```

[Federal Register Volume 79, Number 217 (Monday, November 10, 2014)]
[Rules and Regulations]
[Pages 66769-67034]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26146]

[[Page 66769]]

Vol. 79

Monday,

No. 217

November 10, 2014

Part II

 Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 411, 412, 416, et al.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment 
and Ambulatory Surgical Center Payment Systems and Quality Reporting 
Programs; Physician-Owned Hospitals: Data Sources for Expansion 
Exception; Physician Certification of Inpatient Hospital Services; 
Medicare Advantage Organizations and Part D Sponsors: CMS-Identified 
Overpayments Associated with Submitted Payment Data; Final Rule

Federal Register / Vol. 79 , No. 217 / Monday, November 10, 2014 / 
Rules and Regulations

[[Page 66770]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

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

[CMS-1613-FC]
RIN 0938-AS15

Medicare and Medicaid Programs: Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems and Quality 
Reporting Programs; Physician-Owned Hospitals: Data Sources for 
Expansion Exception; Physician Certification of Inpatient Hospital 
Services; Medicare Advantage Organizations and Part D Sponsors: CMS-
Identified Overpayments Associated with Submitted Payment Data

AGENCY: Centers for Medicare & Medicaid Services (CMS), 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 CY 2015 to 
implement applicable statutory requirements and changes arising from 
our continuing experience with these systems. In this final rule with 
comment period, 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. In addition, this 
final rule with comment period updates and refines the requirements for 
the Hospital Outpatient Quality Reporting (OQR) Program and the ASC 
Quality Reporting (ASCQR) Program.
    In this document, we also are making changes to the data sources 
permitted for expansion requests for physician-owned hospitals under 
the physician self-referral regulations; changes to the underlying 
authority for the requirement of an admission order for all hospital 
inpatient admissions and changes to require physician certification for 
hospital inpatient admissions only for long-stay cases and outlier 
cases; and changes to establish a formal process, including a three-
level appeals process, to recoup overpayments that result from the 
submission of erroneous payment data by Medicare Advantage (MA) 
organizations and Part D sponsors in the limited circumstances in which 
the organization or sponsor fails to correct these data.

DATES: Effective Date: This final rule with comment period is effective 
on January 1, 2015.
    Comment Period: To be assured consideration, comments on the 
payment classifications assigned to HCPCS codes identified in Addenda 
B, AA, and BB to this final rule with comment period with the ``NI'' 
comment indicator, and on other areas specified throughout this final 
rule with comment period must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on December 
30, 2014.
    Application Deadline--New Class of New Technology Intraocular 
Lenses: Requests for review of applications for a new class of new 
technology intraocular lenses must be received by 5 p.m. EST on March 
2, 2015, at the following address: ASC/NTIOL, Division of Outpatient 
Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services, 
7500 Security Boulevard, Baltimore, MD 21244-1850.

ADDRESSES: In commenting, please refer to file code CMS-1613-FC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may (and we encourage you to) submit 
electronic comments on this regulation to http://www.regulations.gov. 
Follow the instructions under the ``submit a comment'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1613-FC, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments via 
express or overnight mail to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1613-FC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC-- Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal Government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call the telephone number (410) 786-7195 in advance to schedule 
your arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, we refer readers to the 
beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION: 
Marjorie Baldo, (410) 786-4617, for issues related to new CPT and Level 
II HCPCS codes, revised process for soliciting comments related to new 
Category I and III CPT codes, and exceptions to the 2 times rule.
Elizabeth Bainger, (410) 786-0529, for issues related to the Hospital 
Outpatient Quality Reporting--Program Administration, Validation, and 
Reconsideration Issues.
Anita Bhatia, (410) 786-7236, for issues related to the Ambulatory 
Surgical Center Quality Reporting (ASCQR) Program--Program 
Administration and Reconsideration Issues.
Chuck Braver, (410) 786-9379, for issues related to the CMS Web posting 
of the OPPS and ASC payment files.
Anne Calinger, (410) 786-3396, for issues related to Medicare Advantage 
(MA) organizations and Medicare Part D sponsor overpayments.
Elisabeth Daniel, (410) 786-0237, for issues related to OPPS drugs, 
radiopharmaceuticals, biologicals, blood clotting factors, packaged 
items/services, and brachytherapy sources payment.
Dexter Dickey, (410) 786-6856, or Dorothy Myrick, (410) 786-9671, for 
issues related to partial hospitalization and community mental health 
center (CMHC) issues.
Eva Fung, (410) 786-7539, or Vinitha Meyyur, (410) 786-8819, for issues

[[Page 66771]]

related to Hospital OQR Program and ASCQR measures issues and 
publication of Hospital OQR Program data issues.
Twi Jackson, (410) 786-1159, for issues related to device-dependent 
APCs, composite APCs (extended assessment and management, low dose 
brachytherapy, multiple imaging), hospital outpatient visits, inpatient 
procedures list, and no cost/full credit and partial credit devices.
Marina Kushnirova, (410) 786-2682, for issues related to OPPS status 
indicators and comment indicators.
John McInnes, (410) 786-0791, for issues related to new technology 
intraocular lenses (NTIOLs).
Esther Markowitz, (410) 786-4595, for issues related to comprehensive 
APCs and ambulatory surgical center (ASC) payments.
David Rice, (410) 786-6004, for issues related to APC weights, blood 
and blood products, cancer hospital payments, conversion factor, 
copayments, cost-to-charge ratios (CCRs), data claims, geometric mean 
calculation, off-campus provider-based issues, rural hospital payments, 
outlier payments, and wage index.
Daniel Schroder, (410) 786-4487, for issues related to physician 
certification of hospital inpatient services.
Carol Schwartz, (410) 786-0576, for issues related to the Advisory 
Panel on Hospital Outpatient Payment (HOP Panel) and OPPS pass-through 
devices.
Teresa Walden, (410) 786-3755, or Patricia Taft, (410) 786-4561, for 
issues related to the physician self-referral law/physician-owned 
hospital expansion exception process.
Marjorie Baldo, (410) 786-4617, for all other issues related to 
hospital outpatient and ambulatory surgical center payments not 
previously identified.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection, generally beginning approximately 3 weeks after publication 
of the rule, at the headquarters of the Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday 
through Friday of each week from 8:30 a.m. to 4:00 p.m. EST. To 
schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

    This Federal Register document is also available from the Federal 
Register online database through Federal Digital System (FDsys), a 
service of the U.S. Government Printing Office. This database can be 
accessed via the Internet at http://www.gpo.gov/fdsys/.

Addenda Available Only Through the Internet on the CMS Web Site

    In the past, a majority of the Addenda referred to in our OPPS/ASC 
proposed and final rules were published in the Federal Register as part 
of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC 
proposed rule, all of the Addenda no longer appear in the Federal 
Register as part of the annual OPPS/ASC proposed and final rules to 
decrease administrative burden and reduce costs associated with 
publishing lengthy tables. Instead, these Addenda are published and 
available only on the CMS Web site. The Addenda relating to the OPPS 
are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the 
ASC payment system are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/index.html.

Alphabetical List of Acronyms Appearing in This Federal Register 
Document

AHA American Hospital Association
AMA American Medical Association
AMI Acute myocardial infarction
APC Ambulatory Payment Classification
ASC Ambulatory surgical center
ASCQR Ambulatory Surgical Center Quality Reporting
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999, Public 
Law 106-113
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Public Law 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CAHPS Consumer Assessment of Healthcare Providers and Systems
CAP Competitive Acquisition Program
C-APC Comprehensive Ambulatory Payment Classification
CASPER Certification and Survey Provider Enhanced Reporting
CAUTI Catheter-associated urinary tract infection
CBSA Core-Based Statistical Area
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CED Coverage with Evidence Development
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CI Comment indicator
CLABSI Central Line [Catheter] Associated Blood Stream Infection
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American 
Medical Association)
CR Change request
CRC Colorectal cancer
CSAC Consensus Standards Approval Committee
CT Computed tomography
CV Coefficient of variation
CY Calendar year
DFO Designated Federal Official
DIR Direct or indirect remuneration
DME Durable medical equipment
DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and 
Supplies
DRA Deficit Reduction Act of 2005, Public Law 109-171
DSH Disproportionate share hospital
EACH Essential access community hospital
EAM Extended assessment and management
ECG Electrocardiogram
ED Emergency department
E/M Evaluation and management
EHR Electronic health record
ESRD End-stage renal disease
ESRD QIP End-Stage Renal Disease Quality Improvement Program
FACA Federal Advisory Committee Act, Public Law 92-463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FY Fiscal year
GAO Government Accountability Office
GI Gastrointestinal
HAI Healthcare-associated infection
HCAHPS Hospital Consumer Assessment of Healthcare Providers and 
Systems
HCERA Health Care and Education Reconciliation Act of 2010, Public 
Law 111-152
HCP Health care personnel
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HCUP Healthcare Cost and Utilization Project
HH QRP Home Health Quality Reporting Program
HHS Department of Health and Human Services

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HIE Health information exchange
HEU Highly enriched uranium
HIPAA Health Insurance Portability and Accountability Act of 1996, 
Public Law 104-191
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
HPMS Health Plan Management System
IBD Inflammatory bowel disease
ICC Interclass correlation coefficient
ICD Implantable cardioverter defibrillator
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICH In-center hemodialysis
IDTF Independent diagnostic testing facility
IGI IHS Global Insight, Inc.
IHS Indian Health Service
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IORT Intraoperative radiation treatment
IPFQR Inpatient Psychiatric Facility Quality Reporting
IPPS [Hospital] Inpatient Prospective Payment System
IQR [Hospital] Inpatient Quality Reporting
IRF Inpatient rehabilitation facility
IRF QRP Inpatient Rehabilitation Facility Quality Reporting
IT Information technology
LCD Local coverage determination
LDR Low dose rate
LTCH Long-term care hospital
LTCHQR Long-Term Care Hospital Quality Reporting
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MedPAC Medicare Payment Advisory Commission
MEG Magnetoencephalography
MFP Multifactor productivity
MGCRB Medicare Geographic Classification Review Board
MIEA-TRHCA Medicare Improvements and Extension Act under Division B, 
Title I of the Tax Relief Health Care Act of 2006, Public Law 109-
432
MIPPA Medicare Improvements for Patients and Providers Act of 2008, 
Public Law 110-275
MLR Medical loss ratio
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Public Law 108-173
MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public 
Law 110-173
MPFS Medicare Physician Fee Schedule
MR Medical review
MRA Magnetic resonance angiography
MRgFUS Magnetic Resonance Image Guided Focused Ultrasound
MRI Magnetic resonance imaging
MRSA Methicillin-Resistant Staphylococcus Aures
MS-DRG Medicare severity diagnosis-related group
MSIS Medicaid Statistical Information System
MUC Measure under consideration
NCCI National Correct Coding Initiative
NDC National Drug Code
NHSN National Healthcare Safety Network
NOS Not otherwise specified
NPWT Negative Pressure Wound Therapy
NPI National provider identification
NQF National Quality Forum
NQS National Quality Strategy
NTIOL New technology intraocular lens
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509
OIG [HHS] Office of the Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information 
Technology
OPD [Hospital] Outpatient Department
OPO Organ Procurement Organization
OPPS [Hospital] Outpatient Prospective Payment System
OPSF Outpatient Provider-Specific File
OQR [Hospital] Outpatient Quality Reporting
OT Occupational therapy
PBD Provider-Based Department
PCHQR PPS-Exempt Cancer Hospital Quality Reporting
PCR Payment-to-cost ratio
PDE Prescription Drug Event
PE Practice expense
PEPPER Program Evaluation Payment Patterns Electronic Report
PHP Partial hospitalization program
PHSA Public Health Service Act, Public Law 96-88
PMA Premarket approval
PN Pneumonia
POS Place of service
PPI Producer Price Index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PQRS Physician Quality Reporting System
QDC Quality data code
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
RADV Risk Adjustment Data Validation
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RTI Research Triangle Institute, International
RVU Relative value unit
SAMS Secure Access Management Services
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SES Socioeconomic status
SI Status indicator
SIR Standardized infection ratio
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
SSA Social Security Administration
SSI Surgical site infection
TEP Technical Expert Panel
TIP Transprostatic implant procedure
TMS Transcranial Magnetic Stimulation [Therapy]
TOPs Transitional Outpatient Payments
USPSTF United States Preventive Services Task Force
VBP Value-based purchasing
WAC Wholesale acquisition cost

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    1. Purpose
    2. Summary of the Major Provisions
    3. Summary of Costs and Benefits
    B. Legislative and Regulatory Authority for the Hospital OPPS
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel)
    1. Authority of the Panel
    2. Establishment of the Panel
    3. Panel Meetings and Organizational Structure
    F. Public Comments Received on the CY 2015 OPPS/ASC Proposed 
Rule
    G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule 
with Comment Period
II. Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    1. Database Construction
    a. Database Source and Methodology
    b. Use of Single and Multiple Procedure Claims
    c. Calculation and Use of Cost-to-Charge Ratios (CCRs)
    2. Data Development Process and Calculation of Costs Used for 
Ratesetting
    a. Claims Preparation
    b. Splitting Claims and Creation of ``Pseudo'' Single Procedure 
Claims
    (1) Splitting Claims
    (2) Creation of ``Pseudo'' Single Procedure Claims
    c. Completion of Claim Records and Geometric Mean Cost 
Calculations
    (1) General Process
    (2) Recommendations of the Panel Regarding Data Development
    d. Calculation of Single Procedure APC Criteria-Based Costs
    (1) Device-Dependent APCs
    (2) Blood and Blood Products
    (3) Brachytherapy Source Payment
    e. Establishment of Comprehensive APCs
    (1) Background
    (2) CY 2015 Policy for C-APCs
    (3) Public Comments
    (4) Statement of Final Policy and List of CY 2015 C-APCs
    f. Calculation of Composite APC Criteria-Based Costs
    (1) Extended Assessment and Management Composite APCs (APC 8009)
    (2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC 
(APC 8001)
    (3) Mental Health Services Composite APC (APC 0034)
    (4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 
8007, and 8008)
    3. Changes to Packaged Items and Services
    a. Background and Rationale for Packaging in the OPPS
    b. Revision of a Packaging Policy Established in CY 2014--
Procedures Described by Add-On Codes
    c. Packaging Policies for CY 2015
    (1) Ancillary Services
    (2) Prosthetic Supplies
    4. Calculation of OPPS Scaled Payment Weights
    B. Conversion Factor Update
    C. Wage Index Changes
    D. Statewide Average Default CCRs
    E. Adjustment for Rural SCHs and EACHs under Section 
1833(t)(13)(B) of the Act

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    F. OPPS Payment to Certain Cancer Hospitals Described by Section 
1886(d)(1)(B)(v) of the Act
    1. Background
    2. Payment Adjustment for Certain Cancer Hospitals for CY 2015
    G. Hospital Outpatient Outlier Payments
    1. Background
    2. Outlier Calculation
    3. Final Outlier Calculation
    H. Calculation of an Adjusted Medicare Payment from the National 
Unadjusted Medicare Payment
    I. Beneficiary Copayments
    1. Background
    2. OPPS Copayment Policy
    3. Calculation of an Adjusted Copayment Amount for an APC Group
III. OPPS Ambulatory Payment Classification (APC) Group Policies
    A. OPPS Treatment of New CPT and Level II HCPCS Codes
    1. Treatment of New CY 2014 Level II HCPCS and CPT Codes 
Effective April 1, 2014 and July 1, 2014 for Which We Solicited 
Public Comments in the CY 2015 OPPS/ASC Proposed Rule
    2. Process for New Level II HCPCS Codes That Will Be Effective 
October 1, 2014 and New CPT and Level II HCPCS Codes That Will Be 
Effective January 1, 2015 for Which We Are Soliciting Public 
Comments in this CY 2015 OPPS/ASC Final Rule with Comment Period
    3. Process for Soliciting Public Comments for New and Revised 
CPT Codes Released by the AMA
    a. Current Process for Accepting Comments on New and Revised CPT 
Codes for a Year
    b. Modification of Process for New and Revised CPT Codes That 
Are Effective January 1
    B. OPPS Changes--Variations within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. Exceptions to the 2 Times Rule
    C. OPPS APC-Specific Policies
    1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 
0213)
    2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 
0142, 0361, 0419, and 0422)
    3. Genitourinary Services
    a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 
0202)
    b. Cystourethroscopy, Transprostatic Implant Procedures, and 
Other Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and 
1564
    c. Level IV Anal/Rectal Procedures (APC 0150)
    d. Percutaneous Renal Cryoablation (APC 0423)
    4. Nervous System Services
    a. Chemodenervation (APC 0206)
    b. Epidural Lysis (APCs 0203 and 0207)
    c. Transcranial Magnetic Stimulation Therapy (TMS) (APC 0218)
    5. Ocular Services: Ophthalmic Procedures and Services
    6. Imaging
    a. Echocardiography (APCs 0269, 0270, and 0697)
    b. Optical Coherence Tomography Procedures of the Breast
    c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, 0414)
    7. Radiology Oncology
    a. Proton Beam Therapy and Magnetoencephalography (MEG) Services 
(APCs 0065, 0412, 0446, 0664, and 0667)
    b. Stereotactic Radiosurgery Services (SRS) and Magnetic 
Resonance Image Guided Focused Ultrasound (MRgFUS) (APC 0066)
    8. Respiratory Services: Level II Endoscopy Lower Airway (APC 
0415)
    9. Other Services
    a. Epidermal Autograft (APC 0327)
    b. Image-Guided Breast Biopsy Procedures and Image-Guided 
Abscess Drainage Procedures (APCs 0005 and 0007)
    c. Negative Pressure Wound Therapy (NPWT) (APCs 0012 and 0015)
    d. Platelet Rich Plasma (PRP) (APC 0327)
IV. OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    1. Expiration of Transitional Pass-Through Payments for Certain 
Devices
    a. Background
    b. CY 2015 Policy
    2. Provisions for Reducing Transitional Pass-Through Payments to 
Offset Costs Packaged into APC Groups
    a. Background
    b. CY 2015 Policy
    B. Adjustment to OPPS Payment for No Cost/Full Credit and 
Partial Credit Devices
    1. Background
    2. Policy for CY 2015
V. OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. OPPS Transitional Pass-Through Payment for Additional Costs 
of Drugs, Biologicals, and Radiopharmaceuticals
    1. Background
    2. Drugs and Biologicals with Expiring Pass-Through Status in CY 
2014
    3. Drugs, Biologicals, and Radiopharmaceuticals with New or 
Continuing Pass-Through Status in CY 2015
    4. Provisions for Reducing Transitional Pass-Through Payments 
for Policy-Packaged Drugs and Biologicals to Offset Costs Packaged 
into APC Groups
    a. Background
    b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
    c. Payment Offset Policy for Contrast Agents
    d. Payment Offset Policy for Drugs, Biologicals, and 
Radiopharmaceuticals That Function as Supplies When Used in a 
Diagnostic Test or Procedure and Drugs and Biologicals That Function 
as Supplies When Used in a Surgical Procedure
    B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 
without Pass-Through Status
    1. Background
    2. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
    a. Background
    b. Cost Threshold for Packaging of Payment for HCPCS Codes That 
Describe Certain Drugs, Certain Biologicals, and Therapeutic 
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    c. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    d. Pass-Through Evaluation Process for Skin Substitutes
    e. Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    3. 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 and Packaged Drugs and Biologicals
    b. CY 2015 Payment Policy
    4. Payment Policy for Therapeutic Radiopharmaceuticals
    5. Payment Adjustment Policy for Radioisotopes Derived From Non-
Highly Enriched Uranium Sources
    6. Payment for Blood Clotting Factors
    7. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital 
Claims Data
VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, 
Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Estimate of Pass-Through Spending
VII. OPPS Payment for Hospital Outpatient Visits
    A. Payment for Hospital Outpatient Clinic and Emergency 
Department Visits
    B. Payment for Critical Care Services
VIII. Payment for Partial Hospitalization Services
    A. Background
    B. PHP APC Update for CY 2015
    C. Separate Threshold for Outlier Payments to CMHCs
IX. Procedures That Will Be Paid Only as Inpatient Procedures
    A. Background
    B. Changes to the Inpatient List
X. Nonrecurring Policy Changes: Collecting Data on Services 
Furnished in Off-Campus Provider-Based Departments of Hospitals
XI. CY 2015 OPPS Payment Status and Comment Indicators
    A. CY 2015 OPPS Payment Status Indicator Definitions
    B. CY 2015 Comment Indicator Definitions
XII. Updates to the Ambulatory Surgical Center (ASC) Payment System
    A. Background
    1. Legislative History, Statutory Authority, and Prior 
Rulemaking for the ASC Payment System
    2. Policies Governing Changes to the Lists of Codes and Payment 
Rates for ASC Covered Surgical Procedures and Covered Ancillary 
Services
    B. Treatment of New Codes
    1. Process for Recognizing New Category I and Category III CPT 
Codes and Level II HCPCS Codes
    2. Treatment of New Level II HCPCS Codes and Category III CPT 
Codes Implemented in April 2014 and July 2014 for Which We Solicited 
Public Comments in the CY 2015 OPPS/ASC Proposed Rule
    3. Process for New Level II HCPCS Codes and Category I and 
Category III CPT

[[Page 66774]]

Codes for Which We Are Soliciting Public Comments in this CY 2015 
OPPS/ASC Final Rule with Comment Period
    C. Update to the Lists of ASC Covered Surgical Procedures and 
Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Additions to the List of ASC Covered Surgical Procedures
    b. Covered Surgical Procedures Designated as Office-Based
    (1) Background
    (2) Changes for CY 2015 to Covered Surgical Procedures 
Designated as Office-Based
    c. ASC Covered Surgical Procedures Designated as Device-
Intensive
    (1) Background
    (2) Changes to List of Covered ASC Surgical Procedures 
Designated as Device-Intensive for CY 2015
    d. Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    e. ASC Treatment of Surgical Procedures Removed from the OPPS 
Inpatient List for CY 2015
    2. Covered Ancillary Services
    D. ASC Payment for Covered Surgical Procedures and Covered 
Ancillary Services
    1. ASC Payment for Covered Surgical Procedures
    a. Background
    b. Update to ASC Covered Surgical Procedure Payment Rates for CY 
2015
    c. Waiver of Coinsurance and Deductible for Certain Preventive 
Services
    d. Payment for Cardiac Resynchronization Therapy Services
    e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy 
Composite
    2. Payment for Covered Ancillary Services
    a. Background
    b. Payment for Covered Ancillary Services for CY 2015
    E. New Technology Intraocular Lenses (NTIOLs)
    1. NTIOL Application Cycle
    2. Requests to Establish New NTIOL Classes for CY 2015
    3. Payment Adjustment
    4. Announcement of CY 2015 Deadline for Submitting Requests for 
CMS Review of Applications for a New Class of NTIOLs
    F. ASC Payment and Comment Indicators
    1. Background
    2. ASC Payment and Comment Indicators
    G. Calculation of the ASC Conversion Factor and the ASC Payment 
Rates
    1. Background
    2. Calculation of the ASC Payment Rates
    a. Updating the ASC Relative Payment Weights for CY 2015 and 
Future Years
    b. Transition Period to New OMB Delineations for ASC Wage Index
    c. Updating the ASC Conversion Factor
    3. Display of CY 2015 ASC Payment Rates
XIII. Hospital Outpatient Quality Reporting Program Updates
    A. Background
    1. Overview
    2. Statutory History of the Hospital OQR Program
    3. Measure Updates and Data Publication
    a. Maintenance of Technical Specifications for Quality Measures
    b. Public Display of Quality Measures
    B. Process for Retention of Hospital OQR Program Measures 
Adopted in Previous Payment Determinations
    C. Removal of Quality Measures from the Hospital OQR Program 
Measure Set
    1. Considerations in Removing Quality Measures from the Hospital 
OQR Program
    2. Criteria for Removal of ``Topped-Out'' Measures
    3. Removal of Measures from the Hospital OQR Program for the CY 
2017 Payment Determination and Subsequent Years
    D. Quality Measures Previously Adopted for the CY 2016 Payment 
Determination and Subsequent Years
    1. Data Submission Requirements for OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF #0431) Reported via NHSN 
for the CY 2017 Payment Determination and Subsequent Years
    a. Clarification of Submission Deadline and Data Submitted
    b. Clarification on Reporting by CMS Certification Number (CCN)
    2. Delayed Data Collection for OP-29 and OP-30
    3. OP-31: Cataracts--Improvement in Patient's Visual Function 
within 90 Days Following Cataract Surgery
    a. Correction of Response to Public Comments
    b. Delayed Data Collection for OP-31 and Exclusion from the CY 
2016 Payment Determination Measure Set
    c. Voluntary Collection of Data for OP-31 for the CY 2017 
Payment Determination and Subsequent Years
    E. New Quality Measure for the CY 2018 Payment Determination and 
Subsequent Years
    F. Possible Hospital OQR Program Measures and Topics for Future 
Consideration
    1. Electronic Clinical Quality Measures
    2. Partial Hospitalization Program Measures
    3. Behavioral Health Measures
    4. National Quality Strategy and CMS Quality Strategy Measure 
Domains
    G. Payment Reduction for Hospitals That Fail to Meet the 
Hospital Outpatient Quality Reporting (OQR) Program Requirements for 
the CY 2015 Payment Update
    1. Background
    2. Reporting Ratio Application and Associated Adjustment Policy 
for CY 2015
    H. Requirements for Reporting Hospital OQR Program Data for the 
CY 2017 Payment Determination and Subsequent Years
    1. Administrative Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    2. Form, Manner, and Timing of Data Submitted for the Hospital 
OQR Program
    a. General Procedural Requirements
    b. Requirements for Chart-Abstracted Measures Where Data Are 
Submitted Directly to CMS for the CY 2017 Payment Determination and 
Subsequent Years
    c. Claims-Based Measure Data Requirements for the CY 2017 and CY 
2018 Payment Determination and Subsequent Years
    d. Data Submission Requirements for Measure Data Submitted via 
the CMS Web-Based Tool for the CY 2017 Payment Determination and 
Subsequent Years
    e. Population and Sampling Data Requirements for the CY 2017 
Payment Determination and Subsequent Years
    f. Review and Corrections Period for Chart-Abstracted Measures
    3. Hospital OQR Program Validation Requirements for Chart-
Abstracted Measure Data Submitted Directly to CMS for the CY 2017 
Payment Determination and Subsequent Years
    a. Background
    b. Selection of Hospitals for Data Validation of Chart-
Abstracted Measures for the CY 2017 Payment Determination and 
Subsequent Years
    c. Targeting Criteria for Data Validation Selection for the CY 
2017 Payment Determination and Subsequent Years
    d. Methodology for Encounter Selection for the CY 2017 Payment 
Determination and Subsequent Years
    e. Medical Record Documentation Requests for Validation and 
Validation Score Calculation for the CY 2017 Payment Determination 
and Subsequent Years
    I. Hospital OQR Program Reconsideration and Appeals Procedures 
for the CY 2017 Payment Determination and Subsequent Years
    J. Extension or Exception Process for the CY 2017 Payment 
Determination and Subsequent Years
XIV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    1. Overview
    2. Statutory History of the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    3. Regulatory History of the ASCQR Program
    B. ASCQR Program Quality Measures
    1. Considerations in the Selection of ASCQR Program Quality 
Measures
    2. Policy for Removal of Quality Measures from the ASCQR Program
    3. Criteria for Removal of ``Topped-Out'' Measures
    4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    5. New ASCQR Program Quality Measure for the CY 2018 Payment 
Determination and Subsequent Years
    6. ASCQR Program Measures for Future Consideration
    7. Maintenance of Technical Specifications for Quality Measures
    8. Public Reporting of ASCQR Program Data
    C. Payment Reduction for ASCs That Fail to Meet the ASCQR 
Program Requirements
    1. Statutory Background
    2. Reduction to the ASC Payment Rates for ASCs That Fail to Meet 
the ASCQR Program Requirements for a Payment Determination Year

[[Page 66775]]

    D. Administrative Requirements
    1. Requirements Regarding QualityNet Account and Security 
Administrator
    2. Requirements Regarding Participation Status
    E. Form, Manner, and Timing of Data Submitted for the ASCQR 
Program
    1. Requirements Regarding Data Processing and Collection Periods 
for Claims-Based Measures Using Quality Data Codes (QDCs)
    2. Minimum Threshold, Minimum Case Volume, and Data Completeness 
for Claims-Based Measures Using QDCs
    3. Requirements for Data Submitted Via a CMS Online Data 
Submission Tool
    a. Data Collection for ASC-6 and ASC-7
    b. Delayed Data Collection for ASC-9 and ASC-10
    c. Delayed Data Collection and Exclusion for ASC-11 for the CY 
2016 Payment Determination and Voluntary Data Collection for ASC-11 
for the CY 2017 Payment Determination and Subsequent Years
    4. Claims-Based Measure Data Requirements for the New Measure 
for the CY 2018 Payment Determination and Subsequent Years
    5. Data Submission Requirements for ASC-8 (Influenza Vaccination 
Coverage Among Healthcare Personnel) Reported via the National 
Healthcare Safety Network (NHSN) for the CY 2016 Payment 
Determination and Subsequent Years
    a. Previously Adopted Requirements for the CY 2016 Payment 
Determination
    b. Data Collection Timeframes for the CY 2017 Payment 
Determination and Subsequent Years and Submission Deadlines for the 
CY 2016 Payment Determination and Subsequent Years
    6. ASCQR Program Validation of Claims-Based and CMS Web-Based 
Measures
    7. Extraordinary Circumstances Extensions or Exemptions for the 
CY 2017 Payment Determination and Subsequent Years
    8. ASCQR Program Reconsideration Procedures for the CY 2017 
Payment Determination and Subsequent Years
XV. Changes to the Rural Provider and Hospital Ownership Exceptions 
to the Physician Self-Referral Law: Expansion Exception Process
    A. Background
    1. Statutory Basis
    2. Affordable Care Act Amendments to the Rural Provider and 
Hospital Ownership Exceptions to the Physician Self-Referral Law
    B. Limitations Identified by Stakeholders Regarding the Required 
Use of HCRIS Data
    C. Changes to the Physician-Owned Hospital Expansion Exception 
Process
    1. Supplemental Data Sources
    a. Internal Data Sources
    b. External Data Sources
    c. Completeness of Supplemental Data Sources
    d. Other Issues Related to Supplemental Data Sources
    e. Summary of Final Provisions Regarding Supplemental Data 
Sources
    2. Fiscal Year Standard
    a. Summary of Public Comments and Our Response Regarding the 
Fiscal Year Standard
    b. Summary of Final Provisions Regarding the Fiscal Year 
Standard
    3. Community Input and Timing of a Complete Request
    a. Summary of Public Comments and Our Responses Regarding 
Community Input and Timing of a Complete Request
    b. Final Provisions Regarding Community Input and Timing of a 
Complete Request
    D. Additional Considerations
    E. Summary of the Final Provisions Regarding the Expansion 
Exception Process under the Rural Provider and Hospital Ownership 
Exceptions to the Physician Self-Referral Law
XVI. Revision of the Requirements for Physician Certification of 
Hospital Inpatient Services Other Than Psychiatric Inpatient 
Services
XVII. CMS-Identified Overpayments Associated with Payment Data 
Submitted by Medicare Advantage (MA) Organizations and Medicare Part 
D Sponsors (Sec. Sec.  422.330 and 423.352)
    A. Background
    1. Medicare Part C Payment Background
    1. Medicare Part D Payment Background
    B. Provisions of the Proposed Rule and Final Policies
    1. Definitions of ``Payment Data'' and ``Applicable 
Reconciliation Date''
    2. Request for Corrections of Payment Data
    3. Payment Offset
    a. Offset Amount
    b. Payment Offset Notification
    4. Appeals Process for MA Organizations and Part D Sponsors
    a. Reconsideration
    b. Informal Hearing
    c. Review by Administrator
    5. Matters Subject to Appeal and Burden of Proof
    6. Effective Date of Appeals Process Provisions
XVIII. Files Available to the Public Via the Internet
XIX. Collection of Information Requirements
    A. Legislative Requirements for Solicitation of Comments
    B. Requirements in Regulation Text: Changes to the Rural 
Provider and Hospital Ownership Exceptions to the Physician Self-
Referral Law: Expansion Exception Process (Sec.  411.362)
    C. Associated Information Collections Not Specified in 
Regulatory Text
    1. Hospital OQR Program
    a. Revisions to the CY 2016 Payment Determination Estimates
    b. Hospital OQR Program Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    c. Review and Corrections Period Requirements for the CY 2017 
Payment Determination and Subsequent Years
    d. Hospital OQR Program Validation Requirements for the CY 2017 
Payment Determination and Subsequent Years
    e. Extraordinary Circumstances Extensions or Exemptions Process
    f. Reconsideration and Appeals
    2. ASCQR Program Requirements
    a. Background
    b. Revisions to the CY 2016 Payment Determination Estimates
    c. Claims-Based Measures for the CY 2014 Payment Determination 
and Subsequent Years
    d. Web-Based Measures for the CY 2017 Payment Determination and 
Subsequent Years
    e. Extraordinary Circumstances Extension or Exemptions Process
    f. Reconsiderations and Appeals
XX. Waiver of Proposed Rulemaking and Response to Comments
    A. Waiver of Proposed Rulemaking
    B. Response to Comments
XXI. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts for the OPPS and ASC Payment Provisions
    4. Detailed Economic Analyses
    a. Estimated Effects of OPPS Changes in this Final Rule with 
Comment Period
    (1) Limitations of Our Analysis
    (2) Estimated Effects of OPPS Changes on Hospitals
    (3) Estimated Effects of OPPS Changes on CMHCs
    (4) Estimated Effect of OPPS Changes on Beneficiaries
    (5) Estimated Effects of OPPS Changes on Other Providers
    (6) Estimated Effects of OPPS Changes on the Medicare and 
Medicaid Programs
    (7) Alternative OPPS Policies Considered
    b. Estimated Effects of CY 2015 ASC Payment System Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of CY 2015ASC Payment System Policies on 
ASCs
    (3) Estimated Effects of ASC Payment System Policies on 
Beneficiaries
    (4) Alternative ASC Payment Policies Considered
    c. Accounting Statements and Tables
    d. Effects of Requirements for the Hospital OQR Program
    e. Effects of CY 2014 Policies for the ASCQR Program
    f. Effects of Changes to the Rural Provider and Hospital 
Ownership Exceptions to the Physician Self-Referral Law
    g. Effects of Policies Related to CMS-Identified Overpayments 
Associated with Payment Data Submitted by Medicare Advantage (MA) 
Organizations and Medicare Part D Sponsors
    B. Regulatory Flexibility Act (RFA) Analysis
    C. Unfunded Mandates Reform Act Analysis
    D. Conclusion
XXII. Federalism Analysis

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this final rule with comment period, we are updating the payment 
policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments and

[[Page 66776]]

Ambulatory Surgical Centers (ASCs) beginning January 1, 2015. Section 
1833(t) of the Social Security Act (the Act) requires us to annually 
review and update the relative payment weights and the conversion 
factor for services payable under the Outpatient Prospective Payment 
System (OPPS). Under section 1833(i) of the Act, we annually review and 
update the ASC payment rates. We describe these and various other 
statutory authorities in the relevant sections of this final rule with 
comment period. In addition, this final rule with comment period 
updates and refines the requirements for the Hospital Outpatient 
Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) 
Program.
    In this document, we also are making changes to the data sources 
permitted for expansion requests for physician-owned hospitals under 
the physician self-referral regulations; changes to the underlying 
authority for the requirement of an admission order for all hospital 
inpatient admissions and changes to require physician certification for 
hospital inpatient admissions only for long-stay cases and outlier 
cases; and changes to establish a formal process, including a three-
level appeals process, to recoup overpayments that result from the 
submission of erroneous payment data by Medicare Advantage (MA) 
organizations and Part D sponsors in the limited circumstances in which 
the organization or sponsor fails to correct these data.
2. Summary of the Major Provisions
     OPPS Update: For CY 2015, we are increasing the payment 
rates under the OPPS by an Outpatient Department (OPD) fee schedule 
increase factor of 2.2 percent. This increase is based on the final 
hospital inpatient market basket percentage increase of 2.9 percent for 
inpatient services paid under the hospital inpatient prospective 
payment system (IPPS), minus the multifactor productivity (MFP) 
adjustment of 0.5 percentage point, and minus a 0.2 percentage point 
adjustment required by the Affordable Care Act. Under this final rule 
with comment period, we estimate that total payments for CY 2015, 
including beneficiary cost-sharing, to the approximate 4,000 facilities 
paid under the OPPS (including general acute care hospitals, children's 
hospitals, cancer hospitals, and community mental health centers 
(CMHCs)), will be approximately $56.1 billion, an increase of 
approximately $5.1 billion compared to CY 2014 payments, or $900 
million excluding our estimated changes in enrollment, utilization, and 
case-mix.
    We are continuing to implement the statutory 2.0 percentage point 
reduction in payments for hospitals failing to meet the hospital 
outpatient quality reporting requirements, by applying a reporting 
factor of 0.980 to the OPPS payments and copayments for all applicable 
services.
     Rural Adjustment: We are continuing the adjustment of 7.1 
percent to the OPPS payments to certain rural sole community hospitals 
(SCHs), including essential access community hospitals (EACHs). This 
adjustment will apply to all services paid under the OPPS, excluding 
separately payable drugs and biologicals, devices paid under the pass-
through payment policy, and items paid at charges reduced to cost.
