 
that decreasing the Star Rating of hospitals performing poorly in the 
Safety of Care measure group by one star would not allow accurate 
comparison across hospitals and would not accurately reflect 
performance improvement, as there would always be a lowest quartile 
category, and CMS already penalizes for poor performance on safety 
measures in other programs. A commenter pointed to an in-house study 
which suggested this option would increase 1-star hospitals but not 
have any effect on 5-star hospitals. They noted this could create 
confusion for consumers and possibly cause reputational concerns for 
hospitals, especially if a once 5-star hospital was publicly reported 
as 4-stars. Commenters believed this approach would not take individual 
hospital nuances into account. A commenter suggested removing one star 
for poor performers would undermine the Star Rating, as a 4-star 
hospital that performed well across all measure groups would be 
compared with a 4-star hospital that did not perform well on the Safety 
of Care measure group.
    Comments on option 3, reweighting the Safety of Care measure group 
and capping poor performers within the measure group at 4-stars are:
    Several commenters supported this option. Commenters supported this 
option and noted that it is misleading to consumers if a hospital 
performing in the lowest quartile of this measure group could achieve 
5-stars. Commenters believed that reweighting the Safety of Care 
measure group combined with a policy-based Star Rating cap would 
incentivize hospitals to invest in safety. A commenter suggested adding 
more patient safety measures but urged CMS to allow hospitals to test 
and validate any new measures before capping Star Ratings if this 
option is proposed. A commenter suggested increased performance and 
focus on patient safety would ultimately result in performance 
improvements in other measure groups such as Mortality and 
Readmissions.
    A few commenters felt the reweighting of the Safety of Care measure 
group along with capping the Star Rating would have negligible impacts 
and would do a disservice to consumers when choosing a hospital as the 
Safety of Care measure group may not be as important to the consumer as 
other categories. A commenter believed this would cause confusion to 
consumers, as they may not understand why a hospital did not receive a 
5-star rating.
    We received the following comments on an approach of both up-
scoring high performers and down-scoring poor performers as in options 
1 and 3, or an approach of just down-scoring poor performers as in 
option 2:
    A few commenters shared varying concerns with respect to an 
approach of both up-scoring high performers and down-scoring poor 
performers as in options 1 (reweighting the Safety of Care Measure 
Group) and option 3 (reweighting the Safety of Care measure group 
combined with a policy-based Star Rating cap), or an approach of just 
down-scoring poor performers as in option 2 (policy-based 1-Star 
reduction for poor performance on Safety of Care). One commenter 
expressed concern with an automatic ``up-score'' or ``down-score'' 
approach based on composite measure groupings noting that this approach 
would likely mislead consumers. Another commenter recommended a maximum 
of two stars

[[Page 94521]]

where there is poor performance in the Safety of Care measure group 
noting that subpar performance in safety should commensurately and 
inherently be reflected in a subpar Star Rating.
    We received the following comments on special considerations for 
small, rural or safety net hospitals:
    Several commenters were concerned with the impact on smaller 
hospitals, since at least three measures are required to score the 
Safety of Care measure group. A few commenters recommended CMS segment 
small, rural, and safety net hospitals, highlighting that smaller 
hospitals may report on fewer of the Safety of Care measures due to 
smaller populations, which could negatively impact their Star Rating. 
One commenter suggested adding additional safety measures relevant to 
rural hospitals to more accurately reflect patient safety performance 
and provide better comparisons among similar facilities.
    We received the following comments on the composition of the Safety 
of Care measure group itself:
    Several commenters shared concerns on the use of composite measures 
in the Safety of Care measure group, specifically PSI-90. One commenter 
suggested that the PSI-90 be split into individual measures and 
reweighted for patient safety focus; another commenter suggested 
removing PSI-90 and replacing it with other, non-composite PSI 
measures, such as Pressure Ulcer Rate (PSI-03), Iatrogenic Pneumothorax 
Rate (PSI-06), and Perioperative Hemorrhage and Hematoma Rate (PSI-09), 
which would allow more targeted and actionable information. A commenter 
stated the HAI measures should stand alone outside of the composite as 
their results get lost in the composite results and does not allow for 
easy comparison of like measures across hospitals. A commenter 
mentioned that the Safety of Care measure group has the most skewed 
measures among the five groups in the Overall Hospital Star Ratings and 
suggested a thorough review of the factors causing skewness in both 
patient safety and all other measures; another commenter recommended 
novel approaches to using broader safety measures that are not heavily 
affected by rare events. A commenter questioned whether the current 
Safety of Care measure group captures the safety culture of hospitals 
and was disappointed that CMS was only considering updating the 
methodology rather than assuring the safety culture of hospitals was 
taken into consideration; other commenters recommended ensuring all 
quality measures in the Safety of Care measure group accurately reflect 
patient and workforce safety.
    We received the following comments on alternative methodological 
approaches that could be used to emphasize the Safety of Care measure 
group:
    A few commenters were concerned that focusing on the Safety of Care 
measure group would result in excess penalties for hospitals doing well 
in other measure groups and would not reflect performance improvements 
in the Safety of Care measure group. One commenter recommended 
maintaining the current methodology and adding a special flag for 
hospitals in the lowest quartile for Safety performance, and a 
different flag for hospitals without a Safety score to highlight 
important information. Other commenters recommended equal weighting of 
the outcome-based Mortality, Readmission, and Safety of Care measure 
groups; incorporating social determinants of health as risk adjustment; 
and grouping hospitals on volume thresholds and surgical complexities 
rather the number of measure groups with at least three reported 
measures. A commenter suggested CMS explore placing more emphasis on 
patient safety in other programs, such as the Hospital-Acquired 
Condition Reduction Program (HACRP) and the Hospital Value-Based 
Purchasing (VBP) Program and was concerned that frequent changes to 
measures and methodologies could make it difficult for consumers to 
interpret Star Rating results.
    We received the following general comments and recommendations for 
the Overall Hospital Quality Star Rating modification:
    A commenter suggested adding comparison data, including percentile 
ranges to help identify and prioritize improvement efforts across the 
entire Star Rating program; another commenter recommended offering 
ratings by measure groups to give consumers more transparency about a 
provider's performance in specific areas. Other commenters recommended 
uniform application of a Star Rating cap across all measure groups, so 
poor performance in any measure group precludes hospitals from getting 
a 5-star rating; implementation of a simpler weighting system where the 
Safety of Care measure group is weighted at 30 percentage, Mortality, 
Readmission, and Patient Experience measure groups at 20 percentage 
each, and the Timely and Effective measure group at 10 percentage; 
delaying the proposal to modify the Overall Hospital Quality Star 
Rating and re-evaluating its options when more recent, non-COVID data 
are available; and reconsidering the methodology for determining peer 
groups.
    Response: We thank commenters for their input and acknowledge their 
concerns and recommendations. We believe efforts to manage the issue of 
hospitals receiving a high Star Rating while performing in the lowest 
quartile of the Safety of Care measure group is critical to achieving 
our vision of emphasizing patient safety across CMS programs. We will 
take commenters' feedback into consideration as appropriate, in future 
potential rulemaking related to changes to the Overall Hospital Quality 
Star Rating.

XXV. Files Available to the Public Via the Internet

    The Addenda to the OPPS/ASC proposed rules and final rules with 
comment period are published and available via the internet on the CMS 
website. In the CY 2019 OPPS/ASC final rule with comment period (83 FR 
59154), for CY 2019, we changed the format of the OPPS Addenda A, B, 
and C by adding a column titled ``Copayment Capped at the Inpatient 
Deductible of $1,364.00'' where we flag, through use of an asterisk, 
those items and services with a copayment that is equal to or greater 
than the inpatient hospital deductible amount for any given year (the 
copayment amount for a procedure performed in a year cannot exceed the 
amount of the inpatient hospital deductible established under section 
1813(b) of the Act for that year). In the CY 2022 OPPS/ASC final rule 
with comment period (85 FR 86266), we updated the format of the OPPS 
Addenda A, B, and C by adding a column titled ``Drug Pass-Through 
Expiration during Calendar Year'' where we flagged, through the use of 
an asterisk, each drug for which pass-through payment was expiring 
during the calendar year on a date other than December 31. For CY 2025 
and subsequent years, we proposed to retain these columns that are 
updated to reflect the drug codes for which pass-through payment is 
expiring in the applicable year.
    In the CY 2023 OPPS/ASC final rule with comment period (87 FR 
72250) for CY 2023, we changed the format of the OPPS Addenda A, B, and 
C by adding a column titled ``Drug Pass-Through Expiration during 
Calendar Year'' to include devices, so that the column reads: ``Drug 
and Device Pass-Through Expiration during Calendar Year'' where we 
flagged, through the use of an asterisk, each drug and device for which 
pass-through payment was expiring

[[Page 94522]]

during the calendar year on a date other than December 31.
    For CY 2024, we deleted the column titled ``Copayment Capped at the 
Inpatient Deductible'' and instead added a new column for ``Adjusted 
Beneficiary Copayment'' to identify any copayment adjustment due to 
either the inpatient deductible amount copayment cap or the inflation-
adjusted copayment of a Part B rebatable drug per section 1833(t)(8)(F) 
and section 1833(i)(9) of the Act, as added by section 11101 of the 
Inflation Reduction Act (IRA). We also added another column for notes. 
The ``Note'' column contains multiple messages including, but not 
limited to, inflation-adjusted copayment of a Part B rebatable drug, 
the copayment for a code capped at the inpatient deductible, or 8 
percent of the reference product add-on applied for a biosimilar.
    In addition, for CY 2024, we updated the format of the OPPS Addenda 
A, B, and C by adding another column for ``IRA Coinsurance Percentage'' 
to identify the percentage for the inflation-adjusted copayment of a 
Part B rebatable drug per section 1833(t)(8)(F) and section 1833(i)(9) 
of the Act, as added by section 11101 of the Inflation Reduction Act 
(IRA).
    For CY 2025 and subsequent years we proposed to keep the same 
format for the addenda A, B, and C, and we did not propose any 
additional changes for CY 2025.
    We did not receive any public comments related to the format of the 
OPPS Addenda A, B, and C and are adopting the addenda format as 
proposed.
    To view the Addenda to this final rule with comment period 
pertaining to CY 2025 payments under the OPPS, we refer readers to the 
CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices; select ``CMS-
1809-FC'' from the list of regulations. All OPPS Addenda to this final 
rule with comment period are contained in the zipped folder titled 
``2025 NFRM OPPS Addenda'' in the related links section at the bottom 
of the page. To view the Addenda to this final rule with comment period 
pertaining to CY 2025 payments under the ASC payment system, we refer 
readers to the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-regulations-and-notices; select ``CMS-1809-FC'' from the list of 
regulations. The ASC Addenda to this final rule with comment period are 
contained in a zipped folder titled ``2025 NFRM Addendum AA, BB, DD1, 
DD2, EE, and FF'' in the related links section at the bottom of the 
page.

XXVI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):

A. ICRs for the Hospital Outpatient Quality Reporting (OQR) Program

a. Background
    In section XV of this final rule with comment period, we discuss 
the requirements for the Hospital OQR Program. The Hospital OQR Program 
is generally aligned with the CMS quality reporting program for 
hospital inpatient services known as the Hospital Inpatient Quality 
Reporting (IQR) Program. We refer readers to the CY 2024 OPPS/ASC final 
rule with comment period (88 FR 82131 through 82140) for detailed 
discussions of the previously finalized Hospital OQR Program ICRs which 
are currently approved under OMB control number 0938-1109 (expiration 
date February 28, 2025).
    In this final rule with comment period, we are adopting four web-
based measures as proposed that would impact previously approved burden 
estimates: (1) the Hospital Commitment to Health Equity (HCHE) measure, 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination; (2) the Screening for Social Drivers of Health (SDOH) 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination; (3) the Screen Positive 
Rate for SDOH measure, beginning with voluntary reporting for the CY 
2025 reporting period and mandatory reporting beginning with the CY 
2026 reporting period/CY 2028 payment determination; and (4) the 
Patient Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM), 
beginning with voluntary reporting for the CY 2026 reporting period and 
mandatory reporting beginning with the CY 2027 reporting period/CY 2029 
payment determination.
    We are also finalizing changes to the Hospital OQR Program that 
will not impact the previously approved burden estimates. We are 
removing two claims-based measures beginning with the CY 2025 reporting 
period/CY 2027 payment determination: (1) Magnetic Resonance Imaging 
(MRI) Lumbar Spine for Low Back Pain measure; and (2) Cardiac Imaging 
for Preoperative Risk Assessment for Non-Cardiac, Low-Risk Surgery 
measure. We are further modifying the public reporting of data for the 
Median Time from Emergency Department (ED) Arrival to ED Departure for 
Discharged ED Patients (Median Time for Discharged ED Patients)--
Psychiatric/Mental Health Patients stratification so that it may be 
published on the Compare tool hosted by HHS, available at: https://www.medicare.gov/care-compare/, or its successor website(s), in 
addition to the Provider Data Catalog downloadable files, available at: 
data.cms.gov/provider-data/, beginning in CY 2025. Lastly, we are 
requiring electronic health record (EHR) technology to be certified to 
all electronic clinical quality measures (eCQMs) available to report 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
calculated reporting burden estimates for the Hospital OQR Program by 
utilizing the Bureau of Labor Statistics (BLS) mean hourly wage rate 
for Medical Records Specialists (88 FR 82132). Specifically, we used 
the ``general medical and surgical hospitals'' industry to estimate the 
mean wage, as this categorization aligns the closest with the Hospital 
OQR Program care setting compared to other industries, such as ``office 
of physicians'' or ``nursing care facilities.'' The most recent data 
from BLS' May 2023 National Occupational Employment and Wage Estimates 
reflects a mean hourly wage of $27.69 per hour for medical records 
specialists

[[Page 94523]]

working in ``general medical and surgical hospitals'' (SOC 29-
2072).\731\ We calculated the cost of overhead, including fringe 
benefits, at 100 percent of the mean hourly wage, consistent with 
previous years. This is a rough adjustment, both because fringe 
benefits and overhead costs vary significantly by employer and methods 
of estimating these costs vary widely in the literature. Nonetheless, 
we believe that doubling the hourly wage rate ($27.69 x 2 = $55.38) to 
estimate total cost is a reasonably accurate estimation method. 
Accordingly, unless otherwise specified, we calculate cost burden to 
hospitals using a wage plus benefits estimate of $55.38 per hour 
throughout the discussion in this section of this rule for the Hospital 
OQR Program.
---------------------------------------------------------------------------

    \731\ U.S. Bureau of Labor Statistics. Occupational Outlook 
Handbook, Medical Records Specialists. Accessed April 29, 2024. 
Available at: https://www.bls.gov/oes/current/oes292072.htm.
---------------------------------------------------------------------------

    In the CY 2024 OPPS/ASC final rule with comment period, our burden 
estimates were based on an assumption that approximately 3,350 hospital 
outpatient departments (HOPDs) would report data to the Hospital OQR 
Program (88 FR 82132). For this final rule with comment period, based 
on the most recent available data from the CY 2024 Hospital OQR Program 
payment determination, we estimate that 3,200 HOPDs will report data to 
the Hospital OQR Program for the CY 2025 reporting period/2027 payment 
determination.
b. Information Collection Burden Estimate for the Adoption of the 
Hospital Commitment to Health Equity Measure Beginning With the CY 2025 
Reporting Period/CY 2027 Payment Determination
    As discussed in section XIV.B.1 of this final rule with comment 
period, we are adopting the web-based HCHE measure beginning with the 
CY 2025 reporting period/CY 2027 payment determination. For this 
measure, HOPDs will be required to report once annually on attestations 
of ``yes'' or ``no'' to a set of five domains related to organizational 
efforts towards health equity, using a CMS-designated information 
system, as described in section XIV.B.1.b of this final rule with 
comment period.
    We estimate the reporting burden associated with this measure to 
be, on average across all 3,200 HOPDs, no more than 10 minutes per HOPD 
per year, as we believe the burden for HOPDs to report this measure 
will be very similar to the burden for hospital inpatient departments 
to report the same measure once annually under the Hospital IQR 
Program. We refer readers to the currently approved burden estimate for 
the HCHE measure in the Hospital IQR Program under OMB control number 
0938-1022 (expiration date January 31, 2026) and as discussed in the FY 
2023 IPPS/LTCH PPS final rule (87 FR 49385).
    Using an estimate of 10 minutes (or 0.167 hours) per HOPD per year, 
we estimate that this measure adoption will result in a total annual 
burden increase of 533 hours (0.167 hours x 3,200 HOPDs) at a cost of 
$29,518 (533 hours x $55.38/hr) across program-eligible HOPDs.
    We received no comments on our burden estimates.
c. Information Collection Burden Estimate for the Adoption of the 
Screening for Social Drivers of Health (SDOH) Measure Beginning With 
Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Payment Determination
    In section XIV.B.2 of this final rule with comment period, we are 
adopting the web-based Screening for SDOH measure beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination. For this measure, HOPDs will be required to 
report whether they screened patients for five health-related social 
need (HRSN) domains, as described in section XIV.B.2.a of this final 
rule with comment period.
    HOPDs will be able to collect data for the measure using a self-
selected screening tool. We expect that most HOPDs will likely collect 
data through a screening tool incorporated into their EHR or other 
patient intake process, such as those we describe as examples in 
section XIV.B.2.e of this final rule with comment period. We estimate 
the information collection burden related to conducting patient 
screening associated with this measure to be two minutes (0.033 hours) 
per patient. This is based on the currently approved burden estimate 
for the Hospital IQR Program under OMB control number 0938-1022 for the 
same measure with patient screening for the same HRSN domains and the 
same frequency of data reporting, as discussed in the FY 2023 IPPS/LTCH 
PPS final rule (87 FR 49385 through 49386).
    In the CY 2025 OPPS/ASC proposed rule, we estimated 498,843,518 
patients would be screened annually when the measure becomes mandatory 
(89 FR 59517). In this final rule, we have revised our methodology to 
account for multiple HOPD visits per patient and the corresponding 
reduction in screenings per reporting period. To provide an estimate of 
patient volume for the purposes of calculating the information 
collection burden associated with this measure, we utilized data 
derived from the American Hospital Association which estimates 2,399 
outpatient visits per 1,000 population in CY 2022 \732\ and multiplied 
this by the estimated total U.S. population in CY 2022 \733\ to 
estimate the total number of outpatient visits across the hospitals 
surveyed. We estimate that each year there are approximately 
799,556,849 hospital outpatient visits ((2,399 hospital outpatient 
visits per 1,000 population in CY 2022 \734\) x 333,287,557 total U.S. 
population in 2022). We then estimate a total of 412,651,290 HOPD 
patient visits potentially resulting in a patient needing to be 
screened when the measure becomes mandatory by multiplying the total 
799,556,849 (hospital outpatient visits by a ratio of 3,200 HOPDs to 
the total of 6,200 hospitals surveyed \735\ (799,556,849 hospital 
outpatient visits x 51.61 percent (3,200 HOPDs / 6,200 hospitals 
surveyed)). We anticipate that the estimate of 412,651,290 is likely an 
overestimate due to the policy we are finalizing which allows for the 
use of screening information collected from other settings in the same 
reporting period, such as the hospital inpatient setting, and the 
expectation that some patients may have more than one outpatient visit 
in a reporting period at the same facility, and therefore, their 
information would have already been collected. To help mitigate the 
potentially significant impact to our estimates of repeat visits where 
re-screening would be unnecessary, such as in a follow-up visit, 
routine treatments, or multiple emergency department encounters, we 
divided the total number of HOPD patient visits by two. As a result, we 
estimate a total of

[[Page 94524]]

206,325,645 HOPD patient visits (412,651,290 / 2) per reporting period 
when the measure becomes mandatory. We intend to assess actual reported 
volumes of visits for future estimates. As submission rates among 
hospitals may vary, we conservatively estimate that for voluntary 
reporting for the CY 2025 reporting period, 50 percent of HOPDs will 
screen 50 percent of patients, and beginning with the first mandatory 
reporting period, 100 percent of HOPDs will screen 100 percent of 
patients.
---------------------------------------------------------------------------

    \732\ Kaiser Family Foundation, Hospital Outpatient Visits per 
1,000 Population by Ownership Type. Available at http://www.kff.org/other/state-indicator/outpatient-visits-by-ownership/?currentTimeframe=&0sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
    \733\ Growth in U.S. Population Shows Early Indication of 
Recovery Amid COVID-19 Pandemic, December 22, 2022. Available at 
https://www.census.gov/newsroom/press-releases/2022/2022-population-estimates.html.
    \734\ American Hospital Association, Fast Facts on U.S. 
Hospitals. Available at https://www.aha.org/statistics/fast-facts-us-hospitals.
    \735\ American Hospital Association--Data and Insights, AHA 
Annual Survey DatabaseTM. Available at https://www.ahadata.com/aha-annual-survey-database.
---------------------------------------------------------------------------

    We determine the cost for patients (or their representative) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when individuals 
undertake activities on their own time.\736\ To derive the costs for 
patients (or their representatives), a measurement of the usual weekly 
earnings of wage and salary workers of $1,139 is divided by 40 hours to 
calculate an hourly pre-tax wage rate of $28.48/hr.\737\ This rate is 
adjusted downwards by an estimate of the effective tax rate for median 
income households of about 14 percent calculated by comparing pre-and 
post-tax income,\738\ resulting in the post-tax hourly wage rate of 
$24.49/hr. Unlike our state and private sector wage adjustments, we are 
not adjusting patient wages for fringe benefits and other indirect 
costs since the individuals' activities, if any, will occur outside the 
scope of their employment.
---------------------------------------------------------------------------

    \736\ Office of the Assistant Secretary for Planning and 
Evaluation, Valuing Time in U.S. Department of Health and Human 
Services Regulatory Impact Analyses: Conceptual Framework and Best 
Practices, September 17, 2017. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
    \737\ Bureau of Labor and Statistics, Usual Weekly Earnings of 
Wage and Salary Workers, First Quarter 2024. Available at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed April 16, 2024.
    \738\ U.S. Census Bureau, End of Pandemic-Era Expanded Federal 
Tax Programs Results in Lower Income, Higher Poverty, September 12, 
2023. Available at https://www.census.gov/library/stories/2023/09/median-household-income.html. Accessed April 16, 2024.
---------------------------------------------------------------------------

    Measure data aggregated to the hospital level as a numerator and a 
denominator will be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109, we estimate a burden of 10 minutes per HOPD to report 
the measure data. Therefore, we estimate that each HOPD will spend 10 
minutes (0.167 hours) annually to report the Screening for SDOH measure 
data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
burden increase for patients of 1,719,380 hours (206,325,645 patients x 
50 percent response rate x 50 percent of HOPDs x 0.033 hours per 
patient) at a cost of $42,107,616 (1,719,380 hours x $24.49/hr). 
Beginning with the CY 2026 mandatory reporting period, we estimate an 
annual total burden increase for patients of 6,877,522 hours 
(206,325,645 patients x 0.033 hours per patient) at a cost of 
$168,430,514 (6,877,522 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for program-eligible HOPDs of 
267 hours (3,200 HOPDs x 50 percent of HOPDs x 0.167 hours per HOPDs) 
at a cost of $14,786 (267 hours x $55.38/hr). Beginning with the CY 
2026 mandatory reporting period, we estimate a total collection and 
reporting burden increase for program-eligible HOPDs of 533 hours 
(3,200 HOPDs x 0.167 hours per HOPD) at a cost of $29,518 (533 hours x 
$55.38/hr).
    We received no comments on our burden estimates in the proposed 
rule.
d. Information Collection Burden Estimate for the Adoption of the 
Screen Positive Rate for Social Drivers of Health (SDOH) Measure 
Beginning With Voluntary Reporting for the CY 2025 Reporting Period 
Followed by Mandatory Reporting Beginning With the CY 2026 Reporting 
Period/CY 2028 Payment Determination
    In section XIV.B.3 of this final rule with comment period, we are 
adopting the Screen Positive Rate for SDOH measure beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination. We refer readers to the currently approved 
burden estimate for the Screen Positive Rate for SDOH measure in the 
Hospital IQR Program under OMB control number 0938-1022 for the same 
measure and the same frequency of data reporting, as discussed in the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49386). As discussed in section 
XIV.B.3.g of this final rule with comment period, if a hospital 
participates in both the Hospital OQR and Hospital IQR Programs, the 
hospital will need to submit data on this measure separately under each 
program. As such, we are estimating the burden separately under each 
program.
    For this measure, HOPDs will be required to report on the number of 
patients who screened positive for one or more of the five domains 
(reported as five separate rates to reflect each of the five HRSN 
domains) divided by the total number of patients screened. We 
previously included the collection burden associated with screening 
patients in our discussion of the Screening for SDOH measure. Thus, for 
the Screen Positive Rate for SDOH measure, we estimate only the 
additional burden for HOPD reporting via the HQR system since patients 
will not need to provide, and HOPDs will not need to collect, any 
additional information for this measure. We continue to estimate that, 
for voluntary reporting for the CY 2025 reporting period, 50 percent of 
HOPDs will submit data, and beginning with the first mandatory 
reporting period, 100 percent of HOPDs will submit data.
    Measure data aggregated to the hospital level as a numerator and a 
denominator will be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109, we estimate a burden of 10 minutes per HOPD to report 
the measure data. Therefore, we estimate that each HOPD will spend 10 
minutes (0.167 hours) annually to report the Screen Positive Rate for 
SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase of 267 hours (0.167 hours x 
3,200 HOPDs x 50 percent of HOPDs) at a cost of $14,786 (267 hours x 
$55.38), and beginning with the CY 2026 reporting period, we estimate a 
total annual collection and reporting burden increase for hospitals of 
533 hours (0.167 hours x 3,200 HOPDs) at a cost of $29,518 (533 hours x 
$55.38/hr) across all program-eligible HOPDs.
    We received no comments on our burden estimates.

[[Page 94525]]

e. Information Collection Burden Estimate for the Adoption of the 
Patient Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM), 
Beginning With Voluntary Reporting for the CY 2026 Reporting Period and 
Mandatory Reporting Beginning With the CY 2027 Reporting Period/CY 2029 
Payment Determination
    In section XV.C.1.b of this final rule with comment period, we are 
adopting the Information Transfer PRO-PM beginning with voluntary 
reporting for the CY 2026 reporting period and mandatory reporting 
beginning with the CY 2027 reporting period/CY 2029 payment 
determination. The Information Transfer PRO-PM will use PRO data 
regarding recovery instructions, collected by HOPDs through a nine-item 
survey instrument administered to patients post-operatively. The modes 
of PRO data collection can include completion of the post-operative 
surveys electronically.
    In the CY 2025 OPPS/ASC proposed rule, we estimated 498,843,518 
patients would be screened annually when the measure becomes mandatory 
(89 FR 59518). In this final rule with comment period, we have revised 
our methodology to account for multiple HOPD visits per patient and the 
corresponding reduction in screenings per reporting period. To provide 
an estimate of patient volume for the purposes of calculating the 
information collection burden associated with this measure, we utilized 
data derived from the American Hospital Association related to hospital 
outpatient visits to estimate that each year there are roughly 
799,556,849 hospital outpatient visits ((2,399 hospital outpatient 
visits per 1,000 population in CY 2022 \739\) x 333,287,557 total U.S 
population in 2022 \740\). We then estimate a total of 412,651,290 HOPD 
patient visits potentially resulting in a patient needing to be 
screened when the measure becomes mandatory by multiplying the total 
799,556,849 hospital outpatient visits by a ratio of 3,200 HOPDs to the 
total of 6,200 hospitals surveyed \741\ (799,556,849 hospital 
outpatient visits x 51.61 percent (3,200 HOPDs / 6,200 hospitals 
surveyed)). However, as not all hospital outpatient visits are related 
to surgeries and procedures, and there are often multiple visits such 
as pre- and post-op visits associated with those that are, we estimate 
that 137,550,430 hospital outpatient visits (412,651,290 hospital 
outpatient visits / 3 surgery or procedure-specific visits) would more 
realistically qualify for the cohort of this measure. We anticipate 
that this may be an overestimate and intend to assess actual reported 
volumes of visits for future estimates. As submission rates among 
hospitals may vary, we conservatively estimate that for voluntary 
reporting for the CY 2025 reporting period, 50 percent of HOPDs will 
survey 50 percent of patients, and beginning with the first mandatory 
reporting period, 100 percent of HOPDs will survey 100 percent of 
patients. While we are also allowing HOPDs to report a sample of at 
least 300 completed patient surveys, we are requiring all patients to 
be surveyed for this measure when mandatory reporting begins.
---------------------------------------------------------------------------

    \739\ Kaiser Family Foundation, Hospital Outpatient Visits per 
1,000 Population by Ownership Type. Available at http://www.kff.org/other/state-indicator/outpatient-visits-by-ownership/?currentTimeframe=0&sortModel=%7B%22colId%22%22Location%22%22sort%22:%22asc%22%7D.
    \740\ Growth in U.S. Population Shows Early Indication of 
Recovery Amid COVID-19 Pandemic, December 22, 2022. Available at 
https://www.census.gov/newsroom/press-releases/2022/2022-population-estimates.html.
    \741\ American Hospital Association--Data and Insights, AHA 
Annual Survey DatabaseTM. Available at https://www.ahadata.com/aha-annual-survey-database.
---------------------------------------------------------------------------

    In the CY 2025 OPPS/ASC proposed rule, we estimated each patient 
would require an average of six minutes to complete the survey (89 FR 
59518). In this final rule with comment period, we are revising our 
estimate to five minutes (0.083 hours) per patient based on more recent 
information.\742\ As described in section XXIV.B.c of this final rule 
with comment period, for purposes of calculating patient burden, we 
determine the cost for patients (or their representatives) undertaking 
administrative and other tasks, such as filling out a survey or intake 
form, using a post-tax wage of $24.49/hr based on the report ``Valuing 
Time in U.S. Department of Health and Human Services Regulatory Impact 
Analyses: Conceptual Framework and Best Practices,'' which identifies 
the approach for valuing time when individuals undertake activities on 
their own time.\743\ Unlike our state and private sector wage 
adjustments, we are not adjusting patient wages for fringe benefits and 
other indirect costs since the individuals' activities, if any, will 
occur outside the scope of their employment.
---------------------------------------------------------------------------

    \742\ Yale New Haven Health Services Corporation--Center for 
Outcomes Research & Evaluation, Patient Understanding of Key 
Information Related to Recovery After a Facility-Based Outpatient 
Procedure or Surgery, Patient Reported Outcome-Based Performance 
Measure (PRO-PM) Version 1.0 Methodology Report, April 2024. 
Available at https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/measure-methodology.
    \743\ Office of the Assistant Secretary for Planning an 
Evaluation, Valuing Time in U.S. Department of Health and Human 
Services Regulatory Impact Analyses: Conceptual Framework and Best 
Practices, September 17, 2017. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
---------------------------------------------------------------------------

    Measure data will be submitted via the HQR system annually. Similar 
to the currently approved burden estimate for web-based measures 
reported via the HQR system for the Hospital OQR Program under OMB 
control number 0938-1109, we estimate a burden of 10 minutes per HOPD 
to report the measure data. Therefore, we estimate that each HOPD will 
spend 10 minutes (0.167 hours) annually to report the Information 
Transfer PRO-PM data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
burden for patients of 2,865,634 hours (137,550,430 patients x 50 
percent response rate x 50 percent of HOPDs x 0.083 hours per patient 
surveyed) at a cost of $70,179,377 (2,865,634 hours x $24.49/hr). 
Beginning with the CY 2026 mandatory reporting period, we estimate an 
annual total burden for patients of 11,462,536 hours (137,550,430 
patients x 0.083 hours per patient) at a cost of $280,717,507 
(11,462,536 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden for program-eligible HOPDs of 267 hours 
(3,200 HOPDs x 50 percent of HOPDs x 0.167 hours per HOPDs) at a cost 
of $14,786 (267 hours x $55.38/hr). Beginning with the CY 2026 
mandatory reporting period, we estimate a total collection and 
reporting burden for program-eligible HOPDs of 533 hours (3,200 HOPDs x 
0.167 hours per HOPD) at a cost of $29,518 (533 hours x $55.38/hr).
    We received no comments on our burden estimates in the CY OPPS/ASC 
proposed rule.
f. Information Collection Burden for the Removal of Two Claims-Based 
Measures
    In sections XV.C.2.a and XV.C.2.b of this final rule with comment 
period, we are removing two claims-based measures beginning with the CY 
2025 reporting period/CY 2027 payment determination: (1) MRI Lumbar 
Spine for Low Back Pain measure; and (2) Cardiac Imaging for 
Preoperative Risk

[[Page 94526]]

Assessment for Non-Cardiac, Low-Risk Surgery measure. Because these 
measures are calculated using Medicare fee-for-service (FFS) claims 
that are already reported to the Medicare program for payment purposes, 
removing these measures will not result in a change in burden 
associated with OMB control number 0938-1109.
    We received no comments on our assumptions regarding burden for 
these measures calculated from administrative data.
g. Information Collection Burden To Publicly Report Data for the Median 
Time for Discharged ED Patients--Psychiatric/Mental Health Patients 
Stratification on Care Compare Beginning in CY 2025
    In section XV.F.2 of this final rule with comment period, we are 
finalizing the public reporting of data for the Median Time for 
Discharged ED Patients--Psychiatric/Mental Health Patients 
stratification on Care Compare beginning in CY 2025. Because we are not 
requiring HOPDs to collect or submit any additional data for purposes 
of this public reporting, this policy will not result in a change in 
burden associated with OMB control number 0938-1109.
    We received no comments on our assumptions regarding burden.
h. Information Collection Burden To Require EHR Technology To Be 
Certified to All eCQMs Available To Report Beginning With the CY 2025 
Reporting Period/CY 2027 Payment Determination
    In section XV.E.2.b of this final rule with comment period, we are 
requiring EHR technology to be certified to all eCQMs available to 
report beginning with the CY 2025 reporting period/CY 2027 payment 
determination. We do not expect HOPDs will experience an increase in 
information collection burden associated with this policy because the 
use of EHR technology that is certified to all available eCQMs is 
already required for the Promoting Interoperability Program (83 FR 
41672) and the Hospital IQR Program (84 FR 42604).
    We received no comments on our assumptions regarding burden.
g. Summary of Information Collection Burden Estimates for the Hospital 
OQR Program
    In summary, we estimate that the policies in this final rule with 
comment period will result in a total HOPD burden increase of 
18,342,190 hours at a cost of $449,266,093 annually for all 3,200 
program-eligible HOPDs from the CY 2025 reporting period/CY 2027 
payment determination through the CY 2027 reporting period/CY 2029 
payment determination. We will submit the revised information 
collection estimates to OMB for approval under OMB control number 0938-
1109. (See Tables 178, 179, and 180.)
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    We requested comment on how we can reduce burden on HOPDs for both 
these new information collections as well as recommendations for the 
removal of existing information collections to offset these new 
burdens. We received no comments regarding the burden estimates 
associated with these new information collections; however, some 
commenters expressed their belief that CMS underestimates the burden of 
requirements for the Hospital OQR Program, in general. A few commenters 
recommended removal of measures in general to reduce information 
collections burden currently included in the Hospital OQR Program. We 
thank the commenters for their input but disagree that the burden of 
the Hospital OQR Program is underestimated, as this burden has been 
estimated in a manner aligned with other quality reporting programs, 
such as the Hospital IQR Program, and measure type burden has been 
approved under OMB control number 0938-1109. This burden accurately 
reflects the reporting burden estimate for the Hospital OQR Program. We 
appreciate their recommendations

[[Page 94530]]

and may consider them in future rulemaking.

B. ICRs for the Rural Emergency Hospitals Quality Reporting (REHQR) 
Program

a. Background
    In section XVI of this final rule with comment period, we discuss 
the requirements for the REHQR Program. The REHQR Program is generally 
aligned with the CMS quality reporting program for HOPDs known as the 
Hospital OQR Program. We refer readers to the CY 2024 OPPS/ASC final 
rule with comment period (88 FR 82148 through 82149) for detailed 
discussions of the previously finalized REHQR Program ICRs, which are 
currently approved under OMB control number 0938-1454 (expiration date 
April 30, 2027).
    In this final rule with comment period, we are adopting three web-
based measures that will impact previously approved burden estimates: 
(1) the Hospital Commitment to Health Equity (HCHE) measure, beginning 
with the CY 2025 reporting period/CY 2027 program determination; (2) 
the Screening for Social Drivers of Health (SDOH) measure, beginning 
with voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
program determination; and (3) the Screen Positive Rate for SDOH 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 program determination.
    We are also finalizing our proposal to extend the reporting period 
for the previously adopted Risk-Standardized Hospital Visits Within 7 
Days After Hospital Outpatient Surgery measure beginning with the CY 
2027 program determination. We believe this policy will not impact the 
previously approved burden estimates.
    In the CY 2024 OPPS/ASC final rule with comment period, we 
calculated reporting burden estimates for the REHQR Program by 
utilizing the BLS mean hourly wage rate for Medical Records Specialists 
(88 FR 82148). Specifically, we used the ``general medical and surgical 
hospitals'' industry to estimate the mean wage, as this categorization 
aligns the closest with the REHQR Program care setting compared to 
other medical record specialist related industries, such as ``office of 
physicians'' or ``nursing care facilities.'' The most recent data from 
BLS' May 2023 National Occupational Employment and Wage Estimates 
reflects a mean hourly wage of $27.69 per hour for medical records 
specialists working in ``general medical and surgical hospitals'' (SOC 
29-2072).\744\ We calculated the cost of overhead, including fringe 
benefits, at 100 percent of the mean hourly wage, consistent with 
previous years. This is necessarily a rough adjustment, both because 
fringe benefits and overhead costs vary significantly by employer and 
methods of estimating these costs vary widely in the literature. 
Nonetheless, we believe that doubling the hourly wage rate ($27.69 x 2 
= $55.38) to estimate total cost is a reasonably accurate estimation 
method. Accordingly, unless otherwise specified, we will calculate cost 
burden to REHs using a wage plus benefits estimate of $55.38 per hour 
throughout the discussion in this section of this rule for the REHQR 
Program.
---------------------------------------------------------------------------

    \744\ U.S. Bureau of Labor Statistics. Occupational Outlook 
Handbook, Medical Records Specialists. Accessed April 29, 2024. 
Available at: https://www.bls.gov/oes/current/oes292072.htm.
---------------------------------------------------------------------------

    In the CY 2024 OPPS/ASC final rule with comment period, our burden 
estimates were based on an assumption that approximately 746 hospitals 
could transition to REH status assuming that all eligible hospitals in 
states which have passed or amended necessary legislation enabling 
transition to occur as of March 2023 choose to do so and we stated that 
we would update our estimates once more information was made available 
(88 FR 82148). For this final rule with comment period, based on the 
actual number of acute care and critical access hospital conversions to 
REH status as of September 27, 2024, we estimate that 33 REHs will 
report data to the REHQR Program during the CY 2025 reporting period 
unless otherwise noted. While the exact number of REHs required to 
submit data may vary due to status changes to and from an REH, as 
reiterated in section XVI.A of this final rule with comment period, 
REHs are required by statute to submit quality data. Therefore, for 
purposes of estimating burden, we assume that all 33 REHs will submit 
data under the REHQR Program beginning with the CY 2025 reporting 
period.
b. Information Collection Burden for the Adoption of the Hospital 
Commitment to Health Equity (HCHE) Measure Beginning With the CY 2025 
Reporting Period/CY 2027 Program Determination
    In section XIV.B.1 of this final rule with comment period, we are 
adopting the web-based HCHE measure beginning with the CY 2025 
reporting period/CY 2027 program determination. For this measure, REHs 
will be required to report on attestations of ``yes'' or ``no'' to a 
set of five domains related to organizational efforts towards health 
equity, as described in section XIV.B.1.b of this final rule with 
comment period.
    We estimate the reporting burden associated with this measure to 
be, on average across all 33 REHs, no more than 10 minutes per REH per 
year, as we believe the burden that is annually reported by hospital 
inpatient departments under the Hospital IQR Program will be very 
similar to annual reporting by REHs on the same measure. We refer 
readers to the currently approved burden for the HCHE measure in the 
Hospital IQR Program under OMB control number 0938-1022 (expiration 
date January 31, 2026) and as discussed in the FY 2023 IPPS/LTCH PPS 
final rule (87 FR 49385).
    Using an estimate of 10 minutes (or 0.167 hours) per REH per year, 
we estimate that this measure adoption will result in a total annual 
burden increase of six hours (0.167 hours x 33 REHs) at a cost of $332 
(6 hours x $55.38/hr) across all REHs.
    We received no comments on our burden estimates.
c. Information Collection Burden for the Adoption of the Screening for 
Social Drivers of Health (SDOH) Measure Beginning With Voluntary 
Reporting for the CY 2025 Reporting Period Followed by Mandatory 
Reporting Beginning With the CY 2026 Reporting Period/CY 2028 Program 
Determination
    In section XIV.B.2 of this final rule with comment period, we are 
adopting the Screening for SDOH measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period/CY 2028 program 
determination. We refer readers to the currently approved burden for 
the Screening for SDOH measure for the Hospital IQR Program under OMB 
control number 0938-1022. For this measure, REHs will be required to 
report whether they screened patients for five health-related social 
need (HRSN) domains as described in section XIV.B.2.a of this final 
rule with comment period.
    REHs will be able to collect data for the measure using a self-
selected screening tool. We expect that most REHs will collect data 
through a screening tool incorporated into their EHR or other patient 
intake process, such as those we describe as examples in section 
XIV.B.2.e of this final rule with comment period. We estimate the 
information collection burden related to conducting patient screening 
associated

[[Page 94531]]

with this measure to be two minutes (0.033 hours) per patient. This is 
based on the currently approved burden estimate for the Hospital IQR 
Program for the same measure with patient screening for the same HRSN 
domains and the same frequency of data reporting, as discussed in the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49385 through 49386).
    To provide an estimate of patient volume for the purposes of 
calculating the information collection burden associated with this 
measure, we utilized data derived from a Definitive Healthcare survey 
which calculated that Medicare FFS patients account for 35.6 percent of 
hospital payer mix and a MedPAC report that determined hospitals which 
have converted to REH status average 4,200 outpatient visits for 
Medicare FFS beneficiaries to estimate that each year 11,798 (4,200 / 
35.6 percent) patients will be screened per REH when reporting on the 
measure becomes mandatory.745 746 We therefore estimate a 
total of approximately 389,334 patients (11,798 patients x 33 REHs) 
will be screened across all 33 REHs. As submission rates among 
hospitals may vary, we conservatively estimate that for voluntary 
reporting for the CY 2025 reporting period, 50 percent of REHs will 
screen 50 percent of patients, and beginning with the first mandatory 
reporting period, REHs will screen 100 percent of patients.
---------------------------------------------------------------------------

    \745\ Definitive Healthcare, Breaking down U.S. hospital payor 
mixes, July 14, 2023. Available at https://www.definitivehc.com/resources/healthcare-insights/breaking-down-us-hospital-payor-mixes.
    \746\ Medicare Payment Advisory Commission, Medicare and the 
Health Care Delivery System, June 2021. Available at https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun21_medpac_report_to_congress_sec.pdf.
---------------------------------------------------------------------------

    We determine the cost for patients (or their representative) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when individuals 
undertake activities on their own time.\747\ To derive the costs for 
patients (or their representatives), a measurement of the usual weekly 
earnings of wage and salary workers of $1,139 is divided by 40 hours to 
calculate an hourly pre-tax wage rate of $28.48/hr.\748\ This rate is 
adjusted downwards by an estimate of the effective tax rate for median 
income households of about 14 percent calculated by comparing pre- and 
post-tax income,\749\ resulting in the post-tax hourly wage rate of 
$24.49/hr. Unlike our State and private sector wage adjustments, we are 
not adjusting beneficiary wages for fringe benefits and other indirect 
costs since the individuals' activities, if any, will occur outside the 
scope of their employment.
---------------------------------------------------------------------------

    \747\ Office of the Assistant Secretary for Planning an 
Evaluation, Valuing Time in U.S. Department of Health and Human 
Services Regulatory Impact Analyses: Conceptual Framework and Best 
Practices, September 17, 2017. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
    \748\ Bureau of Labor and Statistics, Usual Weekly Earnings of 
Wage and Salary Workers, First Quarter 2024. Available at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed April 16, 2024.
    \749\ U.S. Census Bureau, End of Pandemic-Era Expanded Federal 
Tax Programs Results in Lower Income, Higher Poverty, September 12, 
2023. Available at https://www.census.gov/library/stories/2023/09/median-household-income.html. Accessed April 16, 2024.
---------------------------------------------------------------------------

    Measure data aggregated to the hospital level as a numerator and a 
denominator will be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109 (expiration date February 28, 2025), which REHs will 
have been eligible to report under prior to conversion to REH status, 
we estimate a burden of 10 minutes per REH to report the measure data. 
Therefore, we estimate that each REH will spend 10 minutes (0.167 
hours) annually to report the Screening for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for patients of 3,343 hours 
(11,798 patients x 50 percent response rate x 17 REHs x 0.033 hours per 
patient) at a cost of $81,870 (3,343 hours x $24.49/hr). Beginning with 
the CY 2026 reporting period, we estimate a total collection and 
reporting burden increase for patients of 12,978 hours (389,334 
patients x 0.033 hours per patient) at a cost of $317,831 (12,978 hours 
x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for REHs of three hours (33 
REHs x 50 percent of REHs x 0.167 hours) at a cost of $166 (3 hours x 
$55.38/hr). Beginning with the CY 2026 reporting period, we estimate a 
total collection and reporting burden increase for REHs of six hours 
(33 REHs x 0.167 hours) at a cost of $332 (4 hours x $55.38/hr).
    We received no comments on our burden estimates.
d. Information Collection Burden for the Adoption of the Screen 
Positive Rate for Social Drivers of Health (SDOH) Measure Beginning 
With Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Program Determination
    In section XIV.B.3 of this final rule with comment period, we are 
adopting the Screen Positive Rate for SDOH measure beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
program determination. We refer readers to the currently approved 
burden estimate for the Screen Positive Rate for SDOH measure in the 
Hospital IQR Program under OMB control number 0938-1022 for the same 
measure and the same frequency of data reporting, as discussed in the 
FY 2023 IPPS/LTCH PPS final rule (87 FR 49386).
    For this measure, REHs will be required to report on an annual 
basis the number of patients who screened positive for one or more of 
the five domains (reported as five separate rates to reflect each of 
the five HRSN domains) divided by the total number of patients 
screened.
    We previously included the burden associated with screening 
patients in our discussion of the Screening for SDOH measure. Thus, for 
the Screen Positive Rate for SODH measure, we estimate only the 
additional burden for a REH reporting via the HQR system since patients 
will not need to provide, and REHs will not need to collect, any 
additional information for this measure. We continue to estimate that, 
for voluntary reporting for the CY 2025 reporting period, 50 percent of 
REHs will screen 50 percent of patients, and beginning with the first 
mandatory period, REHs will survey 100 percent of patients.
    Measure data aggregated to the hospital level as a numerator and a 
denominator will be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the Hospital OQR Program under OMB control 
number 0938-1109, which REHs will have been eligible to report under 
prior to conversion to REH status, we estimate a burden of 10 minutes 
per REH to report the measure data. Therefore, we estimate that each 
REH will spend 10 minutes (0.167 hours) annually to report

[[Page 94532]]

the Screen Positive Rate for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase of three hours (0.167 hours x 
33 REHs x 50 percent of REHs) at a cost of $166 (3 hours x $55.38/hr), 
and beginning with the CY 2026 reporting period, we estimate a total 
annual collection and reporting burden increase for REHs of six hours 
(0.167 hours x 33 REHs) at a cost of $332 (6 hours x $55.38/hr) across 
all REHs.
    We received no comments on our burden estimates.
e. Information Collection Burden To Extend the Reporting Period From 
for the Risk-Standardized Hospital Visits Within 7 Days After Hospital 
Outpatient Surgery Measure Beginning With the CY 2027 Program 
Determination
    In section XVI.C.2 of this final rule with comment period, we are 
extending the reporting period from one year to two years for the Risk-
Standardized Hospital Visits within 7 Days after Hospital Outpatient 
Surgery measure, beginning with the CY 2027 program determination. We 
refer readers to a similar policy which was finalized for the claims-
based Facility 7-Day Risk-Standardized Hospital Visit Rate After 
Outpatient Colonoscopy measure under the Hospital OQR Program in the CY 
2019 OPPS/ASC final rule (83 FR 59106).
    Because this claims-based measure is calculated using data that are 
already reported to the Medicare program for payment purposes, there is 
no burden associated with the collection and submission of data for 
this measure. Accordingly, our policy to extend the reporting period 
from one to two years will not result in additional burden for REHs.
    We received no comments on our assumptions regarding burden.
f. Summary of Information Collection Burden Estimates for the REHQR 
Program
    In summary, we estimate that the policies in this final rule with 
comment period will result in an increase of 12,996 hours at a cost of 
$318,827 for 33 REHs annually from the CY 2025 reporting period through 
the CY 2026 reporting period. We will submit these information 
collection estimates to OMB for approval under OMB control number 0938-
1454. (See Tables 181 and 182.)
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    We requested comment on how we can reduce burden on REHs for both 
these new information collections as well as recommendations for the 
removal of existing information collections to offset these new 
burdens. We received neither comments regarding the burden estimates 
for these new information collections nor recommendations for removal 
of existing information collections under the REHQR Program.

C. ICRs for the Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program

a. Background
    In section XVII of this final rule with comment period, we discuss 
the requirements for the ASCQR Program. We refer readers to the CY 2024 
OPPS/ASC final rule with comment period (88 FR 82140 through 82148) for 
detail regarding the previously finalized ASCQR Program ICRs which are 
currently approved under OMB control number 0938-1270 (expiration date 
August 31, 2025).
    In section XIV.B of this final rule with comment period, we are 
adopting three measures that will impact previously approved burden 
estimates: (1) the Facility Commitment to Health Equity (FCHE) measure, 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination; (2) the Screening for Social Drivers of Health (SDOH) 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination; and (3) the Screen 
Positive Rate for SDOH measure, beginning with voluntary reporting for 
the CY 2025 reporting period followed by mandatory reporting beginning 
with the CY 2026

[[Page 94534]]

reporting period/CY 2028 payment determination. In section XVII.E.2.a 
of this final rule with comment period, we are finalizing that ASCs 
that ASCs will submit data annually for these measures using the CMS-
designated information system (currently, the Hospital Quality 
Reporting [HQR] system).
    In the CY 2024 OPPS/ASC final rule with comment period, we 
calculated reporting burden estimates for the ASCQR Program by 
utilizing the BLS mean hourly wage rate for Medical Records Specialists 
(88 FR 82140). Specifically, we used the ``general medical and surgical 
hospitals'' industry to estimate the mean wage, as this categorization 
aligns the closest with the ASCQR Program care setting compared to 
other medical record specialist related industries, such as ``office of 
physicians'' or ``nursing care facilities.'' The most recent data from 
BLS' May 2023 National Occupational Employment and Wage Estimates 
reflects a mean hourly wage of $27.69 per hour for medical records 
specialists working in ``general medical and surgical hospitals'' (SOC 
29-2072).\750\ We calculated the cost of overhead, including fringe 
benefits, at 100 percent of the mean hourly wage, consistent with 
previous years. This is necessarily a rough adjustment, both because 
fringe benefits and overhead costs vary significantly by employer and 
methods of estimating these costs vary widely in the literature. 
Nonetheless, doubling the hourly wage rate ($27.69 x 2 = $55.38) to 
estimate total cost is a reasonably accurate estimation method. 
Accordingly, unless otherwise specified, we will calculate cost burden 
to ASCs using a wage plus benefits estimate of $55.38 per hour 
throughout the discussion in this section of this rule for the ASCQR 
Program.
---------------------------------------------------------------------------

    \750\ U.S. Bureau of Labor Statistics. Occupational Outlook 
Handbook, Medical Records Specialists. Accessed April 29, 2024. 
Available at: https://www.bls.gov/oes/current/oes292072.htm.
---------------------------------------------------------------------------

    Based on the most recent analysis of the CY 2024 payment 
determination data, we found that, of the 5,536 ASCs that were actively 
billing Medicare, 4,196 were required to participate in the ASCQR 
Program. Of the 1,340 ASCs not required to participate in the program, 
279 ASCs did so and met full requirements. On this basis, we estimate 
that 4,475 ASCs (4,196 + 279) will submit data for the ASCQR Program 
for the CY 2025 reporting period/CY 2027 payment determination.
b. Information Collection Burden for the Adoption of the Facility 
Commitment to Health Equity (FCHE) Measure Beginning With the CY 2025 
Reporting Period/CY 2027 Payment Determination
    In section XIV.B.1 of this final rule with comment period, we are 
adopting the FCHE measure for the ASCQR Program beginning with the CY 
2025 reporting period/CY 2027 payment determination. For this measure, 
ASCs will be required to report an attestation of ``yes'' or ``no'' to 
a set of five domains related to organizational efforts towards health 
equity, as described in section XIV.B.1.b of this final rule with 
comment period.
    We estimate the reporting burden associated with this measure to 
be, on average across all 4,475 ASCQR Program eligible facilities, no 
more than 10 minutes per ASC per year, based on the currently approved 
burden for the same measure under the Hospital IQR Program under OMB 
control number 0938-1022 (expiration date January 31, 2026). This also 
aligns with our estimated burden per providers for HOPDs and REHs, 
discussed above.
    Using an estimate of 10 minutes (0.167 hours) per ASC per year, we 
estimate that this measure adoption will result in a total annual 
collection and reporting burden increase of 746 hours (0.167 hours x 
4,475 ASCs) at a cost of $41,313 (746 hours x $55.38/hr) across 
program-eligible ASCs.
    We received no comments on our burden estimates.
c. Information Collection Burden for the Adoption of the Screening for 
Social Drivers of Health (SDOH) Measure Beginning With Voluntary 
Reporting for the CY 2025 Reporting Period Followed by Mandatory 
Reporting Beginning With the CY 2026 Reporting Period/CY 2028 Payment 
Determination
    In section XIV.B.2 of this final rule with comment period, we are 
adopting the Screening for SDOH measure for the ASCQR Program beginning 
with voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination. For this measure, ASCs will be required to 
report whether they screened patients for five health-related social 
need (HSRN) domains as described in section XIV.B.2.a of this final 
rule with comment period.
    As described in section XIV.B.2.e of this final rule with comment 
period, ASCs will be able to collect data for this measure using a 
self-selected screening tool. We expect that most ASCs will collect 
data through a screening tool incorporated into their EHR or other 
patient intake process, such as those we describe as examples in 
section XIV.B.2.e of this final rule with comment period. We estimate 
the information collection burden related to conducting patient 
screening associated with this measure will be 2 minutes (0.033 hours) 
per patient. This estimate is based on the currently approved burden 
for the Hospital IQR Program for the same measure, requiring the 
reporting of patient screening for the same HRSN domains and the same 
frequency of data reporting, as discussed in the FY 2023 IPPS/LTCH PPS 
final rule (87 FR 49385 through 49386).
    To provide an estimate of patient volume for the purposes of 
calculating the information collection burden associated with this 
measure, we utilized data derived from the ASC Quality Collaborative 
(ASCQC) related to ASC patient fall benchmarking data as this metric 
applies to all patients rather than a subset. In the CY 2025 OPPS/ASC 
proposed rule, we estimated approximately 10,427,619 patients would be 
screened annually (89 FR 59526). Based on public comments received, we 
are correcting our estimate. Since we expect that ASCs reporting data 
to the ASCQC will tend to be larger facilities with larger patient 
populations than non-reporting ASCs, we conservatively estimate that 
each year approximately 21,322,000 patients ((10,434,676 admissions 
\751\ / 2,190 ASCs reporting) x 4,475 ASCs) with an average of 4,765 
patients per ASC (21,322,000 admissions / 4,475 ASCs) will be screened 
annually when reporting on the measure becomes mandatory. As submission 
rates among facilities may vary, we conservatively estimate that, for 
voluntary reporting for the CY 2025 reporting period, 50 percent of 
ASCs will survey 50 percent of patients, and beginning with the first 
mandatory reporting period, ASCs will survey and report on 100 percent 
of patients.
---------------------------------------------------------------------------

    \751\ ASC Quality Collaboration, ASC Quality Collaboration 
Quality Report. Available at https://ascquality.org/benchmarking/. 
Accessed September 12, 2024.
---------------------------------------------------------------------------

    We determine the cost for patients (or their representative) 
undertaking administrative and other tasks, such as filling out a 
survey or intake form, using a post-tax wage of $24.49/hr based on the 
report ``Valuing Time in U.S. Department of Health and Human Services 
Regulatory Impact Analyses: Conceptual Framework and Best Practices,'' 
which identifies the approach for valuing time when

[[Page 94535]]

individuals undertake activities on their own time.\752\ To derive the 
costs for patients (or their representatives), a measurement of the 
usual weekly earnings of wage and salary workers of $1,139 is divided 
by 40 hours to calculate an hourly pre-tax wage rate of $28.48/hr.\753\ 
This rate is adjusted downwards by an estimate of the effective tax 
rate for median income households of about 14 percent calculated by 
comparing pre- and post-tax income,\754\ resulting in the post-tax 
hourly wage rate of $24.49/hr. Unlike our state and private sector wage 
adjustments, we are not adjusting beneficiary wages for fringe benefits 
and other indirect costs because the individuals' activities, if any, 
will occur outside the scope of their employment.
---------------------------------------------------------------------------

    \752\ Office of the Assistant Secretary for Planning an 
Evaluation, Valuing Time in U.S. Department of Health and Human 
Services Regulatory Impact Analyses: Conceptual Framework and Best 
Practices, September 17, 2017. Available at https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
    \753\ Bureau of Labor and Statistics, Usual Weekly Earnings of 
Wage and Salary Workers, First Quarter 2024. Available at https://www.bls.gov/news.release/pdf/wkyeng.pdf. Accessed April 16, 2024.
    \754\ U.S. Census Bureau, End of Pandemic-Era Expanded Federal 
Tax Programs Results in Lower Income, Higher Poverty, September 12, 
2023. Available at https://www.census.gov/library/stories/2023/09/median-household-income.html. Accessed April 16, 2024.
---------------------------------------------------------------------------

    Measure data aggregated to the ASC level as a numerator and a 
denominator will be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the ASCQR Program under OMB control number 0938-
1270, we estimate a burden of 10 minutes per ASC to report the measure 
data. Therefore, we estimate that each ASC will spend 10 minutes (0.167 
hours) annually to report the Screening for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for patients of 177,723 hours 
(21,322,000 patients x 50 percent response rate x 50 percent of ASCs x 
0.033 hours per patient) at a cost of $4,352,436 (177,723 hours x 
$24.49/hr). Beginning with the CY 2026 reporting period, we estimate a 
total collection and reporting burden increase for patients of 710,733 
hours (21,322,000 patients x 0.033 hours per patient) at a cost of 
$17,405,851 (710,733 hours x $24.49/hr).
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase for program-eligible ASCs of 
373 hours (4,475 ASCs x 50 percent of ASCs x 0.167 hours) at a cost of 
$20,657 (373 hours x $55.38/hr). Beginning with the CY 2026 reporting 
period, we estimate a total collection and reporting burden increase 
for program-eligible ASCs of 746 hours (4,475 ASCs x 0.167 hours) at a 
cost of $41,313 (746 hours x $55.38/hr).
    Comment: One commenter stated that the burden estimate for this 
information collection was calculated in error due to CMS incorrectly 
using the number of 4,475 ASCs to determine the average number of 
patients per ASC instead of the correct value of 2,190 ASCs as stated 
in the referenced data source.
    Response: We thank the commenter and have clarified our rationale 
and process for the burden estimate. In the CY 2025 OPPS/ASC proposed 
rule, we estimated a total of 10,427,619 patients would be screened 
when the measure becomes mandatory based on a total number of ASC 
admissions over a 12-month period as reported by the ASCQC (89 FR 
59526). In this final rule with comment period, we have revised our 
calculation of the number of ASC admissions using the ASCQC data, 
dividing by the 2,190 ASCs reporting to ASCQC to calculate an average 
number of annual admissions per ASC and multiplying the average per ASC 
by 4,475 total ASCs which could report the measure under the ASCQR 
Program.
d. Information Collection Burden for the Adoption of the Screen 
Positive Rate for Social Drivers of Health (SDOH) Measure Beginning 
With Voluntary Reporting for the CY 2025 Reporting Period Followed by 
Mandatory Reporting Beginning With the CY 2026 Reporting Period/CY 2028 
Payment Determination
    In section XIV.B.3 of this final rule with comment period, we are 
adopting the Screen Positive Rate for SDOH measure beginning with 
voluntary reporting for the CY 2025 reporting period followed by 
mandatory reporting beginning with the CY 2026 reporting period/CY 2028 
payment determination. We refer readers to the currently approved 
burden for the Screen Positive Rate for SDOH measure in the Hospital 
IQR Program under OMB control number 0938-1022 for the same measure and 
the same frequency of data reporting, as discussed in the FY 2023 IPPS/
LTCH PPS final rule (87 FR 49386). For this measure, ASCs will be 
required to report annually the number of patients who screened 
positive for one or more of the five domains (reported as five separate 
rates to reflect each of the five HRSN domains) divided by the total 
number of patients screened.
    We previously included the burden associated with screening 
patients in our discussion of the Screening for SDOH measure. Thus, for 
the Screen Positive Rate for SDOH measure, we estimate only the 
additional burden for an ASC reporting via the HQR system since 
patients will not need to provide, and ASCs will not need to collect, 
any additional information for this measure. We continue to estimate 
that for voluntary reporting for the CY 2025 reporting period, for the 
4,475 ASCs estimated for reporting purposed, 50 percent of these ASCs 
will screen 50 percent of patients, and beginning with the first 
mandatory reporting period, 100 percent of these ASCs will submit data.
    Measure data aggregated to the hospital level as a numerator and a 
denominator will be submitted via the HQR system annually. Similar to 
the currently approved burden estimate for web-based measures reported 
via the HQR system for the ASCQR Program under OMB control number 0938-
1270 (expiration date August 31, 2025), we estimate a burden of 10 
minutes per ASC to report the measure data. Therefore, we estimate that 
each ASC will spend 10 minutes (0.167 hours) annually to report the 
Screen Positive Rate for SDOH measure data to CMS.
    For the CY 2025 voluntary reporting period, we estimate a total 
collection and reporting burden increase of 373 hours (0.167 hours x 
4,475 ASCs x 50 percent of ASCs) at a cost of $20,657 (373 hours x 
$55.38). Beginning with the CY 2026 reporting period, we estimate a 
total annual collection and reporting burden increase for ASCs of 746 
hours (0.167 hours x 4,475 ASCs) at a cost of $41,313 (746 hours x 
$55.38/hr) across program-eligible ASCs.
    We received no comments on our burden estimates.
e. Summary of Information Collection Burden Estimates for the ASCQR 
Program
    In summary, we estimate that the policies in this final rule with 
comment period will result in an increase of 712,971 hours at a cost of 
$17,529,790 for 4,475 program-eligible ASCs from the CY 2025 reporting 
period/CY 2027 payment determination through the CY 2026 reporting 
period/CY 2028 payment determination. We will submit the revised 
information collection estimates

[[Page 94536]]

to OMB for approval under OMB control number 0938-1270. (See Tables 183 
and 184.)
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[[Page 94537]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.242

BILLING CODE 4120-01-C

D. ICRs Related to Medicaid Clinic Services Four Walls Exceptions

    As discussed in section XVII of this final rule, we are finalizing 
our proposal for three additional exceptions to the four walls 
requirement under the Medicaid clinic services benefit at 42 CFR 
440.90. Specifically, we are adding a mandatory four walls exception 
for IHS/Tribal clinics at Sec.  440.90(c) and optional exceptions for 
behavioral health clinics and clinics located in rural areas at Sec.  
440.90(d) and (e). To attest to compliance with Sec.  440.90(c) and to 
effectuate the options at Sec.  440.90(d) and (e), States that cover 
the clinic services benefit will have to submit one or more Medicaid 
State plan amendments (SPAs).
    The burden associated with submitting the SPAs implementing the 
proposed Medicaid clinic services four walls exceptions will be 
addressed as part of an associated SPA preprint being developed by CMS 
and submitted to OMB for approval under OMB control number 0938-1148 
(CMS-10398).

E. ICRs for Changes to the Review Timeframes for Hospital Outpatient 
Department (OPD) Prior Authorization Process

    In the CY 2020 OPPS/ASC final rule with comment period, we 
established a prior authorization process for certain hospital OPD 
services using our authority under section 1833(t)(2)(F) of the Act, 
which allows the Secretary to develop a method for controlling 
unnecessary increases in the volume of covered OPD services (84 FR 
61142, 61446 through 61456).\755\ As part of the CY 2021 OPPS/ASC final 
rule with comment period, we added additional service categories to the 
prior authorization process (85 FR 85866, 86236 through 86248). Through 
the CY 2023 OPPS/ASC final rule with comment period, we added an eighth 
service category to the prior authorization process for certain 
hospital OPD services (87 FR 71748, 72224 through 72233). The 
regulations governing the prior authorization process are located in 
subpart I of 42 CFR part 419, specifically at Sec. Sec.  419.80 through 
419.89.
---------------------------------------------------------------------------

    \755\ See also Correction Notification issued January 3, 2020 
(85 FR 224).
---------------------------------------------------------------------------

    In alignment with the CMS Interoperability and Prior Authorization 
final rule (89 FR 8758), we are finalizing our proposal to change the 
current review timeframes for provisionally affirmed or non-affirmed 
requests from 10-business days to 7-calendar days for standard reviews 
after receiving the prior authorization request for OPD services under 
Medicare FFS. The ICR associated with prior authorization requests for 
these covered outpatient department services is the required 
documentation submitted by providers. The prior authorization request 
must include all relevant documentation

[[Page 94538]]

necessary to show that the service meets applicable Medicare coverage, 
coding, and payment rules, and the request must be submitted before the 
service is provided to the beneficiary and before the claim is 
submitted for processing.
    The burden associated with the changes in review timeframes for the 
OPD prior authorization process will be the time and effort necessary 
for the submitter to locate and obtain the relevant supporting 
documentation to show that the service meets applicable coverage, 
coding, and payment rules. The submitter will then forward the 
information to CMS or its contractor (MAC) for review and determination 
of a provisional affirmation. We expect that this information will 
generally be maintained by providers within the normal course of 
business and that this information will be readily available. We 
estimate that the average time for office clerical activities 
associated with this task will be 30 minutes, equivalent to normal 
prepayment or postpayment medical review. We anticipate that most prior 
authorization requests will be sent by means other than mail, such as 
electronically or by fax. However, we estimate a cost of $5 per request 
for mailing medical records. Based on data from 2019-2022, we estimate 
that there will be 127,397 initial requests mailed per year. In 
addition, we estimate there will be 41,806 resubmissions of a request 
mailed following a non-affirmed decision. Therefore, the total mailing 
cost is estimated to be $846,015 (169,203 mailed requests x $5). We 
also estimate that an additional 3 hours per provider will be required 
for attending educational meetings and reviewing training documents.
    The average labor costs (including 100 percent fringe benefits) 
used to estimate the costs were calculated using data from the Bureau 
of Labor Statistics (BLS) and based on the 2022 median rate for 
Miscellaneous Healthcare Support Occupations.\756\ Based on the BLS 
information, we estimate an average clerical hourly rate of $18.53 with 
a loaded rate of $37.06. The prior authorization program does not 
create any new documentation or administrative requirements. Instead, 
it just requires the same documents needed to support claim payments to 
be submitted earlier in the claim process. We use the clerical rate 
since we do not believe that clinical staff will need to spend more 
time completing the documentation than they would need to in the 
absence of the prior authorization policy. The hourly rate reflects the 
time needed for the additional clerical work of submitting the prior 
authorization request itself. We estimate that the total annual number 
of submissions will be 564,010 (394,808 submissions through fax or 
electronic means + 169,203 mailed submissions). Therefore, we estimate 
that the annual burden hours allotted across all providers will be 
316,412 hours (.5 hours x 564,010 submissions plus 3 hours x 11,469 
providers for education). The annual burden cost is $12,572,244 
(316,412 hours x $37.06 plus $846,015 for mailing costs). We estimate 
the annual burden to be 316,412 hours and $12,572,244. The ICR approved 
under OMB control number 0938-1368 will be revised and submitted to OMB 
for approval of this extension.
---------------------------------------------------------------------------

    \756\ https://www.bls.gov/oes/current/oes_nat.htm.
---------------------------------------------------------------------------

    Table 185 below is a chart reflecting the total burden and 
associated costs for the provisions included in this final rule with 
the comment period. The previously approved Paperwork Reduction Act 
package (CMS-10711) is currently undergoing the renewal process. We did 
not make any changes to the information collection, such as the number 
of respondents, responses, or other information collection 
requirements. However, there is a 1-hour change in the burden hours, 
from 316,413 to 316,412, likely due to rounding up in the previous 
year's calculations. The burden costs have increased from $11,561,950 
to $12,572,244 due to an increase in the average clerical hourly rate 
from $17.13 in 2019 to $18.53 in 2022.
[GRAPHIC] [TIFF OMITTED] TR27NO24.243

F. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program

    In section XXII.B.2 of this final rule with comment period, we are 
finalizing that for the FY 2026 payment determination, the submission 
of CCDEs and linking variables associated with the Hybrid Hospital-Wide 
Readmission (HWR) measure and the Hybrid Hospital-Wide All-Cause Risk 
Standardized Mortality (HWM) measure will remain voluntary. 
Additionally, based on public comment, we are extending voluntary 
reporting of CCDEs and linking variables for an additional year for the 
performance period of July 1, 2024, through June 30, 2025, impacting 
the FY 2027 payment determination for the Hospital IQR Program.
    In the FY 2020 IPPS/LTCH PPS final rule and the FY 2022 IPPS/LTCH 
PPS final rule, we estimated the burden for voluntary reporting for the 
Hybrid HWR (84 FR 42603 and 42604) and Hybrid HWM measures (86 FR 
45508), respectively. In both final rules, we stated that we encourage 
all hospitals to submit data for the Hybrid HWR and Hybrid HWM measures 
during the voluntary reporting period. Our previously finalized burden 
estimates assume that all hospitals will participate during the 
voluntary reporting period in order to not underestimate the burden on 
participating hospitals. Therefore, we estimate no changes to the 
burden currently approved for the Hospital IQR Program under OMB 
control number 0938-1022 (expiration date January 31, 2026).
    We did not receive any public comments on our burden estimates.