     Cancer Hospital Payment Adjustment: For CY 2015, we are 
continuing to provide additional payments to cancer hospitals so that 
the cancer hospital's payment-to-cost ratio (PCR) after the additional 
payments is equal to the weighted average PCR for the other OPPS 
hospitals using the most recently submitted or settled cost report 
data. Based on those data, a target PCR of 0.89 will be used to 
determine the CY 2015 cancer hospital payment adjustment to be paid at 
cost report settlement. That is, the payment adjustments will be the 
additional payments needed to result in a PCR equal to 0.89 for each 
cancer hospital.
     Payment of Drugs, Biologicals, and Radiopharmaceuticals: 
For CY 2015, payment for the acquisition and pharmacy overhead costs of 
separately payable drugs and biologicals that do not have pass-through 
status are set at the statutory default of average sales price (ASP) 
plus 6 percent.
     Packaging Policies: We are conditionally packaging certain 
ancillary services when they are integral, ancillary, supportive, 
dependent, or adjunctive to a primary service. The initial set of 
services packaged under this ancillary service policy are the services 
assigned to APCs having an APC geometric mean cost (prior to 
application of status indicator Q1) of less than or equal to $100. This 
$100 geometric mean cost limit for the APC is part of the methodology 
of establishing an initial set of conditionally packaged ancillary 
service APCs, and is not meant to represent a threshold above which a 
given ancillary service will not be packaged, but as a basis for 
selecting an initial set of APCs that will likely be updated and 
expanded in future years.
     Implementation of Comprehensive APCs: For CY 2015, we are 
implementing, with several modifications, the policy for comprehensive 
APCs (C-APCs) that was finalized in the CY 2014 OPPS/ASC final rule 
with comment period effective January 1, 2015. We are continuing to 
define the services assigned to C-APCs as primary services, and to 
define a C-APC as a classification for the provision of a primary 
service and all adjunctive services and supplies provided to support 
the delivery of the primary service. We continue to consider the entire 
hospital stay, defined as all services reported on the hospital claim 
reporting the primary service, to be one comprehensive service for the 
provision of a primary service into which all other services appearing 
on the claim would be packaged. This results in a single Medicare 
payment and a single beneficiary copayment under the OPPS for the 
comprehensive service based on all included charges on the claim.
    We are establishing a total of 25 C-APCs for CY 2015, including all 
of the formerly device-dependent APCs remaining after some 
restructuring and consolidation of these APCs (except for APCs 0427, 
0622, and 0652) and two C-APCs for other procedures that are either 
largely device-dependent or represent single session services with 
multiple components (single-session cranial stereotactic radiosurgery 
and intraocular telescope implantation). We are modifying the 
complexity adjustment criteria finalized last year by lowering volume 
and cost threshold criteria for complexity adjustments. Finally, we are 
packaging all add-on codes furnished as part of a comprehensive 
service, which is consistent with our general add-on code packaging 
policy. However, the add-on codes assigned to the CY 2014 device-
dependent APCs will be being evaluated with a primary service for a 
potential complexity adjustment.
     Ambulatory Surgical Center Payment Update: For CY 2015, we 
are increasing payment rates under the ASC payment system by 1.4 
percent. This increase is based on a projected CPI-U update of 1.9 
percent minus a multifactor productivity adjustment required by the 
Affordable Care Act that is projected to be 0.5 percentage point. Based 
on this update, we estimate that total payments to ASCs (including 
beneficiary cost-sharing and estimated changes in enrollment, 
utilization, and case-mix), for CY 2015 will be approximately $4.147 
billion, an increase of approximately $236 million compared to 
estimated CY 2014 Medicare payments.

[[Page 66777]]

     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are adding one claims-based quality 
measure for the CY 2018 payment determination and subsequent years 
instead of the CY 2017 payment determination and subsequent years as 
proposed. However, prior to publicly reporting this measure, we plan to 
conduct a dry run (a preliminary analysis) for hospitals to review 
their performance and provide feedback using the most recently 
available data. There will be no payment impact during this dry-run 
period, and the results of the dry run will not be publicly reported. 
We are refining the criteria for determining ``topped-out'' measures, 
and we are removing the OP-6 and OP-7 measures due to ``topped-out'' 
status. In addition, we are updating several previously adopted 
measures. We are clarifying data submission requirements for OP-27 and 
are noting a delayed data collection for OP-29 and OP-30. We are 
excluding one previously adopted measure (OP-31) from the measure set 
for the CY 2016 payment determination and changing this measure from 
required to voluntary for the CY 2017 payment determination and 
subsequent years. We will not subject hospitals to payment reductions 
with respect to the OP-31 measure for the CY 2016 payment determination 
or during the period of voluntary reporting. In addition, we are 
formalizing a review and corrections period for chart-abstracted 
measures. We also are updating validation procedures and changes to 
regulation text to correct typographical errors. We are changing the 
eligibility criteria for validation; a hospital will only be eligible 
for random selection for validation if it submits at least 12 cases to 
the Hospital OQR Program Clinical Data Warehouse during the quarter 
with the most recently available data. Hospitals also will have the 
option to submit validation data using electronic methods and must 
identify the medical record staff responsible for submission of records 
to the designated CMS contractor. Finally, we are clarifying how we 
refer to the extraordinary circumstances extensions or exemptions 
process.
     Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are adopting one new quality measure 
(ASC-12) for the CY 2018 payment determination and subsequent years. 
This measure will be computed using paid Medicare fee-for-service (FFS) 
claims data and will not impose any additional burden on ASCs. We also 
are excluding one measure (ASC-11) previously adopted for the CY 2016 
payment determination and providing that this measure may be 
voluntarily rather than mandatorily reported for the CY 2017 payment 
determination and subsequent years. We will not subject ASCs to payment 
reductions with respect to this measure for the CY 2016 payment 
determination or during the period of voluntary reporting. In addition, 
we are establishing a measure removal process and criteria, defining 
data collection timeframes and submission deadlines, and clarifying how 
we refer to the extraordinary circumstances extensions or exemptions 
process.
3. Summary of Costs and Benefits
    In sections XXI. and XXII. of this final rule with comment period, 
we set forth a detailed analysis of the regulatory and federalism 
impacts that the changes will have on affected entities and 
beneficiaries. Key estimated impacts are described below.
a. Impacts of the OPPS Update
(1) Impacts of All OPPS Changes
    Table 49 in section XXI. 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 2015 compared to all estimated 
OPPS payments in CY 2014. We estimate that the policies in this final 
rule with comment period will result in a 2.3 percent overall increase 
in OPPS payments to providers. We estimate that total OPPS payments for 
CY 2015, including beneficiary cost-sharing, to the approximate 4,000 
facilities paid under the OPPS (including general acute care hospitals, 
children's hospitals, cancer hospitals, and CMHCs) will be 
approximately $56.1 billion, an increase of approximately $5.1 billion 
compared to CY 2014 payments, or $900 million, excluding our estimated 
changes in enrollment, utilization, and case-mix.
    We estimated the isolated impact of our OPPS policies on CMHCs 
because CMHCs are only paid for partial hospitalization services under 
the OPPS. Continuing the provider-specific structure that we adopted 
beginning in CY 2011 and basing payment fully on the type of provider 
furnishing the service, we estimate a 1.3 percent increase in CY 2015 
payments to CMHCs relative to their CY 2014 payments.
(2) Impacts of the Updated Wage Indexes
    We estimate that our update of the wage indexes and application of 
the frontier State wage index, including changes resulting from the 
adoption of the new OMB labor market area delineations and the 
transitional 1-year, 50/50 blended wage index, will mitigate any 
negative changes due to the new CBSA delineations.
(3) Impacts of the Rural Adjustment and the Cancer Hospital Payment 
Adjustment
    There are no significant impacts of our CY 2015 payment policies 
for hospitals that are eligible for the rural adjustment or for the 
cancer hospital payment adjustment. We are not making any change in 
policies for determining the rural and cancer hospital payment 
adjustments, and the adjustment amounts do not significantly impact the 
budget neutrality adjustments for these policies.
(4) Impacts of the OPD Fee Schedule Increase Factor
    We estimate that, for most hospitals, the application of the OPD 
fee schedule increase factor of 2.2 percent to the conversion factor 
for CY 2015 will mitigate the small negative impacts of the budget 
neutrality adjustments. As a result of the OPD fee schedule increase 
factor and other budget neutrality adjustments, we estimate that urban 
and rural hospitals will experience increases of approximately 2.3 
percent for urban hospitals and 1.9 percent for rural hospitals. 
Classifying hospitals by teaching status or type of ownership suggests 
that these hospitals will receive similar increases.
b. Impacts of the ASC Payment Update
    For impact purposes, the surgical procedures on the ASC list of 
covered procedures are aggregated into surgical specialty groups using 
CPT and HCPCS code range definitions. The percentage change in 
estimated total payments by specialty groups under the CY 2015 payment 
rates compared to estimated CY 2014 payment rates ranges between -4.0 
percent for ancillary items and services and 14 percent for hematologic 
and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
    We do not expect our CY 2015 policies to significantly affect the 
number of hospitals that do not receive a full annual payment update.
d. Impacts of the ASCQR Program
    We do not expect our CY 2015 proposed policies to significantly 
affect the number of ASCs that do not receive a full annual payment 
update.

[[Page 66778]]

B. Legislative and Regulatory Authority for the Hospital OPPS

    When Title XVIII of the Social Security Act was enacted, Medicare 
payment for hospital outpatient services was based on hospital-specific 
costs. In an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR Parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: The Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 
2006; the Medicare Improvements and Extension Act under Division B of 
Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), enacted on December 20, 2006; the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), 
enacted on December 29, 2007; the Medicare Improvements for Patients 
and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 
15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-
148), enacted on March 23, 2010, as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on 
March 30, 2010 (these two public laws are collectively known as the 
Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 
(MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act 
of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the 
Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 
112-96), enacted on February 22, 2012; and the American Taxpayer Relief 
Act of 2012 (Pub. L. 112-240), enacted January 2, 2013.
    Under the OPPS, we pay for hospital Part B services on a rate-per-
service basis that varies according to the APC group to which the 
service is assigned. We use the Healthcare Common Procedure Coding 
System (HCPCS) (which includes certain Current Procedural Terminology 
(CPT) codes) to identify and group the services within each APC. The 
OPPS includes payment for most hospital outpatient services, except 
those identified in section I.C. of this final rule with comment 
period. Section 1833(t)(1)(B) of the Act provides for payment under the 
OPPS for hospital outpatient services designated by the Secretary 
(which includes partial hospitalization services furnished by CMHCs), 
and certain inpatient hospital services that are paid under Part B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use (section 1833(t)(2)(B) of 
the Act). In accordance with section 1833(t)(2) of the Act, subject to 
certain exceptions, items and services within an APC group cannot be 
considered comparable with respect to the use of resources if the 
highest median cost (or mean cost, if elected by the Secretary) for an 
item or service in the APC group is more than 2 times greater than the 
lowest median cost (or mean cost, if elected by the Secretary) for an 
item or service within the same APC group (referred to as the ``2 times 
rule''). In implementing this provision, we generally use the cost of 
the item or service assigned to an APC group.
    For new technology items and services, special payments under the 
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act 
provides for temporary additional payments, which we refer to as 
``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices. For new technology services that are not eligible for 
transitional pass-through payments, and for which we lack sufficient 
clinical information and cost data to appropriately assign them to a 
clinical APC group, we have established special APC groups based on 
costs, which we refer to as New Technology APCs. These New Technology 
APCs are designated by cost bands which allow us to provide appropriate 
and consistent payment for designated new procedures that are not yet 
reflected in our claims data. Similar to pass-through payments, an 
assignment to a New Technology APC is temporary; that is, we retain a 
service within a New Technology APC until we acquire sufficient data to 
assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

    Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to 
designate the hospital outpatient services that are paid under the 
OPPS. While most hospital outpatient services are payable under the 
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for 
ambulance, physical and occupational therapy, and speech-language 
pathology services, for which payment is made under a fee schedule. It 
also excludes screening mammography, diagnostic mammography, and 
effective January 1, 2011, an annual wellness visit providing 
personalized prevention plan services. The Secretary exercises the 
authority granted under the statute to also exclude from the OPPS 
certain services that are paid under fee schedules or other payment 
systems. Such excluded services include, for example, the professional 
services of physicians and nonphysician practitioners paid under the 
Medicare Physician Fee Schedule (MPFS); certain laboratory services 
paid under the Clinical Laboratory Fee Schedule (CLFS); services for 
beneficiaries with end-stage renal disease (ESRD) that are paid under 
the ESRD prospective payment system; and services and procedures that 
require an inpatient stay that are paid under the hospital IPPS. We set 
forth the services that are excluded from payment under the OPPS in 
regulations at 42 CFR 419.22.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals include: Critical access hospitals (CAHs); hospitals located 
outside of the 50 States, the District of Columbia, and Puerto Rico; 
and Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

    On April 7, 2000, we published in the Federal Register a final rule 
with comment period (65 FR 18434) to implement a prospective payment 
system for hospital outpatient services. The hospital OPPS was first 
implemented for services furnished on or after August 1, 2000. Section 
1833(t)(9) of the Act requires the Secretary to review certain 
components

[[Page 66779]]

of the OPPS, not less often than annually, and to revise the groups, 
relative payment weights, and other adjustments that take into account 
changes in medical practices, changes in technologies, and the addition 
of new services, new cost data, and other relevant information and 
factors.
    Since initially implementing the OPPS, we have published final 
rules in the Federal Register annually to implement statutory 
requirements and changes arising from our continuing experience with 
this system. These rules can be viewed on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
106-113, requires that we consult with an external advisory panel of 
experts to annually review the clinical integrity of the payment groups 
and their weights under the OPPS. In CY 2000, based on section 
1833(t)(9)(A) of the Act and section 222 of the Public Health Service 
(PHS) Act, the Secretary established the Advisory Panel on Ambulatory 
Payment Classification Groups (APC Panel) to fulfill this requirement. 
In CY 2011, based on section 222 of the PHS Act which gives 
discretionary authority to the Secretary to convene advisory councils 
and committees, the Secretary expanded the panel's scope to include the 
supervision of hospital outpatient therapeutic services in addition to 
the APC groups and weights. To reflect this new role of the panel, the 
Secretary changed the panel's name to the Advisory Panel on Hospital 
Outpatient Payment (the HOP Panel, or the Panel). The Panel is not 
restricted to using data compiled by CMS, and in conducting its review 
it may use data collected or developed by organizations outside the 
Department.
2. Establishment of the Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the HOP Panel, at that time named the APC Panel. This 
expert panel, which may be composed of up to 19 appropriate 
representatives of providers (currently employed full-time, not as 
consultants, in their respective areas of expertise), reviews clinical 
data and advises CMS about the clinical integrity of the APC groups and 
their payment weights. Since CY 2012, the Panel also is charged with 
advising the Secretary on the appropriate level of supervision for 
individual hospital outpatient therapeutic services. The Panel is 
technical in nature, and it is governed by the provisions of the 
Federal Advisory Committee Act (FACA). The current charter specifies, 
among other requirements, that: The Panel continues to be technical in 
nature; is governed by the provisions of the FACA; may convene up to 
three meetings per year; has a Designated Federal Official (DFO); and 
is chaired by a Federal Official designated by the Secretary. The 
current charter was amended on November 15, 2011, and the Panel was 
renamed to reflect expanding the Panel's authority to include 
supervision of hospital outpatient therapeutic services and therefore 
to add CAHs to its membership.
    The current Panel membership and other information pertaining to 
the Panel, including its charter, Federal Register notices, membership, 
meeting dates, agenda topics, and meeting reports, can be viewed on the 
CMS Web site at: http://www.cms.gov/FACA/
05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups .asp#TopOfPage.
3. Panel Meetings and Organizational Structure
    The Panel has held multiple meetings, with the last meeting taking 
place on August 25, 2014. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations for Panel membership and to announce new members.
    The Panel has established an operational structure that, in part, 
currently includes the use of three subcommittees to facilitate its 
required review process. The three current subcommittees are the Data 
Subcommittee, the Visits and Observation Subcommittee, and the 
Subcommittee for APC Groups and Status Indicator (SI) Assignments.
    The Data Subcommittee is responsible for studying the data issues 
confronting the Panel and for recommending options for resolving them. 
The Visits and Observation Subcommittee reviews and makes 
recommendations to the Panel on all technical issues pertaining to 
observation services and hospital outpatient visits paid under the OPPS 
(for example, APC configurations and APC relative payment weights). The 
Subcommittee for APC Groups and SI Assignments advises the Panel on the 
following issues: The appropriate SIs to be assigned to HCPCS codes, 
including but not limited to whether a HCPCS code or a category of 
codes should be packaged or separately paid; and the appropriate APC 
placement of HCPCS codes regarding services for which separate payment 
is made.
    Each of these subcommittees was established by a majority vote from 
the full Panel during a scheduled Panel meeting, and the Panel 
recommended at the August 2014 meeting that the subcommittees continue. 
We accepted this recommendation.
    Discussions of the other recommendations made by the Panel at the 
August 2014 Panel meeting are included in the sections of this final 
rule with comment period that are specific to each recommendation. For 
discussions of earlier Panel meetings and recommendations, we refer 
readers to previously published OPPS/ASC proposed and final rules, the 
CMS Web site mentioned earlier in this section, and the FACA database 
at: http://fido.gov/facadatabase/public.asp.

F. Public Comments Received on the CY 2015 OPPS/ASC Proposed Rule

    We received approximately 719 timely pieces of correspondence on 
the CY 2015 OPPS/ASC proposed rule that appeared in the Federal 
Register on July 14, 2014 (79 FR 40915). We note that we received some 
public comments that are outside the scope of the CY 2015 OPPS/ASC 
proposed rule. Out-of-scope public comments are not addressed in this 
CY 2015 OPPS/ASC final rule with comment period. Summaries of those 
public comments that are within the scope of the proposed rule and our 
responses are set forth in the various sections of this final rule with 
comment period under the appropriate headings.

G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule With 
Comment Period

    We received approximately 490 timely pieces of correspondence on 
the CY 2014 OPPS/ASC final rule with comment period that appeared in 
the Federal Register on December 10, 2013 (78 FR 74826), some of which 
contained comments on the interim APC assignments and/or status 
indicators of new or replacement HCPCS codes (identified with comment 
indicator ``NI'' in Addenda B, AA, and BB to that final rule). 
Summaries of the public comments on new or replacement codes are set 
forth in this CY 2015 OPPS/ASC final rule with comment period under the 
appropriate subject-matter headings.

[[Page 66780]]

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 APCs. In the April 7, 2000 OPPS final rule with comment period (65 
FR 18482), we explained in detail how we calculated the relative 
payment weights that were implemented on August 1, 2000 for each APC 
group.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40925), for the CY 
2015 OPPS, we proposed to recalibrate the APC relative payment weights 
for services furnished on or after January 1, 2015, and before January 
1, 2016 (CY 2015), using the same basic methodology that we described 
in the CY 2014 OPPS/ASC final rule with comment period. That is, we 
proposed to recalibrate the relative payment weights for each APC based 
on claims and cost report data for hospital outpatient department 
(HOPD) services, using the most recent available data to construct a 
database for calculating APC group weights. Therefore, for the purpose 
of recalibrating the proposed APC relative payment weights for CY 2015, 
we used approximately 149 million final action claims (claims for which 
all disputes and adjustments have been resolved and payment has been 
made) for hospital outpatient department services furnished on or after 
January 1, 2013, and before January 1, 2014. For this final rule with 
comment period, for the purpose of recalibrating the final APC relative 
payment weights for CY 2015, we used approximately 161 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, 2013, and before January 1, 2014. For exact counts of 
claims used, we refer readers to the claims accounting narrative under 
supporting documentation for the CY 2015 OPPS/ASC proposed rule and 
this final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Of the approximately 161 million final action claims for services 
provided in hospital outpatient settings used to calculate the CY 2015 
OPPS payment rates for this final rule with comment period, 
approximately 123 million claims were the type of bill potentially 
appropriate for use in setting rates for OPPS services (but did not 
necessarily contain services payable under the OPPS). Of the 
approximately 123 million claims, approximately 5 million claims were 
not for services paid under the OPPS or were excluded as not 
appropriate for use (for example, erroneous cost-to-charge ratios 
(CCRs) or no HCPCS codes reported on the claim). From the remaining 
approximately 118 million claims, we created approximately 101 million 
single records, of which approximately 50 million were ``pseudo'' 
single or ``single session'' claims (created from approximately 22 
million multiple procedure claims using the process we discuss later in 
this section). Approximately 1 million claims were trimmed out on cost 
or units in excess of  3 standard deviations from the 
geometric mean, yielding approximately 101 million single bills for 
ratesetting. As described in section II.A.2. of this final rule with 
comment period, our data development process is designed with the goal 
of using appropriate cost information in setting the APC relative 
payment weights. The bypass process is described in section II.A.1.b. 
of this final rule with comment period. This section discusses how we 
develop ``pseudo'' single procedure claims (as defined below), with the 
intention of using more appropriate data from the available claims. In 
some cases, the bypass process allows us to use some portion of the 
submitted claim for cost estimation purposes, while the remaining 
information on the claim continues to be unusable. Consistent with the 
goal of using appropriate information in our data development process, 
we only use claims (or portions of each claim) that are appropriate for 
ratesetting purposes.
    The final APC relative weights and payments for CY 2015 in Addenda 
A and B to this final rule with comment period (which are available via 
the Internet on the CMS Web site) were calculated using claims from CY 
2013 that were processed through June 30, 2014. While prior to CY 2013 
we historically based the payments on median hospital costs for 
services in the APC groups, beginning with the CY 2013 OPPS, we 
established the cost-based relative payment weights for the OPPS using 
geometric mean costs, as discussed in the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68259 through 68271). For the CY 2015 OPPS, 
we proposed and are using this same methodology, basing payments on 
geometric mean costs. Under this methodology, we select claims for 
services paid under the OPPS and match these claims to the most recent 
cost report filed by the individual hospitals represented in our claims 
data. We continue to believe that it is appropriate to use the most 
current full calendar year claims data and the most recently submitted 
cost reports to calculate the relative costs underpinning the APC 
relative payment weights and the CY 2015 payment rates.
b. Use of Single and Multiple Procedure Claims
    For CY 2015, in general, and as we proposed, we are continuing to 
use single procedure claims to set the costs on which the APC relative 
payment weights are based. We generally use single procedure claims to 
set the estimated costs for APCs because we believe that the OPPS 
relative weights on which payment rates are based should be derived 
from the costs of furnishing one unit of one procedure and because, in 
many circumstances, we are unable to ensure that packaged costs can be 
appropriately allocated across multiple procedures performed on the 
same date of service.
    It is generally desirable to use the data from as many claims as 
possible to recalibrate the APC relative payment weights, including 
those claims for multiple procedures. As we have for several years, we 
are continuing to use date of service stratification and a list of 
codes to be bypassed to convert multiple procedure claims to ``pseudo'' 
single procedure claims. Through bypassing specified codes that we 
believe do not have significant packaged costs, we are able to use more 
data from multiple procedure claims. In many cases, this enables us to 
create multiple ``pseudo'' single procedure claims from claims that 
were submitted as multiple procedure claims spanning multiple dates of 
service, or claims that contained numerous separately paid procedures 
reported on the same date on one claim. We refer to these newly created 
single procedure claims as ``pseudo'' single procedure claims. The 
history of our use of a bypass list to generate ``pseudo'' single 
procedure claims is well documented, most recently in the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74849 through 74851). In 
addition, for CY 2008 (72 FR 66614 through 66664), we increased 
packaging and created the first composite APCs, and continued those 
policies through CY 2014. Increased packaging and creation of composite 
APCs also increased the number of bills that we were able to use for 
ratesetting by enabling us to use claims that contained multiple major

[[Page 66781]]

procedures that previously would not have been usable. Further, for CY 
2009, we expanded the composite APC model to one additional clinical 
area, multiple imaging services (73 FR 68559 through 68569), which also 
increased the number of bills we were able to use in developing the 
OPPS relative weights on which payments are based. We have continued 
the composite APCs for multiple imaging services through CY 2014, and 
as we proposed, we are continuing this policy for CY 2015. We refer 
readers to section II.A.2.f. of the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74910 through 74925) for a discussion of the use 
of claims in modeling the costs for composite APCs and to section 
II.A.3. of the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74925 through 74948) for a discussion of our packaging policies for CY 
2014. In addition, as we proposed, we are establishing additional 
packaging policies for the CY 2015 OPPS, as discussed in section 
II.A.3. of this final rule with comment period.
    As we proposed, we are continuing to apply these processes to 
enable us to use as much claims data as possible for ratesetting for 
the CY 2015 OPPS. This methodology enabled us to create, for this final 
rule with comment period, approximately 50 million ``pseudo'' single 
procedure claims, including multiple imaging composite ``single 
session'' bills (we refer readers to section II.A.2.f.(4) of this final 
rule with comment period for further discussion), to add to the 
approximately 51 million ``natural'' single procedure claims.
    For CY 2015, we proposed to bypass 227 HCPCS codes that were 
identified in Addendum N to the CY 2015 OPPS/ASC proposed rule (which 
is available via the Internet on the CMS Web site). Since the inception 
of the bypass list, which is the list of codes to be bypassed to 
convert multiple procedure claims to ``pseudo'' single procedure 
claims, we have calculated the percent of ``natural'' single bills that 
contained packaging for each HCPCS code and the amount of packaging on 
each ``natural'' single bill for each code. Each year, we generally 
retain the codes on the previous year's bypass list and use the updated 
year's data (for CY 2015, data available for the March 10, 2014 meeting 
of the Advisory Panel on Hospital Outpatient Payment (the Panel) from 
CY 2013 claims processed through September 30, 2013, and CY 2012 claims 
data processed through June 30, 2013, used to model the payment rates 
for CY 2014) to determine whether it would be appropriate to add 
additional codes to the previous year's bypass list. For CY 2015, we 
proposed to continue to bypass all of the HCPCS codes on the CY 2014 
OPPS bypass list, with the exception of HCPCS codes that we proposed to 
delete for CY 2015, which were listed in Table 1 of the proposed rule 
(79 FR 40927 through 40929). We also proposed to remove HCPCS codes 
that are not separately paid under the OPPS because the purpose of the 
bypass list is to obtain more data for those codes relevant to 
ratesetting. Some of the codes we proposed to remove from the CY 2015 
bypass list are affected by the CY 2015 final packaging policy, 
discussed in section II.A.3. of this final rule with comment period. In 
addition, we proposed to add to the bypass list for CY 2015 HCPCS codes 
not on the CY 2014 bypass list that, using either the CY 2014 final 
rule with comment period data (CY 2012 claims) or the March 10, 2014 
Panel data (first 9 months of CY 2013 claims), met the empirical 
criteria for the bypass list that are summarized below. Finally, to 
remain consistent with the CY 2015 proposal to continue to develop OPPS 
relative payment weights based on geometric mean costs, we also 
proposed that the packaged cost criterion continue to be based on the 
geometric mean cost. The entire list proposed for CY 2015 (including 
the codes that remain on the bypass list from prior years) was open to 
public comment in the CY 2015 OPPS/ASC proposed rule. Because we must 
make some assumptions about packaging in the multiple procedure claims 
in order to assess a HCPCS code for addition to the bypass list, we 
assumed that the representation of packaging on ``natural'' single 
procedure claims for any given code is comparable to packaging for that 
code in the multiple procedure claims. The criteria for the bypass list 
are:
     There are 100 or more ``natural'' single procedure claims 
for the code. This number of single procedure claims ensures that 
observed outcomes are sufficiently representative of packaging that 
might occur in the multiple claims.
     Five percent or fewer of the ``natural'' single procedure 
claims for the code have packaged costs on that single procedure claim 
for the code. This criterion results in limiting the amount of 
packaging being redistributed to the separately payable procedures 
remaining on the claim after the bypass code is removed and ensures 
that the costs associated with the bypass code represent the cost of 
the bypassed service.
     The geometric mean cost of packaging observed in the 
``natural'' single procedure claims is equal to or less than $55. This 
criterion also limits the amount of error in redistributed costs. 
During the assessment of claims against the bypass criteria, we do not 
know the dollar value of the packaged cost that should be appropriately 
attributed to the other procedures on the claim. Therefore, ensuring 
that redistributed costs associated with a bypass code are small in 
amount and volume protects the validity of cost estimates for low cost 
services billed with the bypassed service.
    We note that, as we did for CY 2014, we proposed to continue to 
establish the CY 2015 OPPS relative payment weights based on geometric 
mean costs. To remain consistent in the metric used for identifying 
cost patterns, we proposed to use the geometric mean cost of packaging 
to identify potential codes to add to the bypass list.
    In response to public comments on the CY 2010 OPPS/ASC proposed 
rule requesting that the packaged cost threshold be updated, we 
considered whether it would be appropriate to update the $50 packaged 
cost threshold for inflation when examining potential bypass list 
additions. As discussed in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60328), the real value of this packaged cost threshold 
criterion has declined due to inflation, making the packaged cost 
threshold more restrictive over time when considering additions to the 
bypass list. Therefore, adjusting the threshold by the market basket 
increase would prevent continuing decline in the threshold's real 
value. Based on the same rationale described for the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74838), we proposed for CY 2015 
to continue to update the packaged cost threshold by the market basket 
increase. By applying the final CY 2014 market basket increase of 1.7 
percent to the prior nonrounded dollar threshold of $54.73 (78 FR 
74838), we determined that the threshold remains for CY 2015 at $55 
($55.66 rounded to $55, the nearest $5 increment). Therefore, we 
proposed to set the geometric mean packaged cost threshold on the CY 
2013 claims at $55 for a code to be considered for addition to the CY 
2015 OPPS bypass list.
     The code is not a code for an unlisted service. Unlisted 
codes do not describe a specific service, and thus their costs would 
not be appropriate for bypass list purposes.
    In addition, we proposed to continue to include on the bypass list 
HCPCS codes that CMS medical advisors believe have minimal associated 
packaging based on their clinical assessment of the complete CY 2015 
OPPS proposal. Some of these codes were identified by CMS medical

[[Page 66782]]

advisors and some were identified in prior years by commenters with 
specialized knowledge of the packaging associated with specific 
services. We also proposed to continue to include certain HCPCS codes 
on the bypass list in order to purposefully direct the assignment of 
packaged costs to a companion code where services always appear 
together and where there would otherwise be few single procedure claims 
available for ratesetting. For example, we have previously discussed 
our reasoning for adding HCPCS code G0390 (Trauma response team 
associated with hospital critical care service) to the bypass list (73 
FR 68513).
    As a result of the multiple imaging composite APCs that we 
established in CY 2009, the program logic for creating ``pseudo'' 
single procedure claims from bypassed codes that are also members of 
multiple imaging composite APCs changed. When creating the set of 
``pseudo'' single procedure claims, claims that contain ``overlap 
bypass codes'' (those HCPCS codes that are both on the bypass list and 
are members of the multiple imaging composite APCs) were identified 
first. These HCPCS codes were then processed to create multiple imaging 
composite ``single session'' bills, that is, claims containing HCPCS 
codes from only one imaging family, thus suppressing the initial use of 
these codes as bypass codes. However, these ``overlap bypass codes'' 
were retained on the bypass list because, at the end of the ``pseudo'' 
single processing logic, we reassessed the claims without suppression 
of the ``overlap bypass codes'' under our longstanding ``pseudo'' 
single process to determine whether we could convert additional claims 
to ``pseudo'' single procedure claims. (We refer readers to section 
II.A.2.b. of this final rule with comment period for further discussion 
of the treatment of ``overlap bypass codes.'') This process also 
created multiple imaging composite ``single session'' bills that could 
be used for calculating composite APC costs. ``Overlap bypass codes'' 
that are members of the multiple imaging composite APCs are identified 
by asterisks (*) in Addendum N to this final rule with comment period 
(which is available via the Internet on the CMS Web site).
    Comment: One commenter supported the CY 2015 proposal to remove 
certain codes from the bypass list, in particular for the anatomic 
pathology procedures, and suggested that the bypass list undervalues 
codes and artificially lowers their estimated costs, as evidenced by 
the estimated increase in payment for some of those services in the CY 
2015 OPPS/ASC proposed rule.
    Response: We appreciate the commenter's support. The bypass list 
process is used to extract more data from claims that would otherwise 
be unusable. We use a variety of information in identifying codes that 
could be potentially added to the bypass list each year, including 
codes selected based on the empirical criteria, CMS medical advisor 
recommendations, and commenter requests. In doing so, we attempt to 
ensure that the amount of packaged cost being redistributed as a result 
of the process is limited.
    After consideration of the public comments we received, we are 
adopting as final the proposed ``pseudo'' single claims process. As 
discussed earlier in this section, there are interactions between the 
application of a bypass list and various other OPPS payment policies. 
As a result of modifications to the packaging policies described in 
section III. of this final rule with comment period, we are adding 
codes that we had originally proposed to remove from the CY 2015 bypass 
list back on the CY 2015 final OPPS bypass list.
    Addendum N to this final rule with comment period (which is 
available via the Internet on the CMS Web site) includes the list of 
bypass codes for CY 2015. The list of bypass codes contains codes that 
were reported on claims for services in CY 2013 and, therefore, 
includes codes that were in effect in CY 2013 and used for billing but 
were deleted for CY 2014. We retained these deleted bypass codes on the 
CY 2015 bypass list because these codes existed in CY 2013 and were 
covered OPD services in that period, and CY 2013 claims data are used 
to calculate CY 2015 payment rates. Keeping these deleted bypass codes 
on the bypass list potentially allows us to create more ``pseudo'' 
single procedure claims for ratesetting purposes. ``Overlap bypass 
codes'' that were members of the multiple imaging composite APCs are 
identified by asterisks (*) in the third column of Addendum N to this 
final rule with comment period. HCPCS codes that we are adding for CY 
2015 are identified by asterisks (*) in the fourth column of Addendum 
N.
    Table 1 of the proposed rule contained the list of codes that we 
proposed to remove from the CY 2015 bypass list (79 FR 40927 through 
40929). Table 1 below contains the list of codes that we are removing 
from the final CY 2015 bypass list because these codes were either 
deleted from the HCPCS before CY 2013 (and therefore were not covered 
OPD services in CY 2013) or were not separately payable codes under the 
CY 2015 OPPS because these codes are not used for ratesetting through 
the bypass process. The list of codes for removal from the bypass list 
includes those that will be affected by the CY 2015 OPPS packaging 
policy described in section II.A.3. of this final rule with comment 
period.

        Table 1--HCPCS Codes Removed From the CY 2015 Bypass List
------------------------------------------------------------------------
            HCPCS Code                     HCPCS Short descriptor
------------------------------------------------------------------------
11056.............................  Trim skin lesions 2 to 4.
11300.............................  Shave skin lesion 0.5 cm/> views.
70120.............................  X-ray exam of mastoids.
70130.............................  X-ray exam of mastoids.
70140.............................  X-ray exam of facial bones.
70150.............................  X-ray exam of facial bones.
70160.............................  X-ray exam of nasal bones.
70200.............................  X-ray exam of eye sockets.
70210.............................  X-ray exam of sinuses.
70220.............................  X-ray exam of sinuses.
70240.............................  X-ray exam pituitary saddle.
70250.............................  X-ray exam of skull.
70260.............................  X-ray exam of skull.
70320.............................  Full mouth x-ray of teeth.
70328.............................  X-ray exam of jaw joint.
70330.............................  X-ray exam of jaw joints.
70355.............................  Panoramic x-ray of jaws.
70360.............................  X-ray exam of neck.
71021.............................  Chest x-ray frnt lat lordotc.
71022.............................  Chest x-ray frnt lat oblique.
71023.............................  Chest x-ray and fluoroscopy.
71030.............................  Chest x-ray 4/> views.
71035.............................  Chest x-ray special views.
71100.............................  X-ray exam ribs uni 2 views.
71101.............................  X-ray exam unilat ribs/chest.
71110.............................  X-ray exam ribs bil 3 views.
71111.............................  X-ray exam ribs/chest4/> vws.
71120.............................  X-ray exam breastbone 2/> vws.
71130.............................  X-ray strenoclavic jt 3/>vws.
72020.............................  X-ray exam of spine 1 view.
72040.............................  X-ray exam neck spine 2-3 vw.
72050.............................  X-ray exam neck spine 4/5vws.
72052.............................  X-ray exam neck spine 6/>vws.
72069.............................  X-ray exam trunk spine stand.
72070.............................  X-ray exam thorac spine 2vws.
72072.............................  X-ray exam thorac spine 3vws.
72074.............................  X-ray exam thorac spine4/>vw.

[[Page 66783]]

 
72080.............................  X-ray exam trunk spine 2 vws.
72090.............................  X-ray exam scloiosis erect.
72100.............................  X-ray exam l-s spine 2/3 vws.
72110.............................  X-ray exam l-2 spine 4/>vws.
72114.............................  X-ray exam l-s spine bending.
72120.............................  X-ray bend only l-s spine.
72170.............................  X-ray exam of pelvis.
72190.............................  X-ray exam of pelvis.
72202.............................  X-ray exam si joints 3/> vws.
72220.............................  X-ray exam sacrum tailbone.
73000.............................  X-ray exam of collar bone.
73010.............................  X-ray exam of shoulder blade.
73020.............................  X-ray exam of shoulder.
73030.............................  X-ray exam of shoulder.
73050.............................  X-ray exam of shoulders.
73060.............................  X-ray exam of humerus.
73070.............................  X-ray exam of elbow.
73080.............................  X-ray exam of elbow.
73090.............................  X-ray exam of forearm.
73100.............................  X-ray exam of wrist.
73110.............................  X-ray exam of wrist.
73120.............................  X-ray exam of hand.
73130.............................  X-ray exam of hand.
73140.............................  X-ray exam of finger(s).
73510.............................  X-ray exam of hip.
73520.............................  X-ray exam of hips.
73540.............................  X-ray exam of pelvis & hips.
73550.............................  X-ray exam of thigh.