G. ICRs for Continuous Eligibility (42 CFR 435.926 and 457.342)

    In section XX of this final rule with comment period, we are 
finalizing our proposal to align the Medicaid and CHIP regulations with 
the continuous

[[Page 94539]]

eligibility requirements under section 5112 of Title V, subtitle B 
(hereafter, ``section 5112'') of the CAA, 2023. To comply with section 
5112 of the CAA, 2023, States must submit a CHIP SPA and a Medicaid SPA 
to provide continuous eligibility for children if they do not already 
do so in their CHIP or Medicaid State plans, or if their current 
continuous eligibility SPAs do not comply with the CAA, 2023 
requirements. CMS has already received approval for the burden 
estimates for the CHIP continuous eligibility SPA under OMB control 
number 0938-1148 (CMS-10398) and for the Medicaid continuous 
eligibility SPA under OMB control number 0938-1188 (CMS-10434). States 
may provide extended continuous eligibility through an 1115 
demonstration, which they would do by submitting a demonstration 
application or amendment.
    We did not receive any public comments on the information 
collection requirements for our proposal and therefore, we are 
finalizing our provisions as proposed.

H. ICRs Regarding Organization, Staffing and Delivery of Services for 
Hospitals (Sec.  482.59(a) and (b)) and CAHs (Sec.  485.649(a) and (b))

    We proposed that if a hospital or Critical Access Hospital (CAH) 
provides OB services, such services must be well-organized and in 
accordance with nationally recognized acceptable standards of practices 
for physical and behavioral health of pregnant, birthing, and 
postpartum patients. We also proposed that any outpatient OB services 
would be consistent in quality with inpatient OB services in accordance 
with the complexity of services offered. In addition, we proposed that 
the organization of the OB service be appropriate to the scope of 
services offered by the facility and integrated with other departments 
of the facility. We further proposed that the OB patient care units be 
supervised by an individual with the necessary education and training, 
and specify that person should be an experienced registered nurse, 
certified nurse midwife, nurse practitioner, physician assistant, or a 
doctor of medicine or osteopathy. In addition, we proposed that 
hospitals and CAHs must delineate and document obstetrical privileges 
for all practitioners providing obstetrical care in accordance with the 
competencies of each practitioner.
    For delivery of services, we proposed that OB services must be 
consistent with the needs and resources of the facility. We proposed 
that policies governing OB care must be designed to ensure the 
achievement and maintenance of high standards of medical practice and 
patient care and safety. We additionally proposed that labor & delivery 
room suites have certain basic resuscitation equipment readily 
available, including a call-in-system, cardiac monitor, and fetal 
doppler or monitor. Furthermore, we proposed that the service must 
ensure that it has adequate provisions and protocols, consistent with 
nationally recognized and evidence-based guidelines for OB emergencies, 
complications, immediate post-delivery care, and other patient health 
and safety events as identified as part of the facility's QAPI program.
    Comment: The Joint Commission (TJC) questioned our assumption that 
there would be no burden for TJC-accredited facilities to develop 
policies and procedures to ensure that OB services are well organized, 
provide high-quality care that is appropriate to the level of services 
provided, and integrated with other departments of the facility, and 
that facilities have internal standards and protocols to ensure 
compliance with nationally accepted guidelines for OB emergencies, 
complications, immediate post-delivery care, and other patient health 
and safety events. They indicated that the other proposed requirements 
would exceed their requirements in some areas and would impose 
additional costs on facilities.
    Response: We appreciate the feedback on the burden for TJC-
accredited facilities. Rather than assuming that TJC-accredited 
hospitals and CAHs will have no burden for these requirements, in this 
final rule with comment period we modify our cost estimate and assume 
that there is only a 50 percent overlap between the proposed 
organization, staffing, and delivery of service policy development 
requirements and current standards for TJC-accredited hospitals and 
CAHs. For all other proposed OB services requirements, we maintain the 
same approach we used in the proposed rule and do not assume any 
overlap between our proposed requirements and TJC requirements.
    After consideration of the public comments we received and as 
indicated in section XXI.C.2 of this final rule with comment period, we 
are finalizing the proposed policies for hospitals (Sec.  482.59(a) 
through (b)) and CAHs (Sec.  485.649(a) through (b)) that offer 
obstetrical (OB) services with the modification to reference the 
requirements of the medical staff bylaws for hospitals and CAHs rather 
than requiring hospitals and CAHs with OB services to delineate and 
document obstetrical privileges for all practitioners. In addition, we 
are clarifying that basic equipment must be kept at the hospital and 
CAH and be readily available for treating obstetrical cases to meet the 
needs of patients. Below, we provide the burden estimate for the final 
requirements that include the following modifications: (1) a higher 
burden for TJC-accredited hospitals to develop policies and procedures 
to ensure that OB services are well organized and (2) the removal of 
the cost for facilities to delineate and document obstetrical 
privileges for all practitioners providing obstetrical care.
    To identify the number of hospitals and CAHs subject to the 
finalized provisions, we utilized the Center for Medicare and Medicaid 
Services' Provider of Services File--Hospital and Non-Hospital 
Facilities. We excluded hospitals and CAHs that do not offer obstetric 
services, as well as Rural Emergency Hospitals that are not subject to 
these CoPs. Using this methodology, we obtained a total of 513 CAHs and 
4,415 hospitals that offer obstetric services.\757\
---------------------------------------------------------------------------

    \757\ Provider of Services File--Hospital & Non-Hospital 
Facilities. Available at https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/provider-of-services-file-hospital-non-hospital-facilities/data. Accessed April 10, 2024.
---------------------------------------------------------------------------

    We calculated the estimated hourly rates for staff members involved 
in developing these policies based upon the national mean salary for 
that particular position increased by 100 percent to account for 
overhead costs and fringe benefits using the May 2023 National 
Occupational Employment and Wage Estimates, Bureau of Labor Statistics 
(BLS) at https://www.bls.gov/oes/current/oes_nat.htm. The wage and 
salary data from the BLS do not include health, retirement, and other 
fringe benefits, or the rent, utilities, information technology, 
administrative, and other types of overhead costs supporting each 
employee. The HHS-wide guidance on preparation of regulatory and 
paperwork burden estimates states that doubling salary costs is a good 
approximation for including these overhead and fringe benefit costs.
    Table 186 presents the BLS occupation code and title, the facility 
provider position, the estimated average or mean hourly wage, and the 
adjusted hourly wage (with a 100 percent markup of the salary to 
include fringe benefits and overhead costs).
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[[Page 94540]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.244

[[Page 94541]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.245

BILLING CODE 4120-01-C
    We expect that most hospitals and CAHs that offer OB services 
already have internal standards and protocols to ensure that OB 
services are well organized and to provide high-quality care that is 
appropriate to the level of services provided and integrated with other 
departments of the facility. We also expect that they have internal 
standards and protocols to ensure compliance with nationally accepted 
guidelines for OB emergencies, complications, immediate post-delivery 
care, and other patient health and safety events. Many hospital 
accrediting organizations also have specific requirements governing 
care for pregnant and postpartum patients that will meet part of these 
finalized requirements. For example, TJC has wide-ranging requirements 
for hospitals that provide perinatal care, covering everything from 
providing information to families in a way that is easy to understand 
to providing initial care for complications such as hemorrhage, 
hypertensive disorders, fetal heart rate abnormalities.\758\ We expect, 
however, that all hospitals and CAHs will need to spend time ensuring 
that these standards and their sources are well-documented.
---------------------------------------------------------------------------

    \758\ The Joint Commission Edition. Program: Perinatal Care, 
``Chapter: Provision of Care, Treatment, and Services.'' Available 
at https://e-dition.jcrinc.com/MainContent.aspx. Accessed April 10, 
2024.
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    As outlined in 84 FR 51732, writing new policies related to patient 
care is estimated to take eight hours for each member of the staff 
involved in the care policy. We have estimated wages as indicated in 
Table 186 and included the involvement of a physician at $2,029.60 (8 x 
$253.70), a lawyer at $1357.44 (8 x $169.68), a registered nurse at 
$726.72 (8 x $90.84), a medical secretary at $333.6 (8 x $41.70), and a 
medical and health services manager at $1,034.24 (8 x $129.28) for a 
total estimated cost of $5,481.60 per policy. This estimate leads to an 
average hourly cost of $137.04 ($5,481.60 / 40) per staff member 
involved in ensuring that these standards and their sources are well-
documented. We assume that documentation will consist of one 
comprehensive policy per facility.
    We do not expect that all facilities will need to spend 40 hours to 
meet these requirements. We expect that the burden will be lower for 
TJC-accredited facilities since the organization has wide-ranging 
requirements for hospitals and CAHs, with the requirements increasing 
as the complexity of OB care offered increases. We estimate that there 
is a 50 percent overlap between TJC requirements and our finalized 
requirements. To account for this reduction in the overall burden, we 
used CMS' CASPER (Certification and Survey Provider Enhanced Reports) 
\759\ to identify TJC-accredited hospitals and CAHs. According to 
CASPER, approximately 72.2 percent of Medicare and Medicaid approved 
hospitals are accredited by TJC, as well as 25 percent of Critical 
Access Hospitals (CAHs). We then multiply the respective shares of TJC-
accredited hospitals and CAHs by 0.5 to account for the 50 percent 
overlap in requirements.
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    \759\ Quality, Certification & Oversight Reports (QCOR). CASPER 
(4/16/2024). qcor.cms.gov.
---------------------------------------------------------------------------

    To calculate the hourly burden for this requirement, in Table 187 
we multiply the number of facilities by the number of responses per 
facility, applying the discount for hospitals and CAHs that are 
accredited by TJC, by the hourly burden estimate. To determine the 
associated cost, we multiply the revised hourly burden estimate by the 
average hourly labor cost. Using this formula, in Table 187 we estimate 
a total burden of 13,802 hours at a cost of $17,925,161.
    Table 188 provides the annual burden estimate over a 10-year period 
for these finalized requirements. We do not estimate a burden for 
updating these policies and procedures after their initial development 
in year 1 since regularly reviewing and updating policies is a standard 
business practice for healthcare facilities that must comply with 
applicable Federal, state, and local laws, regulations and ordinances 
that periodically change. As such, the total estimate over 10 years is 
130,802 hours at a cost of $17,925,161.
    For the requirements that OB patient care units be supervised by an 
individual with the necessary education and training, as well as 
ensuring that OB patient care units have certain basic equipment 
readily available, and that the facility has adequate provisions for 
obstetrical emergencies, we provide the estimated cost in the 
regulatory impact analysis section below.

[[Page 94542]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.246

[GRAPHIC] [TIFF OMITTED] TR27NO24.247

I. ICRs Regarding OB Staff Training for Hospitals (Sec.  482.59(c)) and 
CAHs (Sec.  485.649(c))

    We proposed that hospitals and CAHs that offer OB services must 
develop policies and procedures to ensure that staff are trained on 
select topics related to improving the delivery of maternal care. The 
training must reflect the scope and complexity of services offered and 
must include, but is not limited to, facility-identified evidence-based 
best practices and protocols to improve the delivery of maternal care 
within the facility. They would also need to be trained in any 
additional topics as identified by the facility's QAPI program. We also 
proposed that the governing body must identify and document which staff 
must complete annual training on these topics. The facility must 
further document that training was successfully completed and must be 
able to demonstrate staff knowledge on these topics. Lastly, we 
proposed that the efficacy of the training must be reviewed and 
assessed on an ongoing basis, based on the results of data, measures, 
and quality indicators from the facility's QAPI program.
    Comment: A commenter said that increased demand for training 
material for facilities to meet the proposed training requirement could 
cause vendors to raise their prices.
    Response: We appreciate the comment regarding vendor prices. 
Facilities have the flexibility to determine which topics they train 
staff on to improve the delivery of maternal care and which vendors 
they use for their training. While some vendors could raise the prices 
for training materials in response to higher demand, others may choose 
to maintain or even lower it given the increased demand. Facilities may 
also choose to use free training resources such as those outlined in 
section XXI.C.3 of this final rule with comment period. Given the 
availability of free and low-cost resources for many training topics 
and likely variation across vendors, we are not including any 
additional burden related to vendor pricing.
    Comment: A few commenters said that CMS should consider the 
disproportionate financial impact that the requirements will have on 
some provider types, particularly hospitals and CAHs that are most at 
risk of closing their OB units, which could lead to increased burden on 
other hospitals and result in patients having to travel greater 
distance to access maternal care.
    Response: We appreciate commenters' suggestions to consider 
differences across providers. The CY 2025 OPPS/ASC proposed rule 
assessed likely variation in burden across different providers, taking 
into account variation in facility size, the number of patients, and 
staff size that we believe accurately reflects the likely burden for 
each facility type. We have also taken several steps to reduce burden 
and ensure that all hospitals and CAHs are able to successfully meet 
the requirements. First, we are implementing the requirements in three 
phases (see section XXI.A.7 of this final rule with comment period) to 
reduce potential implementation burden or unintended consequences. 
Second, as we discuss in more detail in the regulatory impact analysis, 
we are also reducing the frequency of the obstetrical services training 
requirement from annually to biannually (every other year), which leads 
to a large reduction in cost. Finally, we are not finalizing the 
requirement that hospitals and CAHs delineate and document obstetrical 
privileges for all practitioners providing obstetrical care.
    After consideration of the public comments we received, and as 
indicated in section XXI.C.3 of this final rule with comment period, we 
are finalizing the policies for hospitals (Sec.  482.59(c)) and CAHs 
(Sec.  485.649(c)) that offer OB services with the modification that 
the effective date of the staff training requirement is January 1, 
2027, and that the governing body in hospitals and CAHs must identify 
and document which staff must complete an initial training and 
subsequent biannual training.

[[Page 94543]]

    As outlined in 84 FR 51732, writing new policies related to patient 
care is estimated to take eight hours for each member of the staff 
involved in the care policy. We have estimated wages as indicated in 
Table 186 and included the involvement of a physician at $2,029.60 (8 x 
$253.70), a lawyer at $1357.44 (8 x $169.68), a registered nurse at 
$726.72 (8 x $90.84), a medical secretary at $333.6 (8 x $41.70), and a 
medical and health services manager at $1,034.24 (8 x $129.28) for a 
total estimated cost of $5,481.60 per policy. This estimate leads to an 
average hourly cost of $137.04 ($5481.60 / 40) per staff member 
involved in ensuring that these standards and their sources are well-
documented. We assume that documentation will consist of one 
comprehensive policy per facility. We do not estimate a burden for 
reviewing and assessing the efficacy of these efforts since we address 
this below in section XXVI.J. We do not estimate a burden for 
documenting that training was completed as updating employee records is 
also a customary business practice. As indicated in Table 189 and Table 
190, we estimate that the development of the finalized OB staff 
training policies and procedures will take 197,120 hours to complete 
and cost $27,013,325. We discuss the burden for staff training in the 
regulatory impact analysis below.
[GRAPHIC] [TIFF OMITTED] TR27NO24.248

[GRAPHIC] [TIFF OMITTED] TR27NO24.249

J. ICRs Regarding Revisions to QAPI Standards for OB Services in 
Hospitals (Sec.  482.21) and CAHs (Sec.  485.641)

    We proposed that hospitals and CAHs with OB services must use their 
QAPI program to address health disparities among OB patients on an 
ongoing basis. They must also measure and monitor for health 
disparities among OB patients and develop and implement actions to 
address these disparities and monitor subsequent results. Moreover, on 
an annual basis, they must conduct at least one performance improvement 
project focused on reducing maternal health disparities. In addition to 
the proposed QAPI requirements, we proposed that OB leadership be 
engaged in the facility's QAPI requirement. We further proposed that if 
a Maternal Mortality Review Committee (MMRC) is available at the state 
or local jurisdiction in which the facility is located, the facility 
must and have a process for incorporating MMRC data and recommendations 
into the facility's QAPI program.
    Comment: One commenter said that full utilization of quality 
improvement activities often requires significant financial investment 
and administrative support to be successful. Another commenter noted 
that many metrics used in obstetrics cannot be assessed using 
administrative data and instead requires a time-consuming manual chart 
review. Some commenters indicated that the rule did not take into 
account increases in staff wages and salaries.
    Response: We appreciate the comments regarding utilization of QAPI 
and that some obstetrical metrics could require manual chart reviews. 
We believe that the estimated costs in the proposed rule that included 
costs for data system modifications, data stratification, incorporation 
of MMRC recommendations into the QAPI program, and carrying out an 
annual project provide an accurate estimate of the likely average 
burden for facilities to engage in these activities. We agree that 
growth in staff wages and salaries needs to be considered when 
calculating costs.

[[Page 94544]]

According to the Bureau of Labor Statistics,\760\ RNs in 2015 earned a 
mean hourly rate of $34.14 with the nominal mean hourly rate in 2023 
\761\ increasing to $45.42. Inflation,\762\ however, accounts for 3.49 
percentage points annually over these eight years, leaving a compound 
annual real growth rate of approximately 0.44 percent. To address 
concerns that wage costs are underestimated, we are including a 0.44 
annual increase in real wage rates for staff involved in carrying out 
this requirement.
---------------------------------------------------------------------------

    \760\ U.S. Bureau of Labor Statistics. Occupational Employment 
and Wages--May 2015. Accessed September 25, 2024. https://www.bls.gov/news.release/archives/ocwage_03302016.pdf.
    \761\ U.S. Bureau of Labor Statistics. Occupational Employment 
and Wages, May 2023: 29-1141 Registered Nurses. Accessed September 
25, 2024. https://www.bls.gov/oes/current/oes291141.html.
    \762\ [thinsp]Federal Reserve Bank of Minneapolis. Inflation 
Calculator. Accessed February September 25, 2024. https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator.
---------------------------------------------------------------------------

    After consideration of the public comments we received, and as 
indicated in section XXI.C.4 of this final rule with comment period, we 
are finalizing the proposed revision to existing QAPI standards (Sec.  
482.21; Sec.  485.641) for hospitals and CAHs that offer obstetrical 
services without modifications. To account for growth in staff wage 
rates, we are including a 0.44 percent annual increase in real wage 
rates.
    The costs associated with data collection will include the cost for 
facilities to modify their information technology infrastructure to 
ensure that they capture all features relevant for the diverse 
subpopulations that the facility identifies. Given that many facilities 
already collect some of these patient characteristics, such as race and 
ethnicity, we estimate that planning, programming, and performing 
quality checks will take 8 hours in the first year and 4 hours in all 
subsequent years. We anticipate a mixture of staff from computer and 
mathematical occupations will oversee these changes at an average 
hourly cost of $108.78. This leads to an average cost of $870.24 (8 x 
$108.78) per provider in the first year. For subsequent years, we 
estimate that the requirement will take 4 hours to complete and include 
a 0.44 percent annual increase in the average hourly cost to account 
for growth in real wage rates. As indicated in Table 191 we estimate 
that in the first year, updating infrastructure will cost a total of 
$4,288,543. In Table 192, we provide the estimated total 10-year cost 
which we estimate at $24,016,571.
    Based on our experience working with healthcare data, we anticipate 
that stratification of data and quality indicators, together with 
monitoring the results after actions are taken to address these 
disparities, will take 8 hours annually. We anticipate that data 
scientists will oversee these efforts at an average hourly cost of 
$114.46. Since the requirements do not go into effect until year 2, we 
estimate that there will be no burden in year 1. For subsequent years, 
we increase the estimated burden to include a 0.44 percent annual 
increase in the average hourly cost to account for growth in real wage 
rates. For year 2, we estimate an average cost of $919.71 per provider. 
Table 193 provides the estimated cost in year 2 and Table 194 provides 
the estimated cost over 10 years. We estimate an average annual cost of 
annual cost of $4,532,326 with a total cost of $41,516,273 over 10 
years.
[GRAPHIC] [TIFF OMITTED] TR27NO24.250

[GRAPHIC] [TIFF OMITTED] TR27NO24.251

[[Page 94545]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.252

[GRAPHIC] [TIFF OMITTED] TR27NO24.253

K. ICRS Regarding Emergency Services Readiness in Emergency Services 
for Hospitals (Sec.  482.55(c)) and CAHs (Sec.  485.618(e))

    We proposed a new standard for emergency services readiness and to 
improve staff readiness for providing emergency services to all 
patients, including pregnant and postpartum patients. The first 
proposed standard would require hospitals and CAHs with emergency 
services to have adequate provisions and protocols, consistent with 
nationally recognized and evidence-based guidelines, for the care of 
patients with emergency conditions (including but not limited to 
patients with OB emergencies, complications, immediate post-delivery 
care). Applicable staff would be required to be trained on these 
protocols and provisions. We also proposed that equipment, supplies, 
and medication used in treating emergency cases are kept at the 
hospital and are readily available for treating emergency cases.
    Comment: A commenter said that the emergency services requirements 
may require additional investment by facilities, such as establishing 
proper storage, tracking, and protocols related to the necessary 
products.
    Response: CMS expects that facilities would already have protocols 
in place for the storage and tracking of emergency products. As such, 
we do not estimate any additional burden for this requirement.
    After consideration of the public comments we received and as 
indicated in section XXI.C.5 of this final rule with comment period, we 
are finalizing the proposed emergency services readiness standard for 
hospitals and CAHs without modifications. We are also finalizing the 
burden estimates as proposed.
    As outlined in 84 FR 51732, writing new policies related to patient 
care is estimated to take eight hours for each member of the staff 
involved in the care policy. Since the finalized standard for emergency 
services involves adding a new standard to an existing policy, we 
estimate that it will take half the amount of time as writing a new 
policy, or 4 hours for each staff member involved. We have estimated 
wages as indicated in Table 186 and included the involvement of a 
physician at $1,014.80 (4 x $253.70), a lawyer at $678.72 (4 x 
$169.68), a registered nurse at $363.36 (4 x $90.84), a medical 
secretary at $166.80 (4 x $41.70), and a health services manager at 
$517.12 (4 x $129.28) for a total estimated cost of $2,740.80 per 
policy. This estimate leads to an average hourly cost of $137.04 
($2,740.80 / 20) per staff member involved in developing this standard. 
We do not estimate a burden for updating standards since reviewing and 
updating policies and procedures is a customary business practice. As 
indicated in Table 195 and Table 196, we estimate that creating this 
standard will cost hospitals $17,294,448 with a total hourly burden of 
126,200 hours.

[[Page 94546]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.254

[GRAPHIC] [TIFF OMITTED] TR27NO24.255

L. Transfer Protocols in Discharge Planning (Sec.  482.43) for 
Hospitals

    We proposed transfer protocol requirements for hospitals 
transferring patients under their care to the appropriate level of 
care, including to another hospital, as necessary to meet the needs of 
the patient and stabilize any emergency conditions (including but not 
limited to patients with OB emergencies, complications, immediate post-
delivery care).
    After consideration of the comments, and as indicated in section 
XXI.C.6 of this final rule with comment period, we are finalizing the 
proposed emergency services readiness standard for hospitals with the 
modification that acute care hospitals are required to provide annual 
training to the relevant staff (as determined by the facility) 
regarding the hospital policies and procedures for transferring 
patients under its care. We did not receive any comments on the 
estimated cost to develop transfer protocols and are finalizing our 
estimate for this requirement as proposed.
    In 87 FR 40350, we estimated that for rural emergency hospitals 
(REHs), developing a transfer agreement with at least one hospital 
would require 2 hours of work from an administrator and a clerical 
person. We believe that hospitals will face a similar burden for this 
requirement. Using estimated wages as indicated in Table 186, we 
estimate that this requirement will include the involvement of a 
medical secretary at $83.40 (2 x 41.70) and a medical and health 
services manager at $258.56 (2 x 129.28) for a total estimate cost of 
$341.96 per hospital. This estimate leads to an average hourly cost of 
$85.49 ($341.96 / 4) per staff member involved in developing this 
standard. We do not estimate a burden for updating transfer protocols 
since reviewing and updating policies and procedures is a customary 
business practice. As indicated in Table 197 and Table 198, we estimate 
that creating these protocols will cost hospitals $1,982,342 with a 
total hourly burden of 23,188 hours.
[GRAPHIC] [TIFF OMITTED] TR27NO24.256

[[Page 94547]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.257

M. Total Costs for all ICRs Related to Maternal Health

    In Tables 199 and 227, we provide the total hourly burden estimate 
and cost for all collection of information requirements related to 
maternal health as outlined in Tables 188, 190, 192, 194, 196, and 198. 
Overall, we estimate that the finalized requirements will have a total 
burden of 1,048,958 hours over 10 years at a cost of $129,748,120.
[GRAPHIC] [TIFF OMITTED] TR27NO24.258

[[Page 94548]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.259

XXVII. 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 preamble; 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

XXVIII. Economic Analyses

A. Statement of Need

    This final rule with comment period is necessary to make updates to 
the Medicare hospital OPPS rates. It is also necessary to make changes 
to the payment policies and rates for outpatient services furnished by 
hospitals and CMHCs in CY 2025. 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 revising 
the APC relative payment weights using claims data for services 
furnished on and after January 1, 2023, through and including December 
31, 2023, and processed through June 30, 2024, and updated HCRIS cost 
report information.
    This final rule with comment period is also necessary to make 
updates to the ASC payment rates for CY 2025, enabling CMS to make 
changes to payment policies and payment rates for covered surgical 
procedures and covered ancillary services that are performed in ASCs in 
CY 2025. Because ASC payment rates are based on the OPPS relative 
payment weights for most of the procedures performed in ASCs, the ASC 
payment rates are updated annually to reflect annual changes to the 
OPPS relative payment weights. In addition, we are required under 
section 1833(i)(1) of the Act to review and update the list of surgical 
procedures that can be performed in an ASC, not less frequently than 
every 2 years.
    In the CY 2019 OPPS/ASC final rule with comment period (83 FR 59075 
through 59079), we finalized a policy to update the ASC payment system 
rates using the hospital market basket update instead of the CPI-U for 
CY 2019 through 2023. In the CY 2024 OPPS/ASC final rule, we finalized 
a policy to extend the 5-year interim period by an additional 2 years, 
through CY 2024 and CY 2025, to enable us to more accurately analyze 
whether the application of the hospital market basket update to the ASC 
payment system resulted in a migration of services from the hospital 
setting to the ASC setting (88 FR 81960).
    This final rule is also necessary to create three additional 
exceptions to the four walls requirement under the Medicaid clinic 
services benefit at 42 CFR 440.90. Specifically, we are finalizing our 
proposal to add a mandatory four walls exception for IHS/Tribal clinics 
at 42 CFR 440.90(c) and optional exceptions for behavioral health 
clinics and clinics located in rural areas at 42 CFR 440.90(d) and (e). 
As discussed in section XVIII.A of this final rule, our current 
regulation at 42 CFR 440.90(b) allows for an exception to the four 
walls requirement only for certain clinic services furnished to 
individuals who are unhoused.
    This final rule is also necessary to codify the requirements of the 
CAA, 2023 for States to provide 12 months of continuous eligibility to 
children under the age of 19 in Medicaid and CHIP, with limited 
exceptions. Specifically, we are finalizing our proposal to remove the 
option to provide continuous eligibility to a subgroup of Medicaid and 
CHIP enrollees and for a time period of less than 12 months. For CHIP, 
we are finalizing removal of the option to disenroll children from CHIP 
during a continuous eligibility period for failure to pay premiums.
    This final rule is necessary to make policy changes under the OPPS 
or ASC payment system for hospital outpatient

[[Page 94549]]

departments (HOPDs), rural emergency hospitals (REHs), and ASCs 
reporting data under the Hospital Outpatient Quality Reporting (OQR), 
REH Quality Reporting (REHQR), and ASC Quality Reporting (ASCQR) 
Programs, respectively. The primary objective of these quality 
reporting programs is to promote higher quality, more efficient health 
care for Medicare beneficiaries by collection and reporting on quality-
of-care metrics. This information is made available to consumers, both 
to empower Medicare beneficiaries and inform decisionmaking, as well as 
to incentivize healthcare facilities to make continued improvements.
    This final rule with comment period is also necessary to improve 
the quality of obstetrical services in hospitals and Critical Access 
Hospitals (CAHs). The United States has the highest maternal mortality 
rate among OECD countries.\763\ This mortality rate has increased 
sharply in recent years rising from 17.4 deaths per 100 thousand live 
births in 2018, to 32.9 deaths per 100 thousand live births in 
2021,\764\ with most of the increased deaths in 2020 and 2021 being 
Covid-19 related deaths.\765\ The causes of pregnancy-related deaths 
has shifted in recent years with a decline in traditional causes, such 
as hemorrhage, hypertensive disorders of pregnancy, and 
thromboembolism, and an increase in cardiovascular problems and other 
medical conditions.766 767 Nearly a third of all pregnancy-
related deaths occur between the day of delivery and the 6 days that 
follow, with another 20 percent of deaths occurring 7 to 42 days 
postpartum.\768\
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    \763\ Tikkanen, R., et al., Maternal Mortality and Maternity 
Care in the United States Compared to 10 Other Developed Countries. 
2020, Commonwealth Fund.
    \764\ Hoyert, D.L., Maternal Mortality Rates in the United 
States, 2021. 2023, NCHS Health E-Stats.
    \765\ United States Government Accountability Office, MATERNAL 
HEALTH: Outcomes Worsened and Disparities Persisted During the 
Pandemic. 2022.
    \766\ Creanga, A.A., et al., Pregnancy-Related Mortality in the 
United States, 2011-2013. Obstetrics & Gynecology, 2017. 130(2): 
366-373.
    \767\ Wang, S., et al., Maternal Mortality in the United States: 
Trends and Opportunities for Prevention. Annual Review of Medicine, 
2023. 74(1): 199-216.
    \768\ Peterson, E.E., et al., Vital Signs: Pregnancy-Related 
Deaths, United States, 2011-2015, and Strategies for Prevention, 13 
States, 2013-2017. Morbidity and Mortality Weekly Report, 2019. 
68(18): 423-429.
---------------------------------------------------------------------------

    Within the United States, there are widespread differences in 
maternal mortality rates based on age, race, and geographical location. 
According to the National Center for Health Statistics, the maternal 
mortality rates for women in the United States over 40 years of age in 
2021 was nearly 8 times greater than for women under 25 years of age, 
with mortality rates for non-Hispanic black women over 40 years of age 
more than 21 times higher than the rate for Hispanic women under 25 
years of age.\769\ Similarly, pregnancy-related mortality rates are 
higher in rural areas vis-[agrave]-vis urban areas.\770\ Beyond deaths, 
maternal morbidity, defined as ``any health condition attributed to 
and/or aggravated by pregnancy and childbirth that has a negative 
impact on the woman's wellbeing,'' \771\ remains a common occurrence, 
with rates also varying by age and race.772 773
---------------------------------------------------------------------------

    \769\ Hoyert, D.L., Maternal Mortality Rates in the United 
States, 2021. 2023, NCHS Health E-Stats.
    \770\ Merkt, P.T., et al., Urban-rural differences in pregnancy-
related deaths, United States, 2011-2016. American Journal of 
Obstetrics and Gynecology, 2021. 225(2): 183.e1-183.e16.
    \771\ Firoz, T., et al., Measuring maternal health: focus on 
maternal morbidity. Bull World Health Organ, 2013. 91(10): 794-796.
    \772\ Liese, K.L., et al., Racial and Ethnic Disparities in 
Severe Maternal Morbidity in the United States. Journal of Racial 
and Ethnic Health Disparities, 2019. 6(4): p. 790-798.
    \773\ Leonard, S.A., et al., Racial and ethnic disparities in 
severe maternal morbidity prevalence and trends. Annals of 
Epidemiology, 2019. 33: 30-36.
---------------------------------------------------------------------------

    Pregnancy-related mortality and morbidity have large health and 
economic costs. One study estimates that between 2018 and 2020, 
pregnancy-related mortalities lead to nearly 114,000 years of potential 
life lost (YPLL) and cost more than $27.4 billion based on the value of 
statistical life (VSL).\774\ Another study finds that severe maternal 
morbidity, as measured by 21 ICD-10 codes that the Centers for Disease 
Control and Prevention (CDC) identified, is associated with a 75 
percent increase in costs for Medicaid patients and a more than 
doubling in costs for commercially insured patients during the prenatal 
to 30 days post-partum period.\775\ Focusing specifically on nine 
maternal morbidities among the 2019 US birth cohort from birth to 5-
years postpartum, researchers estimated they had a cost of $32.3 
billion for birthing parents and their children, with $18.7 billion due 
to medical costs and $13.6 billion from non-medical costs.\776\
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    \774\ White Robert, S., et al., Economic burden of maternal 
mortality in the USA, 2018-2020. Journal of Comparative 
Effectiveness Research, 2022. 11(13): 927-933.
    \775\ Black, C.M., et al., Costs of Severe Maternal Morbidity in 
U.S. Commercially Insured and Medicaid Populations: An Updated 
Analysis. Women's Health Reports, 2021. 2(1): 443-451.
    \776\ O'Neil, S.S., et al., Societal cost of nine selected 
maternal morbidities in the United States. PLOS ONE, 2022. 17(10): 
e0275656.
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    Although the studies vary in their methodology, time period pre-
post birth analyzed, medical conditions analyzed, and cost estimates, 
they overall suggest that maternal morbidity and mortality impose a 
high health, safety, and economic cost on birth parents, children, and 
society.\777\ Given these costs, we are implementing conditions of 
participation (COPs) that are designed to help reduce maternal 
mortality and morbidity.
---------------------------------------------------------------------------

    \777\ Moran, P.S., et al., Economic burden of maternal 
morbidity--A systematic review of cost-of-illness studies. PLOS ONE, 
2020. 15(1): e0227377.
---------------------------------------------------------------------------

    We are finalizing requirements that hospital and CAH OB patient 
care units be supervised by an individual with the necessary education 
and training and have equipment at the hospital and CAH and readily 
available for treating obstetrical cases to meet the needs of patients. 
Facilities offering obstetrical services must also have adequate 
provisions that include equipment, supplies and medication used in 
treating emergency cases for obstetrical emergencies, complications, 
immediate post-delivery care, and other patient health and safety 
events as identified as part of the QAPI program. We also are 
finalizing requirements that staff involved with OB services be trained 
on key topics related to improving the delivery of maternal care. 
Hospitals and CAHs will also be required to utilize data from their 
QAPI program to implement one quality improvement project to address 
disparities in maternal care and to integrate information from MMRCs 
into their QAPI program. We are also finalizing requirements that 
hospitals and CAHs train their staff on emergency procedures for all 
patients and that hospitals have provisions including equipment, 
supplies, and medication used in treating emergency cases. Finally, we 
are finalizing the requirement that relevant acute care hospital staff 
receive annual training on proper transfer protocols.

B. Overall Impact of Provisions of This Final Rule With Comment Period

    We have examined the impacts of this rule, as required by Executive 
Order 12866, as amended, on Regulatory Planning and Review (September 
30, 1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), Executive Order 14094, titled ``Modernizing 
Regulatory Review'' (April 6, 2023), 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 (March 22, 1995, Pub. L. 104-4), Executive

[[Page 94550]]

Order 13132 on Federalism (August 4, 1999), and the Congressional 
Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866, as amended, 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 14094 amends section 3(f) of Executive Order 12866. The 
amended section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) having an annual effect on the economy of $200 million or more in 
any 1 year (adjusted every 3 years by the Administrator of OMB's Office 
of Information and Regulatory Affairs (OIRA) for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) ($200 million or more in any 1 year). Based on our 
estimates, OIRA has determined this rulemaking is significant per 
section 3(f)(1) as measured by an effect on the economy of $200 million 
or more in any 1 year. Pursuant to Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act), OIRA has also determined that this rule 
meets the criteria set forth in 5 U.S.C. 804(2). Accordingly, we have 
prepared an RIA that to the best of our ability presents the costs and 
benefits of the rulemaking. Therefore, OMB has reviewed this final rule 
with comment period, and the Departments have provided the following 
assessment of their impact.
    We estimate that the total increase in Federal Government 
expenditures under the OPPS for CY 2025, compared to CY 2024, due to 
the changes to the OPPS in this final rule with comment period, will be 
approximately $1.98 billion. Taking into account our estimated changes 
in enrollment, utilization, and case-mix for CY 2025 we estimate that 
the OPPS expenditures, including beneficiary cost-sharing, for CY 2025 
would be approximately $87.7 billion, which is approximately $4.7 
billion higher than estimated OPPS expenditures in CY 2024. Table 201 
of this final rule with comment period displays the distributional 
impact of the CY 2025 changes in OPPS payment to various groups of 
hospitals and for CMHCs.
    We note that under our final CY 2025 policy, drugs and biologicals 
are generally paid at ASP plus 6 percent, WAC plus 6 percent, or 95 
percent of AWP, as applicable.
    We estimate that the final update to the conversion factor will 
increase total OPPS payments by 2.9 percent in CY 2025. The final 
changes to the APC relative payment weights, the final changes to the 
wage indexes, the final continuation of a payment adjustment for rural 
SCHs, including EACHs, and the final payment adjustment for cancer 
hospitals would not increase total OPPS payments because these changes 
to the OPPS are budget neutral. However, these updates would change the 
distribution of payments within the budget neutral system. We estimate 
that the total change in payments between CY 2024 and CY 2025, 
considering all budget-neutral payment adjustments, changes in 
estimated total outlier payments, the application of the frontier State 
wage adjustment, in addition to the application of the 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 will increase 
total estimated OPPS payments by 3.0 percent.
    We estimate the total increase (from changes to the ASC provisions 
in this final rule with comment period, as well as from enrollment, 
utilization, and case-mix changes) in Medicare expenditures (not 
including beneficiary cost-sharing) under the ASC payment system for CY 
2025 compared to CY 2024, to be approximately $240 million. Tables 202 
and 203 of this final rule with comment period display the 
redistributive impact of the CY 2025 changes regarding ASC payments, 
grouped by specialty area and then grouped by procedures with the 
greatest ASC expenditures, respectively.
    We estimate that finalizing three additional exceptions to the 
Medicaid clinic services benefit four walls requirement for IHS/Tribal 
clinics, behavioral health clinics, and clinics located in rural areas 
would cause total Medicaid transfers to increase by $1.18 billion for 
fiscal years 2025 through 2029. This includes a Federal impact of $1.15 
billion and State impact of $30 million.
    For the OB services provisions of this final rule with comment 
period, in Tables 231 and 232, we provide the total estimated cost and 
hourly burden of these finalized requirements both annually and over 10 
years, excluding collection of information costs that we have already 
estimated above. Overall, we estimate that these finalized requirements 
will cost an average of approximately $410 million and take $2.24 
million hours to complete. Over 10 years, we estimate that the total 
cost will be approximately $4.10 billion and take $22.4 million hours 
to complete. Below, we provide the cost estimates for each of the 
finalized requirements.

C. Detailed Economic Analyses

1. Estimated Effects of OPPS Changes in This Final Rule With Comment 
Period
a. Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the final CY 2025 policy changes on various hospital groups. We post 
our hospital-specific estimated payments for CY 2025 on the CMS website 
with the other supporting documentation for this final rule with 
comment period. To view the hospital-specific estimates, we refer 
readers to the CMS website at: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient. On the website, select 
``Regulations and Notices'' from the left side of the page and then 
select ``CMS-1809-FC'' 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 final rule with 
comment period. We show hospital-specific data only for hospitals whose 
claims were used for modeling the impacts shown in Table 201 of this 
final rule with comment period. 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 final rule with comment period for a 
discussion of the hospitals whose claims we do not use for ratesetting 
or impact purposes.
    We estimate the effects of the 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 policy changes in order to isolate

[[Page 94551]]

the effects associated with specific policies or updates, but any 
policy that changes payment could have a behavioral response. In 
addition, we have not made any adjustments for future changes in 
variables, such as service volume, service-mix, or number of 
encounters.
b. Estimated Effects of OPPS Changes on Hospitals
    Table 201 shows the estimated impact of the proposed rule on 
hospitals. Historically, the first line of the impact table, which 
estimates the change in payments to all facilities, has always included 
cancer and children's hospitals, which are held harmless to their pre-
Balanced Budget Act (BBA) amount. We also include CMHCs in the first 
line that includes all providers. We include a second line for all 
hospitals, excluding permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 201, and we discuss 
them separately below, because CMHCs have historically been paid only 
for partial hospitalization services under the OPPS and are a different 
provider type from hospitals. In the CY 2024 OPPS/ASC final rule with 
comment period (88 FR 81833), we finalized paying CMHCs for partial 
hospitalization services and intensive outpatient services under APCs 
5851 through 5854. For CY 2025, we are maintaining the same APC 
structure and updating each APC payment rate to reflect the most recent 
available cost data.
    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 final rule with 
comment period.
    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 final 
IPPS market basket percentage increase applicable to the OPD fee 
schedule for CY 2025 is 3.4 percent. Section 1833(t)(3)(F)(i) of the 
Act reduces that 3.4 percent by the productivity adjustment described 
in section 1886(b)(3)(B)(xi)(II) of the Act, which is 0.5 percentage 
point for CY 2025 (which is also the productivity adjustment for FY 
2025 in the FY 2025 IPPS/LTCH PPS final rule (89 FR 69344)) resulting 
in the final CY 2025 OPD fee schedule increase factor of 2.9 percent. 
We are using the OPD fee schedule increase factor of 2.9 percent in the 
calculation of the final CY 2025 OPPS conversion factor. Section 10324 
of the Affordable Care Act, as amended by HCERA, further authorized 
additional expenditures outside budget neutrality for hospitals in 
certain frontier States that have a wage index less than 1.0000. The 
amounts attributable to this frontier State wage index adjustment are 
incorporated in the estimates in Table 201 of this final rule with 
comment period.
    To illustrate the impact of the CY 2025 changes, our analysis 
begins with a baseline simulation model that uses the CY 2024 relative 
payment weights, the FY 2024 final IPPS wage indexes that include 
reclassifications, and the final CY 2024 conversion factor. Table 201 
shows the estimated redistribution of the increase or decrease in 
payments for CY 2025 over CY 2024 payments to hospitals and CMHCs as a 
result of the following factors: the impact of the APC reconfiguration 
and recalibration changes between CY 2024 and CY 2025 (Column 2); the 
wage indexes and the provider adjustments (Column 3); the combined 
impact of all of the changes described in the preceding columns plus 
the 2.9 percent OPD fee schedule increase factor update to the 
conversion factor (Column 4); the estimated impact taking into account 
all payments for CY 2025 relative to all payments for CY 2024, 
including the impact of changes in estimated outlier payments and 
changes to the pass-through payment estimate (Column 5).
    We did not model an explicit budget neutrality adjustment for the 
rural adjustment for SCHs because we are maintaining the current 
adjustment percentage for CY 2025. Because the final 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 2025 are 
applied uniformly across services, observed redistributions of payments 
in the impact table for hospitals largely depend on the mix of services 
furnished by a hospital (for example, how the APCs for the hospital's 
most frequently furnished services would change), and the impact of the 
wage index changes on the hospital. However, total payments made under 
this system and the extent to which this final rule would redistribute 
money during implementation also will depend on changes in volume, 
practice patterns, and the mix of services billed between CY 2024 and 
CY 2025 by various groups of hospitals, which CMS cannot forecast.
    Overall, we estimate that the final rates for CY 2025 will increase 
Medicare OPPS payments by an estimated 3.0 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 3.2 percent increase in 
Medicare payments to all other hospitals. These estimated payments will 
not significantly impact other providers.
Column 1: Total Number of Hospitals
    The first line in Column 1 in Table 201 shows the total number of 
facilities (3,562), including designated cancer and children's 
hospitals and CMHCs, for which we were able to use CY 2023 hospital 
outpatient and CMHC claims data to model CY 2024 and CY 2025 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 2024 or CY 2025 payment and entities that are not paid 
under the OPPS. The latter entities include CAHs, IHS and tribal 
hospitals, and hospitals located in Guam, the U.S. Virgin Islands, 
Northern Mariana Islands, American Samoa, and the State of Maryland. 
This process is discussed in greater detail in section II.A of this 
final rule with comment period. At this time, we are unable to 
calculate a DSH variable for hospitals that are not also paid under the 
IPPS because DSH payments are only made to hospitals paid under the 
IPPS. Hospitals for which we do not have a DSH variable are grouped 
separately and generally include freestanding psychiatric hospitals, 
rehabilitation hospitals, and long-term care hospitals. We show the 
total number of OPPS hospitals (3,460), excluding the hold harmless 
cancer and children's hospitals and CMHCs, on the second line of the 
table. We excluded cancer and children's hospitals because section 
1833(t)(7)(D) of the Act permanently holds harmless cancer hospitals 
and children's hospitals to their ``pre-BBA amount'' as specified under 
the terms of the statute, and therefore, we removed them from our 
impact analyses. We show the isolated impact on the 35 CMHCs at the 
bottom of the impact table (Table 201) and discuss that impact 
separately below.

[[Page 94552]]

Column 2: APC Recalibration--All 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 0.1 
increase, with the impact ranging from a decrease of 0.1 percent to an 
increase of 0.4, depending on the number of beds. Rural hospitals will 
experience an estimated decrease of 0.4 overall. Major teaching 
hospitals will experience an estimated decrease of 0.1 percent.
Column 3: Wage Indexes and the Effect of the Provider Adjustments
    Column 3 demonstrates the combined budget neutral impact of the APC 
recalibration, the updates for the wage indexes with the FY 2025 IPPS 
post-reclassification wage indexes including the low wage index 
hospital policy, the rural adjustment, the frontier adjustment, and the 
cancer hospital payment adjustment. We modeled the independent effect 
of the budget neutrality adjustments and the OPD fee schedule increase 
factor by using the relative payment weights and wage indexes for each 
year and using a CY 2024 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 updated wage 
indexes, including the application of budget neutrality for the rural 
floor policy on a nationwide basis, as well as the final CY 2025 
changes in wage index policy, discussed in section II.C of this final 
rule with comment period. We note that the final CY 2025 OPPS wage 
index includes the low wage index hospital policy, as proposed. We did 
not model a budget neutrality adjustment for the rural adjustment for 
SCHs because we proposed to continue the rural payment adjustment of 
7.1 percent to rural SCHs for CY 2025, as described in section II.E of 
this final rule with comment period. We modeled a budget neutrality 
adjustment for the final cancer hospital payment adjustment because the 
proposed payment-to-cost ratio target for the cancer hospital payment 
adjustment in CY 2025 is 0.87, which is different from the 0.88 PCR 
target adopted in the CY 2024 OPPS/ASC final rule with comment period 
(88 FR 81589). We note that, in accordance with section 16002 of the 
21st Century Cures Act, we are applying a budget neutrality factor 
calculated as if the cancer hospital adjustment target payment-to-cost 
ratio was 0.88, not the 0.87 target payment-to-cost ratio we are 
finalizing in section II.F of this final rule with comment period.
    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 CY 2025 
scaled weights and a CY 2024 conversion factor that included a budget 
neutrality adjustment for the effect of the changes to the wage indexes 
between CY 2024 and CY 2025.
Column 4: All Budget Neutrality Changes Combined With the Market Basket 
Update
    Column 4 demonstrates the combined impact of all the final changes 
previously described and the update to the conversion factor of 2.9 
percent. Overall, these changes would increase payments to urban 
hospitals by 3.2 percent and to rural hospitals by 3.3 percent. Rural 
sole community hospitals would receive an estimated increase of 3.3 
percent while other rural hospitals would receive an estimated increase 
of 3.5 percent.
Column 5: All Changes for CY 2025
    Column 5 depicts the full impact of the final CY 2025 policies on 
each hospital group by including the effect of all changes for CY 2025 
and comparing them to all estimated payments in CY 2024. Column 5 shows 
the combined budget neutral effects of Columns 2 and 3; the OPD fee 
schedule increase; the impact of estimated OPPS outlier payments, as 
discussed in section II.G of final rule with comment period; the 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 XIV of this final rule with comment 
period); and other rule adjustments to the CY 2025 OPPS payments.
    Of those hospitals that failed to meet the Hospital OQR Program 
reporting requirements for the full CY 2024 update (and assumed, for 
modeling purposes, to be the same number for CY 2025), we included 98 
hospitals in our model because they had both CY 2023 claims data and 
recent cost report data. We estimate that the cumulative effect of all 
changes for CY 2025 would increase payments to all facilities by 3.0 
percent for CY 2024. We modeled the independent effect of all changes 
in Column 5 using the final relative payment weights for CY 2024 and 
the proposed relative payment weights for CY 2025. We used the final 
conversion factor for CY 2024 of $87.382 and the final CY 2025 
conversion factor of $89.169 discussed in section II.B of this final 
rule with comment period.
    Column 5 contains simulated outlier payments for each year. We used 
the 1-year charge inflation factor used in the FY 2025 IPPS/LTCH PPS 
final rule (89 FR 69660) of 4.1 percent (1.04118) to increase charges 
on the CY 2023 claims, and we used the overall CCR in the July 2024 
Outpatient Provider-Specific File (OPSF) to estimate outlier payments 
for CY 2024. Using the CY 2023 claims and a 4.1 percent charge 
inflation factor, we currently estimate that outlier payments for CY 
2024, using a multiple threshold of 1.75 and a fixed-dollar threshold 
of $7,750, would be approximately 0.83 percent of total payments. The 
estimated current outlier payments of 0.83 percent are incorporated in 
the comparison in Column 5. We used the same set of claims and a charge 
inflation factor of 8.5 percent (1.08406) and the CCRs in the July 2024 
OPSF, with an adjustment of 1.015192 (89 FR 69960), to reflect relative 
changes in cost and charge inflation between CY 2023 and CY 2025, to 
model the proposed CY 2025 outliers at 1.0 percent of estimated total 
payments using a multiple threshold of 1.75 and a fixed dollar 
threshold of $7,175. The charge inflation and CCR inflation factors are 
discussed in detail in the FY 2025 IPPS/LTCH PPS final rule (89 FR 
69955 through 69960).
    Overall, we estimate that facilities will experience an increase of 
3.0 percent under this final rule in CY 2025 relative to total spending 
in CY 2024. This projected increase (shown in Column 5) of Table 201 of 
this final rule reflects the final 2.9 percent OPD fee schedule 
increase factor, adding the 0.17 difference in estimated outlier 
payments between CY 2024 (0.83 percent) and CY 2025 (1.0 percent), 
minus 0.10 percent for the change in the pass-through payment estimate 
between CY 2024 and CY 2025. We estimate that the combined effect of 
all changes for CY 2025 would increase payments to urban hospitals by 
3.2 percent. Overall, we estimate that rural hospitals would experience 
a 3.2 percent increase as a result of the combined effects of all the 
changes for CY 2025.
    Among hospitals, by teaching status, we estimate that the impacts 
resulting from the combined effects of all changes include an increase 
of 2.7 percent for major teaching hospitals and an increase of 3.3 
percent for nonteaching hospitals. Minor teaching hospitals will

[[Page 94553]]

experience an estimated increase of 3.5 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
will experience an increase of 3.1 percent, proprietary hospitals will 
experience an increase of 4.9 percent, and governmental hospitals will 
experience an increase of 2.6 percent.
c. Estimated Effects of OPPS Changes on CMHCs
    The last line of Table 201 demonstrates the isolated impact on 
CMHCs, which historically have only furnished partial hospitalization 
services under the OPPS. As discussed in section VIII.C of this final 
rule with comment period, we are finalizing the proposal for CY 2025 to 
continue paying CMHCs using APCs 5851 through 5854. We modeled the 
impact of this APC policy, assuming CMHCs will continue to provide the 
same PHP care as seen in the CY 2023 claims used for ratesetting in the 
proposed rule. We note that the CY 2023 claims used for the CY 2025 
final rule do not include any provision of IOP services. We did not 
exclude days with one or two services from our modeling for CY 2025, 
because our final rule policy would pay the per diem rate for APC 5853 
for such days beginning in CY 2025. As a result of the final PHP APC 
changes for CMHCs, we estimate that CMHCs would experience a 11.9 
percent increase in CY 2025 payments relative to their CY 2024 payments 
(shown in Column 5). For a detailed discussion of our final PHP 
policies, please see section VIII of this final rule with comment 
period.
    Column 3 shows the estimated impact of adopting the final FY 2025 
wage index values, which result in an estimated change of 0.0 percent 
to CMHCs. Column 4 shows that combining the OPD fee schedule increase 
factor, along with the proposed changes in APC policy for CY 2025 and 
the proposed FY 2025 wage index updates, will result in an estimated 
increase of 11.9 percent.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TR27NO24.260

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[GRAPHIC] [TIFF OMITTED] TR27NO24.261

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[GRAPHIC] [TIFF OMITTED] TR27NO24.262

BILLING CODE 4120-01-C
d. Estimated Effect of OPPS Changes on Beneficiaries
    For services for which the beneficiary pays a copayment of 20 
percent of the payment rate, the beneficiary's payment would increase 
for services for which the OPPS payments would rise and decrease for 
services for which the OPPS payments would fall. For further discussion 
of the calculation of the national unadjusted copayments and minimum 
unadjusted copayments, we refer readers to section II.H of this final 
rule with comment period. In all cases, section 1833(t)(8)(C)(i) of the 
Act limits beneficiary liability for copayment for a procedure 
performed in a year to the hospital inpatient deductible for the 
applicable year.
    We estimate that the aggregate beneficiary coinsurance percentage 
would be approximately 18.0 percent for all services paid under the 
OPPS in CY 2025. The estimated aggregate beneficiary coinsurance 
reflects general system adjustments, including the final CY 2025 
comprehensive APC payment policy discussed in section II.A.2.b of this 
final rule with comment period. We note that the individual payments, 
and therefore copayments, associated with services may differ based on 
the setting in which they are furnished. However, at the aggregate 
system level, we do not currently observe significant impact on 
beneficiary coinsurance as a result of those policies.
e. Estimated Effects of 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 XIII 
of this final rule with comment period. Hospitals, CMHCs, and ASCs 
would be affected by the changes in this final rule. Additionally, the 
payment policies we established for IOP services affect RHCs and FQHCs. 
These providers of IOP are not paid under the OPPS and are not included 
in the impact analysis shown in Table 201. However, the final payment 
amount for OPPS APC 5861 would affect payments to RHCs and FQHCs since 
under sections 1834(o)(5)(A) and 1834(y)(3)(A) of the Act payment for 
IOP services in these settings is required to be equal to the payment 
determined for IOP services in the hospital outpatient department.
f. Estimated Effects of OPPS Changes on the Medicare and Medicaid 
Programs
    The effect of the update on the Medicare program is expected to be 
an increase of $1.98 billion in program payments for OPPS services 
furnished in CY 2025. The effect on the Medicaid program is expected to 
be limited to copayments that Medicaid may make on behalf of Medicaid 
recipients who are also Medicare beneficiaries. We estimate that the 
changes in this final rule with comment period will increase these 
Medicaid beneficiary payments by approximately $165 million in CY 2025. 
Currently, there are approximately 11.5 million dual-eligible 
beneficiaries, which represent approximately 40 percent of Medicare 
Part B fee-for-service beneficiaries. The impact on Medicaid was 
determined by taking 40 percent of the beneficiary cost-sharing impact. 
The national average split of Medicaid payments is 58 percent Federal 
payments and 42 percent State payments. Therefore, for the estimated 
$165 million Medicaid increase, approximately $95 million will be from 
the Federal Government and $70 million will be from State governments.
g. Alternative OPPS Policies Considered
    Alternatives to the OPPS changes we proposed and the reasons for 
our selected alternatives are discussed throughout this final rule with 
comment period.
h. Add-On Payment for High-Cost Drugs to the Indian Health Service 
(IHS) All-Inclusive Rate (AIR)
    For CY 2025, we proposed to pay Indian Health Service (IHS) and 
tribal hospitals separately for high-cost drugs (Part B drugs with 
daily costs over $1,334) furnished in hospital outpatient departments 
through an add-on payment, in addition to the All-Inclusive Rate (AIR), 
using the IHS authority \778\ under which the annual AIR is calculated. 
This policy is projected to increase Medicare program expenditures by 
approximately $30

[[Page 94557]]

million in CY 2025. We refer readers to section X.C of this final rule 
with comment period for further discussion of this policy.
---------------------------------------------------------------------------

    \778\ Sections 321(a) and 322(b) of the Public Health Service 
Act (42 U.S.C. 248), Public Law 83-568 (42 U.S.C. 2001(a)), and the 
Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.).
---------------------------------------------------------------------------

2. Estimated Effects of CY 2025 ASC Payment System Changes
    Most ASC payment rates are calculated by multiplying the ASC 
conversion factor by the ASC relative payment weight. As discussed 
fully in section XIII of this final rule with comment period, we are 
setting the CY 2025 ASC relative payment weights by scaling the final 
CY 2025 OPPS relative payment weights by the finalized CY 2025 ASC 
scalar of 0.872. The estimated effects of the updated relative payment 
weights on payment rates are varied and are reflected in the estimated 
payments displayed in Tables 202 and 203.
    Beginning in CY 2011, section 3401 of the Affordable Care Act 
requires that the annual update to the ASC payment system after 
application of any quality reporting reduction be reduced by a 
productivity adjustment. In CY 2019, we adopted a policy for the annual 
update to the ASC payment system to be the hospital market basket 
update for CY 2019 through CY 2023. In the CY 2024 OPPS/ASC final rule 
with comment period, we extended this 5-year interim period an 
additional 2 years through CYs 2024 and 2025. Section 
1886(b)(3)(B)(xi)(II) of the 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 (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 2025 
payment determinations would be based on the application of a 2.0 
percentage point reduction to the annual update factor, which is the 
hospital market basket update for CY 2025. We calculated the finalized 
CY 2025 ASC conversion factor by adjusting the CY 2024 ASC conversion 
factor by 0.9969 to account for changes in the pre-floor and pre-
reclassified hospital wage indexes between CY 2024 and CY 2025, which 
includes our final policy to limit wage index declines of greater than 
5 percent, and by applying the CY 2025 productivity-adjusted hospital 
market basket update factor of 2.9 percent (which is equal to the final 
inpatient hospital market basket percentage increase of 3.4 percent 
reduced by a productivity adjustment of 0.5 percentage point). The 
final CY 2025 ASC conversion factor is $54.895 for ASCs that 
successfully meet the quality reporting requirements.
a. Limitations of Our Analysis
    Presented here are the projected effects of the final changes for 
CY 2025 on Medicare payment to ASCs. A key limitation of our analysis 
is our inability to predict changes in ASC service-mix between CY 2023 
and CY 2025 with precision. We believe the net effect on Medicare 
expenditures resulting from the final CY 2025 changes would be small in 
the aggregate for all ASCs. However, such changes may have differential 
effects across surgical specialty groups, as ASCs continue to adjust to 
the payment rates based on the policies of the revised ASC payment 
system. We are unable to accurately project such changes at a 
disaggregated level. Clearly, individual ASCs would experience changes 
in payment that differ from the aggregated estimated impacts presented 
below.
b. Estimated Effects of ASC Payment System Policies on ASCs
    Some ASCs are multispecialty facilities that perform a wide range 
of surgical procedures from excision of lesions to hernia repair to 
cataract extraction; others focus on a single specialty and perform 
only a limited range of surgical procedures, such as eye, digestive 
system, or orthopedic procedures. The combined effect of the final 
update to the CY 2025 payments on an individual ASC would depend on a 
number of factors, including, but not limited to, the mix of services 
the ASC provides, the volume of specific services provided by the ASC, 
the percentage of its patients who are Medicare beneficiaries, and the 
extent to which an ASC provides different services in the coming year. 
The following discussion includes tables that display estimates of the 
impact of the final CY 2025 updates to the ASC payment system on 
Medicare payments to ASCs, assuming the same mix of services, as 
reflected in our CY 2023 claims data. Table 202 depicts the estimated 
aggregate percent change in payment by surgical specialty or ancillary 
items and services group by comparing estimated CY 2024 payments to 
estimated CY 2025 payments, and Table 203 shows a comparison of 
estimated CY 2024 payments to estimated CY 2025 payments for procedures 
that we estimate would receive the most Medicare payment in CY 2024.
    In Table 202, 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 202.
     Column 1--Surgical Specialty or Ancillary Items and 
Services Group indicates the surgical specialty into which ASC 
procedures are grouped and the ancillary items and services group, 
which includes all HCPCS codes for covered ancillary items and 
services. To group surgical procedures by surgical specialty, we used 
the CPT code range definitions and Level II HCPCS codes and Category 
III CPT codes, as appropriate, to account for all surgical procedures 
to which the Medicare program payments are attributed.
     Column 2--Estimated CY 2024 ASC Payments were calculated 
using CY 2023 ASC utilization data (the most recent full year of ASC 
utilization) and CY 2024 ASC payment rates. The surgical specialty 
groups are displayed in descending order based on estimated CY 2024 ASC 
payments.
     Column 3--Estimated CY 2025 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 is attributable to final updates to ASC payment rates for CY 
2025 compared to CY 2024.
    As shown in Table 202, for the six specialty groups that account 
for the most ASC utilization and spending, we estimate that the final 
update to ASC payment rates for CY 2025 will result in a 3 percent 
increase in aggregate payment amounts for eye and ocular adnexa 
procedures, a 3 percent increase in aggregate payment amounts for 
musculoskeletal system procedures, a 3 percent increase in aggregate 
payment amounts for nervous system procedures, a 5 percent increase in 
aggregate payment amounts for digestive system procedures, a 3 percent 
increase in aggregate payment amounts for cardiovascular system 
procedures, and a 3 percent increase in aggregate payment amounts for 
genitourinary system procedures. We note that these changes can be a 
result of different factors, including updated data, payment weight 
changes, and changes in policy. In general, spending in each of these 
categories of services is increasing due to the 2.9 percent payment 
rate update which is offset by roughly 0.3 percentage points as a 
result of the final CY 2025 ASC wage indexes and the final ASC wage 
index scalar of 0.9969,

[[Page 94558]]

resulting in a net 2.6 percent payment rate update. After the payment 
rate update is accounted for, aggregate payment increases or decreases 
for a category of services can be higher or lower than a 2.6 percent 
increase, depending on if payment weights in the OPPS APCs that 
correspond to the applicable services increased or decreased or if the 
most recent data show an increase or a decrease in the volume of 
services performed in an ASC for a category. For example, we estimate a 
5 percent increase in gastrointestinal procedure payments. The increase 
in payment rates for gastrointestinal procedures is a result of 
relative increase in the OPPS relative weights for the Upper GI 
Procedures clinical family. These changes are further increased by the 
2.6 percent ASC overall net payment rate increase for these procedures. 
For estimated changes for selected procedures, we refer readers to 
Table 202 provided later in this section.
[GRAPHIC] [TIFF OMITTED] TR27NO24.263

    Table 203 shows the estimated impact of the updates to the revised 
ASC payment system on aggregate ASC payments for selected surgical 
procedures during CY 2025. The table displays 30 of the procedures 
receiving the greatest estimated CY 2024 aggregate Medicare payments to 
ASCs. The HCPCS codes are sorted in descending order by estimated CY 
2024 program payment.
     Column 1-CPT/HCPCS code.
     Column 2-Short Descriptor of the HCPCS code.
     Column 3-Estimated CY 2024 ASC Payments were calculated 
using CY 2023 ASC utilization (the most recent full year of ASC 
utilization) and the CY 2024 ASC payment rates. The estimated CY 2024 
payments are expressed in millions of dollars.
     Column 4-Estimated CY 2025 Percent Change reflects the 
percent differences between the estimated ASC payment for CY 2024 and 
the estimated payment for CY 2025 based on the final update.