73560.............................  X-ray exam of knee 1 or 2.
73562.............................  X-ray exam of knee 3.
73564.............................  X-ray exam knee 4 or more.
73565.............................  X-ray exam of knees.
73590.............................  X-ray exam of lower leg.
73600.............................  X-ray exam of ankle.
73610.............................  X-ray exam of ankle.
73620.............................  X-ray exam of foot.
73630.............................  X-ray exam of foot.
73650.............................  X-ray exam of heel.
73660.............................  X-ray exam of toe(s).
74000.............................  X-ray exam of abdomen.
74010.............................  X-ray exam of abdomen.
74020.............................  X-ray exam of abdomen.
74022.............................  X-ray exam series abdomen.
76100.............................  X-ray exam of body section.
76510.............................  Ophth us b & quant a.
76514.............................  Echo exam of eye thickness.
76516.............................  Echo exam of eye.
76519.............................  Echo exam of eye.
76645.............................  Us exam breast(s).
76816.............................  Ob us follow-up per fetus.
76882.............................  Us xtr non-vasc lmtd.
76970.............................  Ultrasound exam follow-up.
76977.............................  Us bone density measure.
77072.............................  X-rays for bone age.
77073.............................  X-rays bone length studies.
77074.............................  X-rays bone survey limited.
77076.............................  X-rays bone survey infant.
77077.............................  Joint survey single view.
77078.............................  Ct bone density axial.
77079.............................  Ct bone density peripheral.
77080.............................  Dxa bone density axial.
77081.............................  Dxa bone density/peripheral.
77082.............................  Dxa bone density vert fx.
77083.............................  Radiographic absorptiometry.
80500.............................  Lab pathology consultation.
80502.............................  Lab pathology consultation.
85097.............................  Bone marrow interpretation.
86510.............................  Histoplasmosis skin test.
86850.............................  Rbc antibody screen.
86870.............................  Rbc antibody identification.
86880.............................  Coombs test direct.
86885.............................  Coombs test indirect qual.
86886.............................  Coombs test indirect titer.
86900.............................  Blood typing abo.
86901.............................  Blood typing rh (d).
86904.............................  Blood typing patient serum.
86905.............................  Blood typing rbc antigens.
86906.............................  Blood typing rh phenotype.
86930.............................  Frozen blood prep.
86970.............................  Rbc pretx incubatj w/chemicl.
86977.............................  Rbc serum pretx incubj/inhib.
88104.............................  Cytopath fl nongyn smears.
88106.............................  Cytopath fl nongyn filter.
88107.............................  Cytopath fl nongyn sm/fltr.
88108.............................  Cytopath concentrate tech.
88112.............................  Cytopath cell enhance tech.
88120.............................  Cytp urne 3-5 probes ea spec.
88160.............................  Cytopath smear other source.
88161.............................  Cytopath smear other source.
88162.............................  Cytopath smear other source.
88172.............................  Cytp dx eval fna 1st ea site.
88173.............................  Cytopath eval fna report.
88182.............................  Cell marker study.
88184.............................  Flowcytometry/tc 1 marker.
88189.............................  Flowcytometry/read 16 & >.
88300.............................  Surgical path gross.
88302.............................  Tissue exam by pathologist.
88304.............................  Tissue exam by pathologist.
88305.............................  Tissue exam by pathologist.
88307.............................  Tissue exam by pathologist.
88312.............................  Special stains group 1.
88313.............................  Special stains group 2.
88321.............................  Microslide consultation.
88323.............................  Microslide consultation.
88325.............................  Comprehensive review of data.
88329.............................  Path consult introp.
88331.............................  Path consult intraop 1 bloc.
88342.............................  Immunohisto antibody slide.
88346.............................  Immunofluorescent study.
88347.............................  Immunofluorescent study.
88348.............................  Electron microscopy.
88358.............................  Analysis tumor.
88360.............................  Tumor immunohistochem/manual.
88361.............................  Tumor immunohistochem/comput.
88365.............................  Insitu hybridization (fish).
88368.............................  Insitu hybridization manual.
88385.............................  Eval molecul probes 51-250.
88386.............................  Eval molecul probes 251-500.
89049.............................  Chct for mal hyperthermia.
89220.............................  Sputum specimen collection.
89230.............................  Collect sweat for test.
89240.............................  Pathology lab procedure.
92020.............................  Special eye evaluation.
92025.............................  Corneal topography.
92060.............................  Special eye evaluation.
92081.............................  Visual field examination(s).
92082.............................  Visual field examination(s).
92083.............................  Visual field examination(s).
92133.............................  Cmptr ophth img optic nerve.
92134.............................  Cptr ophth dx img post segmt.
92136.............................  Ophthalmic biometry.
92225.............................  Special eye exam initial.
92226.............................  Special eye exam subsequent.
92230.............................  Eye exam with photos.
92250.............................  Eye exam with photos.
92285.............................  Eye photography.
92286.............................  Internal eye photography.
92520.............................  Laryngeal function studies.
92541.............................  Spontaneous nystagmus test.
92542.............................  Positional nystagmus test.
92550.............................  Tympanometry & reflex thresh.
92552.............................  Pure tone audiometry air.
92553.............................  Audiometry air & bone.
92555.............................  Speech threshold audiometry.
92556.............................  Speech audiometry complete.
92557.............................  Comprehensive hearing test.
92567.............................  Tympanometry.
92570.............................  Acoustic immitance testing.
92582.............................  Conditioning play audiometry.
92603.............................  Cochlear implt f/up exam 7/>.
92604.............................  Reprogram cochlear implt 7/>.
92626.............................  Eval aud rehab status.
93005.............................  Electrocardiogram tracing.
93017.............................  Cardiovascular stress test.
93225.............................  Ecg monit/reprt up to 48 hrs.
93226.............................  Ecg monit/reprt up to 48 hrs.
93270.............................  Remote 30 day ecg rev/report.
93278.............................  Ecg/signal-averaged.
93279.............................  Pm device progr eval sngl.
93280.............................  Pm device progr eval dual.
93281.............................  Pm device progr eval multi.
93282.............................  Icd device progr eval 1 sngl.
93283.............................  Icd device progr eval dual.
93284.............................  Icd device progr eval mult.
93285.............................  Ilr device eval progr.
93288.............................  Pm device eval in person.
93289.............................  Icd device interrogate.
93290.............................  Icm device eval.
93291.............................  Ilr device interrogate.
93292.............................  Wcd device interrogate.
93293.............................  Pm phone r-strip device eval.
93296.............................  Pm/icd remote tech serv.
93299.............................  Icm/ilr remote tech serv.
93701.............................  Bioimpedance cv analysis.
93786.............................  Ambulatory bp recording.
93788.............................  Ambulatory bp analysis.
93875.............................  Extracranial study.
94015.............................  Patient recorded spirometry.
94690.............................  Exhaled air analysis.
95803.............................  Actigraphy testing.
95869.............................  Muscle test thor paraspinal.
95900.............................  Motor nerve conduction test.
95921.............................  Autonomic nrv parasym inervj.
95970.............................  Analyze neurostim no prog.
96900.............................  Ultraviolet light therapy.
96910.............................  Photochemotherapy with uv-b.
96912.............................  Photochemotherapy with uv-a.
96920.............................  Laser tx skin ASC proposed rule (79 FR 40929), 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 2015 APC 
payment rates were based, we calculated hospital-specific overall 
ancillary CCRs and hospital-specific departmental CCRs for each 
hospital for which we had CY 2013 claims data by comparing these claims 
data to the most recently available hospital cost reports, which, in 
most cases, were from CY 2012. For the CY 2015 OPPS proposed rates, we 
used the set of claims processed during CY 2013. We applied the 
hospital-specific CCR to the hospital's charges at the most detailed 
level possible, based on a revenue code-to-cost center crosswalk that 
contains a hierarchy of CCRs used to estimate costs from charges for 
each revenue code. That crosswalk is available for review and 
continuous comment on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 2013 
(the year of claims data we used to calculate the proposed CY 2015 OPPS 
payment rates) and found that the National Uniform Billing Committee 
(NUBC) did not add any new revenue codes to the NUBC 2013 Data 
Specifications Manual.
    In accordance with our longstanding policy, we calculated CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculated CCRs was the hospital-specific departmental level. For a 
discussion of the hospital-specific overall ancillary CCR calculation, 
we refer readers to the CY 2007 OPPS/ASC final rule with comment period 
(71 FR 67983 through 67985). The calculation of blood costs is a 
longstanding exception (since the CY 2005 OPPS) to this general 
methodology for calculation of CCRs used for converting charges to 
costs on each claim. This exception is discussed in detail in the CY 
2007 OPPS/ASC final rule with comment period and discussed further in 
section II.A.2.d.(2) of this final rule with comment period.
    For the CCR calculation process, we used the same general approach 
that we used in developing the final APC rates for CY 2007 and 
thereafter, using the revised CCR calculation that excluded the costs 
of paramedical education programs and weighted the outpatient charges 
by the volume of outpatient services furnished by the hospital. We 
refer readers to the CY 2007 OPPS/ASC final rule with comment period 
for more information (71 FR 67983 through 67985). We first limited the 
population of cost reports to only those hospitals that filed 
outpatient claims in CY 2013 before determining whether the CCRs for 
such hospitals were valid.
    We then calculated the CCRs for each cost center and the overall 
ancillary CCR for each hospital for which we had claims data. We did 
this using hospital-specific data from the Hospital Cost Report 
Information System (HCRIS). We used the most recent available cost 
report data, which, in most cases, were from cost reports with cost 
reporting periods beginning in CY 2012. For the proposed rule, we used 
the most recently submitted cost reports to calculate the CCRs to be 
used to calculate costs for the proposed CY 2015 OPPS payment rates. If 
the most recently available cost report was submitted but not settled, 
we looked at the last settled cost report to determine the ratio of 
submitted to settled cost using the overall ancillary CCR, and we then 
adjusted the most recent available submitted, but not settled, cost 
report using that ratio. We then calculated both an overall ancillary 
CCR and cost center-specific CCRs for each hospital. We used the 
overall ancillary CCR referenced above for all purposes that require 
use of an overall ancillary CCR. We proposed to continue this 
longstanding methodology for the calculation of costs for CY 2015.
    Since the implementation of the OPPS, some commenters have raised 
concerns about potential bias in the OPPS cost-based weights due to 
``charge compression,'' which is the practice of applying a lower 
charge markup to higher cost services and a higher charge markup to 
lower cost services. As a result, the cost-based weights may reflect 
some aggregation bias, undervaluing high-cost items and overvaluing 
low-cost items when an estimate of average markup, embodied in a single 
CCR, is applied to items of widely varying costs in the same cost 
center. This issue was evaluated in a report by the Research Triangle 
Institute, International (RTI). The RTI final report can be found on 
RTI's Web site at: http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_ratios_200807_Final.pdf. For a complete 
discussion of the RTI recommendations, public comments, and our 
responses, we refer readers to the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68519 through 68527).
    We addressed the RTI finding that there was aggregation bias in 
both the IPPS and the OPPS cost estimation of expensive and inexpensive 
medical supplies in the FY 2009 IPPS final rule (73 FR 48458 through 
45467). Specifically, we created one cost center for ``Medical Supplies 
Charged to Patients'' and one cost center for ``Implantable Devices 
Charged to Patients,'' essentially splitting the then current cost 
center for ``Medical Supplies Charged to Patients'' into one cost 
center for low-cost medical supplies and another cost center for high-
cost implantable devices in order to mitigate some of the effects of 
charge compression. In determining the items that should be reported in 
these respective cost centers, we adopted commenters' recommendations 
that hospitals should use revenue codes established by the AHA's NUBC 
to determine the items that should be reported in the ``Medical 
Supplies Charged to Patients'' and the ``Implantable Devices Charged to 
Patients'' cost centers. For a complete discussion of the rationale for 
the creation of the new cost center for ``Implantable Devices Charged 
to Patients,'' a summary of public comments received, and our responses 
to those public comments, we refer readers to the FY 2009 IPPS final 
rule.
    The cost center for ``Implantable Devices Charged to Patients'' has 
been available for use for cost reporting periods beginning on or after 
May 1, 2009. In the CY 2013 OPPS/ASC final rule with comment period, we 
determined that a significant volume of hospitals were utilizing the 
``Implantable Devices Charged to Patients'' cost center. Because a 
sufficient amount of data from which to generate a meaningful analysis 
was available, we established in the CY 2013 OPPS/ASC final rule with 
comment period a policy to create a distinct CCR using the 
``Implantable Devices Charged to Patients'' cost center (77 FR 68225). 
We retained this policy for the CY 2014 OPPS and, as we proposed, we 
are continuing this practice for the CY 2015 OPPS.
    In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 
50080), we finalized our proposal to create new standard cost centers 
for ``Computed Tomography (CT),'' ``Magnetic Resonance Imaging (MRI),'' 
and ``Cardiac Catheterization,'' and to require that hospitals report 
the costs

[[Page 66785]]

and charges for these services under these new cost centers on the 
revised Medicare cost report Form CMS 2552-10. As we discussed in the 
FY 2009 IPPS and CY 2009 OPPS/ASC proposed and final rules, RTI also 
found that the costs and charges of CT scans, MRIs, and cardiac 
catheterization differ significantly from the costs and charges of 
other services included in the standard associated cost center. RTI 
concluded that both the IPPS and the OPPS relative payment weights 
would better estimate the costs of those services if CMS were to add 
standard costs centers for CT scans, MRIs, and cardiac catheterization 
in order for hospitals to report separately the costs and charges for 
those services and in order for CMS to calculate unique CCRs to 
estimate the cost from charges on claims data. We refer readers to the 
FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more 
detailed discussion on the reasons for the creation of standard cost 
centers for CT scans, MRIs, and cardiac catheterization. The new 
standard cost centers for CT scans, MRIs, and cardiac catheterization 
were effective for cost report periods beginning on or after May 1, 
2010, on the revised cost report Form CMS-2552-10.
    Using the HCRIS update for the CY 2015 final rule cycle, which we 
used to estimate costs in the CY 2015 OPPS ratesetting process, as 
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40930), we were 
able to calculate a valid implantable device CCR for 2,895 hospitals, a 
valid MRI CCR for 1,934 hospitals, a valid CT scan CCR for 2,035 
hospitals, and a valid Cardiac Catheterization CCR for 1,397 hospitals.
    In our CY 2014 OPPS/ASC proposed rule discussion (78 FR 43549), we 
noted that, for CY 2014, the estimated changes in geometric mean 
estimated APC cost of using data from the new standard cost centers for 
CT scans and MRIs appeared consistent with RTI's analysis of cost 
report and claims data in the July 2008 final report (pages 5 and 6). 
RTI concluded that ``in hospitals that aggregate data for CT scanning, 
MRI, or nuclear medicine services with the standard line for Diagnostic 
Radiology, costs for these services all appear substantially 
overstated, while the costs for plain films, ultrasound and other 
imaging procedures are correspondingly understated.'' We also noted 
that there were limited additional impacts in the implantable device-
related APCs from adopting the new cost report Form CMS 2552-10 because 
we had used data from the standard cost center for implantable medical 
devices beginning in CY 2013 OPPS ratesetting, as discussed above.
    As we indicated in prior rulemaking (77 FR 68223 through 68225), 
once we determined that cost report data for the new standard cost 
centers were sufficiently available, we would analyze that data and, if 
appropriate, we would propose to use the distinct CCRs for new standard 
cost centers described above in the calculation of the OPPS relative 
payment weights. As stated in the CY 2014 OPPS/ASC proposed rule (78 FR 
43550), we have conducted our analysis and concluded that we should 
develop distinct CCRs for each of the new cost centers and use them in 
ratesetting. Therefore, we began in the CY 2014 OPPS, and proposed to 
continue for the CY 2015 OPPS, to calculate the OPPS relative payment 
weights using distinct CCRs for cardiac catheterization, CT scan, MRI, 
and implantable medical devices. Section XXI. of this final rule with 
comment period includes the impacts of calculating the CY 2015 OPPS 
relative payment weights using these new standard cost centers.
    Comment: A few commenters encouraged CMS to ensure data quality and 
continue to test, refine, and improve its CCR analysis for CT scans and 
MRI.
    Response: We will continue to monitor the CCRs for these services.
    After consideration of the public comments we received, we are 
finalizing our proposal to calculate the OPPS relative payment weights 
using distinct CCRs for cardiac catheterization, CT scan, MRI, and 
implantable medical devices for CY 2015 without modification.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74847), we finalized a policy to remove claims from providers that use 
a cost allocation method of ``square feet'' to calculate CCRs used to 
estimate costs associated with the CT and MRI APCs. This change allows 
hospitals additional time to use one of the more accurate cost 
allocation methods, and thereby improve the accuracy of the CCRs on 
which the OPPS relative payment weights are developed. In Table 2 
below, we display CCR values for providers based on various cost 
allocation methods.

                Table 2--CCR Statistical Values Based on Use of Different Cost Allocation Methods
----------------------------------------------------------------------------------------------------------------
                                                                CT                              MRI
             Cost allocation method              ---------------------------------------------------------------
                                                    Median CCR       Mean CCR       Median CCR       Mean CCR
----------------------------------------------------------------------------------------------------------------
All Providers...................................          0.0464          0.0608          0.0901          0.1151
Square Feet Only................................          0.0370          0.0502          0.0787          0.1013
Direct Assign...................................          0.0640          0.0740          0.1063          0.1294
Dollar Value....................................          0.0555          0.0718          0.1046          0.1298
Direct Assign and Dollar Value..................          0.0554          0.0715          0.1047          0.1297
----------------------------------------------------------------------------------------------------------------

    As part of this transitional policy to estimate the CT and MRI APC 
relative payment weights using only cost data from providers that do 
not use ``square feet'' as the cost allocation statistic, we adopted a 
policy in the CY 2014 OPPS/ASC final rule with comment period that we 
will sunset this policy in 4 years once the updated cost report data 
become available for ratesetting purposes. We stated that we believe 4 
years is sufficient time for hospitals that have not done so to 
transition to a more accurate cost allocation method and for the 
related data to be available for ratesetting purposes. Therefore, in CY 
2018, we will estimate the CT and MRI APC relative payment weights 
using cost data from all providers, regardless of the cost allocation 
statistic employed. In Table 3 below, we display the impact of 
excluding claims based on the ``square feet'' cost allocation method 
from estimates of CT and MRI costs in CY 2015.

[[Page 66786]]

  Table 3--Percentage Change in Estimated Cost for CT and MRI APCs When
    Excluding Claims From Providers Using ``Square Feet'' as the Cost
                            Allocation Method
------------------------------------------------------------------------
       CY 2015 APC             CY 2015 APC Descriptor     Percent change
------------------------------------------------------------------------
0283.....................  Computed Tomography with                  9.6
                            Contrast.
0284.....................  Magnetic Resonance Imaging                4.0
                            and Magnetic Resonance
                            Angiography with Contrast.
0331.....................  Combined Abdomen and Pelvis              12.1
                            CT without Contrast.
0332.....................  Computed Tomography without              14.5
                            Contrast.
0333.....................  Computed Tomography without              12.3
                            Contrast followed by
                            Contrast.
0334.....................  Combined Abdomen and Pelvis              10.1
                            CT with Contrast.
0336.....................  Magnetic Resonance Imaging                7.5
                            and Magnetic Resonance
                            Angiography without Contrast.
0337.....................  Magnetic Resonance Imaging                6.4
                            and Magnetic Resonance
                            Angiography without Contrast
                            f.
0383.....................  Cardiac Computed Tomographic              3.6
                            Imaging.
0662.....................  CT Angiography...............            10.3
8005.....................  CT and CTA without Contrast              12.8
                            Composite.
8006.....................  CT and CTA with Contrast                  9.4
                            Composite.
8007.....................  MRI and MRA without Contrast              6.7
                            Composite.
8008.....................  MRI and MRA with Contrast                 6.9
                            Composite.
------------------------------------------------------------------------

    Comment: A few commenters supported CMS' proposal to continue 
removing claims from providers that use the ``square feet'' cost 
allocation method from the cost model. One commenter suggested that CMS 
continue removing claims from providers that use this method in CY 2018 
and beyond.
    Response: We thank the commenters for their support and are 
finalizing this policy as proposed. We will continue to only include 
cost data from providers that do not use ``square feet'' as the cost 
allocation statistic in relative payment weights through CY 2017. For 
CY 2018 and beyond, we will estimate the CT and MRI APC relative 
payment weights using cost data from all providers, regardless of the 
cost allocation statistic employed.
    In summary, as we proposed, we are continuing to use data from the 
``Implantable Devices Charged to Patients'' and ``Cardiac 
Catheterization'' cost centers to create distinct CCRs for use in 
calculating the OPPS relative payment weights for the CY 2015 OPPS. For 
the ``Magnetic Resonance Imaging (MRI)'' and ``Computed Tomography (CT) 
Scan'' APCs identified in Table 3 of this final rule with comment 
period, we are continuing our policy of removing claims from cost 
modeling for those providers using ``square feet'' as the cost 
allocation statistic for CY 2015.
2. Data Development Process 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 2015. The 
Hospital OPPS page on the CMS Web site on which this final rule with 
comment period is posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an 
accounting of claims used in the development of the final payment 
rates. That accounting provides additional detail regarding the number 
of claims derived at each stage of the process. In addition, below in 
this section we discuss the file of claims that comprises the data set 
that is available for purchase under a CMS data use agreement. The CMS 
Web site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about purchasing 
the ``OPPS Limited Data Set,'' which now includes the additional 
variables previously available only in the OPPS Identifiable Data Set, 
including ICD-9-CM diagnosis codes and revenue code payment amounts. 
This file is derived from the CY 2013 claims that were used to 
calculate the final payment rates for the CY 2015 OPPS.
    In the history of the OPPS, we have traditionally established the 
scaled relative weights on which payments are based using APC median 
costs, which is a process described in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74188). However, as discussed in more detail 
in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68259 through 68271), we finalized the use of geometric 
mean costs to calculate the relative weights on which the CY 2013 OPPS 
payment rates were based. While this policy changed the cost metric on 
which the relative payments are based, the data process in general 
remained the same, under the methodologies that we used to obtain 
appropriate claims data and accurate cost information in determining 
estimated service cost. For CY 2015, as we proposed, we are continuing 
to use geometric mean costs to calculate the relative weights on which 
the CY 2015 OPPS payment rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.f. of this final rule with comment period to calculate the costs 
we used to establish the relative weights used in calculating the OPPS 
payment rates for CY 2015 shown in Addenda A and B to this final rule 
with comment period (which are available via the Internet on the CMS 
Web site). 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.
a. Claims Preparation
    For this final rule with comment period, we used the CY 2013 
hospital outpatient claims processed through June 30, 2014, to 
calculate the geometric mean costs of APCs that underpin the relative 
payment weights for CY 2015. To begin the calculation of the relative 
payment weights for CY 2015, we pulled all claims for outpatient 
services furnished in CY 2013 from the national claims history file. 
This is not the population of claims paid under the OPPS, but all 
outpatient claims (including, for example, critical access hospital 
(CAH) claims and hospital claims for clinical laboratory tests for 
persons who are neither inpatients nor outpatients of the hospital).
    We then excluded claims with condition codes 04, 20, 21, and 77 
because these are claims that providers submitted to Medicare knowing 
that no payment would be made. For example, providers submit claims 
with a condition code 21 to elicit an official denial notice from 
Medicare and document that a service is not covered. We then excluded 
claims for services furnished in Maryland, Guam, the U.S. Virgin 
Islands, American Samoa, and the Northern Mariana Islands because 
hospitals in those geographic areas are

[[Page 66787]]

not paid under the OPPS, and, therefore, we do not use claims for 
services furnished in these areas in ratesetting.
    We divided the remaining claims into the three groups shown below. 
Groups 2 and 3 comprise the 123 million claims that contain hospital 
bill types paid under the OPPS.
    1. Claims that were not bill types 12X (Hospital Inpatient 
(Medicare Part B only)), 13X (Hospital Outpatient), 14X (Hospital--
Laboratory Services Provided to Nonpatients), or 76X (Clinic--Community 
Mental Health Center). Other bill types are not paid under the OPPS; 
therefore, these claims were not used to set OPPS payment.
    2. Claims that were bill types 12X, 13X or 14X. Claims with bill 
types 12X and 13X are hospital outpatient claims. Claims with bill type 
14X are laboratory specimen claims.
    3. Claims that were bill type 76X (CMHC).
    To convert charges on the claims to estimated cost, we multiplied 
the charges on each claim by the appropriate hospital-specific CCR 
associated with the revenue code for the charge as discussed in section 
II.A.1.c. of this final rule with comment period. We then flagged and 
excluded CAH claims (which are not paid under the OPPS) and claims from 
hospitals with invalid CCRs. The latter included claims from hospitals 
without a CCR; those from hospitals paid an all-inclusive rate; those 
from hospitals with obviously erroneous CCRs (greater than 90 or less 
than 0.0001); and those from hospitals with overall ancillary CCRs that 
were identified as outliers (that exceeded  3 standard 
deviations from the geometric mean after removing error CCRs). In 
addition, we trimmed the CCRs at the cost center (that is, 
departmental) level by removing the CCRs for each cost center as 
outliers if they exceeded  3 standard deviations from the 
geometric mean. We used a four-tiered hierarchy of cost center CCRs, 
which is the revenue code-to-cost center crosswalk, to match a cost 
center to every possible revenue code appearing in the outpatient 
claims that is relevant to OPPS services, with the top tier being the 
most common cost center and the last tier being the default CCR. If a 
hospital's cost center CCR was deleted by trimming, we set the CCR for 
that cost center to ``missing'' so that another cost center CCR in the 
revenue center hierarchy could apply. If no other cost center CCR could 
apply to the revenue code on the claim, we used the hospital's overall 
ancillary CCR for the revenue code in question as the default CCR. For 
example, if a visit was reported under the clinic revenue code but the 
hospital did not have a clinic cost center, we mapped the hospital-
specific overall ancillary CCR to the clinic revenue code. The revenue 
code-to-cost center crosswalk is available for inspection on the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Revenue codes that we do not 
use in establishing relative costs or to model impacts are identified 
with an ``N'' in the revenue code-to-cost center crosswalk.
    We applied the CCRs as described above to claims with bill type 
12X, 13X, or 14X, excluding all claims from CAHs and hospitals in 
Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the 
Northern Mariana Islands and claims from all hospitals for which CCRs 
were flagged as invalid.
    We identified claims with condition code 41 as partial 
hospitalization services of hospitals and moved them to another file. 
We note that the separate file containing partial hospitalization 
claims is included in the files that are available for purchase as 
discussed above.
    We then excluded claims without a HCPCS code. We moved to another 
file claims that contained only influenza and pneumococcal pneumonia 
(PPV) vaccines. Influenza and PPV vaccines are paid at reasonable cost; 
therefore, these claims are not used to set OPPS rates.
    We next copied line-item costs for drugs, blood, and brachytherapy 
sources to a separate file (the lines stay on the claim, but are copied 
onto another file). No claims were deleted when we copied these lines 
onto another file. These line-items are used to calculate a per unit 
arithmetic and geometric mean and median cost and a per day arithmetic 
and geometric mean and median cost for drugs and nonimplantable 
biologicals, therapeutic radiopharmaceutical agents, and brachytherapy 
sources, as well as other information used to set payment rates, such 
as a unit-to-day ratio for drugs.
    Prior to CY 2013, our payment policy for nonpass-through separately 
paid drugs and biologicals was based on a redistribution methodology 
that accounted for pharmacy overhead by allocating cost from packaged 
drugs to separately paid drugs. This methodology typically would have 
required us to reduce the cost associated with packaged coded and 
uncoded drugs in order to allocate that cost. However, for CY 2013, we 
paid for separately payable drugs and biologicals under the OPPS at 
ASP+6 percent, based upon the statutory default described in section 
1833(t)(14)(A)(iii)(II) of the Act. Under that policy, we did not 
redistribute the pharmacy overhead costs from packaged drugs to 
separately paid drugs. For the CY 2014 OPPS, we continued the CY 2013 
payment policy for separately payable drugs and biologicals, and we are 
continuing this payment policy for CY 2015. We refer readers to section 
V.B.3. of this final rule with comment period for a complete discussion 
of our CY 2015 final payment policy for separately paid drugs and 
biologicals.
    We then removed line-items that were not paid during claim 
processing, presumably for a line-item rejection or denial. The number 
of edits for valid OPPS payment in the Integrated Outpatient Code 
Editor (I/OCE) and elsewhere has grown significantly in the past few 
years, especially with the implementation of the full spectrum of 
National Correct Coding Initiative (NCCI) edits. To ensure that we are 
using valid claims that represent the cost of payable services to set 
payment rates, we removed line-items with an OPPS status indicator that 
were not paid during claims processing in the claim year, but have a 
status indicator of ``S,'' ``T,'' and ``V'' in the prospective year's 
payment system. This logic preserves charges for services that would 
not have been paid in the claim year but for which some estimate of 
cost is needed for the prospective year, such as services newly removed 
from the inpatient list for CY 2014 that were assigned status indicator 
``C'' in the claim year. It also preserves charges for packaged 
services so that the costs can be included in the cost of the services 
with which they are reported, even if the CPT codes for the packaged 
services were not paid because the service is part of another service 
that was reported on the same claim or the code otherwise violates 
claims processing edits.
    For CY 2015, as we proposed, we are continuing the policy we 
implemented for CY 2013 and CY 2014 to exclude line-item data for pass-
through drugs and biologicals (status indicator ``G'' for CY 2013) and 
nonpass-through drugs and biologicals (status indicator ``K'' for CY 
2013) where the charges reported on the claim for the line were either 
denied or rejected during claims processing. Removing lines that were 
eligible for payment but were not paid ensures that we are using 
appropriate data. The trim avoids using cost data on lines that we 
believe were defective or invalid because those rejected or denied 
lines did not meet the Medicare requirements for payment. For example, 
edits may reject a line for a separately paid drug because the number 
of units billed

[[Page 66788]]

exceeded the number of units that would be reasonable and, therefore, 
is likely a billing error (for example, a line reporting 55 units of a 
drug for which 5 units is known to be a fatal dose). As with our 
trimming in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74849) of line-items with a status indicator of ``S,'' ``T,'' ``V,'' or 
``X,'' we believe that unpaid line-items represent services that are 
invalidly reported and, therefore, should not be used for ratesetting. 
We believe that removing lines with valid status indicators that were 
edited and not paid during claims processing increases the accuracy of 
the data used for ratesetting purposes.
    For the CY 2015 OPPS, as part of our continued packaging of 
clinical diagnostic laboratory tests, we also are applying the line 
item trim to these services if they did not receive payment in the 
claims year. Removing these lines ensures that, in establishing the CY 
2015 OPPS relative payment weights, we appropriately allocate the costs 
associated with packaging these services.
b. Splitting Claims and Creation of ``Pseudo'' Single Procedure Claims
(1) Splitting Claims
    For the CY 2015 OPPS, we then split the remaining claims into five 
groups: single majors; multiple majors; single minors; multiple minors; 
and other claims. (Specific definitions of these groups are presented 
below.) We note that, under the proposed CY 2015 OPPS packaging policy 
(79 FR 40933), we proposed to delete status indicator ``X'' and revise 
the title and description of status indicator ``Q1'' to reflect that 
deletion, as discussed in sections II.A.3. and XI. of this final rule 
with comment period. We note that we also proposed to create status 
indicator ``J1'' to reflect the comprehensive APCs (C-APCs) discussed 
in section II.A.2.e. of this final rule with comment period. For CY 
2015, we proposed to define major procedures as any HCPCS code having a 
status indicator of ``J1,'' ``S,'' ``T,'' or ``V,'' define minor 
procedures as any code having a status indicator of ``F,'' ``G,'' 
``H,'' ``K,'' ``L,'' ``R,'' ``U,'' or ``N,'' and classify ``other'' 
procedures as any code having a status indicator other than one that we 
have classified as major or minor. For CY 2015, we proposed to continue 
to assign status indicator ``R'' to blood and blood products; status 
indicator ``U'' to brachytherapy sources; status indicator ``Q1'' to 
all ``STV-packaged codes;'' status indicator ``Q2'' to all ``T-packaged 
codes;'' and status indicator ``Q3'' to all codes that may be paid 
through a composite APC based on composite-specific criteria or paid 
separately through single code APCs when the criteria are not met.
    As discussed in the CY 2009 OPPS/ASC final rule with comment period 
(73 FR 68709), we established status indicators ``Q1,'' ``Q2,'' and 
``Q3'' to facilitate identification of the different categories of 
codes. As we proposed, we are treating these codes in the same manner 
for data purposes for CY 2015 as we have treated them since CY 2008. 
Specifically, we are continuing to evaluate whether the criteria for 
separate payment of codes with status indicator ``Q1'' or ``Q2'' are 
met in determining whether they are treated as major or minor codes. 
Codes with status indicator ``Q1'' or ``Q2'' are carried through the 
data either with status indicator ``N'' as packaged or, if they meet 
the criteria for separate payment, they are given the status indicator 
of the APC to which they are assigned and are considered as ``pseudo'' 
single procedure claims for major codes. Codes assigned status 
indicator ``Q3'' are paid under individual APCs unless they occur in 
the combinations that qualify for payment as composite APCs and, 
therefore, they carry the status indicator of the individual APC to 
which they are assigned through the data process and are treated as 
major codes during both the split and ``pseudo'' single creation 
process. The calculation of the geometric mean costs for composite APCs 
from multiple procedure major claims is discussed in section II.A.2.f. 
of this final rule with comment period.
    Specifically, we divided the remaining claims into the following 
five groups:
    1. Single Procedure Major Claims: Claims with a single separately 
payable procedure (that is, status indicator ``S,'' ``T,'' or ``V'' 
which includes codes with status indicator ``Q3''); claims with status 
indicator ``J1,'' which receive special processing for C-APCs, as 
discussed in section II.A.2.e. of this final rule with comment period; 
claims with one unit of a status indicator ``Q1'' code (``STV-
packaged'') where there was no code with status indicator ``S,'' ``T,'' 
or ``V'' on the same claim on the same date; or claims with one unit of 
a status indicator ``Q2'' code (``T-packaged'') where there was no code 
with a status indicator ``T'' on the same claim on the same date.
    2. Multiple Procedure Major Claims: Claims with more than one 
separately payable procedure (that is, status indicator ``S,'' ``T,'' 
or ``V'' which includes codes with status indicator ``Q3''), or 
multiple units of one payable procedure. These claims include those 
codes with a status indicator ``Q2'' code (``T-packaged'') where there 
was no procedure with a status indicator ``T'' on the same claim on the 
same date of service but where there was another separately paid 
procedure on the same claim with the same date of service (that is, 
another code with status indicator ``S'' or ``V''). We also include in 
this set claims that contained one unit of one code when the bilateral 
modifier was appended to the code and the code was conditionally or 
independently bilateral. In these cases, the claims represented more 
than one unit of the service described by the code, notwithstanding 
that only one unit was billed.
    3. Single Procedure Minor Claims: Claims with a single HCPCS code 
that was assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' ``L,'' 
``R,'' ``U,'' or ``N'' and not status indicator ``Q1'' (``STV-
packaged'') or status indicator ``Q2'' (``T-packaged'') code.
    4. Multiple Procedure Minor Claims: Claims with multiple HCPCS 
codes that are assigned status indicator ``F,'' ``G,'' ``H,'' ``K,'' 
``L,'' ``R,'' ``U,'' or ``N;'' claims that contain more than one code 
with status indicator ``Q1'' (``STV-packaged'') or more than one unit 
of a code with status indicator ``Q1'' but no codes with status 
indicator ``S,'' ``T,'' or ``V'' on the same date of service; or claims 
that contain more than one code with status indicator ``Q2'' (T-
packaged), or ``Q2'' and ``Q1,'' or more than one unit of a code with 
status indicator ``Q2'' but no code with status indicator ``T'' on the 
same date of service.
    5. Non-OPPS Claims: Claims that contain no services payable under 
the OPPS (that is, all status indicators other than those listed for 
major or minor status). These claims were excluded from the files used 
for the OPPS. Non-OPPS claims have codes paid under other fee 
schedules, for example, durable medical equipment, and do not contain a 
code for a separately payable or packaged OPPS service. Non-OPPS claims 
include claims for therapy services paid sometimes under the OPPS but 
billed, in these non-OPPS cases, with revenue codes indicating that the 
therapy services would be paid under the Medicare Physician Fee 
Schedule (MPFS).
    The claims listed in numbers 1, 2, 3, and 4 above are included in 
the data file that can be purchased as described above. Claims that 
contain codes to which we have assigned status indicators ``Q1'' 
(``STV-packaged'') and ``Q2'' (``T-packaged'') appear in the data for 
the single major file, the multiple major file, and the multiple minor 
file

[[Page 66789]]

used for ratesetting. Claims that contain codes to which we have 
assigned status indicator ``Q3'' (composite APC members) appear in both 
the data of the single and multiple major files used in this final rule 
with comment period, depending on the specific composite calculation.
(2) Creation of ``Pseudo'' Single Procedure Claims
    To develop ``pseudo'' single procedure claims for this final rule 
with comment period, we examined both the multiple procedure major 
claims and the multiple procedure minor claims. We first examined the 
multiple major procedure claims for dates of service to determine if we 
could break them into ``pseudo'' single procedure claims using the 
dates of service for all lines on the claim. If we could create claims 
with single major procedures by using dates of service, we created a 
single procedure claim record for each separately payable procedure on 
a different date of service (that is, a ``pseudo'' single procedure 
claim).
    As proposed, we also use the bypass codes listed in Addendum N to 
this final rule with comment period (which is available via the 
Internet on our Web site) and discussed in section II.A.1.b. of this 
final rule with comment period to remove separately payable procedures 
which we determined contained limited or no packaged costs or that were 
otherwise suitable for inclusion on the bypass list from a multiple 
procedure bill. As discussed above, we ignore the ``overlap bypass 
codes,'' that is, those HCPCS codes that are both on the bypass list 
and are members of the multiple imaging composite APCs, in this initial 
assessment for ``pseudo'' single procedure claims. The final CY 2015 
``overlap bypass codes'' are listed in Addendum N to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site). When one of the two separately payable procedures on a multiple 
procedure claim was on the bypass list, we split the claim into two 
``pseudo'' single procedure claim records. The single procedure claim 
record that contained the bypass code did not retain packaged services. 
The single procedure claim record that contained the other separately 
payable procedure (but no bypass code) retained the packaged revenue 
code charges and the packaged HCPCS code charges. We also removed lines 
that contained multiple units of codes on the bypass list and treated 
them as ``pseudo'' single procedure claims by dividing the cost for the 
multiple units by the number of units on the line. If one unit of a 
single, separately payable procedure code remained on the claim after 
removal of the multiple units of the bypass code, we created a 
``pseudo'' single procedure claim from that residual claim record, 
which retained the costs of packaged revenue codes and packaged HCPCS 
codes. This enabled us to use claims that would otherwise be multiple 
procedure claims and could not be used.
    We then assessed the claims to determine if the criteria for the 
multiple imaging composite APCs, discussed in section II.A.2.f.(5) of 
this final rule with comment period, were met. If the criteria for the 
imaging composite APCs were met, we created a ``single session'' claim 
for the applicable imaging composite service and determined whether we 
could use the claim in ratesetting. For HCPCS codes that are both 
conditionally packaged and are members of a multiple imaging composite 
APC, we first assessed whether the code would be packaged and, if so, 
the code ceased to be available for further assessment as part of the 
composite APC. Because the packaged code would not be a separately 
payable procedure, we considered it to be unavailable for use in 
setting the composite APC costs on which the CY 2015 OPPS relative 
payment weights are based. Having identified ``single session'' claims 
for the imaging composite APCs, we reassessed the claim to determine 
if, after removal of all lines for bypass codes, including the 
``overlap bypass codes,'' a single unit of a single separately payable 
code remained on the claim. If so, we attributed the packaged costs on 
the claim to the single unit of the single remaining separately payable 
code other than the bypass code to create a ``pseudo'' single procedure 
claim. We also identified line-items of overlap bypass codes as a 
``pseudo'' single procedure claim. This allowed us to use more claims 
data for ratesetting purposes.
    As we proposed, we also examined the multiple procedure minor 
claims to determine whether we could create ``pseudo'' single procedure 
claims. Specifically, where the claim contained multiple codes with 
status indicator ``Q1'' (``STV-packaged'') on the same date of service 
or contained multiple units of a single code with status indicator 
``Q1,'' we selected the status indicator ``Q1'' HCPCS code that had the 
highest CY 2014 relative payment weight, and set the units to one on 
that HCPCS code to reflect our policy of paying only one unit of a code 
with a status indicator of ``Q1.'' We then packaged all costs for the 
following into a single cost for the ``Q1'' HCPCS code that had the 
highest CY 2014 relative payment weight to create a ``pseudo'' single 
procedure claim for that code: additional units of the status indicator 
``Q1'' HCPCS code with the highest CY 2014 relative payment weight; 
other codes with status indicator ``Q1;'' and all other packaged HCPCS 
codes and packaged revenue code costs. We changed the status indicator 
for the selected code from the data status indicator of ``N'' to the 
status indicator of the APC to which the selected procedure was 
assigned for further data processing and considered this claim as a 
major procedure claim. We used this claim in the calculation of the APC 
geometric mean cost for the status indicator ``Q1'' HCPCS code.
    Similarly, if a multiple procedure minor claim contained multiple 
codes with status indicator ``Q2'' (``T-packaged'') or multiple units 
of a single code with status indicator ``Q2,'' we selected the status 
indicator ``Q2'' HCPCS code that had the highest CY 2014 relative 
payment weight and set the units to one on that HCPCS code to reflect 
our policy of paying only one unit of a code with a status indicator of 
``Q2.'' We then packaged all costs for the following into a single cost 
for the ``Q2'' HCPCS code that had the highest CY 2014 relative payment 
weight to create a ``pseudo'' single procedure claim for that code: 
additional units of the status indicator ``Q2'' HCPCS code with the 
highest CY 2014 relative payment weight; other codes with status 
indicator ``Q2''; and other packaged HCPCS codes and packaged revenue 
code costs. We changed the status indicator for the selected code from 
a data status indicator of ``N'' to the status indicator of the APC to 
which the selected code was assigned, and we considered this claim as a 
major procedure claim.
    If a multiple procedure minor claim contained multiple codes with 
status indicator ``Q2'' (``T-packaged'') and status indicator ``Q1'' 
(``STV-packaged''), we selected the T-packaged status indicator ``Q2'' 
HCPCS code that had the highest relative payment weight for CY 2014 and 
set the units to one on that HCPCS code to reflect our policy of paying 
only one unit of a code with a status indicator of ``Q2.'' We then 
packaged all costs for the following into a single cost for the 
selected (``T-packaged'') HCPCS code to create a ``pseudo'' single 
procedure claim for that code: additional units of the status indicator 
``Q2'' HCPCS code with the highest CY 2014 relative payment weight; 
other codes with status indicator ``Q2;'' codes with status indicator 
``Q1'' (``STV-packaged''); and

[[Page 66790]]

other packaged HCPCS codes and packaged revenue code costs. We selected 
status indicator ``Q2'' HCPCS codes instead of ``Q1'' HCPCS codes 
because ``Q2'' HCPCS codes have higher CY 2014 relative payment 
weights. If a status indicator ``Q1'' HCPCS code had a higher CY 2014 
relative payment weight, it became the primary code for the simulated 
single bill process. We changed the status indicator for the selected 
status indicator ``Q2'' (``T-packaged'') code from a data status 
indicator of ``N'' to the status indicator of the APC to which the 
selected code was assigned and we considered this claim as a major 
procedure claim.
    We then applied our process for creating ``pseudo'' single 
procedure claims to the conditionally packaged codes that do not meet 
the criteria for packaging, which enabled us to create single procedure 
claims from them, if they met the criteria for single procedure claims. 
Conditionally packaged codes are identified using status indicators 
``Q1'' and ``Q2,'' and are described in section XI.A. of this final 
rule with comment period.
    Lastly, we excluded those claims that we were not able to convert 
to single procedure claims even after applying all of the techniques 
for creation of ``pseudo'' single procedure claims to multiple 
procedure major claims and to multiple procedure minor claims. As has 
been our practice in recent years, we also excluded claims that 
contained codes that were viewed as independently or conditionally 
bilateral and that contained the bilateral modifier (Modifier 50 
(Bilateral procedure)) because the line-item cost for the code 
represented the cost of two units of the procedure, notwithstanding 
that hospitals billed the code with a unit of one.
    We proposed to continue to apply the methodology described above 
for the purpose of creating ``pseudo'' single procedure claims for the 
CY 2015 OPPS.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal to continue to apply the methodology 
described above for the purpose of creating ``pseudo'' single procedure 
claims for the CY 2015 OPPS.
c. Completion of Claim Records and Geometric Mean Cost Calculations
(1) General Process
    We then packaged the costs of packaged HCPCS codes (codes with 
status indicator ``N'' listed in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site) and the costs of those lines for codes with status indicator 
``Q1'' or ``Q2'' when they are not separately paid), and the costs of 
the services reported under packaged revenue codes in Table 4 below 
that appeared on the claim without a HCPCS code into the cost of the 
single major procedure remaining on the claim. For a more complete 
discussion of our final CY 2015 OPPS packaging policy, we refer readers 
to section II.A.3. of this final rule with comment period.
    As noted in the CY 2008 OPPS/ASC final rule with comment period (72 
FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation 
that CMS should review the final list of packaged revenue codes for 
consistency with OPPS policy and ensure that future versions of the I/
OCE edit accordingly. As we have in the past, and as we proposed, we 
are continuing to compare the final list of packaged revenue codes that 
we adopt for CY 2015 to the revenue codes that the I/OCE will package 
for CY 2015 to ensure consistency.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68531), we replaced the NUBC standard abbreviations for the revenue 
codes listed in Table 2 of the CY 2009 OPPS/ASC proposed rule with the 
most current NUBC descriptions of the revenue code categories and 
subcategories to better articulate the meanings of the revenue codes 
without changing the list of revenue codes. In the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60362 through 60363), we 
finalized changes to the packaged revenue code list based on our 
examination of the updated NUBC codes and public comment on the CY 2010 
proposed list of packaged revenue codes.
    For CY 2015, as we did for CY 2014, we reviewed the changes to 
revenue codes that were effective during CY 2013 for purposes of 
determining the charges reported with revenue codes but without HCPCS 
codes that we proposed to package for CY 2015. We believe that the 
charges reported under the revenue codes listed in Table 4 of the 
proposed rule continue to reflect ancillary and supportive services for 
which hospitals report charges without HCPCS codes. Therefore, for CY 
2015, we proposed to continue to package the costs that we derive from 
the charges reported without HCPCS codes under the revenue codes 
displayed in Table 4 of the proposed rule for purposes of calculating 
the geometric mean costs on which the final CY 2015 OPPS/ASC payment 
rates are based.
    Comment: One commenter recommended that CMS include, in the list of 
packaged revenue codes, revenue codes 0331 (Radiology--Therapeutic and/
or Chemotherapy Administration; Chemotherapy Admin--Injected), 0332 
(Radiology--Therapeutic and/or Chemotherapy Administration; 
Chemotherapy Admin--Oral), 0335 (Radiology--Therapeutic and/or 
Chemotherapy Administration; Chemotherapy Admin--IV), 0360 (Operating 
Room Services; General Classification), 0361 (Operating Room Services; 
Minor Surgery), 0362 (Operating Room Services; Organ Transplant--Other 
than Kidney), 0369 (Operating Room Services; Other OR Services), 0410 
(Respiratory Services; General Classification), 0412 (Respiratory 
Services; Inhalation Services), 0413 (Respiratory Services; Hyperbaric 
Oxygen Therapy), 0419 (Respiratory Services; Other Respiratory 
Services), 0722 (Labor Room/Delivery; Delivery Room), 0724 (Labor Room/
Delivery; Birthing Center), 0729 (Labor Room/Delivery; Other Labor 
Room/Delivery), 0760 (Specialty Services; General Classification), 0761 
(Specialty Services; Treatment Room), 0762 (Specialty Services; 
Observation), 0769 (Specialty Services; Other Specialty Services), 0770 
(Preventive Care Services; General Classification). The commenter 
stated that charge data on claim lines with these revenue codes is 
currently included in OPPS modeling, and including them when they 
appear without a HCPCS would more accurately capture the costs from 
these lines.
    Response: On the OPPS revenue code-to-cost center modeling 
crosswalk that we make available online, we indicate which revenue 
codes we believe are appropriately used for OPPS ratesetting purposes. 
As the commenter noted, coded lines billed using these specific revenue 
codes are already currently included for ratesetting purposes. While we 
note that including the packaged costs associated with uncoded lines 
billed with these revenue codes has a minimal impact on the relative 
payment weights, we believe that including them when establishing the 
OPPS relative payment weights would better estimate the full range of 
costs for services to which these lines are packaged. Including the 
uncoded lines and capturing the costs billed using these revenue codes 
would generally be appropriate in establishing the OPPS relative 
payment weights and our ratesetting methodology. Therefore, we have 
updated Table 4 which appeared in the proposed rule (79 FR 40935

[[Page 66791]]

through 40936) (also Table 4 in this final rule with comment period) to 
reflect the addition of these packaged revenue codes and incorporated 
these changes into our cost modeling logic. We will also ensure that 
this list corresponds with that used for I/OCE purposes.
    After consideration of the public comments we received, we are 
finalizing the proposed packaged revenue codes for CY 2015, which are 
identified in Table 4 below, with modification to include the revenue 
codes described earlier in this section.

                 Table 4--CY 2015 Packaged Revenue Codes
------------------------------------------------------------------------
           Revenue code                          Description
------------------------------------------------------------------------
250...............................  Pharmacy; General Classification.
251...............................  Pharmacy; Generic Drugs.
252...............................  Pharmacy; Non-Generic Drugs.
254...............................  Pharmacy; Drugs Incident to Other
                                     Diagnostic Services.
255...............................  Pharmacy; Drugs Incident to
                                     Radiology.
257...............................  Pharmacy; Non-Prescription.
258...............................  Pharmacy; IV Solutions.
259...............................  Pharmacy; Other Pharmacy.
260...............................  IV Therapy; General Classification.
261...............................  IV Therapy; Infusion Pump.
262...............................  IV Therapy; IV Therapy/Pharmacy
                                     Svcs.
263...............................  IV Therapy; IV Therapy/Drug/Supply
                                     Delivery.
264...............................  IV Therapy; IV Therapy/Supplies.
269...............................  IV Therapy; Other IV Therapy.
270...............................  Medical/Surgical Supplies and
                                     Devices; General Classification.
271...............................  Medical/Surgical Supplies and
                                     Devices; Non-sterile Supply.
272...............................  Medical/Surgical Supplies and
                                     Devices; Sterile Supply.
275...............................  Medical/Surgical Supplies and
                                     Devices; Pacemaker.
276...............................  Medical/Surgical Supplies and
                                     Devices; Intraocular Lens.
278...............................  Medical/Surgical Supplies and
                                     Devices; Other Implants.
279...............................  Medical/Surgical Supplies and
                                     Devices; Other Supplies/Devices.
280...............................  Oncology; General Classification.
289...............................  Oncology; Other Oncology.
331...............................  Radiology--Therapeutic and/or
                                     Chemotherapy Administration;
                                     Chemotherapy Admin--Injected.
332...............................  Radiology--Therapeutic and/or
                                     Chemotherapy Administration;
                                     Chemotherapy Admin--Oral.
335...............................  Radiology--Therapeutic and/or
                                     Chemotherapy Administration;
                                     Chemotherapy Admin--IV.
343...............................  Nuclear Medicine; Diagnostic
                                     Radiopharmaceuticals.
344...............................  Nuclear Medicine; Therapeutic
                                     Radiopharmaceuticals.
360...............................  Operating Room Services; General
                                     Classification.
361...............................  Operating Room Services; Minor
                                     Surgery.
362...............................  Operating Room Services; Organ
                                     Transplant--Other than Kidney.
369...............................  Operating Room Services; Other OR
                                     Services.
370...............................  Anesthesia; General Classification.
371...............................  Anesthesia; Anesthesia Incident to
                                     Radiology.
372...............................  Anesthesia; Anesthesia Incident to
                                     Other DX Services.
379...............................  Anesthesia; Other Anesthesia.
390...............................  Administration, Processing and
                                     Storage for Blood and Blood
                                     Components; General Classification.
392...............................  Administration, Processing and
                                     Storage for Blood and Blood
                                     Components; Processing and Storage.
399...............................  Administration, Processing and
                                     Storage for Blood and Blood
                                     Components; Other Blood Handling.
410...............................  Respiratory Services; General
                                     Classification.
412...............................  Respiratory Services; Inhalation
                                     Services.
413...............................  Respiratory Services; Hyperbaric
                                     Oxygen Therapy.
419...............................  Respiratory Services; Other
                                     Respiratory Services.
621...............................  Medical Surgical Supplies--Extension
                                     of 027X; Supplies Incident to
                                     Radiology.
622...............................  Medical Surgical Supplies--Extension
                                     of 027X; Supplies Incident to Other
                                     DX Services.
623...............................  Medical Supplies--Extension of 027X,
                                     Surgical Dressings.
624...............................  Medical Surgical Supplies--Extension
                                     of 027X; FDA Investigational
                                     Devices.
630...............................  Pharmacy--Extension of 025X;
                                     Reserved.
631...............................  Pharmacy--Extension of 025X; Single
                                     Source Drug.
632...............................  Pharmacy--Extension of 025X;
                                     Multiple Source Drug.
633...............................  Pharmacy--Extension of 025X;
                                     Restrictive Prescription.
681...............................  Trauma Response; Level I Trauma.
682...............................  Trauma Response; Level II Trauma.
683...............................  Trauma Response; Level III Trauma.
684...............................  Trauma Response; Level IV Trauma.
689...............................  Trauma Response; Other.
700...............................  Cast Room; General Classification.
710...............................  Recovery Room; General
                                     Classification.
720...............................  Labor Room/Delivery; General
                                     Classification.
721...............................  Labor Room/Delivery; Labor.
722...............................  Labor Room/Delivery; Delivery Room.
724...............................  Labor Room/Delivery; Birthing
                                     Center.
729...............................  Labor Room/Delivery; Other Labor
                                     Room/Delivery.
732...............................  EKG/ECG (Electrocardiogram);
                                     Telemetry.
760...............................  Specialty Services; General
                                     Classification.
761...............................  Specialty Services; Treatment Room.

[[Page 66792]]

 
762...............................  Specialty services; Observation
                                     Hours.
769...............................  Specialty Services; Other Specialty
                                     Services.
770...............................  Preventive Care Services; General
                                     Classification.
801...............................  Inpatient Renal Dialysis; Inpatient
                                     Hemodialysis.
802...............................  Inpatient Renal Dialysis; Inpatient
                                     Peritoneal Dialysis (Non-CAPD).
803...............................  Inpatient Renal Dialysis; Inpatient
                                     Continuous Ambulatory Peritoneal
                                     Dialysis (CAPD).
804...............................  Inpatient Renal Dialysis; Inpatient
                                     Continuous Cycling Peritoneal
                                     Dialysis (CCPD).
809...............................  Inpatient Renal Dialysis; Other
                                     Inpatient Dialysis.
810...............................  Acquisition of Body Components;
                                     General Classification.
819...............................  Acquisition of Body Components;
                                     Other Donor.
821...............................  Hemodialysis-Outpatient or Home;
                                     Hemodialysis Composite or Other
                                     Rate.
824...............................  Hemodialysis-Outpatient or Home;
                                     Maintenance--100%.
825...............................  Hemodialysis-Outpatient or Home;
                                     Support Services.
829...............................  Hemodialysis-Outpatient or Home;
                                     Other OP Hemodialysis.
942...............................  Other Therapeutic Services (also see
                                     095X, an extension of 094x);
                                     Education/Training.
943...............................  Other Therapeutic Services (also see
                                     095X, an extension of 094X),
                                     Cardiac Rehabilitation.
948...............................  Other Therapeutic Services (also see
                                     095X, an extension of 094X),
                                     Pulmonary Rehabilitation.
------------------------------------------------------------------------

    In accordance with our longstanding policy, we proposed to continue 
to exclude: (1) Claims that had zero costs after summing all costs on 
the claim; and (2) claims containing packaging flag number 3. Effective 
for services furnished after July 1, 2014, the I/OCE assigned packaging 
flag number 3 to claims on which hospitals submitted token charges less 
than $1.01 for a service with status indicator ``S'' or ``T'' (a major 
separately payable service under the OPPS) for which the Medicare 
Administrative Contractor (MAC) was required to allocate the sum of 
charges for services with a status indicator equaling ``S'' or ``T'' 
based on the relative payment weight of the APC to which each code was 
assigned. We do not believe that these charges, which were token 
charges as submitted by the hospital, are valid reflections of hospital 
resources. Therefore, we deleted these claims. We also deleted claims 
for which the charges equaled the revenue center payment (that is, the 
Medicare payment) on the assumption that, where the charge equaled the 
payment, to apply a CCR to the charge would not yield a valid estimate 
of relative provider cost. We proposed to continue these processes for 
the CY 2015 OPPS.
    For the remaining claims, we proposed to then standardize 60 
percent of the costs of the claim (which we have previously determined 
to be the labor-related portion) for geographic differences in labor 
input costs. We made this adjustment by determining the wage index that 
applied to the hospital that furnished the service and dividing the 
cost for the separately paid HCPCS code furnished by the hospital by 
that wage index. The claims accounting that we provide for the proposed 
rule and final rule with comment period contains the formula we use to 
standardize the total cost for the effects of the wage index. As has 
been our policy since the inception of the OPPS, we proposed to use the 
pre-reclassified wage indices for standardization because we believe 
that they better reflect the true costs of items and services in the 
area in which the hospital is located than the post-reclassification 
wage indices and, therefore, would result in the most accurate 
unadjusted geometric mean costs. We proposed to use these pre-
reclassified wage indices for standardization using the new OMB labor 
market area delineations described in section II.C. of this final rule 
with comment period.
    In accordance with our longstanding practice, we also proposed to 
exclude single and ``pseudo'' single procedure claims for which the 
total cost on the claim was outside 3 standard deviations from the 
geometric mean of units for each HCPCS code on the bypass list 
(because, as discussed above, we used claims that contain multiple 
units of the bypass codes).
    After removing claims for hospitals with error CCRs, claims without 
HCPCS codes, claims for immunizations not covered under the OPPS, and 
claims for services not paid under the OPPS, approximately 118 million 
claims were left. Using these approximately 118 million claims, we 
created approximately 100 million single and ``pseudo'' single 
procedure claims, of which we used approximately 51 million single 
bills (after trimming out approximately 1 million claims as discussed 
in section II.A.1.a. of this final rule with comment period) in the CY 
2015 geometric mean cost development and ratesetting.
    As discussed above, the OPPS has historically developed the 
relative weights on which APC payments are based using APC median 
costs. For the CY 2013 OPPS and the CY 2014 OPPS, we calculated the APC 
relative payment weights using geometric mean costs, and we are 
continuing this practice for CY 2015. Therefore, the following 
discussion of the 2 times rule violation and the development of the 
relative payment weight refers to geometric means. For more detail 
about the CY 2015 OPPS/ASC policy to calculate relative payment weights 
based on geometric means, we refer readers to section II.A.2.f. of this 
final rule with comment period.
    We proposed to use these claims to calculate the CY 2015 geometric 
mean costs for each separately payable HCPCS code and each APC. The 
comparison of HCPCS code-specific and APC geometric mean costs 
determines the applicability of the 2 times rule. Section 1833(t)(2) of 
the Act provides that, subject to certain exceptions, the items and 
services within an APC group shall not be treated as comparable with 
respect to the use of resources if the highest median cost (or mean 
cost, if elected by the Secretary) for an item or service within the 
group is more than 2 times greater than the lowest median cost (or mean 
cost, if so elected) for an item or service within the same group (the 
2 times rule). While we have historically applied the 2 times rule 
based on median costs, in the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68270), as part of the CY 2013 policy to develop the OPPS 
relative payment weights based on geometric mean costs, we also applied 
the 2 times rule based on geometric mean costs. For the CY 2015 OPPS, 
we are continuing to develop the APC relative payment weights based on 
geometric mean costs.

[[Page 66793]]

    We note that, for purposes of identifying significant HCPCS codes 
for examination in the 2 times rule, we consider codes that have more 
than 1,000 single major claims or codes that have both greater than 99 
single major claims and contribute at least 2 percent of the single 
major claims used to establish the APC geometric mean cost to be 
significant. This longstanding definition of when a HCPCS code is 
significant for purposes of the 2 times rule was selected because we 
believe that a subset of 1,000 claims is negligible within the set of 
approximately 100 million single procedure or single session claims we 
use for establishing geometric mean costs. Similarly, a HCPCS code for 
which there are fewer than 99 single bills and which comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC geometric mean. We note that this method 
of identifying significant HCPCS codes within an APC for purposes of 
the 2 times rule was used in prior years under the median-based cost 
methodology. Under our CY 2015 policy to continue to base the relative 
payment weights on geometric mean costs, we believe that this same 
consideration for identifying significant HCPCS codes should apply 
because the principles are consistent with their use in the median-
based cost methodology. Unlisted codes are not used in establishing the 
percent of claims contributing to the APC, nor are their costs used in 
the calculation of the APC geometric mean. Finally, we reviewed the 
geometric mean costs for the services for which we pay separately under 
this final rule with comment period, and we reassigned HCPCS codes to 
different APCs where it was necessary to ensure clinical and resource 
homogeneity within the APCs. The APC geometric means were recalculated 
after we reassigned the affected HCPCS codes. Both the HCPCS code-
specific geometric means and the APC geometric means were weighted to 
account for the inclusion of multiple units of the bypass codes in the 
creation of ``pseudo'' single procedure claims.
    We did not receive any public comments on our proposed CY 2015 
methodology for calculating the geometric mean costs upon which the CY 
2015 OPPS payment rates are based, and therefore are finalizing our 
methodology as proposed.
    As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this 
final rule with comment period, in some cases, APC geometric mean costs 
are calculated using variations of the process outlined above. 
Specifically, section II.A.2.d. of this final rule with comment period 
addresses the calculation of single APC criteria-based geometric mean 
costs. Section II.A.2.f. of this final rule with comment period 
discusses the calculation of composite APC criteria-based geometric 
mean costs. Section VIII.B. of this final rule with comment period 
addresses the methodology for calculating the geometric mean costs for 
partial hospitalization services.
(2) Recommendations of the Panel Regarding Data Development
    At the August 2014 meeting of the Panel, we discussed changes in 
APC geometric mean cost between the CY 2015 Proposed OPPS and the CY 
2014 Final OPPS, the CY 2015 proposed comprehensive APC policy, and a 
study examining the packaged codes most commonly appearing with clinic 
visit codes.
    At the August 2014 Panel meeting, the Panel made a number of 
recommendations related to the data process. The Panel's data-related 
recommendations and our responses follow.
    Recommendation: The Panel recommends that the work of the Data 
Subcommittee continue.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that Jim Nelson serve as the 
Chair of the Data Subcommittee.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that CMS provide the Panel 
with a list of APCs for which costs fluctuate by more than 20 percent 
relative to the APCs in the most recent prior rulemaking cycle.
    CMS Response: We are accepting this recommendation and will provide 
this information regarding fluctuating APC costs at the next HOP Panel 
meeting.
d. Calculation of Single Procedure APC Criteria-Based Costs
(1) Device-Dependent APCs
    Historically, device-dependent APCs are populated by HCPCS codes 
that usually, but not always, require that a device be implanted or 
used to perform the procedure. The standard methodology for calculating 
device-dependent APC costs utilizes claims data that generally reflect 
the full cost of the required device by using only the subset of single 
procedure claims that pass the procedure-to-device and device-to-
procedure edits; do not contain token charges (less than $1.01) for 
devices; and, until January 1, 2014, did not contain the ``FB'' 
modifier signifying that the device was furnished without cost to the 
provider, or where a full credit was received; and do not contain the 
``FC'' modifier signifying that the hospital received partial credit 
for the device. For a full history of how we have calculated payment 
rates for device-dependent APCs in previous years and a detailed 
discussion of how we developed the standard device-dependent APC 
ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66739 through 66742). Overviews of the 
procedure-to-device edits and device-to-procedure edits used in 
ratesetting for device-dependent APCs are available in the CY 2005 OPPS 
final rule with comment period (69 FR 65761 through 65763) and the CY 
2007 OPPS/ASC final rule with comment period (71 FR 68070 through 
68071).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74857 
through 74859), we finalized a policy to define 29 device-dependent 
APCs as single complete services and to assign them to comprehensive 
APCs (C-APCs) that provide all-inclusive payments for those services, 
but we delayed implementation of this policy until CY 2015 (78 FR 
74862). This policy is a further step toward improving the prospective 
nature of our payments for these services where the cost of the device 
is relatively high compared to the other costs that contribute to the 
cost of the service. Table 5 of the CY 2014 OPPS/ASC final rule with 
comment period provided a list of the 39 APCs recognized as device-
dependent APCs and identified the 29 device-dependent APCs that would 
have been converted to C-APCs. In addition, in the CY 2014 OPPS/ASC 
final rule with comment period, we finalized a policy for the treatment 
of the remaining 10 device-dependent APCs that applied our standard APC 
ratesetting methodology to calculate the CY 2014 payment rates for 
these APCs, but implementation of the entire policy was delayed until 
CY 2015.
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43556 through 43557) 
and in the CY 2015 OPPS/ASC proposed rule (79 FR 40937 through 40938), 
for CY 2015, we proposed to no longer implement procedure-to-device 
edits and device-to-procedure edits for any APC. Under this proposed 
policy, which was discussed but not finalized in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74857 through 74858), hospitals 
are still expected to adhere to the guidelines of correct coding and 
append the correct device

[[Page 66794]]

code to the claim, when applicable. However, claims would no longer be 
returned to providers when specific procedure and device code pairings 
do not appear on a claim. As we stated in both the CY 2014 OPPS/ASC 
proposed rule (78 FR 43556 through 43557) and the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74857 through 74858), we believe 
that this is appropriate because of hospitals' multiyear experience in 
coding and reporting charges for medical device implantation 
procedures. We also believe that the C-APCs will reliably reflect the 
cost of the devices as the C-APCs will include all costs on the claim 
(except for the few categories of items and services that are excluded 
from the comprehensive APC policy). Therefore, we do not believe that 
the burden imposed upon hospitals to adhere to the procedure-to-device 
edits and device-to-procedure edits and the burden imposed upon the 
Medicare program to maintain those edits continue to be necessary. As 
with all other items and services recognized under the OPPS, we expect 
hospitals to code and report their costs appropriately, regardless of 
whether there are claims processing edits in place.
    The CY 2015 comprehensive APC policy that we proposed in the CY 
2015 OPPS/ASC proposed rule consolidates and restructures the 39 
current device-dependent APCs into 26 (of the total 28) proposed C-
APCs, which were listed in Table 5 of the proposed rule. The final CY 
2015 comprehensive APC policy is discussed in section II.A.2.e. of this 
final rule with comment period. As a result of the final CY 2015 
comprehensive APC policy, only 3 of the current 39 device-dependent 
APCs will remain in the CY 2015 OPPS because all other device-dependent 
APCs are being converted to C-APCs. All of the remaining device-
dependent APCs were either deleted due to the consolidation and 
restructuring of these APCs or they were converted to C-APCs. In 
conjunction with the conversion of almost all of the 39 device-
dependent APCs into C-APCs, and as discussed in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74857 through 74858), in the CY 
2015 OPPS/ASC proposed rule, we proposed to no longer use procedure-to-
device edits and device-to-procedure edits for any APC because we 
continue to believe that the elimination of device-to-procedure edits 
and procedure-to-device edits is appropriate considering the experience 
that hospitals now have in coding and reporting these claims fully and, 
for the more costly devices, the C-APCs will reliably reflect the cost 
of the device if it is included anywhere on the claim.
    While we believe that device-to-procedure edits and procedure-to-
device edits are no longer necessary, we are sensitive to the concerns 
raised by stakeholders in the past about the costs of devices being 
reported and captured. In light of these concerns, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40937 through 40938), we proposed to create 
claims processing edits that require any of the device codes used in 
the previous device-to-procedure edits for device-dependent APCs to be 
present on the claim whenever a procedure code assigned to any of the 
former device-dependent APCs (most of which are being converted to C-
APCs) is reported on the claim to ensure that device costs are captured 
by hospitals. We stated that we expect that hospitals would use an 
appropriate device code consistent with correct coding in order to 
ensure that device costs are always reported on the claim, so that 
costs are appropriately captured in claims that CMS uses for 
ratesetting.
    Comment: The majority of commenters requested that CMS maintain 
device-to-procedure and procedure-to-device edits in order to ensure 
continued complete and accurate cost reporting by hospitals. One 
commenter recommended that CMS adopt its proposal to require any 
appropriate device code used in the previous device-to-procedure edits 
to be present on the claim, if CMS discontinues the current edits and 
educates hospitals on the continued need to report the actual device 
used in the procedure for accurate ratesetting. One commenter was 
cautiously optimistic that CMS' proposal requiring any appropriate 
device code used in the previous device-to-procedure edits to be 
present on the claim for most comprehensive APCs could promote complete 
reporting in a potentially less prescriptive way for hospitals. Another 
commenter believed CMS' proposed policy change would result in 
``ridiculous'' combinations of device and procedure codes for some 
services and thus would result in invalid mean costs for the 
procedures. Other commenters recommended that CMS modify its proposed 
policy to incorporate edit logic that will allow exceptions for 
comprehensive APCs that do not require device codes to be reported with 
every assigned procedural code. One commenter recommended that the 
claims edits be implemented initially on a 1-year trial/interim basis. 
Other commenters suggested that CMS eliminate the device claims 
processing edits altogether.
    Response: We continue to believe that the elimination of device-to-
procedure edits and procedure-to-device edits is appropriate due to the 
experience hospitals now have in coding and reporting these claims 
fully. More specifically, for the more costly devices, we believe the 
C-APCs will reliably reflect the cost of the device if charges for the 
device are included anywhere on the claim. We remind commenters that, 
under our proposed policy, hospitals would still be expected to adhere 
to the guidelines of correct coding and append the correct device code 
to the claim when applicable. We also remind commenters that, 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 do not believe 
that our proposed policy will result in ridiculous combinations of 
device and procedure codes for some services, as this would require 
deliberate miscoding by hospitals, which we do not believe would result 
from this change to the device code reporting requirements. We continue 
to expect that hospitals would use an appropriate device code 
consistent with correct coding in order to ensure that device costs are 
always reported on the claim, so that costs are appropriately captured 
in claims that CMS uses for ratesetting. While we believe that device-
to-procedure edits and procedure-to-device edits are no longer 
necessary at this time, we are sensitive to commenters' concerns that 
all relevant costs for the APCs currently recognized as device-
dependent APCs are appropriately included in the claims that CMS will 
use for ratesetting. In light of those concerns, we believe creating a 
claims processing edit requiring a device code to be present on the 
claim whenever a procedure code from the APCs currently recognized as a 
device-dependent APCs will help to ensure continued complete and 
accurate cost reporting by hospitals. Device edits will not apply to 
procedures assigned to C-APCs that either do not use implantable 
medical devices or procedures that do not have device-to-procedure or 
procedure-to-device edits assigned to them currently for CY 2014. This 
will ensure that the proposed device edit policy (requiring only that 
any device code be reported on a claim containing a procedure assigned 
to one of the formerly device-dependent APCs) will only apply to those 
procedures that currently have device-to-procedure or

[[Page 66795]]

procedure-to-device edits currently assigned to them.
    After consideration of the public comments we received, we are 
finalizing our proposal to no longer implement specific procedure-to-
device and device-to-procedure edits for any APC. We also are 
finalizing our proposal to create claims processing edits that require 
any of the device codes used in the previous device-to-procedure edits 
to be present on the claim whenever a procedure code assigned to any of 
the current device-dependent APCs (that remain after the consolidation 
and restructuring of these APCs) listed in Table 5 below is reported on 
the claim to ensure that device costs are captured by hospitals. CMS 
will monitor the claims data to ensure that hospitals continue 
reporting appropriate device codes on the claims for the formerly 
device-dependent APCs. We note that while we proposed to make all 26 of 
the APCs listed in Table 5 C-APCs for CY 2015, in section II.A.2.e. of 
this final rule with comment period, we are not finalizing our proposal 
to recognize APCs 0427, 0622, and 0652 as C-APCs. While APCs 0427, 
0622, and 0652 will not be recognized as comprehensive APCs for CY 
2015, our finalized device edit policy will apply to these 3 APCs, as 
these 3 APCs are formerly device-dependent APCs. The term ``device-
dependent APC'' will no longer be employed beginning in CY 2015. We 
will refer to APCs with a device offset of more than 40 percent as 
``device-intensive'' APCs. Device-intensive APCs will be subject to the 
no cost/full credit and partial credit device policy. For a discussion 
of device-intensive APCs and the no cost/full credit and partial credit 
device policy, we refer readers to section IV.B. of this final rule 
with comment period. For a discussion of ASC procedures designated as 
device intensive, we refer readers to section XII.C.1.c. of this final 
rule with comment period.

 Table 5--APCs That Will Require a Device Code To Be Reported on a Claim
       When a Procedure Assigned to One of These APCs Is Reported
------------------------------------------------------------------------
               APC                               APC Title
------------------------------------------------------------------------
0039.............................  Level III Neurostimulator.
0061.............................  Level II Neurostimulator.
0083.............................  Level I Endovascular.
0084.............................  Level I EP.
0085.............................  Level II EP.
0086.............................  Level III EP.
0089.............................  Level III Pacemaker.
0090.............................  Level II Pacemaker.
0107.............................  Level I ICD.
0108.............................  Level II ICD.
0202.............................  Level V Female Reproductive.
0227.............................  Implantation of Drug Infusion.
0229.............................  Level II Endovascular.
0259.............................  Level VII ENT Procedures.
0293.............................  Level IV Intraocular.
0318.............................  Level IV Neurostimulator.
0319.............................  Level III Endovascular.
0384.............................  GI Procedures with Stents.
0385.............................  Level I Urogenital.
0386.............................  Level II Urogenital.
0425.............................  Level V Musculoskeletal.
0427.............................  Level II Tube/Catheter.
0622.............................  Level II Vascular Access.
0648.............................  Level IV Breast Surgery.
0652.............................  Insertion of IP/Pl. Cath.
0655.............................  Level IV Pacemaker.