[[Page 94559]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.264

c. Estimated Effects of ASC Payment System Policies on Beneficiaries
    We estimate that the CY 2025 update to the ASC payment system will 
be generally positive (that is, result in lower cost-sharing) for 
beneficiaries with respect to the new procedures to be designated as 
office-based for CY 2025. 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), although the 
majority of HOPD procedures have a 20-percent copayment. Second, in 
almost all cases, the ASC payment rates under the ASC payment system 
are lower than payment rates for the same procedures under the OPPS. 
Therefore, the beneficiary coinsurance amount under the ASC payment 
system will usually be less than the OPPS copayment amount for the same 
services. (The only exceptions will be if the ASC coinsurance amount 
exceeds the hospital inpatient deductible since the statute requires 
that OPPS copayment amounts not exceed the hospital inpatient 
deductible. Therefore, in limited circumstances, the ASC coinsurance 
amount may exceed the hospital inpatient deductible and, therefore, the 
OPPS copayment amount for similar services.) Beneficiary coinsurance 
for services migrating from physicians' offices to ASCs may decrease or 
increase under the ASC payment system, depending on the particular 
service and the relative payment amounts under the MPFS compared to the 
ASC. While the ASC payment system bases most of its payment rates on 
hospital cost data used to set OPPS relative payment weights, services 
that are performed a majority of the time in a physician office are 
generally paid the lesser of the ASC amount according to the standard 
ASC ratesetting methodology or at the nonfacility practice expense-
based amount payable under the PFS. For those additional procedures 
that we are finalizing to designate as office-based in CY 2025, the 
beneficiary coinsurance amount under the ASC payment system generally 
will be no greater than the

[[Page 94560]]

beneficiary coinsurance under the PFS because the coinsurance under 
both payment systems generally is 20 percent (except for certain 
preventive services where the coinsurance is waived under both payment 
systems).
Accounting Statements and Tables for OPPS and ASC Payment System
    As required by OMB Circular A-4 (available on the Office of 
Management and Budget website at: https://www.whitehouse.gov/wp-content/uploads/2023/11/CircularA-4.pdf), we have prepared accounting 
statements to illustrate the impacts of the OPPS and ASC changes in 
this final rule with comment period. The first accounting statement, 
Table 204, illustrates the classification of expenditures for the CY 
2025 estimated hospital OPPS incurred benefit impacts associated with 
the final CY 2024 OPD fee schedule increase. The second accounting 
statement, Table 205, illustrates the classification of expenditures 
associated with the 3.1 percent CY 2025 update to the ASC payment 
system, based on the provisions of the proposed rule and the baseline 
spending estimates for ASCs. Both tables classify most estimated 
impacts as transfers. The third accounting statement, Table 206, 
contains the classification of the costs associated with the finalized 
health and safety standards for obstetrical services in hospitals and 
critical access hospitals. This includes the total cost, benefits and 
transfers as outlined in the collection of information section in Table 
200, and the regulatory impact analysis as provided in Table 231. Since 
there are no transfers and we are not able to quantify the benefits of 
these provisions, we do not include them in the table. This statement 
provides our best estimate for the finalized health and safety 
standards for obstetrical services in hospitals and critical access 
hospitals provisions. Finally, the fourth accounting statement, Table 
207, shows the impact of the Medicaid clinic services four walls 
exceptions included in this final rule. Table 207 illustrates the 
classification of expenditures associated with the addition of 
exceptions to the Medicaid clinic services four walls requirement for 
IHS/Tribal clinics, behavioral health clinics, and clinics located in 
rural areas. The table classifies the estimated impacts as transfers 
and they are discounted at a rate of 2 percent.
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[GRAPHIC] [TIFF OMITTED] TR27NO24.267

[[Page 94561]]

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3. Effects of Changes in Requirements for the Hospital Outpatient 
Quality Reporting (OQR) Program
a. Background
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 81961 through 82012) for the previously estimated effects 
of changes to the Hospital OQR Program for the CY 2026 payment 
determination and subsequent years. Of the 3,062 hospital outpatient 
departments (HOPDs) that met eligibility requirements for the CY 2024 
payment determination for the Hospital OQR Program, we determined that 
109 HOPDs did not meet the program requirements to receive the full 
annual Outpatient Department (OPD) fee schedule increase factor while 
an additional 58 HOPDs elected not to participate. In the CY 2025 OPPS/
ASC proposed rule, we erroneously stated that 117 HOPDs did not meet 
the program requirements to receive the full annual OPD fee schedule 
increase factor (89 FR 59553); we are correcting the number to 109 
HOPDs in this final rule.
b. Impact of CY 2025 OPPS/ASC Final Rule Policies
    In this final rule with comment period, we are adopting four 
measures: (1) the Hospital Commitment to Health Equity (HCHE) measure, 
beginning with the CY 2025 reporting period/CY 2027 payment 
determination; (2) the Screening for Social Drivers of Health (SDOH) 
measure, beginning with voluntary reporting for the CY 2025 reporting 
period followed by mandatory reporting beginning with the CY 2026 
reporting period/CY 2028 payment determination; (3) the Screen Positive 
Rate for SDOH measure, beginning with voluntary reporting for the CY 
2025 reporting period and mandatory reporting beginning with the CY 
2026 reporting period/CY 2028 payment determination; and (4) the 
Patient Understanding of Key Information Related to Recovery After a 
Facility-Based Outpatient Procedure or Surgery, Patient Reported 
Outcome-Based Performance Measure (Information Transfer PRO-PM), 
beginning with voluntary reporting for the CY 2026 reporting period and 
mandatory reporting beginning with the CY 2027 reporting period/CY 2029 
payment determination.
    In addition, we are removing two claims-based measures beginning 
with the CY 2025 reporting period/CY 2027 payment determination: (1) 
the MRI Lumbar Spine for Low Back Pain measure; and (2) the Cardiac 
Imaging for Preoperative Risk Assessment for Non-Cardiac, Low-Risk 
Surgery measure.
    We are further requiring electronic health record (EHR) technology 
to be certified to all electronic clinical quality measures (eCQMs) in 
the Hospital OQR Program measure set and available to report for the CY 
2025 reporting period/CY 2027 payment determination and subsequent 
years.
    We are modifying the public reporting of data for the Median Time 
from Emergency Department (ED) Arrival to ED Departure for Discharged 
ED Patients (Median Time for Discharged ED Patients)--Psychiatric/
Mental Health Patients stratification so that it may be published on 
Care Compare in addition to the data.cms.gov downloadable files 
beginning in CY 2025.
    Lastly, we are finalizing our proposal regarding our immediate 
measure suspension policy in the Hospital OQR Program such that in 
cases where we determine there is evidence that the collection and 
reporting of a measure raises potential patient safety concerns, we 
would suspend the measure from the program (as applicable) until 
potential removal can be proposed through the rulemaking process. This 
policy will not result in any additional burden or costs for hospitals 
as its impact would only be to reduce the number of measures hospitals 
are required to report, if necessary.
    We refer readers to section XXVI.B (Collection of Information) of 
this final rule with comment period for a detailed discussion of the 
calculations estimating the changes to the information collection and 
reporting burden for finalized data requirements under the Hospital OQR 
Program for the estimated 3,200 program-eligible HOPDs. A summary table 
(see Table 180) shows an estimated total information collection and 
reporting burden increase of 18,342,190 hours at a cost of $449,266,093 
annually associated with our policies for the CY 2027 reporting period/
CY 2029 payment determination and subsequent years compared to our 
currently approved information collection burden estimates.
    In section XIV.B.1 of this final rule with comment period, we are 
adopting the HCHE measure. For HOPDs For HOPDs to receive a point for 
each of the domains in the measure, affirmative attestations are 
required for each of the elements within a domain. To attest 
affirmatively to all the domains in the measure, HOPDs may incur costs 
associated with activities such as updating facility policies, engaging 
senior leadership, participating in new quality improvement activities, 
performing additional data analysis, and training staff. The extent of 
these costs will vary depending on what activities the HOPD is already 
performing, HOPD size, and the choices each HOPD makes in order to meet 
the criteria necessary to attest affirmatively.
    In section XIV.B.2 of this final rule with comment period, we are 
adopting the Screening for SDOH measure. HOPDs that are not currently 
administering some screening mechanism and elect to begin doing so as a 
result of this measure adoption will

[[Page 94562]]

likely incur some non-recurring costs associated with changes in 
workflow and information systems to collect the data. The extent of 
these costs is difficult to quantify as different HOPDs may utilize 
different modes of data collection (for example, paper-based, 
electronically patient-directed, clinician-facilitated, etc.). In 
addition, depending on the method of data collection utilized, the time 
required to complete the screening may add a negligible amount of time 
to patient visits.
    In section XIV.B.3 of this final rule with comment period, we are 
adopting the Screen Positive Rate for SDOH measure, which will not 
result in any additional economic impacts beyond those discussed for 
the associated Screening for SDOH measure or in section XXVI.B 
(Collection of Information) of this final rule with comment period.
    In section XV.C.1.b of this final rule with comment period, we are 
adopting the Patient Understanding of Key Information Related to 
Recovery After a Facility-Based Outpatient Procedure or Surgery, 
Patient Reported Outcome-Based Performance Measure (Information 
Transfer PRO-PM). For HOPDs that are not currently collecting these 
data and elect to begin doing so as a result of this measure there will 
be some costs associated with changes in workflow and information 
systems to collect the data. The extent of these costs is difficult to 
quantify as HOPDs may utilize different modes of data collection 
(collected by facilities or authorized third-party vendors post-
discharge through a web-based survey instrument, distributed 
electronically) and have differing response rates influencing data 
volume. While we assume the majority of hospitals will report data for 
this measure directly to CMS, we assume some hospitals may elect to 
submit measure data via a third-party survey vendor, for which there 
are associated costs. Under OMB control number 0938-1240 for the 
Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare 
Providers and Systems (OAS CAHPS) Survey (expiration date November 30, 
2026), an estimate of approximately $4,000 per hospital is used to 
account for these costs.
    In section XV.E.2.b of this final rule with comment period, we are 
requiring EHR technology to be certified to all eCQMs available to 
report. We do not expect HOPDs will experience an increase in 
information collection burden for the Hospital OQR Program as discussed 
in section XXVI.B (Collection of Information) of this final rule with 
comment period, because this policy does not require HOPDs to submit 
new data to CMS and the use of EHR technology that is certified to all 
available eCQMs is already required for the Medicare Promoting 
Interoperability Program (83 FR 41672) and the Hospital Inpatient 
Quality Reporting (IQR) Program (84 FR 42604). In addition, due to the 
differences in the build of respective CEHRT deployed in HOPDs, the 
mapping required to capture required data for measure calculation, and 
the range of HOPD participation in the development, implementation, and 
testing of new CEHRT functionality, an estimated cost impact of the 
policy is not quantifiable as it will vary by CEHRT and HOPD. For 
certifying a new eCQM in the measure set specifically, we expect some 
costs for HOPDs so that the eCQM is available for HOPDs to report.
    In section XV.F.2 of this final rule with comment period, we are 
finalizing to publicly report data for the Median Time for Discharged 
ED Patients--Psychiatric/Mental Health Patients stratification on Care 
Compare, which will not result in any additional economic impacts 
because we are not requiring HOPDs to collect or submit any additional 
data for purposes of this public reporting.
4. Effects of Changes in Requirements for the Rural Emergency Hospital 
Quality Reporting (REHQR) Program
a. Background
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 82149) for the previously estimated effects of changes to 
the REHQR Program for the CY 2024 reporting period and subsequent 
years. For the CY 2025 reporting period, we have estimated there will 
be 33 REHs required to report under the REHQR Program based on hospital 
conversions as of September 27, 2024. We use this number of REHs for 
our impact analyses knowing that more jurisdictions will pass or amend 
necessary legislation enabling transitions, acknowledging that the 
number of conversions could be less than or significantly greater than 
this estimate with time.
b. Impact of CY 2025 OPPS/ASC Final Rule Policies
    In this final rule with comment period, we are adopting three 
measures: (1) the Hospital Commitment to Health Equity (HCHE) measure 
beginning with the CY 2025 reporting period; (2) the Screening for 
Social Drivers of Health (SDOH) measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period; and (3) the 
Screen Positive Rate for SDOH measure beginning with voluntary 
reporting for the CY 2025 reporting period followed by mandatory 
reporting beginning with the CY 2026 reporting period. We are also 
extending the reporting period for the Risk-Standardized Hospital 
Visits Within 7 Days After Hospital Outpatient Surgery measure 
beginning with the CY 2025 reporting period.
    We refer readers to section XXVI.C (Collection of Information) of 
this final rule with comment period for a detailed discussion of the 
calculations estimating the changes to the information collection and 
reporting burden for finalized data requirements under the REHQR 
Program for the estimated 33 REHs. A summary table (see Table 182) 
demonstrates an estimated total information collection and reporting 
burden for 33 REHs of 12,996 hours at a cost of $318,827 annually 
associated with our policies for the CY 2026 reporting period/CY 2028 
program determination and subsequent years.
    In section XIV.B.1 of this final rule with comment period, we are 
adopting the HCHE measure. For REHs to receive a point for each of the 
domains in the measure, affirmative attestations are required for each 
of the statements within a domain. To attest affirmatively to all of 
the domains in the measure, REHs may incur costs associated with 
activities such as updating facility policies, engaging senior 
leadership, participating in new quality improvement activities, 
performing additional data analysis, and training staff. The extent of 
these costs will vary depending on what activities the REH is already 
performing, and the individual choices each REH makes in order to meet 
the criteria necessary to attest affirmatively.
    In section XIV.B.2 of this final rule with comment period, we are 
adopting the Screening for SDOH measure. REHs that are not currently 
administering some screening mechanism and elect to begin doing so as a 
result of this measure adoption will likely incur some costs associated 
with changes in workflow and information systems to collect the data. 
The extent of these costs is difficult to quantify as different REHs 
may utilize different modes of data collection (for example paper-
based, electronically patient-directed, clinician-facilitated, etc.). 
In addition, depending on the method of data collection utilized, the 
time required to complete the screening may add a negligible amount of 
time to patient visits.

[[Page 94563]]

    In section XIV.B.3 of this final rule with comment period, we are 
adopting the Screen Positive Rate for SDOH measure, which will not 
result in any additional economic impacts beyond those discussed for 
the associated Screening for SDOH measure or in section XXVI.C 
(Collection of Information) of this final rule with comment period.
    In section XVI.C.2 of this final rule with comment period, we are 
extending the reporting period for the Risk-Standardized Hospital 
Visits Within 7 Days After Hospital Outpatient Surgery measure from one 
to 2 years and establishing when an REH will be required to begin 
submitting data under the REHQR Program after converting to REH status, 
which will not result in any additional economic impacts because we are 
not requiring REHs to collect or submit any additional data.
5. Effects of Changes in Requirements for the Ambulatory Surgical 
Center Quality Reporting (ASCQR) Program
a. Background
    We refer readers to the CY 2024 OPPS/ASC final rule with comment 
period (88 FR 82143) for the previously estimated effects of changes to 
the ASCQR Program for the CY 2027 payment determination. In section 
XVII of this final rule with comment period, we discuss our proposals 
affecting the ASCQR Program. Based on the most recent analysis of the 
CY 2024 payment determination data, we found that, of the 5,536 
ambulatory surgical centers (ASCs) that were actively billing Medicare, 
4,196 were required to participate in the ASCQR Program. Of the 1,340 
ASCs not required to participate in the program, 279 ASCs did so and 
met full requirements. On this basis, we estimate that 4,475 ASCs 
(4,196 + 279) will submit data for the ASCQR Program for the CY 2025 
reporting period unless otherwise noted. We note that this estimate is 
a decrease of 334 ASCs from our estimate of 4,809 provided in the CY 
2024 OPPS/ASC final rule with comment period (88 FR 82143) due to 
results from more recent data analysis regarding numbers of eligible 
ASCs.
b. Impact of CY 2025 OPPS/ASC Final Rule Policies
    In section XIV.B of this final rule with comment period, we are 
adopting three measures: (1) the Facility Commitment to Health Equity 
(FCHE) measure beginning with the CY 2025 reporting period/CY 2027 
payment determination; (2) the Screening for Social Drivers of Health 
(SDOH) measure beginning with voluntary reporting for the CY 2025 
reporting period followed by mandatory reporting beginning with the CY 
2026 reporting period/CY 2028 payment determination; and (3) the Screen 
Positive Rate for SDOH measure beginning with voluntary reporting for 
the CY 2025 reporting period followed by mandatory reporting beginning 
with the CY 2026 reporting period/CY 2028 payment determination.
    In addition, we are finalizing our proposal regarding our immediate 
measure suspension policy in the Hospital OQR Program such that in 
cases where we determine there is evidence that the collection and 
reporting of a measure raises potential patient safety concerns, we 
would suspend the measure from the program (as applicable) until 
potential removal can be proposed through the rulemaking process. This 
policy will not result in any additional burden or costs for hospitals 
as its impact would only be to reduce the number of measures hospitals 
are required to report, if necessary.
    We refer readers to section XXVI.D (Collection of Information) of 
this final rule with comment period for a detailed discussion of the 
calculations estimating the changes to the information collection and 
reporting burden for finalized data requirements under the ASCQR 
Program for the estimated 4,475 program-eligible ASCs. A summary table 
(see Table 184) demonstrates an estimated total information collection 
and reporting burden increase for 4,475 ASCs of 712,971 hours at a cost 
of $17,529,790 annually associated with our policies for the CY 2026 
reporting period/CY 2028 payment determination and subsequent years, 
compared to our currently approved information collection burden 
estimates.
    In section XIV.B.1 of this final rule with comment period, we are 
adopting the FCHE measure. For ASCs to receive a point for each of the 
domains in the measure, affirmative attestations are required for each 
of the statements within a domain. To attest affirmatively to all of 
the domains in the measure, ASCs may incur costs associated with 
activities such as updating facility policies, engaging senior 
leadership, participating in new quality improvement activities, 
performing additional data analysis, and training staff. The extent of 
these costs will vary depending on what activities the ASC is already 
performing, ASC size, and the individual choices each ASC makes in 
order to meet the criteria necessary to attest affirmatively.
    In section XIV.B.2 of this final rule with comment period, we are 
adopting the Screening for SDOH measure. ASCs that are not currently 
administering some screening mechanism and elect to begin doing so as a 
result of this measure adoption will likely incur some non-recurring 
costs associated with changes in workflow and information systems to 
collect the data. The extent of these costs is difficult to quantify as 
different ASCs may utilize different modes of data collection (for 
example paper-based, electronically patient-directed, clinician-
facilitated, etc.). In addition, depending on the method of data 
collection utilized, the time required to complete the screening may 
add a negligible amount of time to patient visits.
    In section XIV.B.3 of this final rule with comment period, we are 
adopting the Screen Positive Rate for SDOH measure, which will not 
result in any additional economic impacts beyond those discussed for 
the associated Screening for SDOH measure or in section XXVI.D 
(Collection of Information) of this final rule.
6. Effects of Changes in Requirements for the Hospital Inpatient 
Quality Reporting (IQR) Program
    In section XXII of this final rule with comment period, we are 
finalizing that for the FY 2026 and FY 2027 payment determinations, the 
submission of core clinical data elements and linking variables 
associated with the Hybrid Hospital-Wide Readmission (HWR) measure and 
the Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (HWM) 
measure will remain voluntary. This policy would not result in any 
economic impacts because we are not modifying either measure.
7. Effects of Changes for Individuals Currently or Formerly in the 
Custody of Penal Authorities
a. Medicare FFS No Legal Obligation To Pay Payment Exclusion and 
Incarceration (Revisions to 42 CFR 411.4)
    The individuals currently or formerly in the custody of penal 
authorities provisions are discussed in section XXIII of this final 
rule with comment period. Section XXIII of this final rule with comment 
period describes the ``no legal obligation to pay'' payment exclusion 
codified in regulation at Sec.  411.4. Specifically, we are narrowing 
the description of custody in Sec.  411.4(b) and removing ``under 
arrest'' from the definition of ``custody'' because we no longer 
believe that certain classes of individuals should be presumed to be in 
custody for purposes of the no legal obligation to pay payment 
exclusion,

[[Page 94564]]

and we are including in regulation an illustrative list of individuals 
who are not considered to be in ``custody.'' We are also reorganizing 
and renumbering the regulation at Sec.  411.4(b), making certain non-
substantive edits to Sec.  411.4(a) to align the regulatory text with 
the statutory no legal obligation to pay payment exclusion, and 
defining ``penal authority.''
    We expect that narrowing the description of ``custody'' will reduce 
burden for individuals on bail, parole, probation, home detention or 
who are required to reside in halfway houses and those providers and 
suppliers that treat them, because it will no longer be necessary to 
rebut the presumption that such individuals do not have a legal 
obligation to pay for their own healthcare in order for Medicare to pay 
for their health care items or services. These revised policies will 
ensure that Medicare properly pays for services for individuals who are 
on bail, parole, probation, home detention or who are required to 
reside in halfway houses. We believe that these policies will have a 
negligible impact on Medicare costs, as they do not add new covered 
services or benefits; rather, the revisions merely remove a real or 
perceived barrier so that individuals on bail, parole, probation, home 
detention or who are required to reside in halfway houses can more 
easily access the Medicare benefits for which they are legally 
entitled. We received no comments on the financial impact of our 
proposals.
b. Revision to Medicare Special Enrollment Period for Formerly 
Incarcerated Individuals
    We proposed to revise the eligibility criteria for the Medicare 
special enrollment period (SEP) for formerly incarcerated individuals 
at Sec. Sec.  406.27(d)(1) and 407.23(d)(1). Specifically, for releases 
on and after January 1, 2025, we proposed to base the determination of 
when an individual is no longer incarcerated on SSA's data collected in 
its systems for determining OASDI benefit suspensions in section 
202(x)(1)(A) of the Act and any additional documentation provided by 
individuals to demonstrate that they have been released from 
incarceration. Our proposal would limit the current eligibility 
criteria for this SEP, which reference to the Medicare payment 
exclusion at Sec.  411.4(b), to releases between January 1, 2023, and 
December 31, 2024.
    The SEP for formerly incarcerated individuals at Sec. Sec.  
406.27(d)(1) (for Premium Part A) and 407.23(d)(1) (for Part B) 
starting in 2023 provides eligible individuals an opportunity to enroll 
in Medicare upon release from incarceration without waiting for the 
General Enrollment Period (GEP) and facing penalties for delayed 
enrollment. We anticipated that the proposed revisions to the SEP for 
formerly incarcerated individuals would provide clarity and make 
accessing this SEP easier upon release from incarceration, especially 
for a population facing many challenges reintegrating into society. 
However, we did not anticipate a significant impact on utilization of 
the SEP since there is no evidence that the current requirements have 
created barriers to those who want to use the SEP. As a result of this 
assumption, we expected a negligible impact on Medicare costs. We did 
not receive any comments related to this assumption.
8. Estimated Effects of Medicaid Clinic Services Four Walls Exceptions
a. Background
    As discussed in more detail in section XVIII of this final rule, we 
are finalizing our proposal to add exceptions to the four walls 
requirement under the Medicaid clinic services benefit for IHS/Tribal 
clinics, behavioral health clinics, and clinics located in rural areas. 
The exception for IHS/Tribal clinics will be mandatory for States that 
cover the clinic services benefit while the exceptions for behavioral 
health clinics and clinics located in rural areas will be at State 
option. We believe that these additional exceptions to the four walls 
requirement will help States strengthen and improve access to Medicaid 
clinic services for the populations served by IHS/Tribal clinics, 
behavioral health clinics, and clinics located in rural areas, and that 
they are responsive to the concerns we have heard from Tribes, the 
TTAG, the STAC, States, and other interested parties. In addition, we 
believe this final rule will advance health equity and improve health 
care access for the populations served by IHS/Tribal clinics, 
behavioral health clinics, and clinics located in rural areas.
b. Overall Estimated Effects of Medicaid Clinic Services Four Walls 
Exceptions
    The aggregate economic impact of this final rule is estimated to be 
$1.18 billion in transfers for fiscal years 2025-2029. This includes a 
Federal impact of $1.15 billion and impacts to States of $30 million. 
For the purposes of this analysis, we estimated the impacts separately 
for Medicaid clinic services furnished outside of the four walls for 
IHS/Tribal clinics, behavioral health clinics, and clinics located in 
rural areas. Uncertainties in the estimate result in an estimated range 
of $554 million to $1.82 billion in the Federal impact and a range of 
$7 million to $95 million in the State impact.
    Current Medicaid clinic services expenditures were estimated using 
financial reporting for 2022. Estimated expenditures for IHS/Tribal 
Medicaid clinic services represent those expenditures not attributable 
to the following Medicaid services: inpatient hospital, outpatient 
hospital, prescription drugs, FQHC, and RHCs; in 2022, these 
expenditures included expenditures for IHS/Tribal Medicaid clinic 
services provided outside of the four walls (due to the grace period 
discussed below). We assumed that 15 percent of expenditures for 
Medicaid clinic services were related to behavioral health based on 
general behavioral health utilization and spending patterns. We assumed 
that 17 percent of remaining Medicaid clinic services expenditures were 
attributable to clinics in rural areas based on 17 percent of the 
Medicaid population residing in rural areas. Estimated baseline Federal 
Medicaid expenditures for Medicaid clinic services in 2025 are $934 
million at IHS/Tribal clinics, $530 million for behavioral health 
services provided at Medicaid clinics, and $495 million for Medicaid 
clinic services provided in rural areas. The estimates for behavioral 
health services provided at Medicaid clinics and Medicaid clinic 
services provided in rural areas do not include Medicaid clinic 
services expenditures from IHS/Tribal clinics.
    It is important to note that IHS/Tribal clinic services provided 
outside of the clinic's four walls are currently being paid for by 
Medicaid programs, under a CMS ``grace period'' that currently extends 
through February 11, 2025. For a more detailed discussion on this grace 
period please see section XVIII.A of this final rule. With the 
finalization of the exception for IHS/Tribal clinics in this final 
rule, States will be permitted to pay for Medicaid clinic services 
provided outside of the four walls of an IHS/Tribal clinic after 
February 11, 2025, when the grace period ends.
    Table 208 demonstrates our estimates for the economic impact of an 
exception to the Medicaid clinic services four walls requirement for 
IHS/Tribal clinics. For the IHS/Tribal clinic exception at 42 CFR 
440.90(c), we assumed that 19 percent of current total IHS/Tribal 
clinic services expenditures were for services provided outside of 
clinics, based on information provided by the Tribes. Allowing current 
claiming practices to continue, trended for changes in expected cost, 
utilization, and enrollment each year, we estimate that

[[Page 94565]]

Federal expenditures for services provided outside of clinics will be 
$1.09 billion for fiscal years 2025 through 2029. State expenditures on 
Medicaid clinic services provided to AI/AN Medicaid beneficiaries by 
IHS/Tribal clinics are Federally matched at 100 percent. State 
expenditures on Medicaid clinic services provided to Medicaid 
beneficiaries who are not AI/AN are matched at the otherwise applicable 
Federal matching percentage, which is generally less than 100 percent. 
The estimate assumes 100 percent Federal share for all IHS/Tribal 
clinic services expenditures, but we acknowledge that a very small 
portion of these IHS/Tribal clinic services expenditures may be 
attributed to Medicaid beneficiaries who are not AI/AN, resulting in 
some State expenditures. Data from which to estimate these State 
expenditures were unavailable for this analysis. We note that this 
impact estimate only reflects or accounts for the grace period through 
February 11, 2025; the baseline for the impact estimate does not 
reflect or account for the grace period for dates after the expiration 
of the grace period. From February 12, 2025, forward, the estimate 
compares projections under current law, which does not allow States to 
pay for Medicaid clinic services provided outside of clinics against 
projections under the final rule, which would permit States to pay for 
IHS/Tribal clinic services provided outside of clinics. When the grace 
period is factored into the analysis for dates after the expiration of 
the grace period and spending under the final rule is compared to 
expenditures under current practice, which allows payment for clinic 
services provided outside of IHS/Tribal clinics due to the grace 
period, we estimate little to no impact.
[GRAPHIC] [TIFF OMITTED] TR27NO24.269

    Tables 209 and 210 demonstrate our estimates for the economic 
impact of exceptions to the four walls requirement under the Medicaid 
clinic services benefit for behavioral health clinics and clinics 
located in rural areas that are not IHS/Tribal clinics. We acknowledge 
that we included in the final rule text that a State adopting the 
exception for clinics located in rural areas must include a definition 
of rural area in its State plan that must be either a definition 
adopted and used by a Federal governmental agency for programmatic 
purposes, or a definition adopted by a State governmental agency with a 
role in setting State rural health policy. For purposes of our 
estimates of the economic impact of our exception to the four walls 
requirement for clinics located in rural areas, our analysis defines 
rural areas using the RUCA classifications. We also acknowledge that 
our exception to the four walls requirement for behavioral health 
clinics includes any clinic services furnished outside of the four 
walls by a behavioral health clinic, including non-behavioral clinic 
services such as physical health services. However, for purposes of our 
economic impact we are unable to quantify the cost of non-behavioral 
clinic services. For our behavioral health clinic exception at 42 CFR 
440.90(d) and clinics located in rural areas exception at 42 CFR 
440.90(e), we assumed a 5 percent increase in current spending in each 
category due to increased payments for clinic services performed 
outside of the four walls. Growth in utilization and expenditures for 
clinic services provided both by behavioral health clinics and clinics 
in rural areas is expected to be limited by provider shortages in these 
areas of practice. Because the exceptions at 42 CFR 440.90(d) and (e) 
are at State option, we assume that States representing 25 percent of 
States providing coverage of the Medicaid clinic services benefit will 
implement one or both of the optional exceptions. Estimated 
expenditures are trended each year for changes in expected cost, 
utilization, and enrollment. We estimate that Federal expenditures will 
be $35 million for fiscal years 2025 through 2029 for clinic services 
furnished by behavioral health clinics, and $30 million for fiscal 
years 2025 through 2029 for clinic services furnished by clinics in 
rural areas.

[[Page 94566]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.270

[GRAPHIC] [TIFF OMITTED] TR27NO24.271

    Projected Medicaid clinic services expenditures may differ from our 
current estimates, including the amounts broken out for IHS/Tribal 
clinics, clinic services provided by behavioral health clinics, and 
clinic services provided by clinics in rural areas. There is 
uncertainty in how much current and projected IHS/Tribal Medicaid 
clinic services spending is attributable to Medicaid clinic services 
provided outside of the four walls. The IHS/Tribal clinic impact may 
range from $544 million to $1.63 billion over 5 years due to 
uncertainty in the level of spending for Medicaid clinic services 
provided outside of IHS/Tribal clinics. Uncertainty in provider 
availability and beneficiary demand result in uncertainty in the 
potential for changes in utilization and costs. The Federal impact for 
Medicaid clinic services furnished by behavioral health clinics may 
range from $5 million to $90 million and the Federal impact for clinic 
services furnished by clinics in rural areas may range from $5 million 
to $100 million over 5 years. State impacts over 5 years may range from 
$5 million to $45 million for clinic services furnished by behavioral 
health clinics and $2 million to $50 million for clinic services 
furnished by clinics in rural areas.
    Table 211 demonstrates the total economic impact for our finalized 
exceptions to the four walls requirement under the Medicaid clinic 
services benefit for IHS/Tribal clinics, behavioral health clinics, and 
clinics located in rural areas. The total estimated impact of these 
exceptions over 5 years is $1.18 billion, including Federal impact of 
$1.15 billion and State impact of $30 million. The impact may range 
from a low of $561 million to a high of $1.92 billion, including a 
range in the Federal estimate of $554 million to $1.82 billion and a 
range in the State impact of $7 million to $95 million.

[[Page 94567]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.272

c. Benefits of Medicaid Clinic Services Four Walls Exceptions
    The changes to the Medicaid clinic services benefit are expected to 
benefit Medicaid beneficiaries, Tribes, and States by improving access 
to care for the populations served by IHS/Tribal clinics, behavioral 
health clinics, and clinics in rural areas. The exceptions to the four 
walls requirement under the Medicaid clinic services benefit for IHS/
Tribal clinics, behavioral health clinics, and clinics located in rural 
areas would help improve access to care for these clinics' patient 
populations by allowing services to be furnished where the beneficiary 
is located. We refer readers to section XVIII.B of this final rule for 
more robust discussions on how the populations served by these clinics 
might benefit from exceptions to the Medicaid clinic services benefit 
four walls requirement and how these exceptions would improve access to 
care. These potential benefits cannot be monetarily quantified at this 
time.
d. Alternative Medicaid Clinic Services Four Walls Exceptions 
Considered
    We considered a few different alternatives in determining the best 
way to address the concerns we heard from Tribes, the TTAG, the STAC, 
States, and other interested parties about the four walls requirement 
under the Medicaid clinic services benefit. We considered including an 
exception to the four walls requirement only for the population served 
by IHS/Tribal clinics, but we viewed that alternative as too limited. 
As we discuss in detail in section XVIII.B of this final rule, we 
concluded that the patient populations served by behavioral health 
clinics and clinics in rural areas might also benefit from exceptions 
to the four walls requirement for those clinics.
    We also considered proposing an exception, in addition to the three 
exceptions we are finalizing in this rule, for any other populations 
that are identified by States as likely to meet the four criteria 
described in this final rule that warrant an exception to the four 
walls requirement and that have no alternative access to services 
through Medicaid benefits that are not subject to a four walls 
requirement under Federal Medicaid law. Ultimately, it is our 
understanding that other populations are better able to access services 
through Medicaid benefits to which a four walls requirement does not 
apply under Federal Medicaid law (for example, FQHC services, RHC 
services, outpatient hospital services, etc.) than the populations 
targeted by the exceptions we are finalizing. As we indicate in section 
XVIII.B of this final rule, we invited comment in the proposed rule on 
our assumptions about other populations that may benefit from an 
exception to the four walls requirement under the Medicaid clinic 
services benefit. We are finalizing this rule without including 
exceptions to the four walls requirement for additional populations 
(beyond the exceptions for IHS/Tribal clinics, behavioral health 
clinics, and clinics located in rural areas), and a summary of the 
comments received that recommend additional exceptions and our response 
can be found in section XVIII.B of this final rule.
    We also considered making the exceptions to the four walls 
requirement mandatory for behavioral health clinics and clinics located 
in rural areas, but, as we discuss in more detail in section XVIII.B of 
this final rule, it is our understanding that there is greater State 
variability in the degree to which the populations targeted by the 
behavioral health and rural exceptions meet the four criteria we 
identified than there is for the population served by IHS/Tribal 
clinics. We also invited public comment on these assumptions in section 
XVIII.B of the CY 2025 OPPS/ASC proposed rule. We are finalizing that 
the exceptions to the four walls requirement for behavioral health 
clinics and clinics located in rural areas are at state option, and a 
summary of the comments received on this topic and our response can be 
found in section XVIII.B of this final rule.
    Finally, as we discuss in section XVIII.B of this final rule, we 
did not propose a specific definition of rural for our exception for 
clinics located in rural areas and in the proposed rule invited public 
comment on the alternative possible definitions we considered and 
described in that section of the proposed rule. The final rule provides 
that a State must include a definition of rural area in its State plan 
that must be either a definition adopted and used by a Federal 
governmental agency for programmatic purposes, or a definition adopted 
by a State governmental agency with a role in setting State rural 
health policy. A summary of the comments received on the options we 
considered for defining rural for clinics located in rural areas and 
our response can be found in section XVIII.B of this final rule.
9. Effects of Continuous Eligibility in Medicaid and CHIP
    As discussed in section XX of this final rule with comment period, 
we are finalizing our proposal to codify the requirement of the CAA, 
2023 for States to provide 12 months of continuous eligibility for 
children under age 19 enrolled in Medicaid and CHIP, with limited 
exceptions. In addition, we are finalizing our proposal to remove the 
option to disenroll children from CHIP during a continuous eligibility 
period due to failure to pay premiums. These regulation changes 
implement the statutory requirement in section 5112 of Title V, 
subtitle B of the Consolidated Appropriations Act, 2023, and the 
entirety of the economic impact

[[Page 94568]]

discussed in this section below follows from this statutory provision.
    The requirement to provide 12-months of continuous eligibility in 
Medicaid and CHIP is estimated to increase annual average enrollment in 
Medicaid and CHIP by approximately 124,000 by 2028 (75,000 in Medicaid 
and 49,000 in CHIP). The total estimated impact of this requirement 
over 5 years is $2,466 million, including Federal impact of $1,592 
million and State impact of $874 million. Enrollment may range from an 
increase of around 92,000 to an increase of around 159,000 by 2028. The 
total impact may range from a low of $1,837 million to a high of $3,154 
million, including a range in the Federal estimate of $1,185 million to 
$2,039 million and a range in the State impact of $652 million to 
$1,115 million. (See Tables 212 and 213.)
[GRAPHIC] [TIFF OMITTED] TR27NO24.273

[GRAPHIC] [TIFF OMITTED] TR27NO24.274

10. Effects of Requirements for Obstetrical Services in Hospitals and 
Critical Access Hospitals (CAHs)
    In response to the CY 2025 OPPS/ASC proposed rule, we received 
multiple comments regarding the cost estimates for the proposed 
requirements for obstetrical services in hospitals and critical access 
hospitals (CAHs). Most of the comments were from professional 
organizations, State agencies, and hospital systems. In this final rule 
with comment period, we provide a summary of the public comments 
received for each proposal and our responses to them, including 
relevant changes in the RIA methodology and estimate.
    Comment: A few commenters said that CMS should consider the 
disproportionate financial impact that the requirements will have on 
some provider types, particularly hospitals and CAHs that are most at 
risk of closing their obstetrical services units, which could lead to 
increased burden on other hospitals and result in patients having to 
travel greater distances to access maternal care.
    Response: We appreciate the suggestions to consider differences 
across providers. The proposed rule assessed likely variation in burden 
across different providers, taking into account variation in facility 
size, the number of patients, and staff size that we believe accurately 
reflects the likely burden for each facility type. In this final rule 
with comment period, we have also taken several steps to reduce burden 
and ensure that all hospitals and CAHs are able to successfully meet 
the requirements. First, we are implementing the requirements in three 
phases over the course of two years to ensure that facilities have 
adequate time to meet these requirements and to reduce any potential 
implementation

[[Page 94569]]

burden or unintended consequences (see section XXI.A.7 of this final 
rule with comment period). Second, we are reducing the frequency of the 
obstetrical services training requirement from annually to biannually 
(every other year). Finally, as we outline below, we are not finalizing 
the requirement that hospitals and CAHs with obstetrical services 
delineate and document obstetrical privileges for all practitioners.
a. Organization, Staffing and Delivery of Services for Hospitals (Sec.  
482.59(a) Through (b)) and CAHs (Sec.  482.649(a) Through (b))
    As indicated in section XXI.C.2 of this final rule with comment 
period, we are finalizing the policies for hospitals (Sec.  482.59(a) 
through (b)) and CAHs (Sec.  485.649(a) through (b)) that provide 
obstetrical (OB) services as proposed with the modification to 
reference the requirements of the medical staff bylaws for hospitals 
and CAHs rather than requiring hospitals and CAHs with OB services to 
delineate and document obstetrical privileges for all practitioners. In 
addition, we are clarifying that basic equipment must be kept at the 
hospital and CAH and be readily available for treating obstetrical 
cases to meet the needs of patients. Below, we provide the comments we 
received on the proposed requirements as well as our modifications to 
the final cost estimate based on these comments and the final policies.
    Comment: Some commenters said that the proposed rule underestimated 
the obstetrical services' equipment costs since it did not consider the 
cost for maintaining and replacing required equipment. Other commenters 
said that the requirement for hospitals and CAHs with OB services to 
have cardiac monitors and call-in systems will result in a higher cost 
than estimated since specialized training is needed for nurses to 
correctly monitor cardiac monitors and facilities will also need to 
purchase central monitoring stations. Some commenters said that the 
requirement for each room/suite to have a call-in system, cardiac 
monitor, and a fetal doppler or monitor was too burdensome and would 
result in equipment going unused. Given this issue, they asked for 
flexibility to have the equipment available on the unit. Other 
commenters questioned the decision to mandate specific equipment for OB 
services, noting that evolving practice guidelines may lead necessary 
equipment to change and requiring specific equipment could prevent the 
adoption of new technology.
    Response: We agree that replacing equipment will add additional 
burden for facilities. Based on our experience, we estimate that the 
required equipment will need to be replaced once every 5 years. As a 
result, in the regulatory impact analysis below, we include additional 
burden in year 6 for hospitals and CAHs with OB services to replace 
cardiac monitors, fetal monitor or dopplers, and call-in systems. As we 
noted in our comment response in section XXI.C.2 of this final rule 
with comment period, several commenters asked for clarity regarding the 
expected availability of basic equipment, noting that it would be 
costly to purchase equipment for every room/suite. In that section and 
in the regulation text, we have clarified that required equipment 
includes a call-in-system (we note that for the purposes of this 
regulation, call-in system describes a call button), cardiac monitor, 
and fetal doppler or monitor kept at the hospital and CAH and readily 
available for treating obstetrical cases to meet the needs of patients 
in accordance with the scope, volume, and complexity of services 
offered. Further, facilities must have adequate provisions that include 
equipment, supplies and medication used in treating emergency cases. We 
would note that while facilities may choose to purchase central 
monitoring equipment, they are not required to do so. In addition, as 
we have clarified in this final rule with comment period, we are 
requiring equipment to be readily available for treating obstetrical 
cases in accordance with the scope, volume, and complexity of services 
offered but are not requiring facilities to have equipment in every 
room/suite in the OB unit. We expect that hospitals and CAHs already 
have staff members in the facility who are able to correctly monitor 
the equipment and that if that expertise was not available in the OB 
unit or if facilities have special areas for patients utilizing cardiac 
monitors, patients would be moved to areas where staff already have 
that knowledge. As such, we are not including burden for training staff 
members to monitor equipment and purchasing central monitoring systems. 
Rather than maintaining our assumption in the proposed rule that 
facilities will have equipment for twice the average number of daily 
patients per facility, we have modified the estimated cost based on 
commenters indicating that facilities were concerned that they would 
have a lot of unused equipment. In our final estimates, we now assume 
that with an average daily birth volume of 2.04 per facility, 
facilities will ensure that they will have supplies for four patients. 
Finally, we disagree that requiring equipment will prevent hospitals 
and CAHs from adopting new technology designed to improve maternal 
care. The equipment we are requiring is basic equipment to ensure the 
health and safety of pregnant and postpartum patients. We expect that 
hospitals and CAHs that are planning on investing in new technology to 
advance maternal healthcare would likely ensure that basic equipment is 
available first even without our requirements.
    Comment: A few commenters said that the CY 2025 OPPS/ASC proposed 
rule did not consider the cost for attracting and retaining qualified 
medical personnel.
    Response: We disagree with the comment that we did not consider the 
cost for attracting qualified medical personnel. In Table 144 of the CY 
2025 OPPS/ASC proposed rule, we estimated that hiring a qualified OB 
supervisor will cost, on average, $54,757 per hospital and CAH. In 
addition, as we noted in section XXI.C.2, many hospitals and CAHs 
already have qualified practitioners on staff and would not need to 
hire additional staff members. The CY 2025 OPPS/ASC proposed rule 
included no fixed minimum staffing requirements and instead allows 
facilities with flexibility to provide services that are well-organized 
and in accordance with nationally recognized acceptable standards of 
practices.
    Based on the finalized policies and the comments received, we are 
making the following modification below to the estimated costs for 
these finalized proposals: including additional cost in year 6 to 
account for equipment replace costs.
    In section XXVI of this final rule with comment period, we have 
estimated the cost for hospitals and CAHs to develop internal standards 
and protocols to ensure that services are well organized and to provide 
high-quality care that is appropriate to the level of services provided 
and integrated with other departments of the facility, as well as to 
ensure compliance with nationally recognized and evidence-based 
guidelines for OB emergencies, complications, immediate post-delivery 
care, and other patient health and safety events. Below, we estimate 
the cost for ensuring that OB patient care units (i.e., labor rooms, 
delivery rooms, including rooms for operative delivery, and post-
partum/recovery rooms whether combined or separate) are supervised by 
an individual with the necessary education and training, and specify 
that person should be an experienced

[[Page 94570]]

registered nurse, certified nurse midwife, nurse practitioner, 
physician assistant, or a doctor of medicine or osteopathy. We also 
estimate the cost for equipment that includes a call-in-system, cardiac 
monitor, and fetal doppler or monitor kept at the hospital and CAH and 
readily available for treating obstetrical cases to meet the needs of 
patients in accordance with the scope, volume, and complexity of 
services offered.
    While hospitals and CAHs are likely to already have an individual 
supervising the OB patient care unit, there is variation across 
facilities regarding whether they have the necessary education and 
training related to OB patient care. Many facilities, especially larger 
hospitals that have large birth volumes, are likely to already have an 
experienced individual with the necessary education and training. 
Smaller facilities with lower birth volumes, in contrast, may be less 
likely to have an experienced individual and need to recruit a new 
individual to meet the proposed requirement.
    Given uncertainty about the number of facilities that already have 
an experienced individual who will meet the requirement, we assume that 
each facility will need to hire one individual, who we assume will be a 
registered nurse, to meet the requirement. To estimate the cost of 
hiring this individual, we reviewed research related to the cost of 
registered nurse turnover. A review of academic literature found that 
each RN turnover cost employers between $21,514 and $88,000.\779\ We 
take the midpoint of these two estimates, or $54,757 per individual 
hired. As shown, in Tables 214 and 215, we estimate that this 
requirement will cost facilities $268,842,496 in year 1 and over 10 
years.
---------------------------------------------------------------------------

    \779\ Bae, S.H., Noneconomic and economic impacts of nurse 
turnover in hospitals: A systematic review. Int Nurs Rev, 2022. 
69(3): 392-404.
[GRAPHIC] [TIFF OMITTED] TR27NO24.275

[GRAPHIC] [TIFF OMITTED] TR27NO24.276

    To estimate the cost for having basic equipment, including a call-
in-system (we note that for the purposes of this regulation, call-in 
system describes a call button), cardiac monitor, and fetal doppler or 
monitor kept at the hospital and CAH and readily available for treating 
obstetrical cases to meet the needs of patients, we reviewed public 
data sources to estimate the cost of purchasing a call-in system, 
cardiac monitor, and a fetal doppler or monitor. While we were not able 
to identify public estimates for the price of call-in systems, based on 
our experience we estimate that they will cost $2,500 to $3,500 per 
system. Reviewing the web pages of various online suppliers, we found 
that fetal dopplers and fetal monitors cost between $502 and $8,995 
780 781 and cardiac monitors cost between $1,071 and 
$10,246.\782\ For each of these systems, we use the mid-point of the 
price estimate and assume that each call-in system will cost $3,000, 
each fetal monitor or fetal doppler will cost $4,749, and each cardiac 
monitor will cost $5,659.
---------------------------------------------------------------------------

    \780\ Medical, U. FETAL DOPPLERS. 2024 May 8, 2024 [cited 2024 
May 8]; Available from: https://www.usamedicalsurgical.com/fetal-dopplers/.
    \781\ CardiacDirect. Fetal Monitors. 2024 [cited 2024 May 8]; 
Available from: https://www.cardiacdirect.com/product-category/fetal-monitors/?utm_source=google&utm_medium=cpc&utm_term=fetal%20heart%20monitor&utm_content=!acq!v3!1163626993_kwd-295102856827__607346518010_g_c__&utm_campaign=FetalMonitor&gad_source=1&gclid=EAIaIQobChMIsLqpo8f-hQMVLyetBh3deAZuEAAYASAAEgIcx_D_BwE.
    \782\ CardiacDirect. Patient Monitors. 2024 May 8, 2024 [cited 
2024 May 8]; Available from: https://www.cardiacdirect.com/product-category/patient-monitors/?min_price=0&max_price=10250&page=1.
---------------------------------------------------------------------------

    According to the Centers for Disease Control and Prevention there 
were a

[[Page 94571]]

total of 3,667,758 births in 2022.\783\ With a total of 4,928 hospitals 
and CAHs with obstetrical units, this leads to an average of 744 
(3,667,758 / 4,928) births per hospital and CAH or an average of 2.04 
births per facility per day. We estimate that each birth will take 1 
day on average. To account for variation in birth volumes throughout 
the year, we assume that each facility will need to prepare for double 
the number of average births per day, or 4.08 patients. Although 
equipment cannot be divided, based on the public comments received and 
discussed above, we assume that cost-conscious facilities will have 
equipment available for 4 patients daily. We also assume that each 
facility already has one fetal monitor and cardiac monitor but do not 
assume that each facility has a call-in system.
---------------------------------------------------------------------------

    \783\ Osterman, M.J.K.H., Brady E., Martin, Joyce A.; Driscoll, 
Anne K.; Valenzuela, Claudia P., Births: Final Data for 2022, in 
National Vital Statistics Reports, U.S.D.o.H.a.H. Services, Editor. 
2024, Centers for Disease Control and Prevention.
---------------------------------------------------------------------------

    Based on our experience working in obstetrical units, we estimate a 
fetal doppler or monitor and a call-in system will need to be available 
for each patient, a call-in system will need to be available for each 
patient, and cardiac monitors will need to be available for half the 
patients. As such, we estimate that each facility will need to purchase 
three fetal monitors or fetal dopplers at $14,247 ($4,749 x 3), one 
cardiac monitor at $5,659 ($5,659 x 1), and four call-in systems at 
$12,000 ($3,000 x 4) for an average per facility cost of $31,906. As 
indicate in Table 216 we expect that this requirement will cost 
$157,232,768 in year 1. We also expect that under normal use, this 
equipment will need to be replaced in five years. In Table 217, we 
estimate that this equipment requirement will cost a total of 
$314,465,536 over 10 years.
[GRAPHIC] [TIFF OMITTED] TR27NO24.277

[GRAPHIC] [TIFF OMITTED] TR27NO24.278

b. OB Staff Training for Hospitals (Sec.  482.59(c)) and CAHs (Sec.  
485.649(c))
    As indicated in section XXI.C.3 of this final rule with comment 
period, we are finalizing the policies for hospitals (Sec.  482.59(c)) 
and CAHs (Sec.  485.649(c)) that provide obstetrical (OB) services with 
the modification that the effective date of the staff training 
requirement is January 1, 2027 and that the governing body in hospitals 
and CAHs must identify and document which staff must complete an 
initial training and subsequent biannual training. Below, we provide 
the comments we received on the proposed requirements as well as our 
modifications to the final cost estimate based on these comments and 
the policies we are finalizing.
    Comment: Several commenters expressed concern about the cost to 
train relevant OB staff. Other commenters said that the proposed rule 
underestimated training costs since it did not consider increases in 
wage and salaries for healthcare personnel. In addition, it did not 
consider staff turnover and the need to train new staff. One commenter 
thought that staff training could require more time than we have 
estimated.
    Response: We appreciate the feedback regarding the cost estimates 
for OB staff training. As noted in section XXI.C.3 of this final rule 
with comment period, we are modifying the training requirements so that 
hospitals and CAHs will need to provide relevant OB staff with initial 
training upon hiring and then every other year, rather than every year. 
This reduction in training frequency reduces the training costs as 
outlined below in the regulatory impact analysis. We agree with the 
feedback regarding the need to

[[Page 94572]]

include wage growth for healthcare staff in the cost estimates. When 
estimating costs, registered nurses (RNs) are the largest group of 
staff members who we assume will likely receive training. According to 
the Bureau of Labor Statistics,\784\ RNs in 2015 earned a mean hourly 
rate of $34.14 with the nominal mean hourly rate in 2023 \785\ 
increasing to $45.42. Inflation,\786\ however, accounts for 3.49 
percentage points annually over these 8 years, leaving a compound 
annual real growth rate of approximately 0.44 percent. To address 
concerns that wage costs are underestimated, we are including a 0.44 
annual increase in real wage rates in the cost estimates for the OB 
services training requirements starting in year 2. To address concern 
regarding staff turnover, we are including training costs for new staff 
members based on a 21 percent annual staff turnover rate.
---------------------------------------------------------------------------

    \784\ U.S. Bureau of Labor Statistics. Occupational Employment 
and Wages--May 2015. Accessed September 25, 2024. https://www.bls.gov/news.release/archives/ocwage_03302016.pdf.
    \785\ U.S. Bureau of Labor Statistics. Occupational Employment 
and Wages, May 2023: 29-1141 Registered Nurses. Accessed September 
25, 2024. https://www.bls.gov/oes/current/oes291141.html.
    \786\ [thinsp]Federal Reserve Bank of Minneapolis. Inflation 
Calculator. Accessed February September 25, 2024. https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator.
---------------------------------------------------------------------------

    We appreciate the comment regarding the time allocated for staff 
training. As noted in section XXI.C.3 of this final rule with comment 
period, hospitals and CAHs have flexibility to identify which evidence-
based best practices and protocols they will train on to improve the 
delivery of maternal care within their facility. We are not prescribing 
a specific format the training be conducted in, allowing facilities to 
carry out the training in a manner that best fits their needs. While 
some facilities could choose training that takes more time than we have 
estimated, others could choose training that takes less time. As such, 
we maintain the estimated time burden for training requirements for 
hospitals and CAHs that offer OB services.
    Based on the comments received and the finalized policies, we are 
making the following modifications to the cost estimates: (1) including 
a 0.44 percent annual increase in hourly rates for training costs 
starting in year 2 to take into account growth in wages and salaries 
for healthcare workers, (2) including additional burden to account for 
the cost of training new staff members, and (3) reducing the burden 
based on the modification that the governing body identify and document 
which staff must complete an initial training and subsequent biannual 
training rather than annual training.
    In section XXVI of this final rule with comment period, we have 
estimated the cost for developing policies and procedures to ensure 
that staff are trained on key topics related to improving the delivery 
of maternal care, as well as documentating that training was completed 
and staff knowledge on these topics. We estimate that staff training on 
evidence-based best practices and protocols will take 2 hours per 
employee and that each facility will spend 1 hour training staff on 
additional topics identified by the facility's QAPI program. This leads 
to a total hourly burden of 3 hours per employee trained.
    While hospitals and CAHs have flexibility regarding which OB staff 
will receive training, we expect that they will likely focus their 
training on medical staff who are working directly with OB patients. 
This includes surgeons, physicians, physician assistants, nurse 
practitioners, nurse midwives, nurse anesthetists, registered nurses 
(RNs), and Licensed Practical Nurses/Licensed Vocational Nurses (LPNs/
LVNs).
    To estimate the number of employees in CAHs and hospitals that are 
likely receive training, we first obtained data from the Bureau of 
Labor Statistics (BLS) on the number of surgeons, physicians, physician 
assistants, nurse practitioners, nurse midwives, nurse anesthetists, 
RNs, and LPNs/LVNs working in hospitals (NAICS 622000). Since the BLS 
does not provide separate employment statistics for CAHs and hospitals, 
we assume that the number of employees needing training and, 
henceforth, the cost to train them will be in proportion to the size of 
facilities, specifically the number of certified beds. We obtained 
information on the number of certified beds in hospitals and CAHs from 
CMS' Q1 2024 Provider of Services File--Hospital & Non-Hospital 
Facilities.\787\ Using this database, we estimate that 98.6 percent of 
certified beds for facilities that provide OB services are in hospitals 
with the remaining 1.4 percent in CAHs.
---------------------------------------------------------------------------

    \787\ Centers for Medicare and Medicaid Services. Provider of 
Services File--Hospital & Non-Hospital Facilities, Q1 2024. https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/provider-of-services-file-hospital-non-hospital-facilities/data (Accessed April 30, 2024).
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    In hospitals, which have a larger number of beds, there is likely 
to be a greater division of staff among units, with medical staff 
specifically designated to work in OB units and with pregnant patients, 
while other medical staff members will not work with pregnant patients. 
In contrast, critical access hospitals (CAHs), which are smaller in 
size, are likely to have medical staff that work across units. Based on 
our experience, we estimate that between 10 and 30 percent of medical 
staff in hospitals and 60 to 100 percent of medical staff in CAHs will 
receive the training. Given the variation for hospitals and CAHs, we 
take the midpoint of the two estimates and assume that 20 percent of 
hospital medical staff and 80 percent of medical staff in CAHs will 
receive training. As indicated in Table 218, if initial training for 
all staff who need the training began in year 1, it would cost 
approximately $151 million and take $1.43 million hours to complete 
annually. Our finalized requirement, however, is that applicable staff 
receive initial training and then every 2 years. Since hospitals have 
an annual turnover rate of approximately 21 percent,\788\ we estimate 
that in addition to training all applicable staff as identified above, 
the number of staff members that hospitals and CAHs will need to train 
will increase by 21 percent due to turnover. Since the training 
requirement goes into effect in year 2, we expect there to be no burden 
for year 1. In year 2, we expect that facilities will need to train 121 
percent of the applicable staff to account for initial training for all 
existing staff as well as staff turnover. In year 3, training will be 
needed for 21 percent of existing staff who will leave and be replaced 
by new staff. In year 4, 21 percent of employees hired in year 3 will 
leave and their replacements will need training. In addition, 79 
percent of the employees who received training 2 years ago will need to 
receive their biannual training. For all subsequent years, the share of 
staff who need to receive training will be 21 percent of staff hired in 
the previous year to account for regular staff turnover and 79 percent 
of staff who received training 2 years prior.
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    \788\ Nursing Solutions Incorporated, 2024 NSI National Health 
Care Retention & RN Staffing Report. 2024.
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    To calculate the total hourly burden cost over 10 years, we 
multiply the share of staff that will need training each year by the 
baseline cost for training all staff members, taking into account an 
annual 0.44 percent increase in real wage rates. As indicated in Table 
219, we estimate the requirements will have an average annual cost of 
approximately $85 million, with a total cost of $849,937,432 over 10 
years. Over 10 years, the requirements are estimated to take $7,875,903 
million hours to complete.

[[Page 94573]]

    This estimate is based on two assumptions. First, we assumed that 
when a staff member leaves, their replacement will be hired in the same 
year. If the replacement was not hired until the following year, then 
the cost would be lower than what we have estimated. Second, we assumed 
that employees who receive training and then quit 2 years after their 
training, would not receive their biannual training prior to leaving. 
If they did, then the actual cost would be higher than what we have 
estimated.
BILLING CODE 4120-01-P

[[Page 94574]]

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[[Page 94575]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.280

[[Page 94576]]

BILLING CODE 4120-01-C
c. Quality Assessment and Performance Improvement Program (QAPI) for 
Hospitals (Sec.  482.21(b)(4)) and CAHs (Sec.  485.641(e)(2))
    As indicated in section XXI.C.4 of this final rule with comment 
period, we are finalizing the proposed revision to existing QAPI 
standards (Sec.  482.21; Sec.  485.641) for hospitals and CAHs that 
offer obstetrical services without modifications. Below, we provide the 
comments we received on the proposed requirements as well as our 
modifications to the cost estimates for the finalized revisions based 
on these comments.
    Comment: Some commenters said that the proposed rule underestimated 
costs since it did not consider increases in wage and salaries for 
healthcare personnel. One commenter said that full utilization of 
quality improvement activities often requires significant financial 
investment and administrative support to be successful. Another 
commenter noted that many metrics used in obstetrical care cannot be 
assessed using administrative data and instead requires a time-
consuming manual chart review.
    Response: We appreciate and agree with the feedback regarding the 
need to include wage growth for healthcare staff in the cost estimates. 
As we noted in our comment response above regarding OB staff training 
costs, real wage costs for hospital staff are estimated to increase 
0.44 percent annually so we are including a 0.44 annual increase in 
real wage rates starting in year 2 for all QAPI requirements. We also 
appreciate that full utilization of QAPI activities takes investment to 
be successful and that some obstetrical metrics could require manual 
chart reviews. We believe that the estimated costs in the proposed rule 
that included costs for data system modifications, data stratification, 
incorporation of MMRC recommendations into the QAPI program, and 
carrying out an annual project provide an accurate estimate of the 
average burden for facilities to engage in these activities.
    Based on the comments received, we are making the following 
modification to the cost estimates: including a 0.44 percent annual 
increase in hourly rates for QAPI costs starting in year 2 to account 
for growing wages and salaries for healthcare workers.
    In section XXVI of this final rule with comment period, we have 
already estimated the burden for collecting data and quality indicators 
for obstetric patients and their outcomes and disparities in processes 
of care and services and operations. We believe that these data will 
serve as the foundation to allow facilities to develop and implement 
actions to improve outcomes and reduce disparities when they exist. We 
expect that these data will likely be the focus of the required 
performance improvement project focused on improving health outcomes 
and reducing disparities among obstetrical patients.
    To estimate the cost of tracking and implementing at least one 
quality improvement project, we utilized estimates from existing 
regulations governing QAPI program. Specifically, 81 FR 68688 estimates 
that collecting and analyzing data for all long-term care facilities' 
improvement projects will take 20 hours, with another 20 years annually 
spent on implementing and documenting improvement projects. Given that 
the requirement we are finalizing involves only a single improvement 
project and we have already accounted for the costs of collecting the 
data in the information collection requirement portion of this rule, we 
anticipate that the ongoing annual burden for each facility to analyze 
the data and implement and document their improvement project(s) will 
be 30 hours. Using loaded hourly wage rates from Table 186, we 
anticipate that this will include the participation of a hospital 
executive at $1,861.28 ($232.66 x 8 hours), an RN at $931.00 ($93.10 x 
10 hours), a physician at $1,729.64 ($216.08 x 8 hours), and a data 
scientist at $368.96 ($92.24 x 4 hours). As indicated in Table 220, 
this would lead to a total per facility cost of $4,889.88 annually and 
an average hourly cost of $163 if the requirement went into effect in 
year 1. Since the requirement will not go into effect until year 2, we 
assume no burden in year 1. For years 2 to 10, we increase the 
estimated cost by 0.44 percent annually to account for growth in staff 
wage rates. As indicated in Tables 220 and 221, we estimate that this 
requirement will cost an average of $22,170,365 annually and 
$221,703,645 over 10 years.
[GRAPHIC] [TIFF OMITTED] TR27NO24.281

[[Page 94577]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.282

d. Maternal Health QAPI Activities for Hospitals (Sec.  482.21(e)) and 
CAHs (Sec.  485.641(d)(4))
    As indicated in section XXI.C.4 of this final rule with comment 
period, we are finalizing the proposed revision to existing QAPI 
standards (Sec.  482.21; Sec.  485.641) for hospitals and CAHs that 
offer obstetrical services without modifications. Below, we provide the 
comments we received on the proposed requirement that when the MMRC 
provides information to hospitals and CAHs, they incorporate this 
information into the facility's QAPI program.
    Comment: Some commenters said that the proposed rule underestimated 
costs since it did not consider increases in wage and salaries for 
healthcare personnel.
    Response: We appreciate and agree with the feedback regarding the 
need to include wage growth for healthcare staff in the cost estimates. 
As we noted in our comment response above regarding OB staff training 
costs, real wage costs for hospital staff are estimated to increase 
0.44 percent annually so we are including a 0.44 annual increase in 
real wage rates starting in year 2 for this requirement.
    Based on the comments received, we are making the following 
modification to the cost estimates: including a 0.44 percent annual 
increase in hourly rates for QAPI requirements starting in year 2 to 
take into account growing wages and salaries for healthcare workers.
    Using loaded hourly wage rates from Table 186, we expect that when 
the MMRC provides information to hospitals and CAHs, incorporating this 
information into the facility's QAPI program will include the 
participation of a physician at $864.32 ($216.08 x 4 hours) and an RN 
at $372.40 ($93.10 x 4 hours). As indicated in Table 222, this would 
lead to a total cost of $1,236.72 per facility if the requirement went 
into effect in year 1. Since the requirement will not go into effect 
until year 2, we assume no burden in year 1. For years 2 to 10, we 
increase the estimated cost by 0.44 percent annually to account for 
growth in staff wage rates. As indicated in table 223, we estimate that 
the average annual cost will be $5,607,200 and the 10-year total cost 
will be $56,071,996.
[GRAPHIC] [TIFF OMITTED] TR27NO24.283

[[Page 94578]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.284

e. Emergency Services Readiness for Hospitals (Sec.  482.55(c)) and 
CAHs (Sec.  485.618(e))
    As indicated in section XXI.C.5 of this final rule with comment 
period, we are finalizing the proposed emergency services readiness 
standard for hospitals and CAHs without modifications. Below, we 
provide the comments we received on the proposed requirement's cost as 
well as our modifications to the final cost estimate based on these 
comments.
    Comment: Some commenters said that the proposed rule underestimated 
costs since it did not consider increases in wage and salaries for 
healthcare personnel, as well as staff turnover.
    Response: We appreciate and agree with the commenters. We are 
including a 0.44 annual increase in real wage rates starting in year 2 
for the emergency services training requirements. While the emergency 
training cost estimate in the proposed rule included costs for turnover 
in years 2 through 10, it did not include them in year 1. To address 
concern regarding staff turnover and training for new staff members, we 
are including training costs for new staff members based on a 21 
percent annual staff turnover rate, which is the same rate we used for 
the OB staff training requirement.
    Comment: Some commenters said that the proposed rule underestimated 
the equipment costs since it did not consider the cost for maintaining 
and replacing required equipment.
    Response: We agree that replacing equipment will add additional 
burden for facilities. Based on our experience, we estimate that the 
required equipment will need to be replaced once every 5 years. As a 
result, we include additional burden in year 6 for hospitals with 
emergency services to replace all call-in systems.
    Based on the comments received, we are making the following 
modifications to the cost estimates: (1) including a 0.44 percent 
annual increase in hourly rates for training costs starting in year 2 
to take into account growing wages and salaries for healthcare workers, 
(2) including additional costs in year 1 to account for training new 
staff members, and (3) including additional costs to replace call-in 
systems in year 6.
    In section XXVI of this final rule with comment period, we have 
already discussed the cost for hospitals to ensure that they have 
adequate protocols in place for emergency services, as well as to 
document that applicable staff have successfully completed the training 
and demonstrate their knowledge on these topics. The training 
requirement for hospitals and CAHs provides flexibility regarding which 
staff will receive training. We expect, however, that they will likely 
focus their training on medical staff within emergency departments. 
This staff includes surgeons, physicians, physician assistants, nurse 
practitioners, nurse midwives, nurse anesthetists, registered nurses, 
and LPNs/LVNs.
    To estimate the number of employees in CAHs and REHs that will 
likely receive training, we first obtained data from the Bureau of 
Labor Statistics (BLS) on the number of surgeons, physicians, physician 
assistants, nurse practitioners, nurse midwives, nurse anesthetists, 
registered nurses, and LPNs/LVNs working in hospitals (NAICS 622000). 
Since the BLS does not provide separate employment statistics for CAHs 
and hospitals, we assume that the number of employees needing training 
and, henceforth, the costs will be in proportion to the size of 
facilities, specifically the number of certified beds. We obtained 
information on the number of certified beds in hospitals and CAHs from 
CMS' Q1 2024 Provider of Services File--Hospital & Non-Hospital 
Facilities.\789\ Using this database, we estimate that 98.88 percent of 
certified beds for hospitals are in hospitals with the remaining 1.12 
percent in CAHs.
---------------------------------------------------------------------------

    \789\ Centers for Medicare and Medicaid Services. Provider of 
Services File--Hospital & Non-Hospital Facilities, Q1 2024. https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/provider-of-services-file-hospital-non-hospital-facilities/data (Accessed April 30, 2024).
---------------------------------------------------------------------------

    Based on our experience, we expect that initial staff training will 
take approximately 3 hours per employee. Using data from Table 186 on 
loaded wage rates for each employee type, we estimated the cost for 
training all medical staff in hospitals and CAHs in year 1 using the 
following formula: loaded wage rate for medical staff (surgeons, 
physicians, physician assistants, nurse practitioners, nurse midwives, 
nurse anesthetists, registered nurses, and LPNs/LVNs) x total number of 
each medical staff type working in hospitals and CAHs x 3 hours per 
employee. Using this formula, we estimate that training all medical 
staff would cost $724,555,386.
    In hospitals, which have a larger number of beds, there is likely 
to be a greater division of staff among units, with medical staff 
specifically designated to work in emergency departments. In contrast, 
CAHs, which are smaller in size, are likely to have medical staff that 
work across units given their small size. We assume, therefore, that 20 
percent of medical staff in hospitals and all medical staff in CAHs 
will receive the training. To calculate the baseline year 1 cost for 
hospitals and CAHs, therefore, we use the following formula: Total cost 
for training all hospital/CAH medical staff x % hospital (CAH) medical 
staff