------------------------------------------------------------------------

(2) Blood and Blood Products
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs 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 2015 OPPS/ASC proposed rule (79 FR 40938), for CY 2015, 
we proposed to continue to establish payment rates for blood and blood 
products using our blood-specific CCR methodology, which utilizes 
actual or simulated CCRs from the most recently available hospital cost 
reports to convert hospital charges for blood and blood products to 
costs. This methodology has been our standard ratesetting methodology 
for blood and blood products since CY 2005. It was developed in 
response to data analysis indicating that there was a significant 
difference in CCRs for those hospitals with and without blood-specific 
cost centers, and past public comments indicating that the former OPPS 
policy of defaulting to the overall hospital CCR for hospitals not 
reporting a blood-specific cost center often resulted in an 
underestimation of the true hospital costs for blood and blood 
products. Specifically, in order to address the differences in CCRs and 
to better reflect hospitals' costs, we proposed to continue to simulate 
blood CCRs for each hospital that does not report a blood cost center 
by calculating the ratio of the blood-specific CCRs to hospitals' 
overall CCRs for those hospitals that do report costs and charges for 
blood cost centers. We proposed to apply this mean ratio to the overall 
CCRs of hospitals not reporting costs and charges for blood cost 
centers on their cost reports in order to simulate blood-specific CCRs 
for those hospitals. We proposed to calculate the costs upon which the 
proposed CY 2015 payment rates for blood and blood products are based 
using the actual blood-specific CCR for hospitals that reported costs 
and charges for a blood cost center and a hospital-specific simulated 
blood-specific CCR for hospitals that did not report costs and charges 
for a blood cost center.
    Comment: Commenters supported the proposal to continue to 
separately pay for blood and blood products using a blood-specific CCR 
methodology.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to establish payment rates for 
blood and blood products using our blood-specific CCR methodology, 
which utilizes actual or simulated CCRs from the most recently 
available hospital cost reports to convert hospital charges for blood 
and blood products to costs.
    We continue to believe that the hospital-specific simulated blood-
specific CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as 
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into 
account the unique charging and cost accounting structure of each 
hospital, we believe that it yields more accurate estimated costs for 
these products. We continue to believe that this methodology in CY 2015 
will result in costs for blood and blood products that appropriately 
reflect the relative estimated costs of these products for hospitals 
without blood cost centers and, therefore, for these blood products in 
general.
    We note that, as discussed in section II.A.2.e. of the CY 2014 
OPPS/ASC final rule with comment period and this final rule with 
comment period, we established comprehensive APCs that will provide 
all-inclusive payments for certain device-dependent procedures. Under 
this policy, we include the costs of blood and blood products when 
calculating the overall costs of these comprehensive APCs. We proposed 
to continue to apply the blood-specific CCR methodology described in 
this

[[Page 66796]]

section when calculating the costs of the blood and blood products that 
appear on claims with services assigned to the comprehensive APCs (79 
FR 40939). Because the costs of blood and blood products will be 
reflected in the overall costs of the comprehensive APCs (and, as a 
result, in the final payment rates of the comprehensive APCs), we 
proposed to not make separate payments for blood and blood products 
when they appear on the same claims as services assigned to the 
comprehensive APCs (79 FR 40939).
    We did not receive any public comments on this proposal and are 
finalizing the policy as proposed. We refer readers to Addendum B to 
this final rule with comment period (which is available via the 
Internet on the CMS Web site) for the final CY 2015 payment rates for 
blood and blood products (which are identified with status indicator 
``R''). For a more detailed discussion of the blood-specific CCR 
methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 
50524 through 50525). For a full history of OPPS payment for blood and 
blood products, we refer readers to the CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66807 through 66810).
(3) Brachytherapy Sources
    Section 1833(t)(2)(H) of the Act mandates the creation of 
additional groups of covered OPD services that classify devices of 
brachytherapy consisting of a seed or seeds (or radioactive source) 
(``brachytherapy sources'') separately from other services or groups of 
services. The statute provides certain criteria for the additional 
groups. For the history of OPPS payment for brachytherapy sources, we 
refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC 
final rule with comment period (77 FR 68240 through 68241). As we have 
stated in prior OPPS updates, we believe that adopting the general OPPS 
prospective payment methodology for brachytherapy sources is 
appropriate for a number of reasons (77 FR 68240). The general OPPS 
payment methodology uses costs based on claims data to set the relative 
payment weights for hospital outpatient services. This payment 
methodology results in more consistent, predictable, and equitable 
payment amounts per source across hospitals by averaging the extremely 
high and low values, in contrast to payment based on hospitals' charges 
adjusted to costs. We believe that the OPPS prospective payment 
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 2008 OPPS/ASC final rule with comment period (72 FR 
66779 through 66787), the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68668 through 68670, the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60533 through 60537), the CY 2011 OPPS/ASC final 
rule with comment period (75 FR 71978 through 71981), the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74160 through 74163), the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68240 through 
68242), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74860) for further discussion of the history of OPPS payment for 
brachytherapy sources.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40939 through 40940), 
for CY 2015, we proposed to use the costs derived from CY 2013 claims 
data to set the proposed CY 2015 payment rates for brachytherapy 
sources, as we proposed to use to set the proposed payment rates for 
most other items and services that would be paid under the CY 2015 
OPPS. We based the proposed payment rates for brachytherapy sources on 
the geometric mean unit costs for each source, consistent with the 
methodology proposed for other items and services paid under the OPPS, 
as discussed in section II.A.2. of the proposed rule. We also proposed 
to continue the other payment policies for brachytherapy sources that 
we finalized and first implemented in the CY 2010 OPPS/ASC final rule 
with comment period (74 FR 60537). We proposed to pay for the stranded 
and non-stranded not otherwise specified (NOS) codes, HCPCS codes C2698 
and C2699, at a rate equal to the lowest stranded or non-stranded 
prospective payment rate for such sources, respectively, on a per 
source basis (as opposed to, for example, a per mCi), which is based on 
the policy we established in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66785). We also 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). That policy is intended to enable us to assign new HCPCS 
codes for new brachytherapy sources to their own APCs, with prospective 
payment rates set based on our consideration of external data and other 
relevant information regarding the expected costs of the sources to 
hospitals.
    The proposed CY 2015 payment rates for brachytherapy sources were 
included in Addendum B to the proposed rule (which is available via the 
Internet on the CMS Web site) and were identified with status indicator 
``U.''
    We invited public comment on this proposed policy and also 
requested recommendations for new HCPCS codes to describe new 
brachytherapy sources consisting of a radioactive isotope, including a 
detailed rationale to support recommended new sources. In the CY 2015 
OPPS/ASC proposed rule, we provided an appropriate address for receipt 
of these recommendations; the address is repeated at the end of this 
section. We indicated that we will continue to add new brachytherapy 
source codes and descriptors to our systems for payment on a quarterly 
basis.
    Comment: Commenters expressed a number of concerns regarding CMS' 
outpatient hospital claims data used to set prospective payment rates 
for brachytherapy sources. Commenters stated that high dose rate (HDR) 
brachytherapy devices decay over a 90-day period and are used to treat 
multiple patients during this time period. According to the commenters, 
the true cost of brachytherapy sources depends on the number of 
patients treated by a hospital within a 90-day period, as well as the 
number of treatments required and the intensity of the treatments. For 
this reason, the commenters believed that it is difficult to establish 
fair and adequate prospective payment rates for brachytherapy sources. 
Commenters also noted that the brachytherapy source payment data 
continue to show huge variation in per unit cost across hospitals. In 
addition, the commenters believed that CMS' claims data contain rank 
order anomalies, causing the usual cost relationship between the high 
activity palladium-103 source (HCPCS code C2635, Brachytherapy source, 
non-stranded, high activity, palladium-103, greater than 2.2 mci (NIST) 
per source) and the low activity palladium-103 sources (HCPCS codes 
C2640, Brachytherapy source, stranded, palladium-103, per source and 
C2641, Brachytherapy source, non-stranded,

[[Page 66797]]

palladium-103, per source) to be reversed. The commenters noted that 
the proposed geometric mean costs of the brachytherapy source HCPCS 
codes are approximately $26, $69, and $72, respectively. The commenters 
stated that stranded palladium-103 sources (HCPCS code C2640) always 
cost more than non-stranded palladium-103 sources (HCPCS code C2641), 
which is not reflected in the proposed rule claims data.
    Response: As stated above, we believe that geometric mean costs 
based on hospital claims data for brachytherapy sources have produced 
reasonably consistent per-source cost estimates over the past several 
years, comparable to the patterns we have observed for many other OPPS 
services whose payments are set based upon relative payment weights 
from claims data. We believe that our per-source payment methodology 
specific to each source's radioisotope, radioactive intensity, and 
stranded or non-stranded configuration, supplemented by payment based 
on the number of sources used in a specific clinical case, adequately 
accounts for the major expected sources of variability across 
treatments. (We refer readers to the CY 208 OPPS final rule with 
comment period (72 FR 66782); the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60534); the CY 2011 OPPS/ASC final rule with 
comment period (75 FR 71979); the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74161); the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68241); and the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74861)). We believe that the CY 2013 
brachytherapy source claims data used for CY 2015 ratesetting produce 
adequate payment for these services. Also, as we have explained 
previously, a prospective payment system relies upon the concept of 
averaging, where the payment may be more or less than the estimated 
cost of providing a service for a particular patient. With the 
exception of outlier cases, the payment for services is adequate to 
ensure access to appropriate care. In the case of brachytherapy sources 
for which the law requires separate payment groups, without packaging, 
the costs of these individual items could be expected to show greater 
variation than some other APCs under the OPPS because higher 
variability in costs for some component items and services is not 
balanced with lower variability in costs for others, and because 
relative payment weights are typically estimated using a smaller set of 
claims. Nevertheless, we believe that prospective payment for 
brachytherapy sources based on geometric mean costs of the services 
reported on claims calculated according to the standard OPPS 
methodology is appropriate and provides hospitals with the greatest 
incentives for efficiency in furnishing brachytherapy treatment.
    Under the budget neutral provision for the OPPS, it is the 
relativity of costs, not the absolute costs, that is important, and we 
believe that brachytherapy sources are appropriately paid according to 
the standard OPPS payment approach. Furthermore, some sources may have 
geometric mean costs and payment rates based on 50 or fewer providers 
because it is not uncommon for OPPS prospective payment rates to be 
based on claims from a relatively small number of hospitals that 
furnished the service in the year of claims data available for the OPPS 
update year. Fifty hospitals may report hundreds of brachytherapy 
source services on claims for many cases and comprise the universe of 
providers using particular low volume sources, for which we are 
required to pay separately by statute. Further, our methodology for 
estimating geometric mean costs for brachytherapy sources utilizes all 
line-item charges for those sources, which allows us to use all 
hospital reported charge and estimated cost information to set payment 
rates for these items. Therefore, no brachytherapy source claims are 
excluded from the estimate of geometric means costs. We have no reason 
to believe that prospective payment rates based on claims data from 
those providers furnishing a particular source do not appropriately 
reflect the cost of that source to hospitals. As for most other OPPS 
services, we note that the geometric mean costs for brachytherapy 
sources are based upon the costs of those providers sources in CY 2013. 
Hospitals individually determine their charge for an item or service, 
and one of Medicare's primary requirements for setting a charge is that 
it be reasonably and consistently related to the cost of the item or 
service for that facility. (We refer readers to the Medicare Provider 
Reimbursement Manual, Part I, Section 2203, which is available on the 
CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929.html?DLPage=1&DLSort=0&DLSortDir=ascending.) We then estimate 
a cost from that charge using the hospital's most recent Medicare 
hospital cost report data in our standard OPPS ratesetting process.
    We acknowledge that HDR brachytherapy sources such as HDR iridium-
192 have a fixed active life and must be replaced every 90 days. As a 
result, a hospital's per treatment cost for the source would be 
dependent on the number of treatments furnished per source. The 
source's cost must be amortized over the life of the source. Therefore, 
when establishing charges for HDR iridium-192, we expect hospitals to 
project the number of treatments that would be provided over the life 
of the source and establish charges for the source accordingly (72 FR 
66783; 74 FR 60535; 75 FR 71980; 76 FR 74162; 77 FR 68242; and 78 FR 
74861). For most payable services under the OPPS, our practice is to 
establish prospective payment rates based on the geometric mean costs 
determined from hospitals' claims data to provide incentives for 
efficient and cost effective delivery of these services.
    In the case of high-activity and low-activity iodine-125 sources, 
our CY 2013 claims data show that the hospitals' relative costs for the 
high-activity source are greater than the costs of the low-activity 
sources. As we have stated in the past, we do not have any information 
about the expected cost differential between high-activity and low-
activity sources of various isotopes other than what is available in 
our claims and hospital cost report data (75 FR 71979; 76 FR 74162; 77 
FR 68242; and 78 FR 74861). In the case of the relationship between 
high-activity and low-activity palladium-103, our claims data 
consistently have shown higher average costs for low-activity 
palladium-103. For the high-activity palladium-103 sources (HCPCS code 
C2635), 8 hospitals reported this service in CY 2013, compared to 104 
and 159 hospitals that reported services for the low-activity 
palladium-103 sources described by HCPCS codes C2640 and C2641, 
respectively. It is clear that fewer hospitals furnished the high-
activity palladium-103 source than the low-activity palladium-103 
sources, and we expect that the hospital cost distribution for those 
hospitals could be different than the cost distribution of the large 
numbers of hospitals reporting the low-activity palladium-103 sources, 
as previously stated (74 FR 60535; 75 FR 71979; 76 FR 74162; 77 FR 
68242; and 78 FR 74861). These varied cost distributions clearly 
contribute to the observed relationship in geometric mean cost between 
the different types of sources. However, we see no reason why our 
standard ratesetting methodology for brachytherapy sources that relies 
on all claims data from all hospitals furnishing brachytherapy sources 
would not yield valid geometric

[[Page 66798]]

mean costs for those hospitals furnishing the different brachytherapy 
sources upon which CY 2015 prospective payments are based.
    Comment: One commenter, a developer of a linear non-stranded 
palladium-103 source described by HCPCS code C2636 (Brachytherapy 
linear source, nonstranded, palladium-103, per 1 mm), believed that CY 
2013 claims data for services furnished prior to November 2013 used to 
determine the CY 2015 payment rates are invalid because the claims data 
do not reflect the costs of its linear non-stranded palladium-103 
source, which became commercially available in November 2013. Further, 
the commenter stated that there were no other linear non-stranded 
palladium-103 sources commercially available prior to November 2013. 
Therefore, the commenter requested that payment for HCPCS code C2636 
remain at the current CY 2014 payment rate until claims data for HCPCS 
code C2636 become available in CY 2016.
    Response: We understand the commenter's claim that its linear non-
stranded palladium-103 source described by HCPCS code C2636 became 
commercially available in November 2013. However, we disagree with the 
commenter's assertion that there were no other commercially available 
linear non-stranded palladium-103 sources described by HCPCS code C2636 
prior to November 2013. We also disagree with the commenter that the CY 
2013 claims data used to determine the CY 2015 payment rate for HCPCS 
code C2636 are invalid. As discussed in the CY 2005 OPPS final rule (69 
FR 65840), we established HCPCS code C2636 to uniquely identify linear 
non-stranded Palladium-103 brachytherapy sources. Since the HCPCS code 
became effective January 1, 2005, we have used historical claims data 
to set the prospective payment rates. To determine the CY 2015 OPPS 
payment rate for HCPCS code C2636, we used CY 2013 claims data, which 
include brachytherapy sources costs for linear non-stranded palladium-
103 sources. Despite the date of commercial availability for the 
commenter's linear non-stranded palladium-103 brachytherapy source, we 
do have CY 2013 claims data for HCPCS code C2636. Therefore, in 
accordance with our above-mentioned methodology and consistent with our 
policy used to set the prospective payment rates for brachytherapy 
sources, we are finalizing our proposed payment rate for HCPCS code 
C2636 based on CY 2013 claims data.
    Comment: One commenter expressed concern regarding CMS' CY 2014 
payment rate for a new brachytherapy source described by HCPCS code 
C2644 (Brachytherapy source, cesium-131 chloride solution, per 
millicurrie), which became effective July 1, 2014. In the July 2014 
OPPS Change Request (CR) 8776, dated May 23, 2014, CMS established a 
payment rate for HCPCS code C2644 of $18.97. The commenter, who also 
petitioned for the initial establishment of HCPCS code C2644 to 
describe the new brachytherapy source, requested clarification on how 
the payment rate was established by CMS, given that the cost of the new 
brachytherapy source is $25 per millicurie and claims data are not yet 
available.
    Response: As discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66786), we assign new HCPCS codes that describe 
new brachytherapy sources to their own APCs, with prospective payment 
rates set based on consideration of external data and other relevant 
information regarding the expected costs of the sources to hospitals. 
The commenter provided CMS with clinical information on the 
brachytherapy source cesium-131 chloride solution within its petition 
for the establishment of the new HCPCS code, and noted the source's 
clinical similarities with the liquid iodine-125 solution source, which 
is described by HCPCS code A9527 (Iodine I-125 sodium iodide). The 
commenter stated that both iodine I-125 sodium iodide and cesium-131 
chloride solution ``have similar energies, are capable of delivering 
the same radiation dose to the planned treatment volume, are supplied 
in liquid form, and are compatible with the GliaSite RTS Catheter''. 
Based on clinical information provided by the commenter and a clinical 
review by CMS' medical advisors, we believe that the brachytherapy 
sources described by HCPCS code C2644 and HCPCS code A9527 are clinical 
substitutes. Therefore, we set a payment rate for HCPCS code C2644 that 
is equal to the payment rate for HCPCS code A9527 when it became 
effective in CY 2014, and proposed to apply the same methodology for CY 
2015. We are finalizing our proposal for CY 2015 to set the payment 
rate for HCPCS code C2644 as the equivalent of the payment rate for 
HCPCS code A9527. (We refer readers to Addendum B of this final rule 
with comment period for the CY 2015 OPPS payment rate. Addendum B is 
available via the Internet on the CMS Web site.)
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to set the payment rates for 
brachytherapy sources using our established prospective payment 
methodology, which is based on geometric mean costs. The CY 2015 final 
payment rates for brachytherapy sources are found in Addendum B to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).
    As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40940), we 
continue to invite hospitals and other parties to submit 
recommendations to CMS for new HCPCS codes that describe new 
brachytherapy sources consisting of a radioactive isotope, including a 
detailed rationale to support recommended new sources. Such 
recommendations should be directed to the Division of Outpatient Care, 
Mail Stop C4-03-27, Centers for Medicare and Medicaid Services, 7500 
Security Boulevard, Baltimore, MD 21244.
e. Comprehensive APCs
    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 (primarily medical 
device implantation procedures) under the OPPS at the claim level, 
effective January 1, 2015. We defined a comprehensive APC (C-APC) as a 
classification for the provision of a primary service and all 
adjunctive services provided to support the delivery of the primary 
service. We established comprehensive APCs as a category broadly for 
OPPS payment and established 29 C-APCs to prospectively pay for 167 of 
the most costly device-dependent services assigned to these 29 APCs 
beginning in CY 2015 (78 FR 74910). Under this policy, we designated 
each service described by a HCPCS code assigned to a C-APC as the 
primary service and, with few exceptions described below, consider all 
other services reported on a hospital outpatient claim in combination 
with the primary service to be related to the delivery of the primary 
service (78 FR 74869). In addition, under this policy, we calculate a 
single payment for the entire hospital stay, defined by a single claim, 
regardless of the date of service span over which the primary service 
and all related services are delivered. This comprehensive APC 
packaging policy packages payment for all items and services typically 
packaged under the OPPS, but also packages payment

[[Page 66799]]

for other items and services that are not typically packaged under the 
OPPS (78 FR 74909).
    Because of the overall complexity of this new policy and our 
introduction of complexity adjustments in the CY 2014 OPPS/ASC final 
rule with comment period, we modeled the policy as if we were 
implementing it for CY 2014, but delayed the effective date until 
January 1, 2015, to allow additional time for further analysis, 
opportunity for public comment, and systems preparation. In the CY 2015 
OPPS/ASC proposed rule (79 FR 40941 through 40953), we discussed our 
review of the policies finalized in the CY 2014 OPPS/ASC final rule 
with comment period for C-APCs, and summarized and responded to public 
comments received in response to the CY 2014 OPPS/ASC final rule with 
comment period relating to the comprehensive APC payment policy. We 
then outlined our proposed policy for CY 2015, which included several 
clarifications and proposed modifications in response to public 
comments received. In this section, we use the terms ``service'' and 
``procedure'' interchangeably.
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a policy, with a delayed implementation 
date of CY 2015, that designated certain covered OPD services as 
primary services (identified by a new OPPS status indicator of ``J1'') 
assigned to C-APCs. When such a primary service is reported on a 
hospital outpatient claim, taking into consideration the few exceptions 
that are discussed below, we treat all other items and services 
reported on the claim as integral, ancillary, supportive, dependent, 
and adjunctive to the primary service (hereinafter collectively 
referred to as ``adjunctive services'') and representing components of 
a comprehensive service (78 FR 74865). This results in a single 
prospective payment for the primary, comprehensive service based on the 
cost of all reported services at the claim level. We only exclude 
charges for services that are statutorily excluded from the OPPS, such 
as certain mammography and ambulance services that are never covered 
OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; 
charges for brachytherapy seeds, which must receive separate payment 
under section 1833(t)(2)(H) of the Act; charges for pass-through drugs 
and devices, which also require separate payment under section 
1833(t)(6) of the Act; and charges for self-administered drugs (SADs) 
that are not otherwise packaged as supplies because they are not 
covered under Medicare Part B under section 1861(s)(2)(B) of the Act 
(78 FR 74865).
    The ratesetting process set forth in the CY 2014 OPPS/ASC final 
rule with comment period for the comprehensive APC payment policy is 
summarized as follows (78 FR 74887):
    APC assignment of primary (``J1'') services. HCPCS codes assigned 
to status indicator ``J1'' are assigned to C-APCs based on our usual 
APC assignment methodology of evaluating the geometric mean cost of the 
primary service claims to establish resource similarity and the 
clinical characteristics of each procedure to establish clinical 
similarity within each APC. Claims reporting multiple procedures 
described by HCPCS codes assigned to status indicator ``J1'' are 
identified and the procedures are then assigned to a C-APC based on the 
primary HCPCS code that has the highest APC geometric mean cost. This 
ensures that multiple procedures described by HCPCS codes assigned to 
status indicator ``J1'' reported on claims are always paid through and 
assigned to the C-APC that would generate the highest APC payment. If 
multiple procedures described by HCPCS codes assigned to status 
indicator ``J1'' that are reported on the same claim have the same APC 
geometric mean estimated cost, as would be the case when two different 
procedures described by HCPCS codes assigned to status indicator ``J1'' 
are assigned to the same APC, identification of the primary service is 
then based on the procedure described by the HCPCS code assigned to 
status indicator ``J1'' with the highest HCPCS-level geometric mean 
cost. When there is no claims data available upon which to establish a 
HCPCS-level comprehensive geometric mean cost, we use the geometric 
mean cost for the APC to which the HCPCS code is assigned.
    Complexity adjustments and determination of final C-APC groupings. 
We then considered reassigning complex subsets of claims for each 
primary service described by a HCPCS code assigned to status indicator 
``J1.'' All claims reporting more than one procedure described by HCPCS 
codes assigned to status indicator ``J1'' are evaluated for the 
existence of commonly occurring pairs of procedure codes reported on 
claims that exhibit a materially greater comprehensive geometric mean 
cost relative to the geometric mean cost of the claims reporting that 
primary service. This indicates that the subset of procedures 
identified by the secondary HCPCS code has increased resource 
requirements relative to less complex subsets of that primary procedure 
(78 FR 74887). The CY 2014 complexity adjustment criteria are as 
follows:
     The comprehensive geometric mean cost of the claims 
reporting the combination of procedures is more than two times the 
comprehensive geometric mean cost of the single major claims reporting 
only the primary service;
     There are more than 100 claims in the data year reporting 
the specific code combination;
     The number of claims reporting the specific code 
combination exceed 5 percent of the volume of all claims reporting the 
designated primary service; and
     There would be no violation of the ``2 times'' rule within 
the receiving C-APC (78 FR 74886).
    If a pair of procedure codes reported on claims is identified that 
meets these requirements, that is, commonly occurring and exhibiting 
materially greater resource requirements, the pair of procedure codes 
is further evaluated to confirm clinical validity as a complex subset 
of the primary procedure and the pair of procedure codes is then 
identified as complex, and primary service claims with that combination 
of procedure codes are subsequently reassigned as appropriate. If a 
pair of procedure codes does not meet the requirement for a materially 
greater resource requirement or does not occur commonly, the pair of 
procedure codes is not considered to be complex, and primary service 
claims with that combination of procedure codes are not reassigned. All 
pairs of procedures described by HCPCS codes assigned to status 
indicator ``J1'' for each primary service are similarly evaluated. Once 
all pairs of procedures described by HCPCS codes assigned to status 
indicator ``J1'' have been evaluated, all claims identified for 
reassignment for each primary service are combined and the group is 
assigned to a higher level C-APC within a clinical family of C-APCs, 
that is, an APC with greater estimated resource requirements than the 
initially assigned C-APC and with appropriate clinical homogeneity. We 
assessed resource variation for reassigned claims within the receiving 
APC using the geometric mean cost for all reassigned claims for the 
primary service relative to other services assigned to that APC using 
the 2 times rule criteria (78 FR 74887).
    For new HCPCS codes and codes without data, we use the best 
information available to us to identify combinations of procedure codes 
that represent a more complex form of the primary service and warrant

[[Page 66800]]

reassignment to a higher level APC. In the proposed rule, we stated 
that we would reevaluate our APC assignments and identification and APC 
placement of complex claims once claims data become available.
(2) CY 2015 Policy for C-APCs
(a) Methodology
    Basic C-APC Methodology. After consideration of the public comments 
we received on the CY 2014 OPPS/ASC final rule with comment period, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 40941 through 40953), we 
described our proposed payment methodology for C-APCs for CY 2015. For 
CY 2015, we proposed to establish a policy that services assigned to C-
APCs would be designated as the primary services for C-APCs, using new 
status indicator ``J1'' as listed in Addendum J and Addendum B to the 
CY 2015 OPPS/ASC proposed rule (which are available via the Internet on 
the CMS Web site). We stated that the basic steps for calculating the 
C-APC payments remain the same as those finalized in the CY 2014 OPPS/
ASC final rule with comment period, except for the complexity 
adjustment criteria described briefly above (78 FR 74885 through 
74888). For CY 2015, we proposed to restructure and consolidate some of 
the current device-dependent APCs to improve both the resource and 
clinical homogeneity of these APCs. In addition, instead of assigning 
any add-on codes to status indicator ``J1'' as finalized in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74873 through 74883), we 
proposed to package all add-on codes, consistent with our CY 2014 OPPS 
policy to package add-on codes (78 FR 74942), but to allow certain add-
on codes to qualify a primary J1 procedure code-add-on code combination 
for a complexity adjustment. For CY 2015, similar to other procedures 
described by add-on codes under the OPPS and according to 42 CFR 
419.2(b)(18), procedures described by add-on codes furnished in 
conjunction with primary comprehensive services would be packaged 
instead of being assigned to an APC with a separately payable status 
indicator in accordance with the CY 2014 OPPS policy for add-on codes 
assigned to device-dependent APCs. However, the add-on codes currently 
assigned to device-dependent APCs (that are converted to C-APCs) may 
qualify as a secondary code in a complexity adjustment code pair.
    Further, we proposed to convert all current device-dependent APCs 
remaining after the proposed restructuring and consolidation of some of 
these APCs to C-APCs. We also proposed to create two new C-APCs: C-APC 
0067 for single-session cranial stereotactic radiosurgery services 
(SRS) and C-APC 0351 for intraocular telescope implantation. In 
addition, we proposed to reassign CPT codes 77424 and 77425 that 
describe intraoperative radiation therapy (IORT) to C-APC 0648 (Level 
IV Breast and Skin Surgery). We discuss in detail below our proposed 
new complexity adjustment criteria and our proposal to package all add-
on codes, but to allow complexity adjustments for qualifying code 
combinations of primary codes and add-on codes currently assigned to 
device-intensive C-APCs.
    As stated in the CY 2014 OPPS/ASC final rule with comment period, 
we define the comprehensive APC payment policy as including all covered 
OPD services on a hospital outpatient claim reporting a primary service 
that is assigned to status indicator ``J1,'' excluding services that 
cannot be covered OPD services or that cannot by statute be paid under 
the OPPS. Services packaged for payment under the comprehensive APC 
payment packaging policy, that is, services that are typically 
integral, ancillary, supportive, dependent, or adjunctive to the 
primary service, provided during the delivery of the comprehensive 
service, include diagnostic procedures, laboratory tests and other 
diagnostic tests and treatments that assist in the delivery of the 
primary procedure; visits and evaluations performed in association with 
the procedure; uncoded services and supplies used during the service; 
durable medical equipment as well as prosthetic and orthotic items and 
supplies when provided as part of the outpatient service; and any other 
components reported by HCPCS codes that are provided during the 
comprehensive service, except excluded services that are described 
below (78 FR 74865). In addition, payment for outpatient department 
services that are similar to therapy services and delivered either by 
therapists or nontherapists is packaged as part of the comprehensive 
service. These services that are provided during the perioperative 
period are adjunctive services and not 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 under 
section 1834(k) of the Act subject to annual therapy caps, as 
applicable (78 FR 74867). However, certain other services similar to 
therapy services are considered and paid as outpatient services. 
Payment for these nontherapy outpatient department services that are 
reported with therapy codes and provided with a comprehensive service 
is packaged with the comprehensive service. We note that these 
services, even though they are reported with therapy codes, are 
outpatient department services and not therapy services. Therefore, the 
requirement for functional reporting under the regulations at 42 CFR 
410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply.
    Items packaged for payment provided in conjunction with the primary 
service also include all drugs, biologicals, and radiopharmaceuticals, 
regardless of cost, except those drugs with pass-through payment status 
and those drugs that are usually self-administered (SADs), unless they 
function as packaged supplies (78 FR 74868 through 74869 and 74909). We 
refer readers to the Medicare Benefit Policy Manual, Chapter 15, 
Covered Medical and Other Health Services, Section 50.2.M, for a 
description of our policy on self-administered drugs treated as 
hospital outpatient supplies, including lists of SADs that function as 
supplies and those that do not function as supplies.
    Services excluded from the comprehensive APC payment policy are as 
follows: SADs that are not considered supplies, because they are not 
covered under Medicare Part B under section 1861(s)(2)(B) of the Act; 
services excluded from the OPPS according to section 1833(t)(1)(B) of 
the Act including recurring therapy services, which we considered 
unrelated to the comprehensive service (defined as therapy services 
reported on a separate facility claim for recurring services), 
ambulance services, diagnostic and screening mammography, the annual 
wellness visit providing personalized prevention plan services, and 
pass-through drugs and devices that are paid according to section 
1833(t)(6) of the Act.
    We also exclude preventive services defined in 42 CFR 410.2, ``(1) 
[t]he specific services listed in section 1861(ww)(2) of the Act, with 
the explicit exclusion of electrocardiograms; (2) [t]he Initial 
Preventive Physical Examination (IPPE) (as specified by section 
1861(ww)(1) of the Act); and (3) Annual Wellness Visit (AWV), providing 
Personalized Prevention Plan Services (PPPS) (as specified by section 
1861(hhh)(1) of the Act).'' These preventive services are listed by 
their

[[Page 66801]]

HCPCS codes in Addendum J to this final rule with comment period and 
include: Annual wellness visits providing personalized prevention plan 
services; initial preventive physical examinations; pneumococcal, 
influenza, and hepatitis B vaccines and administrations; mammography 
screenings; pap smear screenings and pelvic examination screenings; 
prostate cancer screening tests; colorectal cancer screening tests; 
diabetes outpatient self-management training services; bone mass 
measurements; glaucoma screenings; medical nutrition therapy services; 
cardiovascular screening blood tests; diabetes screening tests; 
ultrasound screenings for abdominal aortic aneurysm; and additional 
preventive services as defined in section 1861(ddd)(1) of the Act. We 
defined and discussed these services in detail for hospital billing 
purposes in the CY 2011 OPPS/ASC final rule with comment period 
pursuant to coverage and payment provisions in the Affordable Care Act 
(75 FR 72013 through 72020).
    This policy is consistent with our policy to exclude preventive 
services from the ancillary services packaging policy, will encourage 
the provision of preventive services, and provide maximum flexibility 
to beneficiaries across different sites of service in receiving 
preventive services. In addition, the statute does not permit 
assessment of beneficiary cost-sharing for most preventive services, 
and some receive cost-based payment (75 FR 72013 through 72020 and 78 
FR 74962). While any beneficiary cost-sharing attributable to 
preventive services, if they were packaged, would be very small in 
relation to the comprehensive service overall, we believe that we 
should exclude these services from the OPPS beneficiary copayment 
calculations, as discussed in section II.I. of this final rule with 
comment period. We note that payment for one preventive service (HCPCS 
code G0102 (Prostate cancer screening; digital rectal examination)) 
will continue to be packaged under the OPPS in CY 2015, both broadly 
and in the context of comprehensive services. Currently, payment for 
the procedure described by this HCPCS code is packaged because it is 
included in evaluation and management services. We note that 
beneficiary cost-sharing is not waived for the service described by 
HCPCS code G0102.
    Consistent with the policy finalized in the CY 2014 OPPS/ASC final 
rule with comment period, we exclude brachytherapy services and pass-
through drugs, biologicals and devices that are separately payable by 
statute (78 FR 74868 and 74909). In addition, we exclude services 
assigned to OPPS status indicator ``F'' that are not paid under the 
OPPS and are instead paid on a reasonable cost basis (certain CRNA 
services, Hepatitis B vaccines, and corneal tissue acquisition, which 
is not part of a comprehensive service for CY 2015). In Table 6 below, 
we list the services that are excluded from the comprehensive APC 
payment policy.

    Table 6--Comprehensive APC Payment Policy Exclusions for CY 2015
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Ambulance services
------------------------------------------------------------------------
Brachytherapy
------------------------------------------------------------------------
Diagnostic and mammography screenings
------------------------------------------------------------------------
Physical therapy, speech-language pathology and occupational therapy
 services--Therapy services reported on a separate facility claim for
 recurring services
------------------------------------------------------------------------
Pass-through drugs, biologicals and devices
------------------------------------------------------------------------
Preventive services defined in 42 CFR 410.2:
     Annual wellness visits providing personalized prevention
     plan services
     Initial preventive physical examinations
     Pneumococcal, influenza, and hepatitis B vaccines and
     administrations
     Mammography Screenings
     Pap smear screenings and pelvic examination screenings
     Prostate cancer screening tests
     Colorectal cancer screening tests
     Diabetes outpatient self-management training services
     Bone mass measurements
     Glaucoma screenings
     Medical nutrition therapy services
     Cardiovascular screening blood tests
     Diabetes screening tests
     Ultrasound screenings for abdominal aortic aneurysm
     Additional preventive services (as defined in section
     1861(ddd)(1) of the Act)
------------------------------------------------------------------------
Self-administered drugs--Drugs that are usually self-administered and do
 not function as supplies in the provision of the comprehensive service
------------------------------------------------------------------------
Services assigned to OPPS status indicator ``F'' (Certain CRNA services,
 Hepatitis B vaccines and corneal tissue acquisition)
------------------------------------------------------------------------
Services assigned to OPPS status indicator ``L'' (Influenza and
 pneumococcal pneumonia vaccines)
------------------------------------------------------------------------
Certain Part B inpatient services--Ancillary Part B inpatient services
 payable under Part B when the primary ``J1'' service for the claim is
 not a payable Part B inpatient service (for example, exhausted Medicare
 Part A benefits, beneficiaries with Part B only)
------------------------------------------------------------------------

    We proposed to continue to 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). 
We proposed to sum all line item charges for services included in the 
C-APC payment, convert the charges to costs, and calculate the 
``comprehensive'' geometric mean cost of one unit of each service 
assigned to status indicator ``J1.'' (We note that we

[[Page 66802]]

use the term ``comprehensive'' to describe the geometric mean cost of a 
claim reporting ``J1'' service(s) or the geometric mean cost of a C-
APC, inclusive of all of the items and services in the C-APC payment 
bundle). Charges for services that would otherwise have been 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 proposed to apply our standard data trims, 
excluding claims with extremely high primary units or extreme costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the C-APCs. We proposed to 
establish a ranking of each primary service (single unit only) assigned 
to status indicator ``J1'' according to their comprehensive geometric 
mean costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof 
(approximately 20 percent of CY 2013 claims), we proposed to continue 
to identify one ``J1'' service as the primary service for the claim 
based on our cost-based ranking of primary services. We then assign 
these multiple ``J1'' procedure claims to the C-APC to which the 
service designated as the primary service is assigned. If the reported 
``J1'' services reported 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 proposed to use complexity adjustments 
to provide increased payment for certain comprehensive services. We 
proposed to apply a complexity adjustment by promoting qualifying 
``J1'' service code combinations or 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 a higher paying C-APC in the same clinical family of 
C-APCs, if reassignment is clinically appropriate and the reassignment 
would not create a violation of the 2 times rule in the receiving APC 
(the higher paying C-APC in the same clinical family of C-APCs). We 
proposed to implement this type of complexity adjustment when the code 
combination represents a complex, costly form or version of the primary 
service according to the following criteria:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the 2 times rule (cost threshold).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40947 through 40948, 
we explained in detail in response to a comment to the CY 2014 OPPS/ASC 
final rule with comment period the differences between the finalized CY 
2014 complexity adjustment criteria and the CY 2015 proposed complexity 
adjustment criteria and our rationale for the proposed changes.
    After designating a single primary service for a claim, we proposed 
to evaluate that service in combination with each of the other 
procedure codes reported on the claim assigned to status indicator 
``J1'' (or certain add-on codes) to determine if they meet the 
complexity adjustment criteria. For new HCPCS codes, we proposed to 
determine initial C-APC assignments and complexity adjustments using 
the best data available, cross-walking the new HCPCS codes to 
predecessor codes wherever possible.
    Once we have determined that a particular code combination of 
``J1'' services (or combinations of ``J1'' services reported in 
conjunction with certain add-on codes) represents a complex version of 
the primary service because it is sufficiently costly, frequent, and a 
subset of the primary comprehensive service overall according to the 
criteria described above, we proposed to promote 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 APC 
reassignment is not clinically appropriate, the reassignment would 
create a violation of the 2 times rule in the receiving APC, or 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 (79 FR 40944). We did not propose to create new APCs with a 
geometric mean cost that is higher than the highest cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any code combination 
for services assigned to a C-APC would be the highest paying C-APC in 
the clinical family.