[[Page 94579]]

receiving training x Share of all Hospital and CAH Certified Beds. We 
then include the cost to train new employees who will need to receive 3 
hours of training by multiplying our baseline cost estimates by 1.21 to 
account for an average hospital turnover rate of 21 percent 
annually.\790\ As indicated in Table 224, we expect that the finalized 
requirement will cost approximately $9.8 million for CAHs and $173.4 
million for hospitals in year 1.
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    \790\ Nursing Solutions Incorporated, 2024 NSI National Health 
Care Retention & RN Staffing Report. 2024.
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    For subsequent years, we expect that refresher training for medical 
staff, who received the full training in previous years, will take 1 
hour to complete. In addition, new staff will need to receive the full 
3-hour training. With an annual hospital turnover rate of approximately 
21 percent,\791\ we expect 21 percent of employees each year to be new 
employees who will need 3 hours of training and 79 percent of employees 
will need 1 hour of training. To calculate the burden for years 2 to 
10, therefore, we use the following formula: (Total cost for training 
all hospital/CAH medical staff x % hospital(CAH) medical staff needing 
initial training x Share of all Hospital and CAH Certified Beds) + 
(Total cost for training all hospital/CAH medical staff x % 
hospital(CAH) medical staff receiving needing initial training x Share 
of all Hospital and CAH Certified Beds). To account for increases in 
real wage rates we increase the estimated cost by 0.44 percent 
annually. As indicated in Table 225, we estimate a total 10-year cost 
of $842,377,531.
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    \791\ Nursing Solutions Incorporated, 2024 NSI National Health 
Care Retention & RN Staffing Report. 2024.
[GRAPHIC] [TIFF OMITTED] TR27NO24.285

[GRAPHIC] [TIFF OMITTED] TR27NO24.286

    To estimate the cost for hospitals to have certain basic equipment 
readily available, we consulted with medical experts on the 
requirements. Based on their experience, we expect that the most 
hospitals with emergency services already have drugs, blood and blood 
products, and biologicals commonly used in emergency procedures, as 
well as equipment and supplies commonly used in emergency procedures. 
As such, we do not estimate a burden for these requirements. There is 
likely, however, to be wide variation in hospitals that have call-in 
systems. Based on our experience, we estimate that 50 percent of 
hospitals already have call-in systems

[[Page 94580]]

while 50 percent will need to install them in their emergency 
departments.
    As we noted above in estimating the cost for call-in systems for 
hospitals that offer obstetrical services, while we were not able to 
identify public estimates for the price of call-in systems, based on 
our experience we estimate that they will cost $2500 to $3500 per 
system, and we utilize the mid-point of the price estimate and assume 
each call-in system will cost $3000. We assume that 20 percent of 
hospital beds are allocated for emergency services and assume that 
there will need to be a call-in system for each bed. As indicated in 
Table 226, we estimate that this requirement will cost a total of 
$334,629,300 in year 1. We also expect that under normal use, call-in 
systems will need to be replaced in five years. As such, in Table 227 
we estimate a total cost of $669,384,600 over 10 years.
[GRAPHIC] [TIFF OMITTED] TR27NO24.287

[GRAPHIC] [TIFF OMITTED] TR27NO24.288

f. Transfer Protocols in Discharge Planning for Hospitals (Sec.  
482.43(c))
    As indicated in section XXI.C.6 of this final rule with comment 
period, we are finalizing the proposed emergency services readiness 
standard for hospitals with the modification that acute care hospitals 
are required to provide annual training to the relevant staff (as 
determined by the facility) regarding the hospital policies and 
procedures for transferring patients under its care. Below, we provide 
the comments we received on the proposed requirement's cost as well as 
our modifications to the final cost estimate based on these comments.
    Comment: Some commenters said that the proposed rule underestimated 
costs since it did not consider increases in wage and salaries for 
healthcare personnel, as well as staff turnover.
    Response: We appreciate and agree with the commenters. We are 
including a 0.44 annual increase in real wage rates starting in year 2 
for the transfer protocol training requirements. To address concern 
regarding staff turnover and training for new staff members, we are 
including training costs for new staff members based on a 21 percent 
annual staff turnover rate.\792\
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    \792\ Nursing Solutions Incorporated, 2024 NSI National Health 
Care Retention & RN Staffing Report. 2024.
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    After consideration of the comments, we are revising the transfer 
protocol staff training costs to include a 0.44 percent annual increase 
in real wage rates to account for wage growth among healthcare staff 
starting in year 2. We are also including additional burden for staff 
training to account for staff turnover and new staff members who will 
need transfer protocol training.
    Since hospital inpatients are included in those who may need to be 
transferred, we believe that medical staff across hospitals, and not 
just those in emergency departments, will need to receive training on 
transfer protocols. Specifically, we expect that all surgeons, 
physicians, physician assistants, nurse practitioners, nurse midwives, 
nurse anesthetists in hospitals will receive this training. We do not 
expect, however, that LPNs will receive this training and similarly 
expect that most RNs will not receive this training. Rather, we expect 
that among RNs, only experienced RNs who serve as transfer coordinators 
will receive it and estimate that this is only 5 percent of RNs 
nationwide. We estimate that each employee will require 1 hour of 
training annually and assume that that this training will occur on an 
annual basis. As indicated in Table 228, after increasing the estimated 
burden by 21 percent to account for the average annual turnover in 
hospitals \793\ that will require training new employees, we

[[Page 94581]]

expect the requirement to cost $86,207,786 in year 1. For subsequent 
years, we increase the estimated annual cost by 0.44 percent to account 
for real wage growth for staff. As indicated in Table 229, we expect 
that this requirement to cost an average of $87,934,883 annually and 
$879,348,830 over 10 years.
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    \793\ Nursing Solutions Incorporated, 2024 NSI National Health 
Care Retention & RN Staffing Report. 2024.
[GRAPHIC] [TIFF OMITTED] TR27NO24.289

[GRAPHIC] [TIFF OMITTED] TR27NO24.290

g. Summary of Regulatory Impact Analysis for Obstetrical and Emergency 
Services
    In Tables 231 and 232 we provide an estimate of the total annual 
and 10-year financial and hourly burden for the requirements related to 
obstetrical and emergency services that include: (1) organization, 
staffing, and delivery of services for hospitals and CAHs as outlined 
in Table 215 and Table 217; (2) obstetrical services staff training for 
hospitals and CAHs as outlined in Table 219; (3) quality assessment and 
performance improvement program requirements for hospitals and CAHs as 
outlined in Table 221; (4) maternal health QAPI activity requirements 
for hospitals and CAHs as outlined in Table 223; (5) emergency services 
readiness requirements for hospitals and CAHs in Table 225 and Table 
227; and (6) transfer protocols training for acute care hospitals as 
outlined in Table 229. These estimates exclude the cost for collection 
of information requirements that we have estimated above in Tables 199 
and 200 to cost $129,748,120 million over 10 years and take 1,038,698 
hours to complete. Overall, we estimate the total financial cost of the 
requirements will be approximately $4.10 billion and take $22.4 million 
hours to complete over 10 years.
    We sought comments on several issues related to the regulatory 
impact analysis, including the following:
     Are there additional data sources that estimate the number 
of medical staff, who work with obstetrical patients?
     Are there additional data sources to estimate the number 
of hospital and CAH obstetrical rooms/suites?
     Are there any additional data sources to estimate the cost 
for the provisions of cardiac monitors, call-in systems, and fetal 
doppler or monitors?
     Are there additional data sources to estimate the number 
of medical staff who work with emergency care units?
     Are there data sources to estimate the number of hospital 
room/suites that are allocated for emergency services?
     Are there any additional staff members who are likely to 
receive training for emergency services and obstetrical services?
    We did not receive responses to these comment solicitations.

[[Page 94582]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.291

[[Page 94583]]

[GRAPHIC] [TIFF OMITTED] TR27NO24.292

h. Benefits
    We invited comments on additional benefits related to the proposed 
requirements for obstetrical services in hospitals and CAHs but did not 
receive any information about additional benefits. Since we are not 
finalizing the requirement that hospitals and CAHs delineate and 
document obstetrical privileges for all practitioners, we are removing 
the benefits for this policy. Below, we detail the benefits from the 
finalized policies.
    First, there are the financial benefits. As noted above in the 
statement of need, research suggests that maternal mortality and 
morbidity have widespread negative effects on pregnant and postpartum 
patients and their families and high financial costs for payors. One 
study found that pregnancy-related mortality in the United States costs 
more than $27.4 billion and resulted in the loss of 114,000 years of 
potential life between 2018 and 2020.\794\ Another study showed that 
from birth to 5 years postpartum, nine maternal morbidities among the 
2019 US birth cohort cost birthing parents and their children $32.3 
billion, with $18.7 billion due to medical costs and $13.6 billion 
related to non-medical costs.795 796 A third study found 
that severe maternal morbidity during the prenatal to 30-day postpartum 
period was associated with a 75 percent increase in medical costs for 
patients utilizing Medicaid and a more than doubling in medical costs 
for commercially insured patients.\797\ While these studies vary in 
their methodology, the pre-post birth time period analyzed, medical 
conditions analyzed, and cost estimates, they suggest that maternal 
morbidity and mortality impose high health and safety, as well as 
economic costs on birth parents, children, payors, and society.\798\
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    \794\ White Robert, S., et al., Economic burden of maternal 
mortality in the USA, 2018-2020. Journal of Comparative 
Effectiveness Research, 2022. 11(13): 927-933.
    \795\ O'Neil, S.S., et al., Societal cost of nine selected 
maternal morbidities in the United States. PLOS ONE, 2022. 17(10): 
e0275656.
    \796\ These nine conditions included the following: amniotic 
fluid embolism, cardiac arrest, gestational diabetes mellitus, 
hemorrhage, hypertensive disorders, mental health conditions, renal 
disease, sepsis, and venous thromboembolism.
    \797\ Black, C.M., et al., Costs of Severe Maternal Morbidity in 
U.S. Commercially Insured and Medicaid Populations: An Updated 
Analysis. Women's Health Reports, 2021. 2(1): 443-451.
    \798\ Moran, P.S., et al., Economic burden of maternal 
morbidity--A systematic review of cost-of-illness studies. PLOS ONE, 
2020. 15(1): e0227377.
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    We believe that the policies we are finalizing will help reduce 
maternal morbidity and mortality and their associated costs for 
pregnant and postpartum patients and their families, as well as payors. 
Specifically, the finalized requirements that OB services are well-
organized and in accordance with acceptable standards of practices, 
have adequate provisions and protocols for OB emergencies, 
complications, immediate post-delivery care and other patient health 
and safety events as identified as part of the facility's QAPI program, 
and that OB patient care units are supervised by an individual with the 
necessary education and training will provide the foundation for 
ensuring uniform high-quality OB services. The requirement that 
hospitals and CAHs that offer obstetrical services have equipment that 
includes a call-in-system, cardiac monitor, and fetal doppler or 
monitor kept at the hospital and CAH and readily available for treating 
obstetrical cases to meet the needs of patients in accordance with the 
scope, volume, and complexity of services offered will help ensure 
efficient and effective care that can help reduce patient morbidity and 
mortality. Similarly, OB staff training and appropriate transfer 
protocols can also help avert avoidable maternal complications and 
deaths.\799\ Finally, engagement with recommendations from MMRCs and 
QAPI stratification of data can help facilities better identify 
unfavorable patient health and safety outcomes, which can allow them to

[[Page 94584]]

better tailor policies to address these issues.
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    \799\ https://saferbirth.org/aim-obstetric-emergency-readiness-resource-kit/.
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    Beyond reductions in maternal morbidity and mortality and their 
associated financial benefits, the finalized policies are likely also 
to reduce inequality among pregnant and postpartum women from different 
groups. For example, research shows that among women with any form of 
disability, there is a heightened risk for labor and delivery 
complications, as well as severe maternal morbidity and mortality. If 
hospitals and CAHs include training that helps health care 
practitioners better understand these risks and be more comfortable 
providing care to women with a disability, they may be able to better 
provide safe, high quality obstetric care, reducing obstetrical 
complications. Research also suggests that due to insufficient patient 
education by staff, women with limited English proficiency (LEP) 
experience disparities in obstetric care and are at risk for mental 
health conditions, including post-partum depression and substandard 
newborn care following neonatal ICU discharge.\800\ If facilities 
engage in increasing language-concordant care and awareness among 
providers regarding the use of medical interpreters and materials in 
diverse languages, they may be able to improve patient satisfaction, 
decrease medical errors, and improve patient safety.801 802 
Similarly, stratification of patient data can produce insights into 
health disparities that allow facilities to develop interventions to 
reduce them, with research showing that data collection and analysis by 
patient subgroup within health care facilities has an important impact 
on improving patient care consistently across patient 
populations.803 804 805 806 807
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    \800\ Togioka, Brandon & Seligman, Katherine & Delgado Upegui, 
Carlos. (2022). Limited English proficiency in the labor and 
delivery unit. Current Opinion in Anesthesiology. 35. 285-291.
    \801\ Sentell, Tetine & Chang, Ann & Ahn, Hyeong Jun & Miyamura, 
Jill. (2015). Maternal Language and Adverse Birth Outcomes in a 
Statewide Analysis. Women & health. 56. 10.1080/
03630242.2015.1088114.
    \802\ https://www.ahrq.gov/sites/default/files/publications/files/lepguide.pdf).
    \803\ Weinick, R.M. and R. Hasnain-Wynia, Quality Improvement 
Efforts Under Health Reform: How To Ensure That They Help Reduce 
Disparities--Not Increase Them. Health Affairs, 2011. 30(10): p. 
1837-1843.
    \804\ Bardach, N.S. and M.D. Cabana, The unintended consequences 
of quality improvement. Curr Opin Pediatr, 2009. 21(6): p. 777-82.
    \805\ Perzynski, A.T., et al., Patient portals and broadband 
internet inequality. J Am Med Inform Assoc, 2017. 24(5): p. 927-932.
    \806\ Antonio, M.G., O. Petrovskaya, and F. Lau, Is research on 
patient portals attuned to health equity? A scoping review. J Am Med 
Inform Assoc, 2019. 26(8-9): p. 871-883.
    \807\ Sequist, T.D., et al., Effect of quality improvement on 
racial disparities in diabetes care. Arch Intern Med, 2006. 166(6): 
p. 675-81.
---------------------------------------------------------------------------

    Beyond the benefits for obstetrical patients, our requirements are 
likely to have positive effects on the health and safety for patients 
generally. Our requirements for hospitals to have written policies and 
procedures for transferring patients under their care and to train 
medical staff regarding transfer protocols can support hospitals in 
expediting transfers when necessary. Efficient transfers to hospitals 
that can treat complex conditions and provide higher levels of care for 
all patients as needed. Similarly, our requirement that hospitals with 
emergency services must have adequate provisions and protocols for the 
care of patients with emergency conditions and train applicable staff 
on these protocols and provisions, is also likely to improve patient 
health and safety. Additional obstetric training for emergency 
department staff improves staff competencies (i.e., skills, knowledge, 
comfort, confidence, and effectiveness) in managing obstetric 
emergencies, supporting improved maternal health and 
safety,808 809 810 811 812 813 while training in pediatric 
readiness,814 815 and geriatric readiness 
816 817 818 819 820 improves staff capabilities in caring 
for these populations.
---------------------------------------------------------------------------

    \808\ Burke SM, Schmitt T, Kennedy P, et al. Emergency Medicine 
Obstetrics and Gynecology: A Case-Based Curriculum for Residents. 
MedEdPORTAL. 2023;19:11330.
    \809\ Espey E, Baty G, Rask J, Chungtuyco M, Pereda B, Leeman L. 
Emergency in the clinic: a simulation curriculum to improve 
outpatient safety. Am J Obstet Gynecol. Dec 2017;217(6):699.e1-
699.e13.
    \810\ Cooper MI, Papanagnou D, Meguerdichian M, Bajaj K. 
Emergency Obstetrics for the Emergency Medicine Provider. 
MedEdPORTAL. Oct 13 2016;12:10481.
    \811\ Jacobs PJ. Using High-Fidelity Simulation and Video-
Assisted Debriefing to Enhance Obstetrical Hemorrhage Mock Code 
Training. J Nurses Prof Dev. Sep/Oct 2017;33(5):234-239.
    \812\ Hopmann P, Varre JS, Duncan G, Devoe WB, Gable BD. 
Multidisciplinary Simulation of Trauma in Pregnancy with 
Resuscitative Endovascular Balloon Occlusion of the Aorta (REBOA) 
Utilization. Cureus. Dec 2022;14(12):e32820.
    \813\ Harrington J, Duncan G, D. Angelo K G. Multidisciplinary 
Simulation Improves Resident Confidence for Pregnant Patients 
Requiring Surgical Intervention. Cureus. Mar 2022;14(3):e23454.
    \814\ Ames, S.G., et al., Emergency Department Pediatric 
Readiness and Mortality in Critically Ill Children. Pediatrics, 
2019. 144(3).
    \815\ Newgard, C.D., et al., Emergency Department Pediatric 
Readiness and Short-term and Long-term Mortality Among Children 
Receiving Emergency Care. JAMA Network Open, 2023. 6(1): p. 
e2250941-e2250941.
    \816\ Keyes, DC, et al., Impact of a New Senior Emergency 
Department on Emergency Department Recidivism, Rate of Hospital 
Admission, and Hospital Length of Stay. Annals of Emergency 
Medicine, 2014. 63(5): p. 517-524.
    \817\ Dresden, S.M., et al., Geriatric Emergency Department 
Innovations: The Impact of Transitional Care Nurses on 30-day 
Readmissions for Older Adults. Acad Emerg Med, 2020. 27(1): p. 43-
53.
    \818\ Foo, C.L., et al., Geriatric assessment and intervention 
in an emergency department observation unit reduced re-attendance 
and hospitalisation rates. Australas J Ageing, 2012. 31(1): p. 40-6.
    \819\ Chong, E., et al., Emergency Department Interventions for 
Frailty (EDIFY): Front-Door Geriatric Care Can Reduce Acute 
Admissions. Journal of the American Medical Directors Association, 
2021. 22(4): p. 923-928.e5.
    \820\ Gettel, C.J., et al., An Outcome Comparison Between 
Geriatric and Nongeriatric Emergency Departments. Ann Emerg Med, 
2023. 82(6): p. 681-689.
---------------------------------------------------------------------------

i. Alternatives Considered
    We considered a variety of approaches when developing the finalized 
obstetrical services requirements for hospitals and CAHs. One approach 
was to leave the development of policies to improve obstetrical 
services to accrediting agencies or individual States. We decided 
against this approach, however, since there is likely to be wide 
variation across States and accrediting agencies in their requirements, 
leading to variation in obstetrical services for patients depending on 
the facility or State where they are located.
    We also considered requiring specific topics for the proposed OB 
services training requirement as well as for the requirement to train 
staff on the protocols for the care of patients with emergency 
conditions. We ultimately decided, however, to provide facilities with 
flexibility in how they approach these trainings so that they could 
provide it in a way that leads to the best improvements in and highest 
quality of care for pregnant and postpartum women. Similarly, we 
considered defining specific subpopulations that facilities must 
analyze when using their QAPI program to identify inequalities in 
health outcomes. Ultimately, however, we decided to provide facilities 
with flexibility regarding which subpopulations they analyze since 
features of patient populations are likely to vary greatly across 
different facilities.

D. Regulatory Review Cost Estimation

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this final rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on this year's proposed rule will be the number of reviewers 
of this final rule. We acknowledge that this assumption may understate 
or overstate

[[Page 94585]]

the costs of reviewing this rule. It is possible that not all 
commenters reviewed this year's rule in detail, and it is also possible 
that some reviewers chose not to comment on the proposed rule. For 
these reasons we thought that the number of past commenters would be a 
fair estimate of the number of reviewers of this rule.
    We welcomed any public comments on the approach in estimating the 
number of entities that would review the proposed rule. We did not 
receive any public comments specific to our solicitation.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $129.28 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it would take approximately 8 hours for 
the staff to review half of this final rule. For each entity that 
reviews the rule, the estimated cost is $1,034.24 (8 hours x $129.28). 
Therefore, we estimate that the total cost of reviewing this regulation 
is $2,645,585.92 ($1,034.24 x 2,558).

E. 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 
many hospitals and CAHs are considered small businesses either by the 
Small Business Administration's size standards with total revenues of 
$41.5 million or less in any single year or by the hospital's not-for-
profit status. Most ASCs and most CMHCs are considered small businesses 
with total revenues of $16.5 million or less in any single year. For 
details, we refer readers to the Small Business Administration's 
``Table of Size Standards'' at http://www.sba.gov/content/small-business-size-standards.
    Individuals and States are not included in the definition of a 
small entity. As its measure of significant economic impact on a 
substantial number of small entities, HHS uses a change in revenue of 
more than 3 to 5 percent. We believe that this threshold will be 
reached by the requirements in this final rule with comment period. 
Therefore, the Secretary has certified that this final rule with 
comment period will have a significant economic impact on a substantial 
number of small entities.
    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 604 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 final 
rule with comment period will increase payments to small rural 
hospitals by approximately 3 percent; therefore, it should have a 
negligible impact on approximately 528 small rural hospitals. We note 
that the estimated payment impact for any category of small entity will 
depend on both the services that they provide as well as the payment 
policies and/or payment systems that may apply to them. Therefore, the 
most applicable estimated impact may be based on the specialty, 
provider type, or payment system.
    For hospitals and CAHs, the finalized obstetrical services 
requirements will have an average annual cost of $423 million. 
According to the 2017 Economic Census,\821\ revenues for general 
medical and surgical hospitals (NAIC 522110) exceeded $1 trillion in 
2017, which is less than 0.50 percent of annual revenues.
---------------------------------------------------------------------------

    \821\ United State Census Bureau.622110: General medical and 
surgical hospitals. https://data.census.gov/profile/622110_-_General_medical_and_surgical_hospitals?n=622110&g=010XX00US. 
Accessed October 16, 2024.
---------------------------------------------------------------------------

    The analysis above, together with the remainder of this preamble, 
provides a regulatory flexibility analysis and a regulatory impact 
analysis.

F. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2024, that 
threshold is approximately $183 million. This final rule with comment 
period does not mandate any requirements for State, local, or tribal 
governments. This final rule with comment period will not impose a 
mandate that will result in the expenditure by State, local, and Tribal 
Governments, in the aggregate. Based on the cost estimates discussed in 
this section, we have assessed the various costs and benefits of the 
final updates to the requirements for participation for hospitals and 
CAHs. For the private sector facilities, the regulatory impact 
analysis, together with the remainder of the preamble, constitutes the 
analysis required under UMRA.

G. Federalism

    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 requirement 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 final rule with comment period 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 201 of this final rule with comment period, we 
estimate that OPPS payments to governmental hospitals (including State 
and local governmental hospitals) would increase by 2.6 percent under 
this final rule with comment period. 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 final rule 
with comment period, in conjunction with the remainder of this 
document, demonstrate that this rule is consistent with the regulatory 
philosophy and principles identified in Executive Order 12866, the RFA, 
and section 1102(b) of the Act.
    This final rule with comment period will 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. However, as noted in section XXIII of this 
final rule with comment period, this rule should not have a significant 
effect on small rural hospitals.
    The obstetrical services provisions in this final rule with comment 
period will not have a substantial direct effect on State, local, or 
tribal governments, preempt State law, or otherwise have a federalism 
implication.

H. Conclusion

    The changes we are finalizing will affect all classes of hospitals 
paid under the OPPS as well as 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 paid under the 
OPPS in CY

[[Page 94586]]

2025. Table 201 demonstrates the estimated distributional impact of the 
OPPS budget neutrality requirements that will result in a 3.0 percent 
increase in payments for all services paid under the OPPS in CY 2025, 
after considering all of the changes to APC reconfiguration and 
recalibration, as well as the OPD fee schedule increase factor, wage 
index changes, including the frontier State wage index adjustment, and 
estimated payment for outliers, changes to the pass-through payment 
estimate, and changes to outlier payments. However, some classes of 
providers that are paid under the OPPS would experience more 
significant gains or losses in OPPS payments in CY 2025.
    The updates we are making to the ASC payment system for CY 2025 
will affect each of the approximately 6,100 ASCs currently approved for 
participation in the Medicare program. The effect on an individual ASC 
would depend on its mix of patients, the proportion of the ASC's 
patients who are Medicare beneficiaries, the degree to which the 
payments for the procedures offered by the ASC are changed under the 
ASC payment system, and the extent to which the ASC provides a 
different set of procedures in the coming year than in previous years. 
Table 201 demonstrates the estimated distributional impact among ASC 
surgical specialties of the productivity-adjusted hospital market 
basket update factor of 2.9 percent for CY 2025.
    The new conditions of participation and the modifications to 
current conditions of participation for hospitals and CAHs that offer 
obstetrical services and emergency services will have a total 10-year 
impact of approximately $4.23 billion as outlined in Tables 200 and 
231. The average annual cost per hospital and CAH will be approximately 
$67,000.
    Finally, the additional exceptions to the four walls requirement 
under the Medicaid clinic services benefit for IHS/Tribal clinics, and 
at State option, behavioral health clinics and clinics located in rural 
areas are estimated to have an $1.18 billion impact in transfers for 
fiscal years 2025-2029. Table 211 demonstrates the Federal and State 
share impacts on IHS/Tribal clinics, behavioral health clinics, clinics 
located in rural areas, and in aggregate. As explained earlier in this 
section of this final rule, there is uncertainty in the potential for 
changes in utilization and costs of clinic services because of 
uncertainty in provider availability and beneficiary demand.

I. Waiver Fiscal Responsibility Act Requirements

    Please note that the Director of OMB has waived the requirements of 
section 263 of the Fiscal Responsibility Act of 2023 (Pub. L. 118-5) 
pursuant to section 265(a)(1) and (2) of that Act.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on October 23, 2024.

List of Subjects

42 CFR Part 406

    Diseases, Health facilities, Medicare.

42 CFR Part 407

    Medicare.

42 CFR Part 410

    Diseases, Health facilities, Health professions, Laboratories, 
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.

42 CFR Part 411

    Diseases, Medicare, 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 435

    Aid to families with dependent children, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements, Supplemental 
Security Income (SSI), Wages.

42 CFR Part 440

    Grant programs--health, Medicaid.

42 CFR Part 457

    Administrative practice and procedure, Grant programs--health, 
Health insurance, Reporting and recordkeeping requirements.

42 CFR Part 482

    Grant programs--health, Hospitals, Medicaid, Medicare, Reporting 
and recordkeeping requirements.

42 CFR Part 485

    Grant programs--health, Health facilities, Medicaid, Privacy, 
Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
and Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

0
1. The authority citation for part 406 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395i-2, 1395i-2a, 1395p, 1395q and 
1395hh.

0
2. Section 406.27 is amended by revising paragraph (d) to read as 
follows:

Sec.  406.27  Special enrollment periods for exceptional conditions.

* * * * *
    (d) SEP for formerly incarcerated individuals. An SEP exists for 
Medicare eligible individuals who are no longer incarcerated on or 
after January 1, 2023.
    (1) SEP parameters and duration before January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from the custody of penal authorities between January 1, 2023, 
and December 31, 2024, as described in Sec.  411.4(b) of this 
subchapter. The individual must demonstrate that they are eligible for 
Medicare and failed to enroll or reenroll in Medicare premium Part A 
due to being in custody of penal authorities and there is a record of 
release either through discharge documents or data available to SSA.
    (ii) SEP duration. The SEP starts the day of the individual's 
release from the custody of penal authorities and ends the last day of 
the 12th month after the month in which the individual is released from 
the custody of penal authorities.
    (2) SEP parameters and duration beginning January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from confinement in a jail, prison, or other penal institution 
or correctional facility on or after January 1, 2025, and demonstrate 
that they are eligible for Medicare and failed to enroll or reenroll in 
Medicare premium Part A due to being so confined, and there is a record 
of release, either through documentation of discharge or data available 
to SSA. Individuals released to and residing in halfway houses after 
incarceration are not considered incarcerated or in confinement for the 
purposes of this SEP.
    (ii) SEP duration. The SEP starts the day an individual is released 
from confinement as determined by SSA and ends the last day of the 12th 
month after the month in which the individual is released from 
confinement in a jail, prison, or other penal institution or 
correctional facility.
    (3) Entitlement--(i) General rule. Entitlement begins the first day 
of the

[[Page 94587]]

month following the month of enrollment, so long as the date is on or 
after January 1, 2023.
    (ii) Special rule. An individual has the option of requesting 
entitlement for a retroactive period of up to 6 months provided the 
date does not precede the month of their release from incarceration, 
the date is on or after January 1, 2023, and the individual pays the 
monthly premiums for the period of coverage (as required under Sec.  
406.32(f)). If retroactive enrollment is requested and the application 
is filed within the first 6 months of the SEP, the effective date is 
retroactive to the beginning of the month of their release from 
incarceration. If retroactive enrollment is requested and the 
application is filed in the last 6 months of the SEP, the coverage 
effective date is retroactive to the 6th month before the month of 
enrollment.
* * * * *

PART 407--SUPPLEMENTARY MEDICAL INSURANCE (SMI) ENROLLMENT AND 
ENTITLEMENT

0
3. The authority citation for part 407 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395p, 1395q, and 1395hh.

0
4. Section 407.23 is amended by revising paragraph (d) to read as 
follows:

Sec.  407.23  Special enrollment periods for exceptional conditions.

* * * * *
    (d) SEP for formerly incarcerated individuals. An SEP exists for 
Medicare eligible individuals who are no longer incarcerated on or 
after January 1, 2023.
    (1) SEP parameters and duration before January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from the custody of penal authorities between January 1, 2023, 
and December 31, 2024, as described in Sec.  411.4(b) of this 
subchapter. The individual must demonstrate that they are eligible for 
Medicare and failed to enroll or reenroll in SMI due to being in the 
custody of penal authorities and there is a record of release either 
through discharge documents or data available to SSA.
    (ii) SEP duration. The SEP starts the day of the individual's 
release from the custody of penal authorities and ends the last day of 
the 12th month after the month in which the individual is released from 
the custody of penal authorities.
    (2) SEP parameters and duration beginning January 1, 2025--(i) 
Eligibility. An individual is eligible for this SEP if they are 
released from confinement in a jail, prison, or other penal institution 
or correctional facility on or after January 1, 2025, and demonstrate 
that they are eligible for Medicare and failed to enroll or reenroll in 
SMI due to being so confined, and there is a record of release, either 
through documentation of discharge or data available to SSA. 
Individuals released to and residing in halfway houses after 
incarceration are not considered incarcerated or in confinement for the 
purposes of this SEP.
    (ii) SEP duration. The SEP starts the day an individual is released 
from confinement as determined by SSA and ends the last day of the 12th 
month after the month in which the individual is released from 
confinement in a jail, prison, or other penal institution or 
correctional facility.
    (3) Entitlement--(i) General rule. Entitlement begins the first day 
of the month following the month of enrollment, so long as the date is 
on after January 1, 2023.
    (ii) Special rule. An individual has the option of requesting 
entitlement for a retroactive period of up to 6 months provided the 
date does not precede the month of their release from incarceration, 
the date is on or after January 1, 2023, and the individual pays the 
monthly premiums for the period of coverage (as required under Sec.  
408.4 of this subchapter). If retroactive enrollment is requested and 
the application is filed within the first 6 months of the SEP, the 
effective date is retroactive to the beginning of the month of their 
release from incarceration. If retroactive enrollment is requested and 
the application is filed in the last 6 months of the SEP, the coverage 
effective date is retroactive to the 6th month before the month of 
enrollment.
* * * * *

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
5. The authority citation for part 410 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.

0
6. Section 410.27 is amended by revising paragraph (a)(1)(iv)(B)(1) to 
read as follows:

Sec.  410.27  Therapeutic outpatient hospital or CAH services and 
supplies incident to a physician's or nonphysician practitioner's 
service: Conditions.

    (a) * * *
    (1) * * *
    (iv) * * *
    (B) * * *
    (1) For purposes of this section, direct supervision means that the 
physician or nonphysician practitioner must be immediately available to 
furnish assistance and direction throughout the performance of the 
procedure. It does not mean that the physician or nonphysician 
practitioner must be present in the room when the procedure is 
performed. For pulmonary rehabilitation, cardiac rehabilitation, and 
intensive cardiac rehabilitation services, direct supervision must be 
furnished as specified in Sec. Sec.  410.47 and 410.49, respectively. 
Through December 31, 2025, the presence of the physician or 
nonphysician practitioner for the purpose of the supervision of 
pulmonary rehabilitation, cardiac rehabilitation, and intensive cardiac 
rehabilitation services includes virtual presence through audio/video 
real-time communications technology (excluding audio-only); and
* * * * *

0
7. Section 410.28 is amended by revising paragraph (e)(2)(iii) to read 
as follows:

Sec.  410.28  Hospital or CAH diagnostic services furnished to 
outpatients: Conditions.

* * * * *
    (e) * * *
    (2) * * *
    (iii) Through December 31, 2025, the presence of the physician or 
nonphysician practitioner under paragraphs (e)(2)(i) and (ii) of this 
section includes virtual presence through audio/video real-time 
communications technology (excluding audio-only).
* * * * *

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

0
8. The authority citation for part 411 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh, 
and 1395nn.

0
9. Section 411.4 is revised to read as follows:

Sec.  411.4  Items and services for which neither the beneficiary nor 
any other person is legally obligated to pay.