    As discussed below, we proposed that add-on codes reported in 
conjunction with a ``J1'' service would receive complexity adjustments 
when a qualifying add-on code is reported in conjunction with the 
primary service assigned to status indicator ``J1'' and satisfies the 
criteria described above for a complexity adjustment. Any combinations 
of HCPCS codes that fail to meet the proposed complexity adjustment 
criteria (frequency and cost thresholds) would not be identified as 
complex subsets of the primary procedure and would not be reassigned to 
a higher paying C-APC within the same clinical family of C-APCs. We 
provided a proposed list of qualifying code combinations (including 
add-on codes) in Addendum J to the proposed rule (which is available 
via the Internet on the CMS Web site).
    We proposed to package payment for all add-on codes into the 
payment for the C-APC. However, we indicated that add-on codes that are 
assigned to the current device-dependent APCs listed in Table 5 of the 
proposed rule (79 FR 40938) would be evaluated for a possible 
complexity adjustment when they are reported in conjunction with a 
designated primary service assigned to status indicator ``J1.'' We 
proposed to only evaluate the add-on codes that are assigned to the 
current device-dependent APCs listed in Table 5 of the proposed rule 
for potential complexity adjustments because we believe that, in 
certain cases, these procedure codes may represent services with 
additional medical device costs that result in significantly more 
complex and costly procedures. To determine which combinations of 
primary service codes reported in conjunction with the add-on code may 
qualify for a complexity adjustment for CY 2015, we proposed to apply 
the proposed frequency and cost criteria 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. If the frequency and cost criteria for a complexity adjustment 
were met, and reassignment to the next higher cost APC in the clinical 
family is appropriate, we proposed to make a complexity adjustment for 
the code combination; that is, we proposed to reassign the primary 
service code reported in conjunction with the add-on code combination 
to a higher cost C-APC within the same clinical family of C-APCs. If 
any add-on code combination reported in conjunction

[[Page 66803]]

with the primary service code did not qualify for a complexity 
adjustment, payment for these services would be packaged. We listed the 
complexity adjustments proposed for add-on code combinations for CY 
2015, along with all of the other proposed complexity adjustments, in 
Addendum J to the proposed rule (which is available via the Internet on 
the CMS Web site). One primary service code and add-on code combination 
(CPT code 37225 and 37233) that satisfied the frequency and cost 
criteria was not proposed for a complexity adjustment because we 
believe that these claims are miscoded. Of the 35 qualifying claims 
reporting this code combination, only 3 claims contained the 
appropriate base code (CPT code 37228) for CPT add-on code 37233.
    We provided in Addendum J to the proposed rule a breakdown of cost 
statistics for each code combination that would qualify for a 
complexity adjustment (including primary code and add-on code 
combinations). Addendum J to the proposed rule also contained summary 
cost statistics for each of the code combinations proposed to be 
reassigned under a given primary code. The combined statistics for all 
proposed reassigned complex code combinations are represented by an 
alphanumeric code with the last 4 digits of the designated primary 
service followed by ``A'' (indicating ``adjustment''). For example, the 
geometric mean cost listed in Addendum J for the code combination 
described by CPT code 33208A assigned to C-APC 0655 included all code 
combinations that were proposed to be reassigned to C-APC 0655 when CPT 
code 33208 is the primary code. Providing the information contained in 
Addendum J in the proposed rule allowed stakeholders the opportunity to 
better assess the impact associated with the proposed reassignment of 
each of the code combinations eligible for a complexity adjustment.
(b) Additional C-APCs
    Several commenters to the CY 2014 OPPS/ASC proposed rule questioned 
why CMS only converted a subset of the device-dependent APCs to C-APCs 
(78 FR 74864). We responded that while we were initially adopting a 
subset of the most costly device-dependent services, we may extend 
comprehensive payments to other procedures in future years as part of a 
broader packaging initiative (78 FR 74864). Upon further review for CY 
2015, we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40944 
through 40945) that we believe that the entire set of the currently 
device-dependent APCs (after the proposed reorganization and 
consolidation of the current device-dependent APCs) are appropriate 
candidates for C-APC payment because the device-dependent APCs not 
included in last year's comprehensive APC payment proposal are similar 
to the original 29 device-dependent APCs that were proposed as C-APCs 
in CY 2014. Similar to the original 29 device-dependent APCs for CY 
2014 that were converted to C-APCs, the additional device-dependent 
APCs that were proposed for conversion to C-APCs contain comprehensive 
services primarily intended for the implantation of costly medical 
devices. Therefore, in the CY 2015 OPPS/ASC proposed rule, we proposed 
to apply the comprehensive APC payment policy to the remaining device-
dependent APCs for CY 2015.
    In addition, since the publication of the CY 2014 OPPS/ASC final 
rule with comment period, stakeholders brought several services to our 
attention as appropriate candidates for C-APC payment. Stakeholders 
recommended that we create C-APCs for these procedures and technologies 
or assign them to a previously proposed C-APC. We agreed with the 
stakeholders. Similar to the other services designated as comprehensive 
in CY 2014, these procedures are comprehensive single-session services 
with high-cost implantable devices or high-cost equipment. For CY 2015, 
we proposed to convert the following existing APCs into C-APCs: APC 
0067 (Single Session Cranial Stereotactic Radiosurgery) and APC 0351 
(Level V Intraocular Surgery)). C-APC 0351 only contains one 
procedure--CPT code 0308T (Insertion of ocular telescope prosthesis 
including removal of crystalline lens). We also proposed to assign the 
CPT codes for IORT (CPT codes 77424 and 77425) to C-APC 0648 (Level IV 
Breast and Skin Surgery) because IORT is a single session comprehensive 
service that includes breast surgery combined with a special type of 
radiation therapy that is delivered inside the surgical cavity but is 
not technically brachytherapy. The HCPCS codes that we proposed to 
assign to these C-APCs in CY 2015 would be assigned to status indicator 
``J1.''
(c) Reconfiguration and Restructuring of the C-APCs
    Based on further examination of the structure of the C-APCs 
illustrated in the CY 2014 OPPS/ASC final rule with comment period and 
an evaluation of their comprehensive geometric mean costs (using the 
updated CY 2013 claims data), in the CY 2015 OPPS/ASC proposed rule (79 
FR 40945), we proposed to reorganize, combine, and restructure some of 
the C-APCs. The purpose of this APC restructuring is to improve 
resource and clinical homogeneity among the services assigned to 
certain C-APCs and to eliminate APCs for clinically similar services, 
but with overlapping geometric mean costs. The services we proposed to 
assign to each of the C-APCs for CY 2015, along with the relevant cost 
statistics, were provided in Addendum J to the proposed rule. Addendum 
J is available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. 
Table 7 of the proposed rule (79 FR 40952) listed the additional 28 
APCs proposed under the CY 2015 comprehensive APC policy.
    In summary, our proposal to reorganize, combine, and restructure 
some of the C-APCs included the following proposed changes:
     Endovascular clinical family (renamed Vascular Procedures, 
VASCX). We proposed to combine C-APCs 0082, 0083, 0104, 0229, 0319, and 
0656 illustrated for CY 2014 to form three proposed levels of 
comprehensive endovascular procedure APCs: C-APC 0083 (Level I 
Endovascular Procedures); C-APC 0229 (Level II Endovascular 
Procedures); and C-APC 0319 (Level IV Endovascular Procedures).
     Automatic Implantable Cardiac Defibrillators, Pacemakers, 
and Related Devices (AICDP). We proposed to combine C-APCs 0089, 0090, 
0106, 0654, 0655, and 0680 as illustrated for CY 2014 to form three 
proposed levels of C-APCs within a broader series of APCs for pacemaker 
implantation and similar procedures as follows: APC 0105 (Level I 
Pacemaker and Similar Procedures), a non-comprehensive APC; C-APC 0090 
(Level II Pacemaker and Similar Procedures); C-APC 0089 (Level III 
Pacemaker and Similar Procedures); and C-APC 0655 (Level IV Pacemaker 
and Similar Procedures).
     We proposed to delete the clinical family for Event 
Monitoring, which only had one C-APC (C-APC 0680 (Insertion of Patient 
Activated Event)) with a single CPT code 33282 as illustrated for CY 
2014. We also proposed to reassign CPT code 33282 to C-APC 0090, which 
contains clinically similar procedures.
     In the urogenital family, we proposed two levels instead 
of three levels for urogenital procedures, and to reassign several 
codes from APC 0195 to C-APC 0202 (Level V Female Reproductive 
Procedures).

[[Page 66804]]

     We proposed to rename the arthroplasty family of APCs to 
``Orthopedic Surgery.'' We also proposed to reassign several codes from 
APC 0052 to C-APC 0425, which we proposed to rename ``Level V 
Musculoskeletal Procedures Except Hand and Foot.''
     We proposed three levels of electrophysiologic procedures, 
using the current inactive APC ``0086'' instead of APC 0444, to have 
consecutive APC grouping numbers for this clinical family and to rename 
APC 0086 ``Level III Electrophysiologic Procedures.'' In addition, we 
proposed to replace composite APC 8000 with proposed C-APC 0086 as 
illustrated in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74870).
    We also proposed three new clinical families: Gastrointestinal 
Procedures (GIXXX) for gastrointestinal stents, Tube/Catheter Changes 
(CATHX) for insertion of various catheters, and Radiation Oncology 
(RADTX), which would include C-APC 0067 for single session cranial SRS.
(3) Public Comments
    Comment: Commenters were generally supportive of the proposed 
changes to the comprehensive APC payment policy for CY 2015 when 
compared to the CY 2014 final policy, and urged CMS to monitor 
implementation for payment adequacy and access to quality care. Some 
commenters requested that CMS delay implementation until at least July 
1, 2015, to allow time to fully test systems changes. Some commenters 
requested that CMS delay implementation for a year or more until CMS 
addresses assorted concerns or so that hospitals can continue to 
analyze the policy and budget for the financial impact.
    Response: We appreciate the commenters' support. We plan to monitor 
the implementation of this C-APC payment policy and will consider 
future revisions as necessary. We will not further delay implementation 
of this policy. We have already delayed implementation of the C-APC 
payment policy for a year, which we believe provided ample time for 
hospitals to evaluate the policy.
    Comment: We received feedback from commenters regarding the data 
resources that CMS provided to support the proposed rule. Some 
commenters commended CMS for the technical support and assistance 
provided that enabled the commenters to replicate CMS' methodology and 
match CMS' results. Other commenters expressed concern that the data 
resources were insufficient, inconsistent, and unclear. Some commenters 
also requested that CMS enhance transparency, expand the data resources 
available to the public, and engage stakeholders in future 
comprehensive APC payment policy development. Some commenters asked 
that CMS provide cost data on all of the code combinations that were 
evaluated for the complexity adjustments, including the code 
combinations that qualified for a complexity adjustment. One commenter 
stated that discrepancies in some of the number entries between 
Addendum J and Addendum B violate the Administrative Procedures Act 
(APA) because these discrepancies ``make it impossible to understand 
what CMS is proposing.''
    Response: We appreciate the commenters' support for the proposed 
expansion of available data resources related to the comprehensive APC 
payment policy methodology. In response to the commenters who expressed 
concern regarding the insufficiency of the data files provided, we 
understand that the OPPS is technically complex. However, we believe 
that the data made available to the public as part of the proposed rule 
were appropriate, clear, and sufficient. We acknowledge the commenters' 
concerns regarding the transparency of related data and the desire for 
additional resources. Therefore, for this final rule with comment 
period, we are providing additional data in Addendum J, such as cost 
statistics related to code combinations that are not eligible for 
complexity adjustments. Regarding any indications of discrepancies in 
some of the number entries between Addendum J and Addendum B, as the 
commenter suggested, we understand and acknowledge that minor 
discrepancies may sometimes occur with complex payment rules that 
include various files with many different types of data. However, we do 
not believe any such discrepancies would limit commenters' ability to 
understand the proposed policies or to evaluate the impacts or effects 
of the proposed policy changes. The comprehensive APC payment policy 
has been open for public comment during three consecutive OPPS 
rulemaking cycles: the CY 2014 OPPS/ASC proposed rule; the CY 2014 
OPPS/ASC final rule with comment period; and the CY 2015 OPPS/ASC 
proposed rule. Therefore, we do not believe that we provided 
insufficient notice of the policies that are a part of the 
comprehensive APC payment policy.
    Comment: Commenters expressed concern regarding the misalignment 
between hospitals' billing practices and systems and the proposal to 
package all services (except for the few exceptions noted above) on a 
claim into the payment for the comprehensive service. The commenters 
observed that a significant number of comprehensive service claims 
spanned more than 5 days, with some claims spanning close to 30 days. 
The commenters recommended that CMS limit the payment bundle to 
services provided within 1 or 2 days of the primary service, or 
defining the bundle based on episodes of care. Commenters also 
requested that CMS clarify the guidance provided and educate providers 
on how to report comprehensive services that fall within the span of a 
recurring service claim. Some commenters expressed concern that 
policies which reduce or eliminate series billing for recurring 
services may create an operational burden for hospitals; increase 
claims processing activity for Medicare contractors; and increase the 
amount of paperwork sent to a beneficiary.
    Response: Our intent is to capture all of the services associated 
with the primary service assigned to a C-APC, except those services 
that would still be separately paid under the OPPS, even when provided 
in conjunction with a comprehensive service. The 219 procedures 
assigned to the C-APCs are a small fraction of the total services 
provided in HOPDs. We believe that it would not be an undue hardship 
for some hospitals to alter their processes such that they file 
separate claims for services that are unrelated both clinically and in 
regard to time to the comprehensive service. With regard to recurring 
services, we have previously issued manual guidance in the Internet 
Only Manual, Pub. 100-4, Chapter 1, Section 50.2.2, that provides that 
only recurring services should be billed monthly. We also have 
specified that, in the event that a recurring service occurs on the 
same day as an acute service that falls within the span of the 
recurring service claim, hospitals should bill separately for recurring 
services on a monthly claim (repetitive billing) and submit a separate 
claim for the acute service. We also do not expect that these claims 
for comprehensive services in the outpatient setting would extend 
beyond a few days because the 219 procedures assigned to the 25 C-APCs 
are almost entirely surgical procedures. If a physician determined that 
furnishing one of these services would be medically necessary for the 
treatment of a Medicare beneficiary and expected the beneficiary to 
require hospital care for more than 2 midnights, inpatient admission 
would be appropriate.

[[Page 66805]]

    Comment: Commenters generally supported the proposed packaging of 
all add-on codes reported in conjunction with comprehensive service 
claims with the allowance of complexity adjustments for add-on codes 
currently assigned to device-dependent APCs in CY 2014. One commenter 
requested that CMS assign add-on CPT code 57267 (Insertion of mesh or 
other prosthesis for repair of pelvic floor defect, each site 
(anterior, posterior compartment), vaginal approach (List separately in 
addition to code for primary procedure) to C-APC 0202 because this code 
has high device costs.
    Response: We appreciate the commenters' support. According to 42 
CFR 419.2(b)(18), add-on codes are packaged under the OPPS. Because 
implementation of the finalized comprehensive APC payment policy was 
delayed until CY 2015, for CY 2014 we maintained the structure and code 
assignments for the device-dependent APCs, which continued separate 
payment for add-on codes assigned to device-dependent APCs for CY 2014. 
We refer readers to Table 7 of the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74859). The add-on code complexity adjustment 
policy is limited only to certain add-on codes that were previously 
assigned to device-dependent APCs and that, along with a primary 
comprehensive service, meet the complexity adjustment criteria. We 
refer readers to Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 
40959) for a listing of these add-on codes. Our intent is not to make a 
higher payment in every case that an add-on procedure results in higher 
costs. Therefore, we are finalizing the CY 2015 proposal to package all 
add-on codes reported on a claim in conjunction with a comprehensive 
service, and also to allow a limited number of add-on codes to be 
evaluated for a complexity adjustment when billed with a primary 
comprehensive service. We are not extending the complexity adjustment 
policy beyond those add-on codes that were assigned to device-dependent 
APCs. The list of add-on codes that we evaluated for a complexity 
adjustment is included later in this section in Table 8.
    Comment: Some commenters requested that CMS divide the restructured 
C-APCs into more discrete groupings to increase clinical coherence and 
resource cost homogeneity. Some commenters believed that improved 
clinical coherence among the procedures within the C-APCs would 
increase the stability of C-APC payments from year-to-year and decrease 
opportunities for ``gaming'' the system. Some commenters also expressed 
concern with the high variation in geometric mean costs for services 
assigned to the C-APCs that do not create a violation of the 2 times 
rule, but would result in inadequate payment for the highest cost 
procedures assigned to the C-APC.
    Response: We disagree with the commenters. We believe that the 
categorization of the restructured C-APCs better represents clinical 
and resource homogeneity when compared to the CY 2014 structure of the 
C-APCs. We also note that the OPPS is a prospective payment system that 
relies on groupings of procedures resulting in a weighted-average cost 
payment based on all of the procedures in the group. Too much 
discretization of APC groupings would move the OPPS more toward a fee 
schedule, which would have individual payments for each HCPCS code and 
presents an undesirable outcome for the OPPS. In addition, we encourage 
all members of the stakeholder public to report all suspected incidents 
of fraud and abuse to the Office of Inspector General or the CMS Center 
for Program Integrity. As required by statute, we will review and 
evaluate, on an annual basis, any year-to-year changes in APC and HCPCS 
geometric mean costs.
    Comment: A few commenters disagreed with CMS' proposal to expand 
the C-APCs to include all of the current device-dependent APCs. The 
commenters noted that a significant percentage of claims for some of 
the lower paying C-APCs (specifically, C-APCs 0084 (Level I 
Electrophysiologic Procedures), 0427 (Level II Tube or Catheter Changes 
or Repositioning), 0622 (Level II Vascular Access Procedures), and 0652 
(Insertion of Intraperitoneal and Pleural Catheters) report services 
assigned to noncomprehensive APCs that are significantly more costly 
than the primary service that is motivating the C-APC payment. 
Commenters believed that procedures assigned to these APCs are not 
infrequently performed as secondary procedures to other more costly 
procedures that are assigned to noncomprehensive APCs. Commenters 
recommended various approaches for addressing this concern: (1) 
Applying complexity adjustments to these claims; (2) excluding high-
cost procedures from the comprehensive APC packaging policy; (3) paying 
for the higher-cost service and applying a multiple procedure reduction 
to the C-APC; or (4) eliminating the lower paying C-APCs from the 
comprehensive APC payment policy methodology.
    Response: Our analysis shows a significant number of claims in APCs 
0427 and 0622 that contain noncomprehensive services that are more 
costly than the procedures assigned to the proposed C-APC. In addition, 
similar to APCs 0427 and 0622, APC 0652 contains a total of three 
catheter-insertion procedures. These procedures are not similar to the 
other major procedures assigned to C-APCs, but are sometimes supportive 
of other procedures. For example, APC 0652 includes the procedure that 
describes the placement of a pleural catheter that can be used for drug 
delivery, but is not a definitive therapeutic procedure similar to most 
of the other procedures assigned to that C-APC. Also, APCs 0427, 0622, 
and 0652 are not device-intensive APCs, meaning that the device offsets 
are not greater than 40 percent. Therefore, we are accepting the 
commenters' recommendation. We are not converting APCs 0427, 0622, and 
0652 into C-APCs for CY 2015. In addition, because we are not 
converting APC 0427 into a C-APC, we will not evaluate add-on CPT code 
49435 for complexity adjustments because the APC that contains the base 
codes for CPT code 49435 are assigned to APC 0427. However, we are 
finalizing the proposal to convert APC 0084 into a C-APC. We did not 
find that a significant number of higher cost noncomprehensive 
procedures are performed in conjunction with the procedures assigned to 
APC 0084. Unlike many of the catheter insertion procedures assigned to 
APCs 0427, 0622, and 0652, the electrophysiology procedures assigned to 
APC 0084 are not supportive of other services, but are the definitive 
therapeutic procedures intended to treat a patient's cardiac condition.
    Comment: Commenters urged CMS to develop adjustments to C-APC 
payments based on patient acuity or diagnosis to account for clinical 
complexity and patient characteristics, which could help mitigate the 
negative payment impact of expanding the comprehensive APC payment 
policy on hospitals that treat more clinically complex patients, such 
as academic medical centers, cancer hospitals, and trauma centers.
    Response: As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
40951), section 1833(t)(2) of the Act provides a procedure-based 
payment methodology for the OPPS, which is unlike the IPPS that makes 
payments based on both diagnoses and procedures. Currently OPPS 
payments are not based on patient severity or diagnosis like payments 
under the IPPS. Therefore, we are unable to make

[[Page 66806]]

payment adjustments based on diagnoses.
    Comment: Commenters expressed concern that not implementing C-APCs 
in the ASC setting distorts the payment relationship between ASCs and 
HOPDs and could result in incentives to direct patients from one 
setting to another. Commenters recommended that CMS reprogram the ASC 
payment system software, as soon as possible, to allow the system to 
perform the complex logic needed to implement and provide adequate 
payment for the C-APCs for ASCs.
    Response: The commenters are correct that the comprehensive APC 
payment policy methodology is not being adopted under the ASC payment 
system. However, we do not believe that this policy decision will 
result in site-of-service shifts, but we will continue to monitor 
procedure volumes in both settings. Although OPPS payments for 
individual surgical procedures assigned to C-APCs are higher than ASC 
payments for the same procedures, under the standard noncomprehensive 
service payment methodology that applies in the ASC for all APCs and in 
the OPPS for noncomprehensive services, there remains separate payment 
for covered procedures and covered ancillary services that are not 
packaged under a general packaging policy. This continuation of 
separate payment for covered procedures and covered ancillary services 
performed in the ASC (which is not available in the OPPS for procedures 
performed in addition to the primary procedures assigned to C-APCs) 
should help mitigate any incentive to perform procedures assigned to C-
APCs in the HOPD. However, given the significant difference between ASC 
and OPPS payment rates, we do not believe that separate payment (at the 
multiple procedure reduction reduced rate) for additional procedures 
performed in the ASC setting along with a procedure that is assigned to 
a C-APC will draw cases away from the HOPD because, in most cases, the 
overall HOPD will be higher than the ASC payment for the same set of 
procedures. We will consider the commenters' suggestion that we develop 
new payment software for the ASC payment system should an opportunity 
to do so arise in the future.
    Comment: Commenters requested that CMS provide separate payment for 
certain services reported on a comprehensive claim. Some commenters 
requested that CMS exclude the following additional services from the 
packaging provision under the comprehensive APC payment policy:
     Dialysis and emergency dialysis services.
     Blood products.
     Expensive diagnostic tests, such as angiography.
     High-cost drugs and devices that account for a high 
percentage of the geometric mean cost of a C-APC.
     Outpatient services paid under a payment schedule, such as 
laboratory services.
    The commenters believed that the C-APC payment would not adequately 
cover the cost of these services. One commenter believed that packaging 
payment for an otherwise separately payable drug when provided in 
conjunction with a comprehensive service may cause hospitals, in 
consultation with physicians, to choose a less-expensive alternative 
drug.
    Response: We responded to similar comments that disagreed with CMS' 
proposal to package payment for various items and services into the C-
APC payment in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74865 through 74910). As previously stated, we disagree with the 
commenters. We believe that the central attribute of the comprehensive 
APC payment policy is the packaging of all adjunctive services, with 
the exception of those services described above that, according to the 
statute, cannot be packaged or the list of preventive services that 
generally would not be provided at the time of a major procedure 
assigned to a C-APC. We note that (as stated above in section II.A.3.a. 
of this final rule with comment period) where there are a variety of 
devices, drugs, items, and supplies that could be used to furnish a 
service, some of which are more expensive than others, packaging 
encourages hospitals to use the most cost-efficient item that meets the 
patient's needs, rather than routinely using a more expensive item, 
which often results if separate payment is provided for the items. 
Furthermore, packaging also encourages hospitals to effectively 
negotiate with manufacturers and suppliers to reduce the purchase price 
of items and services (including drugs) or to explore alternative group 
purchasing arrangements, thereby encouraging the most economical health 
care delivery.
    Comment: Commenters asserted that the reliance on code combinations 
based on cost ranking of codes would lead to instability in the 
complexity adjustments from year to year, and overlook a large number 
of comprehensive claims with three or more ``J1'' services, which is 
common for the clinical complexity of procedures assigned to the 
endovascular revascularization family of APCs. Commenters suggested 
alternative methodologies for determining eligibility, such as applying 
a complexity adjustment to any claim that has three or more ``J1'' 
services or applying the cost and frequency criteria to all 
combinations of ``J1'' services.
    Response: We disagree with the commenters that assigning complexity 
adjustments based on cost ranking of primary and secondary codes is 
either insufficient or would result in instability of the complexity 
adjustments in future years. We proposed complexity adjustments for 
certain code pairs to provide a higher payment in the next higher APC 
within a clinical family for high cost procedure pairs consisting of a 
primary comprehensive procedure and a secondary comprehensive procedure 
that represent sufficiently frequent and sufficiently costly 
comprehensive procedure pairs such that they are separated from and 
provided a higher payment than all of the cases that are accounted for 
in APC assignment of the primary service. We do not believe that 
providing a complexity adjustment to any claim that has three or more 
``J1'' services or to all claims reporting pairs of ``J1'' services 
that meet the cost and frequency criteria would adequately serve the 
stated purpose of the policy. The intent of the complexity adjustment 
policy is to identify a limited number of costly procedure pairs for a 
higher payment at the next higher paying C-APC within the clinical 
family, not to unpackage and separately pay for all of the high cost 
cases that are associated with the primary ``J1'' procedure. Although 
such a policy as the commenters requested could be beneficial to the 
procedures assigned to the endovascular C-APC family because of the 
high number of codes that can be billed per case, we do not believe 
that this approach would serve the other clinical families that do not 
rely on component coding to the same extent as endovascular procedures. 
Therefore, we are finalizing our proposal to base the complexity 
adjustments on code pairs that include the two most costly ``J1'' 
services reported on the C-APC service claim.
    Comment: Commenters believed that the cost threshold is too 
restrictive and would cause financial hardship for hospitals and 
jeopardize beneficiary access to care. Commenters suggested that CMS 
adjust the cost threshold to 1.5, 1.75, or within 2 percent of the 2 
times rule limit.
    Response: In response to comments to the CY 2014 OPPS/ASC final 
rule with comment period, we significantly

[[Page 66807]]

lowered the cost criterion for a complexity adjustment from two times 
the cost of the primary procedure to two times the cost of the lowest 
cost procedure in the APC to which the primary procedure is assigned. 
This change made it significantly easier for code combinations to 
qualify for a complexity adjustment based on higher cost. We do not 
believe that further lowering of the cost criterion would be consistent 
with the objective of the comprehensive APC payment policy. We believe 
that lowering the cost criterion would result in effectively 
unpackaging too many cases from the primary C-APC assignment and, 
therefore, defeat the purpose of the policy, which is to create a 
comprehensive prospective payment for major, primary device-intensive 
procedures.
    Comment: Commenters expressed concern that claims assigned to the 
only level or the highest level C-APC within a clinical family are 
ineligible to receive a complexity adjustment because there is no 
higher paying APC in the clinical family in which to assign these code 
combinations. Commenters requested that CMS add an additional C-APC 
level to these clinical families to provide for more granular payment 
levels and accommodate potential complexity adjustments.
    Response: As we stated in the CY 2015 OPPS/ASC proposed rule, we 
would not create new APCs with a geometric mean cost that is higher 
than the highest cost C-APC in a clinical family just to accommodate 
potential complexity adjustments. Therefore, the highest payment for 
any code combination for services assigned to a C-APC would be the 
highest paying C-APC in the clinical family. We only found 7 code pairs 
out of the 219 procedures that are assigned to the 25 final C-APCs that 
would qualify for a complexity adjustment if a higher paying APC were 
available for assignment of the code combination. We do not believe 
that this small number of code combinations from the highest paying 
APCs in the final 12 clinical families of C-APCs that satisfy the 
complexity adjustment criteria necessitates creating additional APCs, 
especially if these APCs would be populated with only a few multiple 
procedure claims. In addition, in accordance with section 1833(t)(2)(B) 
of the Act, APCs are defined as ``groups of covered OPD services'' that 
are comparable clinically and with respect to the use of resources. If 
we created an additional new higher level APC within each C-APC 
clinical family that did not contain any primary comprehensive services 
and instead only contained a very small volume of complexity-adjusted 
code pairs, we do not believe that such APCs would constitute 
appropriate ``groups of covered OPD services.''
    Comment: One commenter urged CMS to finalize the proposal to assign 
CPT code 0308T to APC 0351 and to convert APC 0351 into a C-APC.
    Response: We appreciate the commenter's support. For this final 
rule with comment period, we are finalizing our proposal to assign CPT 
code 0308T to APC 0351 and to convert APC 0351 into a C-APC for CY 
2015.
    Comment: Commenters generally agreed with the proposed structure of 
the Automatic Implantable Cardiac Defibrillators, Pacemakers, and 
Related Devices (AICDP) C-APCs. One commenter specifically supported 
the assignment of CPT code 0319T to C-APC 108.
    Response: We appreciate the commenters' support.
    Comment: Several commenters supported CMS' proposed assignment of 
CPT codes 77424 and 77425 to C-APC 0648. Another commenter believed 
that the services assigned to C-APC 0648 are not similar clinically or 
similar in resource costs, and suggested that CMS divide this C-APC 
into two levels.
    Response: We appreciate the commenters' support for our proposal 
regarding C-APC 0648. However, we disagree with the commenter that the 
services assigned to C-APC 0648 are not similar clinically or in regard 
to resource costs. All of the seven services proposed to be assigned to 
C-APC 0648 involve the breast. The current clinical application of 
intraoperative radiation therapy (IORT CPT codes 77424 and 77425) is 
for breast cancer following lumpectomy. In regard to resource costs of 
the services assigned to C-APC 0648, the range from the lowest cost 
significant procedure to the highest cost significant procedure is 
between approximately $5,584 and $9,325, which is well within the 2 
times rule limit. In addition, C-APC 0648 is a small APC with only 7 
services and a total of approximately 5,000 claims based on CY2013 
claims data. To further divide this C-APC would be less consistent with 
a prospective payment system than its proposed structure. Therefore, we 
are finalizing our proposal to assign CPT codes 77424 and 77425 to C-
APC 0648.
    Comment: One commenter requested that CMS exclude C-APC 0259 from 
the comprehensive APC payment policy. The commenter believed that the 
change in the procedure-to-device claim edits policy would result in 
more incorrectly coded claims for the procedure described by CPT code 
69930 (Cochlear device implantation, with or without mastoidectomy), 
which is the only service assigned to C-APC 0259.
    Response: We do not believe that C-APC 0259 should be excluded from 
the comprehensive APC payment policy. The discussion of the device 
edits policy is in section II.A.2.d.1. of this final rule with comment 
period. We believe that hospitals will continue to report the cost of 
the cochlear implant when one of these devices is implanted into a 
Medicare beneficiary because the cost of this device is 84 percent of 
the total cost of the procedure. After consideration of this comment, 
we see no reason to exempt C-APC 0259 from the comprehensive APC 
payment policy. We are finalizing our proposal to convert APC 0259 into 
a C-APC for CY 2015.
    Comment: Several commenters agreed with CMS' proposed structure of 
the cardiac electrophysiology C-APCs: C-APC 0084 (Level I 
Electrophysiologic Procedures); C-APC 0085; and C-APC 0086 (Level III 
Electrophysiologic Procedures). One commenter requested that CMS 
reassign CPT code 93603 (Right ventricular recording) from C-APC 0084 
to C-APC 0085 because the commenter believed that the procedure 
described by CPT code 93603 is more similar to the procedures assigned 
to C-APC 0085 than the other procedures assigned to C-APC 0084.
    Response: We appreciate the commenters' support. However, we 
disagree with the commenter that CPT code 93603 should be reassigned 
from C-APC 0084 to C-APC 0085. CPT code 93603 is a very low-volume 
procedure, with a total of 12 claims for CY 2013. The geometric mean 
cost for CPT code 93603 (based on these 12 claims) is $1,807. The 
geometric mean cost of the lowest cost significant service in C-APC 
0085 is $4,064 (CPT code 93619). Therefore, we believe that CPT code 
93603 lacks resource similarity to the procedures assigned to C-APC 
0085. We are finalizing the structure of the cardiac electrophysiology 
C-APCs, as proposed for CY 2015.
    Comment: Several commenters agreed with CMS' proposed structure of 
the neurostimulator APCs. Two commenters believed that the difference 
in cost between CPT code 61885 (Insertion or replacement of cranial 
neurostimulator pulse generator or receiver, direct or inductive 
coupling; with connection to a single electrode array) and CPT code 
61886 (Insertion or replacement of cranial neurostimulator pulse 
generator or receiver, direct or inductive coupling; with connection to 
2 or more electrode

[[Page 66808]]

arrays) is too low and that the device costs may not be adequately 
captured based on the accuracy of the claims data. Another commenter 
recommended that CMS restructure the neurostimulator APCs to improve 
clinical coherence by limiting C-APC 0318 to only certain full-system 
procedures, assigning all lead placement procedures to C-APC 0061, and 
assigning the remaining neurostimulator procedures to C-APC 0039.
    Response: We appreciate the commenters' support. Regarding the 
commenters' concern about the geometric mean cost of CPT codes 61885 
and 61886, the geometric mean cost of CPT code 61886 (dual channel 
procedure) is higher than CPT code 61885 (single channel procedure), 
which is to be expected. It is important to remember that the C-APC 
payment policy packages all procedures performed with the primary 
procedure, so the cost for the primary service in a C-APC may be higher 
than the cost associated with single claims for the same service. We 
note that APC groupings are based on two factors, clinical similarity 
and resource similarity. The OPPS requires that we group services into 
APCs for payment purposes based on these two factors. Clinical 
similarity in the APC grouping context is by definition, and by 
necessity, is much broader than the comparisons that distinguish 
individual CPT codes. All of the procedures assigned to C-APCs 0061, 
0039, and 0318 include the various neurostimulator-related procedures. 
The neurostimulator family of C-APCs groups these procedures based on 
the geometric mean cost and clinical similarity of the primary service. 
In some cases, an APC includes implantation of a complete system of one 
type of neurostimulator and the implantation of either a generator 
alone or a complete system of other types. This is a function of the 
CPT coding system and the prospective nature of the comprehensive APC 
payment policy. Overall, we believe that the proposed structure of the 
neurostimulator family of C-APCs strikes the proper balance of both 
factors for APC construction and resource and clinical similarity. We 
are finalizing the proposed structure of the neurostimulator C-APCs, as 
proposed, and without modification.
    Comment: One commenter requested that CMS divide C-APC 0425 into 
two APCs because the range of procedure costs in this APC is too 
significant. Another commenter requested that CMS reassign the 
following CPT codes from APC 0208 to C-APC 0425 based on more 
appropriate resource homogeneity to the other procedures assigned to C-
APC 0425: CPT codes 22551, 22554, 22612, and 22856.
    Response: We disagree with the commenters' recommendation to divide 
C-APC 0425 into two C-APCs. The cost range for significant procedures 
within C-APC 0425 (using the proposed rule code assignments) is between 
approximately $9,087 (for CPT code 69714) and $15,740 (for CPT code 
24363), which is well within the 2 times rule limit. We agree with the 
commenters that CPT codes 22551 (with a geometric mean cost of 
$10,052), 22554 (with a geometric mean cost of $8,129), 22612 (with a 
geometric mean cost of $8,451), and 22856 (with a geometric mean cost 
of $12,958) should be reassigned from APC 0208 (with a geometric mean 
cost of $4,267) to C-APC 0425 (with a geometric mean cost of $10,606). 
We believe that assigning these four CPT codes to C-APC 0425 supports 
more appropriate resource and clinical similarity when compared to the 
current assignment to APC 0208. Otherwise, we are finalizing the 
proposed structure for C-APC 0425. With these additions to C-APC 0425, 
the cost range for significant procedures within C-APC 0425 (using the 
final rule code assignments) is between approximately $8,451 (for CPT 
code 22612) and $15,740 (for CPT code 24363).
    Comment: One commenter believed that the proposed C-APCs that 
include drug pumps would provide inadequate payment for its developing 
therapy because the therapy uses an advanced technology drug pump and a 
very costly drug. The commenter requested that CMS either provide 
complexity adjustments for high-cost drugs or unpackage the payment for 
certain high-cost drugs.
    Response: As we stated in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74908 through 74909), we do not believe that 
drugs being supplied to the patient to fill the reservoir of a pump at 
the time of pump implantation should be excluded from the comprehensive 
APC payment policy because drugs supplied to fill the pump during 
implantation of the pump are adjunctive to the procedure. The costs of 
costly adjunctive services are included proportionally into the cost 
estimation for the primary services through our ability to use almost 
all claims for a service and adoption of the geometric mean cost upon 
which to establish relative payment weights. In addition, we do not 
believe that we should make complexity adjustments for higher cost 
drugs. Complexity adjustments are for more complex procedure variations 
that differ significantly from the primary ``J1'' procedure. Complexity 
adjustments are not intended as a way to provide separate payment for 
adjunctive drugs and supplies under the guise of a complexity 
adjustment. Therefore, we are not adopting this commenter's suggested 
changes to the comprehensive APC payment policy. We will continue to 
monitor the development of this technology and consider future 
revisions to this policy as needed.
    Comment: Commenters opinions varied regarding CMS' proposal to 
include C-APCs 0202 (Level V Gynecologic Procedures), 0385 (Level I 
Urogenital Procedures), and 0386 (Level II Urogenital Procedures) in 
the urogenital procedures clinical family of C-APCs and to allow 
complexity adjustments from C-APC 0202 to C-APC 0385 and complexity 
adjustments from C-APC 0385 to C-APC 0386. Some commenters agreed with 
CMS' proposed structure of the urogenital procedures family of C-APCs, 
while other commenters opposed the proposal to reassign complexity 
adjustment code combinations from C-APC 0202 to C-APC 0385. The 
commenters believed that the procedures assigned to C-APC 0202, which 
are related to female urogenital anatomy, are not sufficiently 
clinically similar to the primary procedures assigned to C-APC 0385, 
which relate to the male urogenital anatomy.
    Response: We appreciate the commenters' support for the proposed 
structure of the urogenital procedures C-APC clinical family and the 
proposed approach for complexity adjustments. However, we disagree with 
the commenters that complexity adjustments should not be made from C-
APC 0202 to C-APC 0385 because of insufficient clinical similarity 
between the complex procedures with a primary code assigned to C-APC 
0202 that have been reassigned according to the complexity adjustment 
policy to C-APC 0385 and the primary procedures assigned to C-APC 0385. 
Although we acknowledge that there are differences in the male and 
female human urogenital anatomy, we believe that many of these 
procedures involve relatively complex repairs of the urogenital region 
involving implantable medical devices and, therefore, it is appropriate 
to assign complexity adjusted code combinations from C-APC 0202 to the 
next higher paying APC in the urogenital procedures clinical family, 
which is C-APC 0385.
    Comment: Some commenters supported the proposed structure of the C-
APCs in the endovascular clinical

[[Page 66809]]

family. Other commenters noted that payments for some endovascular 
procedure code combinations would be negatively impacted by the 
proposed structure for C-APCs 0083 (Level I Endovascular Procedures), 
0229 Level II Endovascular Procedures), and 0319 (Level III 
Endovascular Procedures). The commenters recommended reviewing and 
revising these C-APCs and creating more levels beyond the proposed 
three levels of endovascular C-APCs.
    Response: We appreciate the commenters' support for the proposed 
structure of the endovascular C-APC clinical family. We do not believe 
that additional levels of endovascular C-APCs are necessary at this 
time. We believe that the restructured endovascular C-APCs better 
reflect resource homogeneity than the CY 2014 final structure of these 
C-APCs because the new structure has clearer delineations between the 
cost ranges of the procedures assigned to the three levels. In 
addition, in response to comments to the CY 2014 OPPS/ASC final rule 
with comment period (79 FR 40951), we proposed less stricter complexity 
adjustment criteria, which resulted in more code combinations 
qualifying for higher payment than would have qualified under the CY 
2014 OPPS final rule complexity adjustment criteria. We also proposed 
evaluating certain add-on codes that are currently assigned to device-
dependent APCs for complexity adjustments, and the overwhelming 
majority of these add-on codes are endovascular add-on codes. We 
believe that these two changes to the CY 2014 comprehensive APC payment 
policy sufficiently mitigate much of any negative payment impact for 
endovascular procedures in this transition from the current payment 
methodology to the comprehensive APC payment methodology. As we do 
annually, we will reevaluate the need for adjustments to the 
endovascular family of C-APCs.
    Comment: In the CY 2015 OPPS/ASC proposed rule (79 FR 40950 through 
40951) in response to a comment to the CY 2014 OPPS/ASC final rule with 
comment period, we proposed to continue to pay for stem cell transplant 
procedures as we have done for many years through APCs 0111 (Blood 
Product Exchange) and 0112 (Apheresis and Stem Cell Procedures). We 
stated that we would not create a C-APC for stem cell transplant 
procedures. Some commenters supported this approach. Other commenters 
requested that CMS create a C-APC for these procedures.
    Response: Based on the rationale discussed in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40950 through 40951), we will continue to pay for 
stem cell transplant procedures through APCs 0111 and 0112 in CY 2015.
    (4) Statement of Final Policy and List of CY 2015 C-APCs.
    As we discussed earlier, in the CY 2015 OPPS/ASC proposed rule (79 
FR 40941 through 40953), we proposed to continue to define a 
comprehensive service as a classification for the provision of a 
primary service and all adjunctive services and supplies reported on 
the hospital Medicare Part B claim, with few exceptions, resulting in a 
single beneficiary copayment per claim. The comprehensive APC payment 
bundle policy includes all hospital services reported on the claim that 
are covered under Medicare Part B, except for the excluded services or 
services requiring separate payment by statute as noted above. We 
proposed to continue to define a clinical family of C-APCs as a set of 
clinically related C-APCs that represent different resource levels of 
clinically comparable services.
    After consideration of the public comments we received, we are 
finalizing our proposals, with some minor modifications, for 
establishment of C-APCs. In this final rule with comment period, we are 
establishing a total of 25 C-APCs within 12 clinical families for CY 
2015, as described below in Table 7.
    We are establishing a comprehensive APC payment methodology that 
adheres to the same basic principles as those finalized in the CY 2014 
OPPS/ASC final rule with comment period, with the following changes for 
CY 2015:
     We are reorganizing and consolidating several of the 
current device-dependent APCs and the CY 2014 C-APCs.
     We are expanding the comprehensive APC payment policy to 
include all device-dependent APCs, except for APCs 0427, 0622, and 
0652.
     We are creating two other new C-APCs (C-APC 0067 and C-APC 
0351).
     We are establishing new complexity adjustment criteria:
    [ssquf] Frequency of 25 or more claims reporting the HCPCS code 
combination (the frequency threshold); and
    [ssquf] Violation of the ``2 times'' rule (the cost threshold).
     We are establishing a policy to package all add-on codes, 
although we evaluate claims reporting a single primary service code 
reported in combination with an applicable add-on code (we refer 
readers to Table 8 below for the list of applicable add-on codes) for 
complexity adjustments.
    Addendum J to this final rule with comment period (which is 
available via the Internet on the CMS Web site) contains all of the 
data related to the comprehensive APC payment policy, including the 
list of complexity adjustments.

                                             Table 7--CY 2015 C-APCs
----------------------------------------------------------------------------------------------------------------
                                                                                                       CY 2015
            Clinical family *               C-APC                       APC title                      payment
----------------------------------------------------------------------------------------------------------------
AICDP...................................       0090  Level II Pacemaker/Similar Procedures.........    $6,542.78
AICDP...................................       0089  Level III Pacemaker/Similar Procedures........     9,489.74
AICDP...................................       0655  Level IV Pacemaker/Similar Procedures.........    16,400.98
AICDP...................................       0107  Level I ICD and Similar Procedures............    22,907.64
AICDP...................................       0108  Level II ICD and Similar Procedures...........    30,806.39
BREAS...................................       0648  Level IV Breast and Skin Surgery..............     7,461.40
ENTXX...................................       0259  Level VII ENT Procedures......................    29,706.85
EPHYS...................................       0084  Level I Electrophysiologic Procedures.........       872.92
EPHYS...................................       0085  Level II Electrophysiologic Procedures........     4,633.33
EPHYS...................................       0086  Level III Electrophysiologic Procedures.......    14,356.62
EYEXX...................................       0293  Level IV Intraocular Procedures...............     8,446.54
EYEXX...................................       0351  Level V Intraocular Procedures................    23,075.30
GIXXX...................................       0384  GI Procedures with Stents.....................     3,173.83
NSTIM...................................       0061  Level II Neurostim./Related Procedures........     5,288.58
NSTIM...................................       0039  Level III Neurostim./Related Procedures.......    17,099.35
NSTIM...................................       0318  Level IV Neurostim./Related Procedures........    26,152.16
ORTHO...................................       0425  Level V Musculoskeletal Procedures............    10,220.00

[[Page 66810]]

 
PUMPS...................................       0227  Implantation of Drug Infusion Device..........    15,566.34
RADTX...................................       0067  Single Session Cranial SRS....................     9,765.40
UROGN...................................       0202  Level V Gynecologic Procedures................     3,977.63
UROGN...................................       0385  Level I Urogenital Procedures.................     6,822.35
UROGN...................................       0386  Level II Urogenital Procedures................    13,967.97
VASCX...................................       0083  Level I Endovascular Procedures...............     4,537.45
VASCX...................................       0229  Level II Endovascular Procedures..............     9,624.10
VASCX...................................       0319  Level III Endovascular Procedures.............    14,840.64
----------------------------------------------------------------------------------------------------------------
* Clinical Family Descriptor Key:
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices.
BREAS = Breast Surgery.
ENTXX = ENT Procedures.
EPHYS = Cardiac Electrophysiology.
EYEXX = Ophthalmic Surgery.
GIXXX = Gastrointestinal Procedures.
NSTIM = Neurostimulators.
ORTHO = Orthopedic Surgery.
PUMPS = Implantable Drug Delivery Systems.
RADTX = Radiation Oncology.
UROGN = Urogenital Procedures.
VASCX = Vascular Procedures.

   Table 8--CY 2015 Packaged CPT Add-On Codes That Are Evaluated for a
                          Complexity Adjustment
------------------------------------------------------------------------
  CY 2015  CPT/HCPCS  add-on code         CY 2015 short descriptor
------------------------------------------------------------------------
19297.............................  Place breast cath for rad.
33225.............................  L ventric pacing lead add-on.
37222.............................  Iliac revasc add-on.
37223.............................  Iliac revasc w/stent add-on.
37232.............................  Tib/per revasc add-on.
37233.............................  Tibper revasc w/ather add-on.
37234.............................  Revsc opn/prq tib/pero stent.
37235.............................  Tib/per revasc stnt & ather.
37237.............................  Open/perq place stent ea add.
37239.............................  Open/perq place stent ea add.
92921.............................  Prq cardiac angio addl art.
92925.............................  Prq card angio/athrect addl.
92929.............................  Prq card stent w/angio addl.
92934.............................  Prq card stent/ath/angio.
92938.............................  Prq revasc byp graft addl.
92944.............................  Prq card revasc chronic addl.
92998.............................  Pul art balloon repr precut.
C9601.............................  Perc drug-el cor stent bran.
C9603.............................  Perc d-e cor stent ather br.
C9605.............................  Perc d-e cor revasc t cabg b.
C9608.............................  Perc d-e cor revasc chro add.
------------------------------------------------------------------------

f. Calculation of Composite APC Criteria-Based Costs
    As discussed in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66613), we believe it is important that the OPPS enhance 
incentives for hospitals to provide necessary, high quality care as 
efficiently as possible. For CY 2008, we developed composite APCs to 
provide a single payment for groups of services that are typically 
performed together during a single clinical encounter and that result 
in the provision of a complete service. Combining payment for multiple, 
independent services into a single OPPS payment in this way enables 
hospitals to manage their resources with maximum flexibility by 
monitoring and adjusting the volume and efficiency of services 
themselves. An additional advantage to the composite APC model is that 
we can use data from correctly coded multiple procedure claims to 
calculate payment rates for the specified combinations of services, 
rather than relying upon single procedure claims which may be low in 
volume and/or incorrectly coded. Under the OPPS, we currently have 
composite policies for extended assessment and management services, low 
dose rate (LDR) prostate brachytherapy, cardiac electrophysiologic 
evaluation and ablation services, mental health services, multiple 
imaging services, and cardiac resynchronization therapy services. We 
refer readers to the CY 2008 OPPS/ASC final rule with comment period 
for a full discussion of the development of the composite APC 
methodology (72 FR 66611 through 66614 and 66650 through 66652) and the 
CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) for more 
recent background.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), for CY 2015, 
we proposed to continue our composite APC payment policies for LDR 
prostate brachytherapy services, mental health services, and multiple 
imaging services, as discussed below. In addition, we noted that we 
finalized a policy in the CY 2014 OPPS/ASC final rule with comment 
period to modify our longstanding policy to provide payment to 
hospitals in certain circumstances when extended assessment and 
management of a patient occur (78 FR 74910 through 74912). For CY 2014, 
we created one new composite APC, entitled ``Extended Assessment and 
Management (EAM) Composite'' (APC 8009), to provide payment for all 
qualifying extended assessment and management encounters rather than 
recognize two levels of EAM composite APCs (78 FR 74910 through 74912). 
Under this policy, we allow any visits, a Level 4 or 5 Type A ED visit 
or a Level 5 Type B ED visit furnished by a hospital in conjunction 
with observation services of substantial duration to qualify for 
payment through EAM composite APC 8009. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 40953 to 40954), we proposed to pay for qualifying 
extended assessment and management services through composite APC 8009.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), we also 
proposed to discontinue our composite APC payment policies for cardiac 
electrophysiologic evaluation and ablation services (APC 8000), and to 
pay for these services through comprehensive APC 0086 (Level III 
Electrophysiologic Procedures), as presented in a proposal included 
under section II.A.2.e. of the CY 2015 OPPS/ASC proposed rule. As such, 
in the CY 2015 OPPS/ASC proposed rule, we proposed to delete APC 8000 
for CY 2015 (79 FR 40953).
    We note that we finalized a policy to discontinue and supersede the 
cardiac resynchronization therapy composite APC with comprehensive APC 
0108 (Level II Implantation of Cardioverter-Defibrillators (ICDs)), as 
discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with 
comment period (78

[[Page 66811]]

FR 74902). For CY 2014, APC 0108 is classified as a composite APC, as 
discussed in the CY 2014 OPPS/ASC final rule with comment period, 
because comprehensive APCs were not made effective until CY 2015 (78 FR 
74925). For CY 2015, with the implementation of our new comprehensive 
APC policy, in the CY 2015 OPPS/ASC proposed rule, we proposed to 
effectuate the policy finalized in the CY 2014 OPPS/ASC final rule with 
comment period, and pay for cardiac resynchronization therapy services 
through comprehensive APC 0108 (proposed to be renamed ``Level II ICD 
and Similar Procedures''), which is discussed in section II.A.2.e. of 
the CY 2015 proposed rule (79 FR 40953).
(1) Extended Assessment and Management Composite APC (APC 8009)
    Beginning in CY 2008, we included composite APC 8002 (Level I 
Extended Assessment and Management (EAM) Composite) and composite APC 
8003 (Level II Extended Assessment and Management (EAM) Composite) in 
the OPPS to provide payment to hospitals in certain circumstances when 
extended assessment and management of a patient occur (an extended 
visit). In most of these circumstances, observation services are 
furnished in conjunction with evaluation and management services as an 
integral part of a patient's extended encounter of care. From CY 2008 
through CY 2013, in the circumstances when 8 or more hours of 
observation care was provided in conjunction with a high level visit, 
critical care, or direct referral for observation, was an integral part 
of a patient's extended encounter of care, and was not furnished on the 
same day as surgery or post-operatively, a single OPPS payment was made 
for the observation and evaluation and management services through one 
of the two composite APCs, as appropriate. We refer readers to the CY 
2012 OPPS/ASC final rule with comment period (76 FR 74163 through 
74165) for a full discussion of this longstanding policy for CY 2013 
and prior years. In the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74910), we created one new composite APC, APC 8009 (Extended 
Assessment and Management (EAM) Composite), to provide payment for all 
qualifying extended assessment and management encounters rather than 
recognizing two levels of EAM composite services. Under the CY 2014 
finalized policy, we no longer recognize composite APC 8002 or APC 
8003. Beginning in CY 2014, we allowed services identified by the new 
single clinic visit HCPCS code G0463, a Level 4 or 5 Type A ED visit 
(CPT code 99284 or 99285), a Level 5 Type B ED visit (HCPCS code 
G0384), or critical care (CPT code 99291) provided by a hospital in 
conjunction with observation services of substantial duration (8 or 
more hours) (provided the observation was not furnished on the same day 
as surgery or post-operatively) (78 FR 74910 through 74912) to qualify 
for payment through EAM composite APC 8009.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40953 through 40954), 
for CY 2015, we proposed to continue our CY 2014 finalized policy to 
provide payment for all qualifying extended assessment and management 
encounters through composite APC 8009. As we did for CY 2014, in the CY 
2015 OPPS/ASC proposed rule, for CY 2015, we proposed to allow a clinic 
visit and certain high level ED visits furnished by a hospital in 
conjunction with observation services of substantial duration (8 or 
more hours) to qualify for payment through the EAM composite APC 8009 
(provided the observation is not furnished on the same day as surgery 
or post-operatively). Specifically, we proposed to continue to allow a 
clinic visit, a Level 4 or Level 5 Type A ED visit, or a Level 5 Type B 
ED visit furnished by a hospital or a direct referral for observation 
(identified by HCPCS code G0379) performed in conjunction with 
observation services of substantial duration to qualify for payment 
through composite APC 8009 (provided the observation is not furnished 
on the same day as surgery or post-operatively). We note that, for CY 
2015, we also proposed to continue our current policy where one service 
code describes all clinic visits. We refer readers to the CY 2014 OPPS/
ASC final rule with comment period (78 FR 74910 through 74912) for a 
full discussion of the creation of composite APC 8009.
    As we noted in the CY 2014 OPPS/ASC final rule with comment period, 
the historical cost data used annually to calculate the geometric mean 
costs and payment rate for composite APC 8009 would not reflect the 
single clinic visit code that was new for CY 2014 (HCPCS code G0463) 
until our CY 2016 rulemaking cycle. We stated in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74910 through 74912) that when 
hospital claims data for the CY 2014 clinic and ED visit codes become 
available, we would calculate the geometric mean cost for EAM composite 
APC 8009 using CY 2014 single and ``pseudo'' single procedure claims 
that meet each of the following criteria:
     The claims do not contain a HCPCS code to which we have 
assigned status indicator ``T'' that is reported with a date of service 
1 day earlier than the date of service associated with HCPCS code 
G0378. (By selecting these claims from single and ``pseudo'' single 
claims, we ensure that they would not contain a code for a service with 
status indicator ``T'' on the same date of service.)
     The claims contain 8 or more units of services described 
by HCPCS code G0378 (Observation services, per hour.)
     The claims contain one of the following codes: HCPCS code 
G0379 (Direct referral of patient for hospital observation care) on the 
same date of service as HCPCS code G0378; CPT code 99291 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; first 30-74 minutes); or HCPCS code G0463 (Hospital 
outpatient clinic visit for assessment and management of a patient) 
provided on the same date of service or 1 day before the date of 
service for HCPCS code G0378.
    Because we have no available cost data for HCPCS code G0463, for CY 
2015, we proposed to calculate the geometric mean cost for procedures 
assigned to APC 8009 using CY 2013 single and ``pseudo'' single 
procedure claims that met each of the following criteria:
     The claim did not contain a HCPCS code to which we have 
assigned status indicator ``T'' that is reported with a date of service 
1 day earlier than the date of service associated with HCPCS code 
G0378. (By selecting these claims from single and ``pseudo'' single 
claims, we assured that they would not contain a code for a service 
with status indicator ``T'' on the same date of service.)
     The claim contained 8 or more units of services described 
by HCPCS code G0378 (Observation services, per hour.)
     The claim contained one of the following codes: HCPCS code 
G0379 (Direct referral of patient for hospital observation care) on the 
same date of service as HCPCS code G0378; or CPT code 99201 (Office or 
other outpatient visit for the evaluation and management of a new 
patient (Level 1)); CPT code 99202 (Office or other outpatient visit 
for the evaluation and management of a new patient (Level 2)); CPT code 
99203 (Office or other outpatient visit for the evaluation and 
management of a new patient (Level 3)); CPT code 99204 (Office or other 
outpatient visit for the evaluation and management of a new patient 
(Level 4)); CPT code 99205 (Office or other outpatient visit for the 
evaluation and management of a new patient (Level 5)); CPT code 99211

[[Page 66812]]

(Office or other outpatient visit for the evaluation and management of 
an established patient (Level 1)); CPT code 99212 (Office or other 
outpatient visit for the evaluation and management of an established 
patient (Level 2)); CPT code 99213 (Office or other outpatient visit 
for the evaluation and management of an established patient (Level 3)); 
CPT code 99214 (Office or other outpatient visit for the evaluation and 
management of an established patient (Level 4)); CPT code 99215 (Office 
or other outpatient visit for the evaluation and management of an 
established patient (Level 5)); CPT code 99284 (Emergency department 
visit for the evaluation and management of a patient (Level 4)); CPT 
code 99285 (Emergency department visit for the evaluation and 
management of a patient (Level 5)); HCPCS code G0384 (Type B emergency 
department visit (Level 5)); or CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes) provided on the same date of service or 1 
day before the date of service for HCPCS code G0378.
    The proposed CY 2015 geometric mean cost resulting from this 
methodology for EAM composite APC 8009 was approximately $1,287.
    Comment: One commenter urged CMS to consider options to minimize 
the financial burden for the beneficiary associated with self-
administered drugs while the beneficiary is receiving observation 
services. The commenter also supported efforts to count outpatient 
observation toward the Medicare skilled nursing facility (SNF) 3-day 
stay requirement. Another commenter expressed concern that paying for 
all qualifying EAM encounters through a single composite APC is likely 
to penalize certain outpatient facilities, such as those that are 
attached to safety-net or teaching hospitals, which treat more complex 
patients and populations. The commenter urged CMS to monitor and accept 
provider feedback concerning the impact of this coding change to ensure 
that it does not create financial pressure or incentives to admit 
borderline cases, deny treatment, or otherwise negatively affect 
clinical decision making.
    Response: The comments related to beneficiary liability associated 
with self-administered drugs and counting outpatient observation toward 
the SNF 3-day qualifying stay are outside the scope of the proposed 
regulations. We do not believe that paying for all qualifying EAM 
encounters through a single composite APC is likely to penalize certain 
outpatient facilities that treat more complex patients and populations. 
We believe that this proposal accurately accounts for the cost of 
providing an extended assessment and management service and that this 
proposal does not have any substantial impact on any particular type of 
facility or patient type. We also do not believe that paying for all 
qualifying EAM encounters through a single composite APC creates any 
financial pressure or incentives to admit borderline cases, deny 
treatment, or otherwise negatively affect clinical decision making. We 
continue to expect hospitals to provide the appropriate medical care to 
all beneficiaries.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue our CY 2014 
finalized policy to provide payment for all qualifying extended 
assessment and management encounters through composite APC 8009 for CY 
2015. We also are finalizing our proposal, without modification, to 
continue to allow a clinic visit and certain high level ED visits 
furnished by a hospital in conjunction with observation services of 
substantial duration (8 or more hours) to qualify for payment through 
EAM composite APC 8009 (provided the observation is not furnished on 
the same day as surgery or post-operatively). The final CY 2015 
geometric mean cost resulting from this methodology for EAM composite 
APC 8009 is approximately $1,281.
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
    LDR prostate brachytherapy is a treatment for prostate cancer in 
which hollow needles or catheters are inserted into the prostate, 
followed by permanent implantation of radioactive sources into the 
prostate through the needles/catheters. At least two CPT codes are used 
to report the composite treatment service because there are separate 
codes that describe placement of the needles/catheters and the 
application of the brachytherapy sources: CPT code 55875 (Transperineal 
placement of needles or catheters into prostate for interstitial 
radioelement application, with or without cystoscopy) and CPT code 
77778 (Interstitial radiation source application; complex), which are 
generally present together on claims for the same date of service in 
the same operative session. In order to base payment on claims for the 
most common clinical scenario, and to further our goal of providing 
payment under the OPPS for a larger bundle of component services 
provided in a single hospital encounter, beginning in CY 2008, we began 
providing a single payment for LDR prostate brachytherapy when the 
composite service, reported as CPT codes 55875 and 77778, is furnished 
in a single hospital encounter. We base the payment for composite APC 
8001 (LDR Prostate Brachytherapy Composite) on the geometric mean cost 
derived from claims for the same date of service that contain both CPT 
codes 55875 and 77778 and that do not contain other separately paid 
codes that are not on the bypass list. We refer readers to the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66652 through 66655) for 
a full history of OPPS payment for LDR prostate brachytherapy services 
and a detailed description of how we developed the LDR prostate 
brachytherapy composite APC.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015, 
we proposed to continue to pay for LDR prostate brachytherapy services 
using the composite APC payment methodology proposed and implemented 
for CY 2008 through CY 2014. That is, we proposed to use CY 2013 claims 
reporting charges for both CPT codes 55875 and 77778 on the same date 
of service with no other separately paid procedure codes (other than 
those on the bypass list) to calculate the proposed payment rate for 
composite APC 8001. Consistent with our CY 2008 through CY 2014 
practice, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955), we 
proposed not to use the claims that meet these criteria in the 
calculation of the geometric mean costs of procedures or services 
assigned to APC 0163 (Level IV Cystourethroscopy and Other 
Genitourinary Procedures) and APC 0651 (Complex Interstitial Radiation 
Source Application), the APCs to which CPT codes 55875 and 77778 are 
assigned, respectively. We proposed to continue to calculate the 
geometric mean costs of procedures or services assigned to APCs 0163 
and 0651 using single and ``pseudo'' single procedure claims. We 
continue to believe that this composite APC contributes to our goal of 
creating hospital incentives for efficiency and cost containment, while 
providing hospitals with the most flexibility to manage their 
resources. We also continue to believe that data from claims reporting 
both services required for LDR prostate brachytherapy provide the most 
accurate geometric mean cost upon which to base the proposed composite 
APC payment rate.
    Using a partial year of CY 2013 claims data available for the CY 
2015 OPPS/ASC proposed rule, we were able to use 379 claims that 
contained both CPT codes 55875 and 77778 to calculate the

[[Page 66813]]

proposed geometric mean cost of approximately $3,669 for these 
procedures upon which the proposed CY 2015 payment rate for composite 
APC 8001 is based.
    Comment: Several commenters expressed concern that the proposed 
payment rate for APC 8001 is based only on 379 claims that reported 
both CPT codes 55875 and 77778 on the same date of service, a 
significant decrease from the CY 2014 final rule claims data used for 
ratesetting when 591 claims were available. Commenters also noted that 
the proposed payment rate of $3,504.02 yields an 8.9 percent decrease 
in payment compared to the CY 2014 payment rate of $3,844.64. One 
commenter opined that the decrease in payment for these services is 
partially due to the number of brachytherapy procedures provided in the 
hospital outpatient setting. A few commenters urged CMS to closely 
monitor the number of claims used to set the payment rate for this APC 
and to consider other ratesetting methodologies if the number of claims 
continues to decrease. Several commenters expressed that the low volume 
of claims reporting outpatient brachytherapy services also affected 
other APCs, notably APC 0312 (Radioelement Applications) and APC 0651 
(Complex Interstitial Radiation Source Application), and cited 
additional decreases in the volume of claims used for ratesetting for 
these APCs.
    Response: The CY 2015 final rule claims data show that 406 claims 
were available and used to set the payment rate for APC 8001, with a 
geometric mean cost of approximately $3,745, compared to the proposed 
rule claims data that showed 379 claims available and used for 
ratesetting, with a geometric mean cost of approximately $3,669. In 
response to comments regarding the decrease in the number of claims 
available for CY 2015 ratesetting and the geometric mean cost relative 
to the number of claims available for CY 2014 ratesetting and the 
geometric mean cost, we note that there is typically some fluctuation 
in costs from year to year. We acknowledge that the number of claims 
available and used for ratesetting for APC 8001 has decreased over 
recent years. However, the percentage of single frequency claims 
compared to total claims that we were able to use for ratesetting in 
this final rule with comment period is comparable to prior years. In 
addition, evaluation of the claims data for the 4 years prior to CY 
2014 indicated that the mean or median costs used for ratesetting for 
APC 8001 were lower in those years than CY 2014 or CY 2015 cost levels. 
For APC 0651, based on final rule claims data, there are 62 single 
frequency claims out of a total of 3,785 claims, with a geometric mean 
cost of approximately $988. For APC 0312, based on final rule claims 
data, there are 26 single frequency claims out of a total of 378 
claims, with a geometric mean cost of approximately $411. We agree with 
the commenters' assertion that it appears that there are an increasing 
number of radiation oncological technologies that are competing with 
prostate brachytherapy, which may be contributing to a decreased number 
of claims available for ratesetting for these APCs. As we stated in the 
CY 2014 OPPS/ASC final rule with comment period, we will continue to 
evaluate additional refinements and improvements to our ratesetting 
methodologies in order to maximize the use of claims data (78 FR 
74913). In addition, we will continue to explore means by which we can 
use a larger volume of claims to establish the payment rate for APC 
0312 and APC 0651.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue use of 
composite APC 8001 for CY 2015 and to set the payment rate for this APC 
using our established methodology. The final geometric mean cost for 
composite APC 8001 for CY 2015 is approximately $3,745.
(3) Mental Health Services Composite APC (APC 0034)
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015, 
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. We refer readers to the April 7, 2000 OPPS final rule with 
comment period (65 FR 18452 through 18455) for the initial discussion 
of this longstanding policy and the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74168) for more recent background.
    Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955), 
we proposed that when the aggregate payment for specified mental health 
services provided by one hospital to a single beneficiary on one date 
of service based on the payment rates associated with the APCs for the 
individual services exceeds the maximum per diem payment rate for 
partial hospitalization services provided by a hospital, those 
specified mental health services would be assigned to APC 0034 (Mental 
Health Services Composite). We also proposed to continue to set the 
payment rate for APC 0034 at the same payment rate that we proposed to 
establish for APC 0176 (Level II Partial Hospitalization (4 or more 
services) for hospital-based PHPs), which is the maximum partial 
hospitalization per diem payment rate for a hospital, and that the 
hospital continue to be paid one unit of APC 0034 (79 FR 40955). Under 
this policy, the I/OCE would continue to determine whether to pay for 
these specified mental health services individually, or to make a 
single payment at the same payment rate established for APC 0176 for 
all of the specified mental health services furnished by the hospital 
on that single date of service. We continue to believe that the costs 
associated with administering a partial hospitalization program at a 
hospital represent the most resource-intensive of all outpatient mental 
health services. Therefore, we do not believe that we should pay more 
for mental health services under the OPPS than the highest partial 
hospitalization per diem payment rate for hospitals.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our CY 2015 proposal, without modification, to 
continue our longstanding policy of limiting the aggregate payment for 
specified less resource-intensive mental health services furnished on 
the same date to a single beneficiary by a hospital to the payment rate 
for APC 0176, which is the maximum partial hospitalization per diem 
payment for a hospital for CY 2015.
(4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 
8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital bills more than one imaging procedure within an imaging family 
on the same date of service, in order to reflect and promote the 
efficiencies hospitals can achieve when performing multiple imaging 
procedures during a single session (73 FR 41448 through 41450). We 
utilize three imaging families based on imaging modality for purposes 
of this methodology: (1) Ultrasound; (2) computed tomography (CT) and 
computed tomographic angiography (CTA); and (3) magnetic resonance 
imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes 
subject to the multiple imaging composite policy and their respective 
families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with

[[Page 66814]]

comment period (78 FR 74920 through 74924).
    While there are three imaging families, there are five multiple 
imaging composite APCs due to the statutory requirement under section 
1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging 
services provided with and without contrast. While the ultrasound 
procedures included in the policy do not involve contrast, both CT/CTA 
and MRI/MRA scans can be provided either with or without contrast. The 
five multiple imaging composite APCs established in CY 2009 are:
     APC 8004 (Ultrasound Composite);
     APC 8005 (CT and CTA without Contrast Composite);
     APC 8006 (CT and CTA with Contrast Composite);
     APC 8007 (MRI and MRA without Contrast Composite); and
     APC 8008 (MRI and MRA with Contrast Composite).
    We define the single imaging session for the ``with contrast'' 
composite APCs as having at least one or more imaging procedures from 
the same family performed with contrast on the same date of service. 
For example, if the hospital performs an MRI without contrast during 
the same session as at least one other MRI with contrast, the hospital 
will receive payment for APC 8008, the ``with contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for composite APC payment, as well as any packaged services furnished 
on the same date of service. The standard (noncomposite) APC 
assignments continue to apply for single imaging procedures and 
multiple imaging procedures performed across families. For a full 
discussion of the development of the multiple imaging composite APC 
methodology, we refer readers to the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68559 through 68569).
    In the CY 2015 OPPS/ASC proposed rule, for CY 2015, 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 (79 FR 40956). We continue to believe 
that this policy will reflect and promote the efficiencies hospitals 
can achieve when performing multiple imaging procedures during a single 
session.
    The proposed CY 2015 payment rates for the five multiple imaging 
composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 8008) 
were based on geometric mean costs calculated from a partial year of CY 
2013 claims available for the proposed rule that qualified for 
composite payment under the current policy (that is, those claims with 
more than one procedure within the same family on a single date of 
service). To calculate the proposed geometric mean costs, we used the 
same methodology that we used to calculate the final CY 2013 and CY 
2014 geometric mean costs for these composite APCs, as described in the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The 
imaging HCPCS codes referred to as ``overlap bypass codes'' that we 
removed from the bypass list for purposes of calculating the proposed 
multiple imaging composite APC geometric mean costs, pursuant to our 
established methodology as stated in the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 74918), are identified by asterisks in 
Addendum N to the CY 2015 OPPS/ASC proposed rule (which is available 
via the Internet on the CMS Web site) and are discussed in more detail 
in section II.A.1.b. of that proposed rule.
    For the CY 2015 OPPS/ASC proposed rule, we were able to identify 
approximately 636,000 ``single session'' claims out of an estimated 1.6 
million potential composite APC cases from our ratesetting claims data, 
approximately 40 percent of all eligible claims, to calculate the 
proposed CY 2015 geometric mean costs for the multiple imaging 
composite APCs.
    Table 8 of the proposed rule (79 FR 40956 through 40958) listed the 
proposed HCPCS codes that would be subject to the multiple imaging 
composite APC policy and their respective families and approximate 
composite APC geometric mean costs for CY 2015.
    Comment: A few commenters expressed concern that the multiple 
imaging composite APCs may undercompensate providers for imaging 
procedures. These commenters recommended that CMS provide an analysis 
of the effects of reductions in imaging payments due to the composite 
APC policy on utilization. The commenters recommended that CMS provide 
separate payment for each imaging procedure in light of reductions to 
payment for imaging procedures.
    Response: We continue to believe that our multiple imaging 
composite policies reflect and promote the efficiencies hospitals can 
achieve when performing multiple imaging procedures during a single 
session, and some of those efficiencies result in lower payments due to 
cost savings from furnishing multiple imaging services on the same 
date. We will continue to monitor the multiple imaging composite APC 
ratesetting methodology and the cost of providing imaging services. If 
appropriate, we may report any information to the HOP Panel, or discuss 
and propose changes to the multiple imaging composite APCs in 
rulemaking in the future.
    After consideration of the public comments received, we are 
finalizing our proposal to continue the use of multiple imaging 
composites without modification. We were able to identify approximately 
661,000 million ``single session'' claims out of an estimated 1.68 
million potential composite cases from our CY 2013 ratesetting claims 
data, approximately 39 percent of all eligible claims, to calculate the 
final CY 2015 geometric mean costs for the multiple imaging composite 
APCs.
    Table 9 below lists the HCPCS codes that will be subject to the 
multiple imaging composite APC policy and their respective families and 
approximate composite APC geometric mean costs for CY 2015.

 Table 9--OPPS Imaging Families and Multiple Imaging Procedure Composite
                                  APCs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
CY 2015 APC 8004 (Ultrasound composite)      CY 2015 Approximate APC
                                            geometric mean cost = $296
------------------------------------------------------------------------
76604..................................  Us exam, chest.
76700..................................  Us exam, abdom, complete.
76705..................................  Echo exam of abdomen.
76770..................................  Us exam abdo back wall, comp.
76775..................................  Us exam abdo back wall, lim.
76776..................................  Us exam k transpl w/Doppler.
76831..................................  Echo exam, uterus.

[[Page 66815]]

 
76856..................................  Us exam, pelvic, complete.
76870..................................  Us exam, scrotum.
76857..................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
  CY 2015 APC 8005 (CT and CTA without       CY 2015 Approximate APC
          Contrast Composite)*              Geometric Mean Cost = $325
------------------------------------------------------------------------
70450..................................  Ct head/brain w/o dye.
70480..................................  Ct orbit/ear/fossa w/o dye.
70486..................................  Ct maxillofacial w/o dye.
70490..................................  Ct soft tissue neck w/o dye.
71250..................................  Ct thorax w/o dye.
72125..................................  Ct neck spine w/o dye.
72128..................................  Ct chest spine w/o dye.
72131..................................  Ct lumbar spine w/o dye.
72192..................................  Ct pelvis w/o dye.
73200..................................  Ct upper extremity w/o dye.
73700..................................  Ct lower extremity w/o dye.
74150..................................  Ct abdomen w/o dye.
74261..................................  Ct colonography, w/o dye.
74176..................................  Ct angio abd & pelvis.
------------------------------------------------------------------------
   CY 2015 APC 8006 (CT and CTA with         CY 2015 Approximate APC
          Contrast Composite)               Geometric Mean Cost = $548
------------------------------------------------------------------------
70487..................................  Ct maxillofacial w/dye.
70460..................................  Ct head/brain w/dye.
70470..................................  Ct head/brain w/o & w/dye.
70481..................................  Ct orbit/ear/fossa w/dye.
70482..................................  Ct orbit/ear/fossa w/o & w/dye.
70488..................................  Ct maxillofacial w/o & w/dye.
70491..................................  Ct soft tissue neck w/dye.
70492..................................  Ct sft tsue nck w/o & w/dye.
70496..................................  Ct angiography, head.
70498..................................  Ct angiography, neck.
71260..................................  Ct thorax w/dye.
71270..................................  Ct thorax w/o & w/dye.
71275..................................  Ct angiography, chest.
72126..................................  Ct neck spine w/dye.
72127..................................  Ct neck spine w/o & w/dye.
72129..................................  Ct chest spine w/dye.
72130..................................  Ct chest spine w/o & w/dye.
72132..................................  Ct lumbar spine w/dye.
72133..................................  Ct lumbar spine w/o & w/dye.