    (a) General rule. Except in the case of federally qualified health 
center services and as provided in Sec.  411.8(b) (for services paid by 
a governmental entity), Medicare may not pay for an item or service 
under Part A or Part B if--
    (1) The individual has no legal obligation to pay for the item or 
service; and

[[Page 94588]]

    (2) No other person (by reason of such individual's membership in a 
prepayment plan or otherwise) has a legal obligation to provide or pay 
for the item or service.
    (b) Special conditions for payment for items or services furnished 
to an individual in the custody of a penal authority. (1) An individual 
in the custody of a penal authority is considered to have a legal 
obligation to pay for items or services furnished to the individual 
only if the following conditions are met:
    (i) State or local law requires the individual to pay the cost of 
items and services that the individual receives;
    (ii) The penal authority enforces the requirement to pay for items 
or services by billing all individuals who receive such items or 
services, whether or not covered by Medicare or any other health 
insurance; and
    (iii) The penal authority pursues collection of amounts owed for 
items or services received in the same way and with the same vigor that 
it pursues the collection of other debts.
    (2) For purposes of this paragraph (b), a penal authority means a 
police department or other law enforcement agency, a government agency 
operating under a penal statute, or a State, local or Federal jail, 
prison, penitentiary, or similar institution.
    (3) For purposes of this paragraph (b)--
    (i) An individual is considered to be in the custody of a penal 
authority if the individual is:
    (A) Incarcerated in a jail, prison, penitentiary, or similar 
institution;
    (B) Temporarily outside of a jail, prison, penitentiary, or similar 
institution on medical furlough or similar arrangement;
    (C) Escaped from confinement by a penal authority; or
    (D) Required to reside in a mental health facility under a penal 
statute or rule.
    (ii) Individuals who are not considered to be in the custody of a 
penal authority include, but are not limited to, individuals who are--
    (A) Released to the community pending trial (including those in 
pretrial community supervision and those released pursuant to cash 
bail);
    (B) On parole;
    (C) On probation;
    (D) On home detention or home confinement; or
    (E) Required to live in a halfway house or other community-based 
transitional facility.

PART 416--AMBULATORY SURGICAL SERVICES

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

    Authority: 42 U.S.C. 1302 and 1395hh.

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

Sec.  416.164  Scope of ASC services.

    (a) * * *
    (4) Drugs and biologicals for which separate payment is not allowed 
under the hospital outpatient prospective payment system (OPPS);
* * * * *
    (b) * * *
    (6) Non-opioid pain management drugs, biologicals, and medical 
devices as determined by CMS under Sec.  416.174.
* * * * *

0
12. Section 416.171 is amended by revising paragraph (b)(1) to read as 
follows:

Sec.  416.171  Determination of payment rates for ASC services.

* * * * *
    (b) * * *
    (1) Covered ancillary services specified in Sec.  416.164(b), with 
the exception of radiology services and certain diagnostic tests as 
provided in Sec.  416.164(b)(5) and non-opioid pain management drugs, 
biologicals, and medical devices as determined by CMS under Sec.  
416.174.
* * * * *

0
13. Section 416.174 is revised to read as follows:

Sec.  416.174  Payment for non-opioid pain management drugs, 
biologicals, and medical devices.

    (a) Eligibility for separate payment for non-opioid pain management 
drugs and biologicals. From January 1, 2025, through December 31, 2027, 
a non-opioid drug or biological is eligible for separate payment for an 
applicable calendar year if CMS determines it meets the following 
requirements through that year's rulemaking:
    (1) The drug is approved under a new drug application under section 
505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), under an 
abbreviated new drug application under section 505(j) of the FDCA, or, 
in the case of a biological product, is licensed under section 351 of 
the Public Health Service Act. The product also has a label indication 
approved by the Food and Drug Administration to reduce postoperative 
pain, or produce postsurgical or regional analgesia, without acting 
upon the body's opioid receptors.
    (2) The drug or biological does not have transitional pass-through 
payment status under Sec.  419.64 of this subchapter. In the case where 
a drug or biological otherwise meets the requirements under this 
section and has transitional pass-through payment status that expires 
during the calendar year, the drug or biological will qualify for 
separate payment as specified in this paragraph (a) during such 
calendar year on the first day of the next quarter following the 
expiration of its pass-through status.
    (3) The drug or biological has payment that is packaged into a 
payment for a covered outpatient department (OPD) service (or group of 
services) under a policy in this part.
    (b) Eligibility for separate payment for non-opioid medical 
devices. From January 1, 2025, through December 31, 2027, a medical 
device is eligible for separate payment for an applicable calendar year 
if CMS determines it meets all of the following requirements through 
that year's rulemaking:
    (1) The medical device is used to deliver a therapy to reduce 
postoperative pain, or produce postsurgical or regional analgesia, and 
has an application under section 515 of the FDCA that has been approved 
with respect to the device, has been cleared for market under section 
510(k) of the FDCA, or is exempt from the requirements of section 
510(k) of the FDCA pursuant to section 510(l) or (m) or 520(g) of the 
FDCA.
    (2) The medical device has demonstrated the ability to replace, 
reduce, or avoid intraoperative or postoperative opioid use or the 
quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal.
    (3) The medical device does not have transitional pass-through 
payment status under Sec.  419.66 of this subchapter. In the case where 
a medical device otherwise meets the requirements under this section 
and has transitional pass-through payment status that expires during 
the calendar year, the medical device will qualify for separate payment 
as specified in this paragraph (b) during such calendar year on the 
first day of the next calendar year quarter following the expiration of 
its pass-through status.
    (4) The medical device has payment that is packaged into a payment 
for a covered OPD service (or group of services) under a policy in this 
part.
    (c) Payment amount. From January 1, 2025, through December 31, 
2027, the amount of payment for a qualifying non-opioid treatment for 
pain relief is as follows:
    (1) For a qualifying drug or biological as defined in paragraph (a) 
of this

[[Page 94589]]

section, the amount of payment is the amount determined under section 
1847A of the Act for the drug or biological that exceeds the portion of 
the otherwise applicable Medicare OPD fee schedule amount, which is 
determined to be zero dollars for calendar year 2025, subject to 
paragraph (c)(3) of this section.
    (2) For a qualifying medical device as defined in paragraph (b) of 
this section, the amount of payment is the amount of the hospital's 
charges for the device, adjusted to cost, that exceeds the portion of 
the otherwise applicable Medicare OPD fee schedule amount, which is 
determined to be zero dollars for calendar year 2025, subject to 
paragraph (c)(3) of this section.
    (3) The payment amounts in paragraphs (c)(1) and (2) of this 
section shall not exceed the estimated average of 18 percent of the OPD 
fee schedule amount of the volume weighted average of the most frequent 
five OPD primary procedures into which a non-opioid treatment for pain 
relief would be packaged.

0
14. Section 416.320 is amended by revising paragraph (b) to read as 
follows:

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

* * * * *
    (b) Immediate measure suspension. If CMS determines that the 
collection and reporting activities related to a measure potentially 
raise patient safety concerns, CMS will immediately suspend the measure 
from the ASCQR Program and promptly notify ASCs and the public of the 
suspension. CMS will propose to retain, modify, or remove the suspended 
measure in the next feasible rulemaking cycle.
* * * * *

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

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

    Authority:  42 U.S.C. 1302, 1395l(t), and 1395hh.

0
16. Section 419.2 is amended by revising paragraph (b)(15) to read as 
follows:

Sec.  419.2  Basis of payment.

* * * * *
    (b) * * *
    (15) Drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure (including but not 
limited to, diagnostic radiopharmaceuticals with per-day costs at or 
below the per-day diagnostic radiopharmaceutical packaging threshold 
for the applicable year, contrast agents, and pharmacologic stress 
agents);
* * * * *

0
17. Section 419.41 is amended by adding paragraphs (h) through (j) to 
read as follows:

Sec.  419.41  Calculation of national beneficiary copayment amounts and 
national Medicare program payment amounts.

* * * * *
    (h) For a therapeutic radiopharmaceutical for which payment is not 
packaged into a payment for a covered outpatient department (OPD) 
service (or group of services) and that does have on transitional pass-
through payment status as described in Sec.  419.64, to calculate the 
program payment and copayment amounts CMS does the following:
    (1) Determines the average sales price (ASP) for the therapeutic 
radiopharmaceutical for the quarter established under the methodology 
described by section 1847A of the Act. If that amount is not available, 
then CMS calculates the mean unit cost (MUC) using the most recently 
available claims data for that therapeutic radiopharmaceutical.
    (2) Subtracts from the amount determined under paragraph (h)(1) of 
this section the amount of the applicable Part B deductible provided 
under Sec.  410.160 of this chapter.
    (3) Multiplies the amount determined under paragraph (h)(1) of this 
section (less any applicable deductible under paragraph (h)(2) of this 
section) by 20 percent. This is the beneficiary's copayment amount for 
the drug or biological.
    (4) Subtracts the amount determined under paragraph (h)(3) of this 
section from the amount determined under paragraph (h)(1) of this 
section (less any applicable deductible determined under paragraph 
(h)(2) of this section). This amount is the preliminary program amount.
    (5) Adds to the preliminary program amount determined under 
paragraph (h)(4) of this section the amount by which the copayment 
amount would have exceeded the inpatient hospital deductible for that 
year. This amount is the final Medicare program payment amount.
    (i) For a diagnostic radiopharmaceutical for which payment is not 
packaged into a payment for a covered OPD service (or group of 
services) and that does not have transitional pass-through payment 
status as described in Sec.  419.64, to calculate the program payment 
and copayment amounts CMS does the following:
    (1) Calculates the MUC using the most recently available claims 
data for that diagnostic radiopharmaceutical, if claims data are 
available. If claims data are not available, determines the ASP for the 
diagnostic radiopharmaceutical for the quarter established under the 
methodology described by section 1847A of the Act. If ASP data are not 
available, then based on the wholesale acquisition cost (WAC), under 
the methodology described by section 1847A of the Act. If WAC data are 
not available, then based on 95 percent of the average wholesale price.
    (2) Subtracts from the amount determined under paragraph (i)(1) of 
this section the amount of the applicable Part B deductible provided 
under Sec.  410.160 of this chapter.
    (3) Multiplies the amount determined under paragraph (i)(1) of this 
section (less any applicable deductible under paragraph (i)(2) of this 
section) by 20 percent. This is the beneficiary's copayment amount for 
the drug or biological.
    (4) Subtracts the amount determined under paragraph (i)(3) of this 
section from the amount determined under paragraph (i)(1) of this 
section (less any applicable deductible determined under paragraph 
(i)(2) of this section). This amount is the preliminary program amount.
    (5) Adds to the preliminary program amount determined under 
paragraph (i)(4) of this section the amount by which the copayment 
amount would have exceeded the inpatient hospital deductible for that 
year. This amount is the final Medicare program payment amount.
    (j) For a drug covered as an additional preventive service (DCAPS), 
as defined at Sec.  410.64 of this chapter, the program payment amount 
is 100 percent of the payment amount determined as follows:
    (1) If ASP data is available for the drug, consistent with part 
414, subpart J, of this chapter, then the payment amount is determined 
using the methodology set forth in section 1847A of the Act and 
according to the provisions in part 414, subpart K, of this chapter.
    (2) If ASP data is not available, then the payment amount is 
determined according to the most recently published National Average 
Drug Acquisition Cost (NADAC) prices for the drug and is the lesser of 
the median NADAC price of all generic forms of the drug or the lowest 
NADAC price brand name product.
    (3) If ASP data and NADAC prices are not available, then the 
payment amount

[[Page 94590]]

is determined according to the most recently published pharmaceutical 
pricing data for the drug as included in the Federal Supply Schedule 
(FSS), as managed by the Department of Veterans Affairs per 48 CFR part 
38, and is the lesser of the median FSS price of all generic forms of 
the drug or the lowest FSS price brand name product.
    (4) If ASP data, NADAC prices, and FSS pharmaceutical prices are 
not available, then, for the period beginning January 1, 2025, through 
December 31, 2025, the payment amount is WAC plus 6 percent, or 3 
percent if in an initial sales period consistent with 1847A(c)(4) of 
the Act, and beginning January 1, 2026, the payment amount is the 
invoice price determined by the Medicare Administrative Contractor 
(MAC).

0
18. Section 419.43 is amended by adding paragraph (k) to read as 
follows:

Sec.  419.43  Adjustments to national program payment and beneficiary 
copayment amounts.

* * * * *
    (k) Payment for non-opioid pain management drugs and biologicals--
(1) Eligibility for separate payment for non-opioid pain management 
drugs and biologicals. From January 1, 2025, through December 31, 2027, 
a drug or biological is eligible for separate payment for an applicable 
calendar year if CMS determines it meets the following requirements 
through that year's rulemaking:
    (i) The drug is approved under a new drug application under section 
505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), under an 
abbreviated new drug application under section 505(j) of the FDCA, or, 
in the case of a biological product, is licensed under section 351 of 
the Public Health Service Act. The product has a label indication 
approved by the Food and Drug Administration to reduce postoperative 
pain, or produce postsurgical or regional analgesia, without acting 
upon the body's opioid receptors.
    (ii) The drug or biological does not have transitional pass-through 
payment status under Sec.  419.64. In the case where a drug or 
biological otherwise meets the requirements under this section and has 
transitional pass-through payment status that expires during the 
calendar year, the drug or biological will qualify for separate payment 
as specified in this paragraph (k) during such calendar year on the 
first day of the next calendar year quarter following the expiration of 
its pass-through status.
    (iii) The drug or biological has payment that is packaged into a 
payment for a covered OPD service (or group of services) under a policy 
in this section.
    (2) Eligibility for separate payment for non-opioid medical 
devices. From January 1, 2025, through December 31, 2027, a medical 
device is eligible for separate payment for an applicable calendar year 
if CMS determines it meets the following requirements through that 
year's rulemaking:
    (i) The medical device, is used to deliver a therapy to reduce 
postoperative pain, or produce postsurgical or regional analgesia, and 
has an application under section 515 of the FDCA that has been approved 
with respect to the device, been cleared for market under section 
510(k) of the FDCA, or is exempt from the requirements of 510(k) of the 
FDCA pursuant to section 510(l) or (m) or 520(g) of the FDCA.
    (ii) The medical device has demonstrated the ability to replace, 
reduce, or avoid intraoperative or postoperative opioid use or the 
quantity of opioids prescribed in a clinical trial or through data 
published in a peer-reviewed journal.
    (iii) The medical device does not have transitional pass-through 
payment status under Sec.  419.66. In the case where a medical device 
otherwise meets the requirements under this section and has 
transitional pass-through payment status that expires during the 
calendar year, the medical device will qualify for separate payment as 
specified in this paragraph (k)(2) during such calendar year on the 
first day of the next calendar year quarter following the expiration of 
its pass-through status.
    (iv) The medical device has payment that is packaged into a payment 
for a covered OPD service (or group of services) under a policy in this 
section.
    (3) Payment amount. From January 1, 2025, through December 31, 
2027, the amount of payment for a qualifying non-opioid treatment for 
pain relief is as follows:
    (i) For a qualifying drug or biological as defined in paragraph 
(k)(1) of this section, the amount of payment is the amount determined 
under section 1847A for the drug or biological that exceeds the portion 
of the otherwise applicable Medicare OPD fee schedule that the 
Secretary determines is associated with the drug or biological, subject 
to paragraph (k)(3)(iii) of this section.
    (ii) For a qualifying medical device as defined in paragraph (k)(2) 
of this section, the amount of payment is the amount of the hospital's 
charges for the device, adjusted to cost, that exceeds the portion of 
the otherwise applicable Medicare OPD fee schedule that the Secretary 
determines is associated with the device, subject to paragraph 
(k)(3)(iii) of this section.
    (iii) The payment amounts in paragraph (k)(3)(i) and (ii) of this 
section shall not exceed the estimated average of 18 percent of the OPD 
fee schedule amount of the volume weighted average of the most frequent 
five OPD primary procedures into which a non-opioid treatment for pain 
relief would be packaged.

0
19. Section 419.46 is amended by revising paragraph (i)(2) and adding 
paragraph (j) to read as follows:

Sec.  419.46  Requirements under the Hospital Outpatient Quality 
Reporting (OQR) Program.

* * * * *
    (i) * * *
    (2) Immediate measure suspension. If CMS determines that the 
collection and reporting activities related to a measure potentially 
raise patient safety concerns, CMS will immediately suspend the measure 
from the Hospital OQR Program and promptly notify hospitals and the 
public of the suspension. CMS will propose to retain, modify, or remove 
the suspended measure in the next feasible rulemaking cycle.
* * * * *
    (j) Requirements for submission of electronic clinical quality 
measures (eCQMs) under the Hospital OQR Program. (1) Hospitals must 
utilize certified technology updated to be consistent with the Office 
of the National Coordinator for Health Information Technology's health 
information technology (IT) certification criteria, as adopted and 
updated in 45 CFR 170.315.
    (2) Hospitals must use electronic health record technology 
certified to all eCQMs that are available to report under the Hospital 
OQR Program.
    (3) Hospitals must use the most recent version of the eCQM 
electronic measure specifications for the applicable reporting period 
available on the Electronic Clinical Quality Improvement Resource 
Center website at https://ecqi.healthit.gov/, or another website as 
designated by CMS.

0
20. Section 419.47 is amended by revising the section heading and 
paragraph (a) introductory text to read as follows:

Sec.  419.47  Coding and payment for Category B Investigational Device 
Exemption (IDE) studies and devices/drugs studies.

    (a) Creation of a new HCPCS code for Category B IDE studies that 
have a treatment arm and a placebo control arm. CMS will create a new 
HCPCS code, or revise an existing HCPCS code,

[[Page 94591]]

to describe a Category B IDE study, which will include both the 
treatment and placebo control arms, related device(s) of the study, as 
well as routine care items and services, as specified under Sec.  
405.201 of this chapter, when CMS determines that:
* * * * *

0
21. Section 419.82 is amended by revising paragraph (d)(1)(iii) to read 
as follows:

Sec.  419.82  Prior authorization for certain covered hospital 
outpatient department services.

* * * * *
    (d) * * *
    (1) * * *
    (iii) The provisional affirmation or non-affirmation will be issued 
within 7-calendar days of receipt of the prior authorization request.
* * * * *

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

0
22. The authority citation for part 435 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
23. Section 435.926 is amended by revising paragraphs (b) introductory 
text, (b)(1), (c)(1), and (d)(1) to read as follows:

Sec.  435.926  Continuous eligibility for children.

* * * * *
    (b) Eligibility. The agency must provide continuous eligibility for 
the period specified in paragraph (c) of this section for an individual 
who is:
    (1) Under age 19; and
* * * * *
    (c) * * *
    (1) The length of the continuous eligibility period is 12 months.
* * * * *
    (d) * * *
    (1) The child attains age 19;
* * * * *

PART 440--SERVICES: GENERAL PROVISIONS

0
24. The authority citation for part 440 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
25. Section 440.90 is revised to read as follows:

Sec.  440.90  Clinic services.

    Clinic services means preventive, diagnostic, therapeutic, 
rehabilitative, or palliative services that are furnished by a facility 
that is not part of a hospital but is organized and operated to provide 
medical care to outpatients. The term includes the following services 
furnished to outpatients (services in paragraphs (a) through (c) of 
this section are a mandatory part of clinic services, while services in 
paragraphs (d) and (e) of this section are optional):
    (a) Services furnished at the clinic by or under the direction of a 
physician or dentist.
    (b) Services furnished outside the clinic, by clinic personnel 
under the direction of a physician, to an individual who does not 
reside in a permanent dwelling or does not have a fixed home or mailing 
address.
    (c) Services furnished outside a clinic that is a facility of the 
Indian Health Service, whether operated by the Indian Health Service or 
by a Tribe or Tribal organization (as authorized by the Indian Self-
Determination and Education Assistance Act (ISDEAA), Pub. L. 93-638), 
by clinic personnel under the direction of a physician.
    (d) Services furnished outside of a clinic that is primarily 
organized for the care and treatment of outpatients with behavioral 
health disorders, including mental health and substance use disorders, 
by clinic personnel under the direction of a physician.
    (e) Services furnished outside of a clinic that is located in a 
rural area and is not a rural health clinic (as referenced in section 
1905(a)(2)(B) of the Social Security Act and Sec.  440.20(b)) by clinic 
personnel under the direction of a physician. States must include a 
definition of rural area in their State plans. This definition must be 
either a definition adopted and used by a Federal governmental agency 
for programmatic purposes, or a definition adopted by a State 
governmental agency with a role in setting State rural health policy.

PART 457--ALLOTMENTS AND GRANTS TO STATES

0
26. The authority citation for part 457 continues to read as follows:

    Authority: 42 U.S.C. 1302.

0
27. Section 457.342 is revised to read as follows:

Sec.  457.342  Continuous eligibility for children.

    A State must provide continuous eligibility for children under a 
separate CHIP in accordance with the terms of Sec.  435.926 of this 
chapter, and subject to a child remaining ineligible for Medicaid, as 
required by section 2110(b)(1) of the Act and Sec.  457.310 (related to 
the definition and standards for being a targeted low-income child) and 
the requirements of section 2102(b)(3) of the Act and Sec.  457.350 
(related to eligibility screening and enrollment).

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

0
28. The authority citation for part 482 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395hh, and 1395rr, unless otherwise 
noted.

0
29. Section 482.21 is amended by--
0
a. Adding paragraph (b)(4);
0
b. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g), 
respectively; and
0
c. Adding new paragraph (e).
    The additions read as follows:

Sec.  482.21  Condition of participation: Quality assessment and 
performance improvement program.

* * * * *
    (b) * * *
    (4) Effective January 1, 2027, for hospitals that offer obstetrical 
services, the hospital must utilize its quality assessment and 
performance improvement (QAPI) program to assess and improve health 
outcomes and disparities among obstetrical patients on an ongoing 
basis. At a minimum, the hospital must:
    (i) Analyze data and quality indicators collected for the QAPI 
program by diverse subpopulations as identified by the hospital among 
obstetrical patients.
    (ii) Measure, analyze, and track data, measures, and quality 
indicators on patient outcomes and disparities in processes of care, 
services and operations among obstetrical patients.
    (iii) Analyze and prioritize patient health outcomes and 
disparities, develop and implement actions to improve patient health 
outcomes and disparities, measure results, and track performance to 
ensure improvements are sustained among obstetrical patients.
    (iv) Conduct at least one measurable performance improvement 
project focused on improving health outcomes and disparities among the 
hospital's population(s) of obstetrical patients annually.
* * * * *
    (e) Standard: Maternal health QAPI activities. Effective January 1, 
2027, for hospitals that offer obstetrical services, the following 
additional QAPI requirements apply:
    (1) Obstetrical services leadership must engage in QAPI as 
specified in this section for obstetrical services, including but not 
limited to participating in data collection and monitoring as specified 
in paragraph (b) of this section.

[[Page 94592]]

    (2) If a maternal mortality review committee (MMRC) is available at 
the State, Tribal, or local jurisdiction in which the hospital is 
located, the facility leadership, obstetrical services leadership, or 
their designate(s) must further have a process for incorporating 
publicly available MMRC(s) data and recommendations into the hospital 
QAPI program as specified in paragraph (b) of this section.
* * * * *

0
30. Section 482.43 is amended by--
0
a. Redesignating paragraph (c) as paragraph (d); and
0
b. Adding new paragraph (c).
    The addition reads as follows:

Sec.  482.43  Condition of participation: Discharge planning.

* * * * *
    (c) Standard: Transfer protocols. Effective July 1, 2025, the 
hospital must have written policies and procedures for transferring 
patients under its care (inclusive of inpatient services) to the 
appropriate level of care (including to another hospital) as needed to 
meet the needs of the patient. The hospital must also provide annual 
training to relevant staff regarding the hospital policies and 
procedures for transferring patients under its care.
* * * * *

0
31. Section 482.55 is amended by adding paragraph (c) to read as 
follows:

Sec.  482.55  Condition of participation: Emergency services.

* * * * *
    (c) Standard: Emergency services readiness. Effective July 1, 2025, 
in accordance with the complexity and scope of services offered, there 
must be adequate provisions and protocols to meet the emergency needs 
of patients.
    (1) Protocols. Protocols must be consistent with nationally 
recognized and evidence-based guidelines for the care of patients with 
emergency conditions, including but not limited to patients with 
obstetrical emergencies, complications, and immediate post-delivery 
care.
    (2) Provisions. Provisions include equipment, supplies, and 
medication used in treating emergency cases. Such provisions must be 
kept at the hospital and be readily available for treating emergency 
cases to meet the needs of patients. The available provisions must 
include the following:
    (i) Drugs, blood and blood products, and biologicals commonly used 
in life-saving procedures;
    (ii) Equipment and supplies commonly used in life-saving 
procedures; and
    (iii) Each emergency services treatment area must have a call-in-
system for each patient.
    (3) Staff training. Applicable staff, as identified by the 
hospital, must be trained annually on the protocols and provisions 
implemented pursuant to this section.
    (i) The governing body must identify and document which staff must 
complete such training.
    (ii) The hospital must document in the staff personnel records that 
the training was successfully completed.
    (iii) The hospital must be able to demonstrate staff knowledge on 
the topics implemented pursuant to this section.
    (iv) The hospital must use findings from its QAPI program, as 
required at Sec.  482.21, to inform staff training needs and any 
additions, revisions, or updates to training topics on an ongoing 
basis.

0
32. Section 482.59 is added to subpart D to read as follows:

Sec.  482.59  Condition of participation: Obstetrical services.

    If the hospital offers obstetrical services, the services must be 
well organized and provided in accordance with nationally recognized 
acceptable standards of practice for the health care (including 
physical and behavioral health) of pregnant, birthing, and postpartum 
patients. If outpatient obstetrical services are offered, the services 
must be consistent in quality with inpatient care in accordance with 
the complexity of services offered.
    (a) Standard: Organization and staffing. Effective January 1, 2026, 
the organization of the obstetrical services must be appropriate to the 
scope of the services offered. As applicable, the services must be 
integrated with other departments of the hospital.
    (1) Labor and delivery rooms/suites (including labor rooms, 
delivery rooms (including rooms for operative delivery), and post-
partum/recovery rooms whether combined or separate) must be supervised 
by an experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a doctor of medicine or 
osteopathy.
    (2) Obstetrical privileges must be delineated for all practitioners 
providing obstetrical care in accordance with the competencies of each 
practitioner in accordance with Sec.  482.22(c).
    (b) Standard: Delivery of service. Effective January 1, 2026, 
Obstetrical services must be consistent with needs and resources of the 
facility. Policies governing obstetrical care must be designed to 
assure the achievement and maintenance of high standards of medical 
practice and patient care and safety.
    (1) The following equipment must be kept at the hospital and be 
readily available for treating obstetrical cases to meet the needs of 
patients in accordance with the scope, volume, and complexity of 
services offered: call-in-system, cardiac monitor, and fetal doppler or 
monitor.
    (2) There must be adequate provisions and protocols, consistent 
with nationally recognized and evidence-based guidelines, for 
obstetrical emergencies, complications, immediate post-delivery care, 
and other patient health and safety events as identified as part of the 
QAPI program (Sec.  482.21). Provisions include equipment (in addition 
to the equipment required under paragraph (b)(1) of this section), 
supplies, and medication used in treating emergency cases. Such 
provisions must be kept in the hospital and be readily available for 
treating emergency cases.
    (c) Standard: Staff training. Effective January 1, 2027, the 
hospital must develop policies and procedures to ensure that relevant 
staff are trained on select topics for improving the delivery of 
maternal care.
    (1) Training concepts must reflect the scope and complexity of 
services offered within the facility, including but not limited to:
    (i) Facility-identified evidence-based best practices and protocols 
to improve the delivery of maternal care within the facility; and
    (ii) The hospital must use findings from its QAPI program, as 
required at Sec.  482.21, to inform staff training needs and any 
additions, revisions, or updates to training topics on an ongoing 
basis.
    (2) The hospital must provide relevant new staff with initial 
training.
    (3) The governing body must identify and document which staff must 
complete initial training and subsequent biannual training on the 
topics identified at paragraph (c)(1) of this section.
    (4) The hospital must document in the staff personnel records that 
the training was successfully completed.
    (5) The hospital must be able to demonstrate staff knowledge on the 
topics identified at paragraph (c)(1) of this section.

PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS

0
33. The authority citation for part 485 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395(hh).

0
34. Section 485.618 is amended by--

[[Page 94593]]

0
a. Redesignating paragraph (e) as paragraph (f); and
0
b. Adding new paragraph (e).
    The addition reads as follows:

Sec.  485.618  Condition of participation: Emergency services.

* * * * *
    (e) Standard: Emergency services readiness. Effective July 1, 2025, 
in accordance with the complexity and scope of services offered, there 
must be adequate provisions (as required under paragraphs (b) and (c) 
of this section) and protocols to meet the emergency needs of patients.
    (1) Protocols. Protocols must be consistent with nationally 
recognized and evidence-based guidelines for the care of patients with 
emergency conditions, including but not limited to patients with 
obstetrical emergencies, complications, and immediate post-delivery 
care.
    (2) Staff training. Applicable staff, as identified by the CAH, 
must be trained annually on the protocols and provisions implemented 
pursuant to this section.
    (i) The governing body must identify and document which staff must 
complete such training.
    (ii) The CAH must document in the staff personnel records that the 
training was successfully completed.
    (iii) The CAH must be able to demonstrate staff knowledge on such 
training.
    (iv) The CAH must use findings from its QAPI program, as required 
at Sec.  485.641, to inform staff training needs and any additions, 
revisions, or updates to training topics on an ongoing basis.

0
35. Section 485.641 is amended by adding paragraph (d)(4) and revising 
paragraph (e) to read as follows:

Sec.  485.641  Condition of participation: Quality assessment and 
performance improvement program.

* * * * *
    (d) * * *
    (4) Effective January 1, 2027, for CAHs that offer obstetrical 
services, the following additional QAPI requirements apply:
    (i) Obstetrical services leadership must engage in QAPI as 
specified in this section for obstetrical services, including but not 
limited to participating in data collection and monitoring as specified 
in this paragraph (d) and paragraph (e) of this section.
    (ii) If a maternal mortality review committee (MMRC) is available 
at the State, Tribal, or local jurisdiction in which the CAH is 
located, the facility leadership, obstetrical services leadership, or 
their designate(s) must further have a process for incorporating 
publicly available MMRC(s) data and recommendations into the CAH QAPI 
program as specified in this section.
    (e) Standard: Program data collection and analysis. (1) The program 
must incorporate quality indicator data including patient care data, in 
order to achieve the goals of the QAPI program.
    (2) Effective January 1, 2027, CAHs that offer obstetrical 
services, the CAH must utilize its QAPI program to assess and improve 
health outcomes and disparities among obstetrical patients on an 
ongoing basis. At a minimum, the CAH must:
    (i) Analyze data and quality indicators collected for the QAPI 
program by diverse subpopulations as identified by the CAH among 
obstetrical patients.
    (ii) Measure, analyze, and track health equity data, measures, and 
quality indicators on patient outcomes and disparities in processes of 
care, services and operations, and outcomes among obstetrical patients.
    (iii) Analyze and prioritize identified patient health outcomes and 
disparities, develop and implement actions to improve patient health 
outcomes and disparities, measure results, and track performance to 
ensure improvements are sustained when disparities exist among 
obstetrical patients.
    (iv) Conduct at least one measurable performance improvement 
project focused on improving health outcomes and disparities among the 
CAH's population(s) of obstetrical patients annually.
* * * * *

0
36. Section 485.649 is added to read as follows:

Sec.  485.649  Condition of participation: Obstetrical services.

    If the CAH offers obstetrical services, the services must be well 
organized and provided in accordance with nationally recognized 
acceptable standards of practice for the health care (including 
physical and behavioral health) of pregnant, birthing, postpartum 
patients. If outpatient obstetrical services are offered, the services 
must be consistent in quality with inpatient care in accordance with 
the complexity of services offered.
    (a) Standard: Organization and staffing. Effective January 1, 2026, 
the organization of the obstetrical services must be appropriate to the 
scope of the services offered. As applicable, the services must be 
integrated with other departments of the CAH.
    (1) Labor and delivery rooms/suites (including labor rooms, 
delivery rooms (including rooms for operative delivery), and post-
partum/recovery rooms whether combined or separate) must be supervised 
by an experienced registered nurse, certified nurse midwife, nurse 
practitioner, physician assistant, or a Doctor of Medicine or a Doctor 
of Osteopathy (MD/DO).
    (2) Obstetrical privileges must be delineated for all practitioners 
providing obstetrical care in accordance with the competencies of each 
practitioner, and consistent with credentialing agreements established 
under Sec.  485.616(b).
    (b) Standard: Delivery of service. Effective January 1, 2026, 
obstetrical services must be consistent with needs and resources of the 
CAH. Policies governing obstetrical care must be designed to assure the 
achievement and maintenance of high standards of medical practice and 
patient care and safety.
    (1) The following equipment must be kept at the CAH and be readily 
available for treating obstetrical cases to meet the needs of patients 
in accordance with the scope, volume, and complexity of services 
offered: call-in-system, cardiac monitor, and fetal doppler or monitor.
    (2) There must be adequate provisions and protocols, consistent 
with nationally recognized and evidence-based guidelines, for 
obstetrical emergencies, complications, immediate post-delivery care, 
and other patient health and safety events as identified as part of the 
QAPI program (Sec.  485.641). Provisions include equipment (in addition 
to the equipment required under paragraph (b)(1) of this section), 
supplies, and medication used in treating emergency cases. Such 
provisions must be kept in the CAH and be readily available for 
treating emergency cases.
    (c) Standard: Staff training. Effective January 1, 2027, the CAH 
must develop policies and procedures to ensure that relevant staff are 
trained on select topics for improving the delivery of maternal care.
    (1) Training concepts must reflect the scope and complexity of 
services offered within the facility, including but not limited to:
    (i) Facility-identified evidence-based best practices and protocols 
to improve the delivery of maternal care within the facility; and
    (ii) The CAH must use findings from its quality assessment and 
performance improvement (QAPI) program, as required at Sec.  485.641, 
to inform staff training needs and any additions, revisions, or updates 
to training topics on an ongoing basis.
    (2) The CAH must provide relevant new staff with initial training.

[[Page 94594]]

    (3) The governing body must identify and document which staff must 
complete initial training and subsequent biannual training on the 
topics identified at paragraph (c)(1) of this section.
    (4) The CAH must document in the staff personnel records that the 
training was successfully completed.
    (5) The CAH must be able to demonstrate staff knowledge on the 
topics identified at paragraph (c)(1) of this section.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-25521 Filed 11-1-24; 4:15 p.m.]
BILLING CODE 4120-01-P
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