72191..................................  Ct angiograph pelv w/o & w/dye.
72193..................................  Ct pelvis w/dye.
72194..................................  Ct pelvis w/o & w/dye.
73201..................................  Ct upper extremity w/dye.
73202..................................  Ct uppr extremity w/o & w/dye.
73206..................................  Ct angio upr extrm w/o & w/dye.
73701..................................  Ct lower extremity w/dye.
73702..................................  Ct lwr extremity w/o & w/dye.
73706..................................  Ct angio lwr extr w/o & w/dye.
74160..................................  Ct abdomen w/dye.
74170..................................  Ct abdomen w/o & w/dye.
74175..................................  Ct angio abdom w/o & w/dye.
74262..................................  Ct colonography, w/dye.
75635..................................  Ct angio abdominal arteries.
74177..................................  Ct angio abd & pelv w/contrast.
74178..................................  Ct angio abd & pelv 1+ regns.
------------------------------------------------------------------------
* If a ``without contrast'' CT or CTA procedure is performed during the
 same session as a ``with contrast'' CT or CTA procedure, the I/OCE
 would assign APC 8006 rather than APC 8005.
------------------------------------------------------------------------
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
 CY 2015 APC 8007 (MRI and MRA without       CY 2015 Approximate APC
          Contrast Composite)*              Geometric Mean Cost = $631
------------------------------------------------------------------------
70336..................................  Magnetic image, jaw joint.
70540..................................  Mri orbit/face/neck w/o dye.
70544..................................  Mr angiography head w/o dye.
70547..................................  Mr angiography neck w/o dye.
70551..................................  Mri brain w/o dye.

[[Page 66816]]

 
70554..................................  Fmri brain by tech.
71550..................................  Mri chest w/o dye.
72141..................................  Mri neck spine w/o dye.
72146..................................  Mri chest spine w/o dye.
72148..................................  Mri lumbar spine w/o dye.
72195..................................  Mri pelvis w/o dye.
73218..................................  Mri upper extremity w/o dye.
73221..................................  Mri joint upr extrem w/o dye.
73718..................................  Mri lower extremity w/o dye.
73721..................................  Mri jnt of lwr extre w/o dye.
74181..................................  Mri abdomen w/o dye.
75557..................................  Cardiac mri for morph.
75559..................................  Cardiac mri w/stress img.
C8901..................................  MRA w/o cont, abd.
C8904..................................  MRI w/o cont, breast, uni.
C8907..................................  MRI w/o cont, breast, bi.
C8910..................................  MRA w/o cont, chest.
C8913..................................  MRA w/o cont, lwr ext.
C8919..................................  MRA w/o cont, pelvis.
C8932..................................  MRA, w/o dye, spinal canal.
C8935..................................  MRA, w/o dye, upper extr.
------------------------------------------------------------------------
   CY 2015 APC 8008 (MRI and MRA with        CY 2015 Approximate APC
          Contrast Composite)               Geometric Mean Cost = $945
------------------------------------------------------------------------
70549..................................  Mr angiograph neck w/o & w/dye.
70542..................................  Mri orbit/face/neck w/dye.
70543..................................  Mri orbt/fac/nck w/o & w/dye.
70545..................................  Mr angiography head w/dye.
70546..................................  Mr angiograph head w/o & w/dye.
70547..................................  Mr angiography neck w/o dye.
70548..................................  Mr angiography neck w/dye.
70552..................................  Mri brain w/dye.
70553..................................  Mri brain w/o & w/dye.
71551..................................  Mri chest w/dye.
71552..................................  Mri chest w/o & w/dye.
72142..................................  Mri neck spine w/dye.
72147..................................  Mri chest spine w/dye.
72149..................................  Mri lumbar spine w/dye.
72156..................................  Mri neck spine w/o & w/dye.
72157..................................  Mri chest spine w/o & w/dye.
72158..................................  Mri lumbar spine w/o & w/dye.
72196..................................  Mri pelvis w/dye.
72197..................................  Mri pelvis w/o & w/dye.
73219..................................  Mri upper extremity w/dye.
73220..................................  Mri uppr extremity w/o & w/dye.
73222..................................  Mri joint upr extrem w/dye.
73223..................................  Mri joint upr extr w/o & w/dye.
73719..................................  Mri lower extremity w/dye.
73720..................................  Mri lwr extremity w/o & w/dye.
73722..................................  Mri joint of lwr extr w/dye.
73723..................................  Mri joint lwr extr w/o & w/dye.
74182..................................  Mri abdomen w/dye.
74183..................................  Mri abdomen w/o & w/dye.
75561..................................  Cardiac mri for morph w/dye.
75563..................................  Card mri w/stress img & dye.
C8900..................................  MRA w/cont, abd.
C8902..................................  MRA w/o fol w/cont, abd.
C8903..................................  MRI w/cont, breast, uni.
C8905..................................  MRI w/o fol w/cont, brst, un.
C8906..................................  MRI w/cont, breast, bi.
C8908..................................  MRI w/o fol w/cont, breast,.
C8909..................................  MRA w/cont, chest.
C8911..................................  MRA w/o fol w/cont, chest.
C8912..................................  MRA w/cont, lwr ext.
C8914..................................  MRA w/o fol w/cont, lwr ext.
C8918..................................  MRA w/cont, pelvis.
C8920..................................  MRA w/o fol w/cont, pelvis.
C8931..................................  MRA, w/dye, spinal canal.
C8933..................................  MRA, w/o&w/dye, spinal canal.
C8934..................................  MRA, w/dye, upper extremity.
C8936..................................  MRA, w/o&w/dye, upper extr.
------------------------------------------------------------------------
* If a ``without contrast'' MRI or MRA procedure is performed during the
  same session as a ``with contrast'' MRI or MRA procedure, the I/OCE
  would assign APC 8008 rather than APC 8007.

[[Page 66817]]

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 bundle of specific services for a particular 
patient. The OPPS packages payment for multiple interrelated items and 
services into a single payment to create incentives for hospitals to 
furnish services most efficiently and to manage their resources with 
maximum flexibility. Our packaging policies support our strategic goal 
of using larger payment bundles in the OPPS to maximize hospitals' 
incentives to provide care in the most efficient manner. For example, 
where there are a variety of devices, drugs, items, and supplies that 
could be used to furnish a service, some of which are more expensive 
than others, packaging encourages hospitals to use the most cost-
efficient item that meets the patient's needs, rather than to routinely 
use a more expensive item, which often results if separate payment is 
provided for the items.
    Packaging also encourages hospitals to effectively negotiate with 
manufacturers and suppliers to reduce the purchase price of items and 
services or to explore alternative group purchasing arrangements, 
thereby encouraging the most economical health care delivery. 
Similarly, packaging encourages hospitals to establish protocols that 
ensure that necessary services are furnished, while scrutinizing the 
services ordered by practitioners to maximize the efficient use of 
hospital resources. Packaging payments into larger payment bundles 
promotes the predictability and accuracy of payment for services over 
time. Finally, packaging may reduce the importance of refining service-
specific payment because packaged payments include costs associated 
with higher cost cases requiring many ancillary items and services and 
lower cost cases requiring fewer ancillary items and services. Because 
packaging encourages efficiency and is an essential component of a 
prospective payment system, packaging payment for items and services 
that are typically integral, ancillary, supportive, dependent, or 
adjunctive to a primary service has been a fundamental part of the OPPS 
since its implementation in August 2000. Over the last 15 years, as we 
have refined our understanding of the OPPS as a prospective payment 
system, we have packaged numerous services that we originally paid as 
primary services. As we continue to develop larger payment groups that 
more broadly reflect services provided in an encounter or episode of 
care, we have expanded the OPPS packaging policies. Most, but not 
necessarily all, items and services currently packaged in the OPPS are 
listed in 42 CFR 419.2(b), including the five packaging policies that 
were added in CY 2014 (78 FR 74925). Our overarching goal is to make 
OPPS payments for all services paid under the OPPS more consistent with 
those of a prospective payment system and less like those of a per 
service fee schedule, which pays separately for each coded item. As a 
part of this effort, we have continued to examine the payment for items 
and services provided in the OPPS to determine which OPPS services can 
be packaged to achieve the objective of advancing the OPPS as a 
prospective payment system.
    We have examined the items and services currently provided under 
the OPPS, reviewing categories of integral, ancillary, supportive, 
dependent, or adjunctive items and services for which we believe 
payment would be appropriately packaged into payment of the primary 
service they support. Specifically, we examined the HCPCS code 
definitions (including CPT code descriptors) to determine whether there 
were categories of codes for which packaging would be appropriate 
according to existing OPPS packaging policies or a logical expansion of 
those existing OPPS packaging policies. In general, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40958 through 40961), we proposed to 
package the costs of selected HCPCS codes into payment for services 
reported with other HCPCS codes where we believe that one code reported 
an item or service that was integral, ancillary, supportive, dependent, 
or adjunctive to the provision of care that was reported by another 
HCPCS code. Below we discuss categories and classes of items and 
services that we proposed to package beginning in CY 2015. For an 
extensive discussion of the history and background of the OPPS 
packaging policy, we refer readers to the CY 2000 OPPS final rule (65 
FR 18434), the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66580), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74925).
b. Revisions of a Packaging Policy Established in CY 2014--Procedures 
Described by Add-On Codes
    In the CY 2014 OPPS/ASC final rule with comment period, we packaged 
add-on codes in the OPPS, with the exception of add-on codes describing 
drug administration services (78 FR 74943; 42 CFR 419.2(b)(18)). With 
regard to the packaging of add-on procedures that use expensive medical 
devices, we stated in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 74943) that the most expensive medical devices used in 
procedures to insert or implant devices in the hospital outpatient 
setting are included in procedures that are assigned to comprehensive 
APCs. Comprehensive APCs are discussed in section II.A.2.e. of this 
final rule with comment period. In the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74864), we discussed the comprehensive APC 
policy, which we adopted, with modification, but delayed the 
implementation of, until CY 2015. We stated that, for CY 2014, we would 
continue to pay separately for only those add-on codes (except for drug 
administration add-on codes) that were assigned to device-dependent 
APCs in CY 2014, but that, after CY 2014, these device-dependent add-on 
codes would be paid under the comprehensive APC policy. According to 
the proposed changes to the comprehensive APC policy described in 
section II.A.2.e. of this final rule with comment period, we proposed 
to package all of the procedures described by add-on codes that are 
currently assigned to device-dependent APCs, which will be replaced by 
comprehensive APCs. The device-dependent add-on codes that are 
separately paid in CY 2014 that we proposed to package in CY 2015 were 
listed in Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 40959).
    Comment: A few commenters disagreed with the proposal to package 
payment for the add-on codes listed in Table 9 of the proposed rule for 
the following reasons:
     Some commenters requested that CMS delay packaging the 
device-dependent add-on codes remaining for CY 2015 while additional 
data analysis is performed and refinements are adopted to ensure 
accurate payment for the full range of add-on procedures, including 
those not assigned to comprehensive APCs.
     A few commenters suggested that add-on codes are separate 
and distinct clinical procedures having unique, independent values 
determined by the American Medical Association (AMA)

[[Page 66818]]

and, therefore, should not be treated as ancillary services.
     Some commenters requested that CMS establish exceptions to 
its proposal to package add-on codes for specific add-on procedures 
with high cost supply items that commenters believed would be underpaid 
under the policy and impede patient access to care.
    Response: We disagree with the commenters that oppose packaging 
these remaining add-on codes. We received similar public comments 
during the CY 2014 rulemaking cycle and responded to those comments in 
the CY 2014 OPPS/ASC final rule with comment period. Generally, we 
disagree because add-on codes describe services that are integral, 
ancillary, supportive, dependent, or adjunctive to the primary service. 
In other words, add-on codes do not represent a stand-alone procedure 
and are inclusive to other procedures performed at the same time. For a 
full discussion of our response to these public comments, we refer 
readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74942 through 74943).
    We also disagree with commenters' assertion that add-on code 
services are separate and distinct clinical procedures and should not 
be treated as ancillary services. We received a similar public comment 
last year where commenters suggested that procedures described by add-
on codes are not integral, ancillary, supportive, dependent, or 
adjunctive to the primary service. As we noted previously (78 FR 74942 
through 74943), the fundamental nature of an add-on code procedure is 
that it typically describes some form of a related extension of or 
addition to the primary procedure or service described by the primary 
procedure. The definition of an add-on code is that it is an extension 
of a primary, base service. CPT defines add-on codes as codes that 
describe ``procedures [that] are commonly carried out in addition to 
the primary procedure performed'' (2014 CPT Codebook Professional 
Edition, page xiv). Further, CPT states that ``add-on codes describe 
additional intra-service work associated with the primary procedure 
(emphasis added) (2014 CPT Codebook Professional Edition, page xiv). We 
also disagree with commenters that some add-on codes are not related to 
the primary procedure but represent a separate procedure that should be 
paid separately from the primary procedure. If such procedures were in 
fact separate procedures, they would not be described by an add-on 
code. Thus, we believe that add-on code procedures are not always 
separate and distinct clinical procedures, but rather are related 
extensions, supportive, integral, or adjunctive of the primary 
procedure and, therefore, it is appropriate to package the cost of the 
add-on codes into the payment calculation for the primary procedure. 
Finally, in response to commenters who requested that CMS establish 
exceptions to its proposal for add-on code with high cost supply items, 
we are allowing certain add-on codes to be evaluated for a complexity 
adjustment when billed with a comprehensive APC primary procedure. We 
refer readers to section II.A.2.e. of this final rule with comment 
period for further discussion of that policy. We see no reason to grant 
exceptions to the add-on code packaging policy to specifically account 
for add-on procedures with high cost supply items, as any associated 
costs are accounted for in the payment for the primary procedure. The 
only reason we did not package the add-on codes listed in Table 9 of 
the proposed rule was that implementation of the comprehensive APC 
policy was delayed for 1 year (78 FR 74943). Because the comprehensive 
APC policy will be implemented in CY 2015, we are packaging these 
remaining add-on codes.
    After consideration of the public comments we received, we are 
finalizing our proposal to package all of the procedures described by 
add-on codes that are currently assigned to device-dependent APCs, 
which will be replaced by comprehensive APCs, as listed in Table 9 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 40959) and included in Table 
10 below. The current device-dependent add-on codes that are separately 
paid in CY 2014 that will be packaged in CY 2015 are included in Table 
8 under section II.A.2.e. of this final rule with comment period, which 
addresses the comprehensive APC policy.

        Table 10--Add-On Codes Assigned to Device-Dependent APCS for CY 2014 That Are Packaged in CY 2015
----------------------------------------------------------------------------------------------------------------
             CY 2015 add-on code                                        Short descriptor
----------------------------------------------------------------------------------------------------------------
19297........................................  Place breast cath for rad.
33225........................................  L ventric pacing lead add-on.
37222........................................  Iliac revasc add-on.
37223........................................  Iliac revasc w/stent add-on.
37232........................................  Tib/per revasc add-on.
37233........................................  Tibper revasc w/ather add-on.
37234........................................  Revsc opn/prq tib/pero stent.
37235........................................  Tib/per revasc stnt & ather.
37237........................................  Open/perq place stent ea add.
37239........................................  Open/perq place stent ea add.
49435........................................  Insert subq exten to ip cath.
92921........................................  Prq cardiac angio addl art.
92925........................................  Prq card angio/athrect addl.
92929........................................  Prq card stent w/angio addl.
92934........................................  Prq card stent/ath/angio.
92938........................................  Prq revasc byp graft addl.
92944........................................  Prq card revasc chronic addl.
92998........................................  Pul art balloon repr precut.
C9601........................................  Perc drug-el cor stent bran.
C9603........................................  Perc d-e cor stent ather br.
C9605........................................  Perc d-e cor revasc t cabg b.
C9608........................................  Perc d-e cor revasc chro add.
----------------------------------------------------------------------------------------------------------------

[[Page 66819]]

c. Packaging Policies for CY 2015
(1) Ancillary Services
    Under the OPPS, we currently pay separately for certain ancillary 
services. Some of these ancillary services are currently assigned to 
status indicator ``X,'' which is defined as ``ancillary services,'' but 
some other ancillary services are currently assigned to status 
indicators other than ``X.'' This is because the current use of status 
indicator ``X'' in the OPPS is incomplete and imprecise. Some 
procedures and services that are ancillary, for example, a chest X-ray, 
are assigned to an APC with services assigned status indicator ``S.'' 
As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 
40961), we reviewed all of the covered services provided in the HOPD 
and identified those that are commonly performed when provided with 
other HOPD services, and also provided as ancillary to a primary 
service in the HOPD. These ancillary services that we identified are 
primarily minor diagnostic tests and procedures that are often 
performed with a primary service, although there are instances where 
hospitals provide such services alone and without another primary 
service during the same encounter.
    As discussed in section II.A.3.a. of this final rule with comment 
period, our intent is that the OPPS be more of a prospective payment 
system with expanded packaging of items and services that are typically 
integral, ancillary, supportive, dependent, or adjunctive to a primary 
service. Given that the longstanding OPPS policy is to package items 
and services that are integral, ancillary, supportive, dependent, or 
adjunctive to a primary service, we stated in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74945) that we believe that 
ancillary services should be packaged when they are performed with 
another service, but should continue to be separately paid when 
performed alone. We indicated that this packaging approach is most 
consistent with a prospective payment system and the regulation at 42 
CFR 419.2(b) that packages many ancillary services into primary 
services while preserving separate payment for those instances in which 
one of these ancillary services is provided alone (not with any other 
service paid under the OPPS) to a hospital outpatient. We did not 
finalize the ancillary packaging policy for CY 2014 because we believed 
that further evaluation was necessary (78 FR 74946).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 40961), 
we proposed to conditionally package certain ancillary services for CY 
2015. Specifically, we proposed to limit the initial set of APCs that 
contain conditionally packaged services to those ancillary service APCs 
with a proposed geometric mean cost of less than or equal to $100 
(prior to application of the conditional packaging status indicator). 
We limited this initial set of packaged ancillary service APCs to those 
with a proposed geometric mean cost of less than or equal to $100 in 
response to public comments on the CY 2014 ancillary service packaging 
proposal in which commenters expressed concern that certain low volume 
but relatively costly ancillary services would have been packaged into 
high volume but relatively inexpensive primary services (for example, a 
visit) (74 FR 74945). We noted that the proposed $100 geometric mean 
cost limit for selecting this initial group of conditionally packaged 
ancillary service APCs is less than the geometric mean cost of APC 
0634, which contains the single clinic visit HCPCS code G0463, which is 
a single payment rate for clinic visits beginning in CY 2014, and had a 
CY 2015 OPPS/ASC proposed rule geometric mean cost of approximately 
$103. This proposed $100 geometric mean cost limit is part of the 
methodology of selecting the initial set of conditionally packaged 
ancillary service APCs under this proposed packaging policy. It is not 
meant to represent a threshold above which ancillary services will not 
be packaged, but as a basis for selecting this initial set of APCs, 
which will likely be updated and expanded in future years. In future 
years, we may package ancillary services assigned to APCs with 
geometric mean costs higher than $100. In addition, geometric mean 
costs can change over time. An increase in the geometric mean cost of 
any of the proposed APCs to above $100 in future years would not change 
the conditionally packaged status of services assigned to the APCs 
selected in CY 2015 in a future year. We would continue to consider 
these APCs to be conditionally packaged. However, we would review the 
conditionally packaged status of ancillary services annually.
    We proposed to exclude certain services from this packaging policy 
even though they are assigned to APCs with a geometric mean cost of 
less than or equal to $100. Preventive services will continue to be 
paid separately, and include the following services listed in Table 11 
below that would otherwise be packaged under this policy.

    Table 11--Preventive Services Exempted From the Ancillary Service
                            Packaging Policy
------------------------------------------------------------------------
           HCPCS Code                Short descriptor           APC
------------------------------------------------------------------------
76977..........................  Us bone density measure            0340
77078..........................  Ct bone density axial..            0260
77080..........................  Dxa bone density axial.            0261
77081..........................  Dxa bone density/                  0260
                                  peripheral.
G0117..........................  Glaucoma scrn hgh risk             0260
                                  direc.
G0118..........................  Glaucoma scrn hgh risk             0230
                                  direc.
G0130..........................  Single energy x-ray                0230
                                  study.
G0389..........................  Ultrasound exam aaa                0265
                                  screen.
G0404..........................  Ekg tracing for initial            0450
                                  prev.
Q0091..........................  Obtaining screen pap               0450
                                  smear.
------------------------------------------------------------------------

    In addition, we did not propose to package certain psychiatry and 
counseling-related services as we see similarities to a visit and, at 
the time of issuance of the CY 2015 OPPS/ASC proposed rule, did not 
consider them to be ancillary services. We also did not propose to 
package certain low cost drug administration services as we are 
examining various alternative payment policies for drug administration 
services, including the associated drug administration add-on codes.
    Finally, we proposed to delete status indicator ``X'' (Ancillary 
Services) because the majority of the services assigned to status 
indicator ``X'' were proposed to be assigned to status indicator ``Q1'' 
(STV-Packaged Codes). For the services that are currently

[[Page 66820]]

assigned status indicator ``X'' that were not proposed to be 
conditionally packaged under this policy, we proposed to assign those 
services status indicator ``S'' (Procedure or Service, Not Discounted 
When Multiple), indicating separate payment and that the services are 
not subject to the multiple procedure reduction. The APCs that we 
proposed for conditional packaging as ancillary services in CY 2015 
were listed in Table 11 of the CY 2015 OPPS/ASC proposed rule (79 FR 
40960 through 40961).
    The HCPCS codes that we proposed to conditionally package as 
ancillary services for CY 2015 were displayed in Addendum B to the CY 
2015 OPPS/ASC proposed rule (which is available via the Internet on the 
CMS Web site). The supporting documents for the proposed rule are 
available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    We also proposed to revise the regulations at 42 CFR 419.2(b)(7) to 
replace the phrase ``Incidental services such as venipuncture'' with 
``Ancillary services'' to more accurately reflect the proposed 
packaging policy discussed above.
    Comment: A number of commenters, which included hospital 
associations, health systems, and individual hospitals, supported 
conditionally packaging ancillary services with a geometric mean cost 
of $100 prior to application of the ``Q1'' status indicator.
    Response: We appreciate the commenters' support.
    Comment: A few commenters expressed concern that conditionally 
packaging ancillary services would disproportionately affect teaching 
hospitals because of the types of patients these hospitals serve and 
the types of services that they typically provide. One commenter 
submitted results from its data analysis that estimated major teaching 
hospitals will lose approximately -0.4 percent on average as a result 
of this packaging proposal, compared to nonteaching hospitals, which 
would gain approximately 0.2 percent. The commenter's concern was that 
the negative impact is a direct result of academic medical centers' 
caring for unique and complex patient populations, for example, trauma 
patients who are seen in teaching hospital emergency departments. The 
commenter's analysis suggested that a large proportion of certain APCs 
listed on Table 11 of the proposed rule (APCs 0012, 0099, 0260, 0261, 
0340, and 0420) are packaged into emergency department visits and 
related services.
    Response: Conditional packaging of ancillary services results in 
packaging of these services when provided with other primary services 
and separate payment for the services when they are performed alone. It 
is possible that, as the commenter asserted, the case-mix at teaching 
hospitals results in greater packaging of ancillary services than at 
nonteaching hospitals. This may be due to teaching hospitals being more 
likely to provide services in addition to the ancillary service, which 
would result in packaging of the ancillary service into the other 
primary service or services provided to the patient. Even if the 
commenter's observation is reflective of a difference between teaching 
and nonteaching hospitals, we do not believe that such an observation 
is a sufficient reason to not package ancillary services in the OPPS. 
Packaging is a fundamental element of a prospective payment system. As 
stated above, in the OPPS, we packaged items and services that are 
typically integral, ancillary, supportive, dependent, or adjunctive to 
a primary service. We believe that the ancillary services proposed for 
conditional packaging are ancillary when provided with other primary 
services and, therefore, are appropriately conditionally packaged in 
the OPPS. As for the impact of the CY 2015 OPPS policies on teaching 
hospitals, we refer the commenter to the impact table (Table 49) in 
section XXI. of this final rule with comment period, which shows that 
teaching hospitals will receive an overall 2.3 percent payment update 
compared to a 2.0 percent payment update for nonteaching hospitals. 
Therefore, overall teaching hospitals stand to benefit more than 
nonteaching hospitals from the policies adopted in this final rule with 
comment period, despite any relative negative impacts from the 
ancillary packaging policy.
    Comment: Several commenters requested clarification of the 
methodology used to identify APCs with a geometric mean cost less than 
or equal to $100 prior to application of the ``Q1'' status indicator, 
given that the geometric mean cost of some of the APCs listed in Table 
11 of the proposed rule exceeds $100. Also, commenters requested that 
the $100 threshold be held constant for future years or updated 
annually based on inflation akin to the drug threshold methodology.
    Response: As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
40960), the ancillary services APCs proposed for conditional packaging 
were those with a geometric mean cost of less than or equal to $100 
prior to application of the ``Q1'' status indicator to the APC. In 
other words, it was ancillary service APCs with a geometric mean cost 
of $100 or less with all of the services assigned to the APC that had 
either status indicator ``X'' or ``S.'' Once status indicator ``Q1'' 
was assigned, some of the geometric mean costs of some of the APCs 
increased to above $100 due to conditional packaging according to the 
``Q1'' status indicator logic. We remind the commenters that the APCs 
listed in Table 11 of the proposed rule (79 FR 40960 through 40961) 
displayed the APC geometric mean costs after application of the ``Q1'' 
status indicator, which resulted in some of the APC geometric mean 
costs that were below $100 prior to application of the ``Q1'' status 
indicator to exceed $100 after application of the ``Q1'' status 
indicator. We also clarify that the $100 geometric mean cost initial 
selection criteria for this packaging policy is not a threshold above 
which ancillary services will not be conditionally packaged. As we 
stated in the CY 2015 OPPS/ASC proposed rule, ``[the $100 limit] is not 
meant to represent a threshold above which ancillary services will not 
be packaged, but as a basis for selecting this initial set of APCs, 
which will likely be updated and expanded in future years'' (79 FR 
40960). As we stated in the proposed rule, in future years, we may 
package additional ancillary services in APCs with a geometric mean 
cost (prior to the application of the conditional packaging status 
indicator) that exceeds $100.
    Comment: One commenter expressed concern regarding the composition 
of APC 0077 (Level I Pulmonary Treatment), which was proposed to be 
conditionally packaged. The commenter believed that HCPCS code G0424 
(Pulmonary rehabilitation, including exercise (includes monitoring), 
one hour, per session, up to two sessions per day) is not clinically 
similar to HCPCS code G0237 (Therapeutic procedures to increase 
strength or endurance of respiratory muscles, face to face, one on one, 
each 15 minutes (includes monitoring) and HCPCS code G0238 (Therapeutic 
procedures to improve respiratory function, other than described by 
G0237, one on one, face to face, per 15 minutes (includes monitoring), 
which also are assigned to APC 0077. In addition, the commenter stated 
that the assignment of HCPCS code G0424 to APC 0077 would create a 2 
times rule violation. The commenter recommended that CMS reassign HCPCS 
code G0424 to APC 0078 (Level II Pulmonary Treatment).
    Response: We disagree with the commenter's assertion that the 
assignment of HCPCS code G0424 to

[[Page 66821]]

APC 0077 would create a 2 times rule violation. Section 1833(t)(9) of 
the Act requires that we annually review all the items and services 
within an APC group and revise the APC structures accordingly. Included 
in this review is the identification of any 2 times rule violations as 
provided under section 1833(t)(2) of the Act and, to the extent 
possible, rectification of these violations. We review our claims data 
and determine whether we need to make changes to the current APC 
assignment for the following year. For HCPCS codes G0238 and G0424, we 
evaluated their APC assignment for the CY 2015 update and determined 
that APC 0340 (Level II Minor Procedures) is the more appropriate 
assignment for these services based on resource similarity to the other 
services assigned to APC 0340. In addition, with the reassignment of 
HCPCS codes G0424 and G0238 to APC 0340, only four HCPCS codes (31270, 
94668, 94669, and G0237) remained in APC 0077, one (HCPCS code 94669) 
of which did not have any claims volume in CY 2013. The commenter 
suggested that we reassign HCPCS code G0424 to APC 0078. APC 0078 has a 
mean cost of approximately $90, which is under the $100 initial 
selection criteria for conditionally packaged ancillary services. With 
the reduced size of APC 0077 and the mean cost of APC 0078 being less 
than $100, we are reassigning the procedure codes remaining in APC 0078 
to APC 0077 and revising the title of APC 0077 to read ``Pulmonary 
Treatment.'' The new combined APC 0077 is assigned status indicator 
``Q1'' under the conditional packaging policy. We note that the mean 
cost of this revised APC 0077 (after application of the ``Q1'' status 
indicator) is approximately $154.
    Comment: One commenter requested that CMS continue separate 
payment, by assigning status indicator ``S,'' for CPT codes 92557 
(comprehensive hearing test), 92601 through 92604 (cochlear implant 
programming), and 92640 (auditory brainstem implant programming) which 
are assigned to APC 0364, an APC that is proposed for conditional 
packaging. The commenter stated that these CPT codes are primary 
audiology services and are not dependent or incident to other services 
in the hospital.
    Response: We do not believe that it is necessary to change the 
status indicator to ``S'' as we disagree that these CPT codes represent 
primary audiology services. Conditional packaging provides separate 
payment when the otherwise packaged services are provided alone without 
other primary services. Therefore, these services will continue to be 
separately paid when performed without other primary services.
    Comment: Some commenters expressed concern that packaging payment 
for ancillary services could have a negative impact on patient access 
because hospitals will not have an incentive to perform ancillary 
services at the time of other therapeutic or evaluation/management 
services, even when providing such services at the same encounter would 
be efficient and offer patients the most appropriate and complete care. 
Commenters cautioned that expanded packaging policies will impede the 
accuracy and stability of future ratesetting under the OPPS.
    Response: We appreciate stakeholders' concerns and predictions 
about the effect that this conditional packaging policy may have on 
patient access to ancillary services. We will continue to monitor 
service utilization trends in the HOPD. We disagree with commenters 
that packaging services impedes the accuracy and stability of future 
OPPS ratesetting. As a reminder, hospitals include HCPCS codes and 
charges for packaged services on their claims, and the costs associated 
with those packaged services are included in the costs of the 
separately payable procedure on the claim. We also continue to 
emphasize that hospitals should report all HCPCS codes for all 
services, including those for packaged services, according to correct 
coding principles.
    Comment: One commenter disagreed with the proposed assignment of 
status indicator ``Q1'' to CPT code 95012 (Expired nitric oxide gas 
determination). The commenter requested that CMS assign status 
indicator ``S'' to CPT code 95012 because the code describes an 
independent, primary procedure that is not ancillary to any other 
procedure. The commenter also requested that CMS reassign CPT code 
95012 to APC 0078 (Level II Pulmonary Treatment) because of its 
clinical homogeneity to other services assigned to that APC.
    Response: We disagree with the commenter. We believe the procedure 
or service described by CPT code 95012 to be an ancillary diagnostic 
test and, therefore, appropriate for conditional packaging under the 
ancillary services policy. We believe that existing assignment to APC 
0340 (Level II Minor Procedures) is appropriate in that CPT code 95012 
is a minor test and that its mean cost of approximately $41 is similar 
to the mean cost of APC 0340 of approximately $53. Therefore, we are 
finalizing our proposal to maintain assignment of CPT code 95012 to APC 
0340 with a ``Q1'' status indicator for CY 2015.
    Comment: A few commenters requested that CMS make an exception to 
the ancillary packaging policy for pathology services, specifically 
those services assigned to APC 0342 (Level I Pathology) and APC 0433 
(Level II Pathology). These commenters were concerned about inadequate 
payment for pathology services.
    Response: We disagree with commenters' concern regarding inadequate 
payment for pathology services and do not believe that an exception to 
this packaging policy for the pathology services assigned to APCs 0342 
and 0433 is appropriate at this time. We remind the commenters that 
this policy only affects the facility payment for the technical aspect 
of the services and does not affect the physician fee schedule payment 
to the pathologist for the physician work in performing pathology 
services. We believe that pathology services are some of the best 
examples of ancillary services as they typically follow a surgical or 
other specimen-generating procedure for the purposes of diagnosis. We 
also remind the commenters that in the event a patient receives a 
pathology test in isolation from other primary HOPD services, the test 
would be separately paid because the ancillary services packaging 
policy is a conditional packaging policy. Therefore, we are not 
creating an exception to this ancillary packaging policy for pathology 
services.
    After consideration of the public comments we received, we are 
finalizing our ancillary services packaging policy as proposed, 
including deletion of status indicator ``X.'' We also are adopting as 
final our proposed revision of the regulations at 42 CFR 419.2(b)(7) to 
replace the phrase ``Incidental services such as venipuncture'' with 
``Ancillary services'' to more accurately reflect the final packaging 
policy for CY 2015.
    The APCs that we are conditionally packaging as ancillary services 
in CY 2015 are listed in Table 12 below.

[[Page 66822]]

                    Table 12--APCs for Conditionally Packaged Ancillary Services for CY 2015
----------------------------------------------------------------------------------------------------------------
                                      CY 2015 OPPS Geometric
                                          mean cost (with       Final CY 2015 OPPS
                APC                  application of Q1 status           SI                   Group title
                                            indicator)
----------------------------------------------------------------------------------------------------------------
0012...............................                  $102.18   Q1                    Level I Debridement &
                                                                                      Destruction.
0060...............................                    20.57   Q1                    Manipulation Therapy.
0077...............................                   170.77   Q1                    Level I Pulmonary
                                                                                      Treatment.
0099...............................                    81.40   Q1                    Electrocardiograms/
                                                                                      Cardiography.
0215...............................                    98.52   Q1                    Level I Nerve and Muscle
                                                                                      Services.
0230...............................                    54.01   Q1                    Level I Eye Tests &
                                                                                      Treatments.
0260...............................                    61.59   Q1                    Level I Plain Film
                                                                                      Including Bone Density
                                                                                      Measurement.
0261...............................                    98.56   Q1                    Level II Plain Film
                                                                                      Including Bone Density
                                                                                      Measurement.
0265...............................                    95.12   Q1                    Level I Diagnostic and
                                                                                      Screening Ultrasound.
0340...............................                    54.33   Q1                    Level II Minor Procedures.
0342...............................                    56.31   Q1                    Level I Pathology.
0345...............................                    78.91   Q1                    Level I Transfusion
                                                                                      Laboratory Procedures.
0364...............................                    44.94   Q1                    Level I Audiometry.
0365...............................                   122.36   Q1                    Level II Audiometry.
0367...............................                   167.31   Q1                    Level I Pulmonary Tests.
0420...............................                   136.66   Q1                    Level III Minor Procedures.
0433...............................                   190.55   Q1                    Level II Pathology.
0450...............................                    30.33   Q1                    Level I Minor Procedures.
0624...............................                    81.76   Q1                    Phlebotomy and Minor
                                                                                      Vascular Access Device
                                                                                      Procedures.
0690...............................                    36.47   Q1                    Level I Electronic Analysis
                                                                                      of Devices.
0698...............................                   104.61   Q1                    Level II Eye Tests &
                                                                                      Treatments.
----------------------------------------------------------------------------------------------------------------

    The HCPCS codes that we are conditionally package as ancillary 
services for CY 2015 are displayed in Addendum B to this CY 2015 OPPS/
ASC final rule with comment period (which is available via the Internet 
on the CMS Web site). The supporting documents for this final rule with 
comment period are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
(2) Prosthetic Supplies
    We have a longstanding policy of providing payment under the OPPS 
for implantable DME, implantable prosthetics, and medical and surgical 
supplies, as provided at sections 1833(t)(1)(B)(i) and (t)(1)(B)(iii) 
of the Act and 42 CFR 419.2(b)(4), (b)(10), and (b)(11). In the CY 2014 
OPPS/ASC final rule with comment period, we clarified that medical and 
surgical supplies under Sec.  419.2(b)(4) include (but are not limited 
to) all supplies on the DMEPOS Fee Schedule except prosthetic supplies 
(78 FR 74947). Under 42 CFR 419.22(j), prosthetic supplies are 
currently excluded from payment under the OPPS and are paid under the 
DMEPOS Fee Schedule, even when provided in the HOPD. However, as we 
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40961), under 
section 1833(t)(1)(B)(i) of the Act, the Secretary has the authority to 
designate prosthetic supplies provided in the hospital outpatient 
setting as covered OPD services payable under the OPPS.
    As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40961) 
and as mentioned above, implantable prosthetic devices are packaged in 
the OPPS under 42 CFR 419.2(b)(11). It is common for implantable 
prosthetic devices to be provided as a part of a device system. Such 
device systems include the implantable part or parts of the overall 
device system and also certain nonimplantable prosthetic supplies that 
are integral to the overall function of the medical device, part of 
which is implanted and part of which is external to the patient. These 
prosthetic supplies are integral to the implantable prosthetic because 
typically shortly after the surgical procedure to implant the 
implantable prosthetic device in the hospital, the surgeon and/or his 
or her colleagues will have to attach, fit, and program certain 
prosthetic supplies that are not surgically implanted into the patient 
but are a part of a system and that are essential to the overall 
function of an implanted device. Because these supplies are integral to 
the overall function of the implanted prosthetic, and because, as 
mentioned above, we package in the OPPS items and services that are 
typically integral, ancillary, supportive, dependent, or adjunctive to 
a primary service, we believe that it is most consistent with a 
prospective payment system to package the payment of prosthetic 
supplies (along with the implantable prosthetic device) into the 
surgical procedure that implants the prosthetic device, as all of the 
components are typically necessary for the performance of the system 
and the hospital typically purchases the system as a single unit. 
Patients requiring replacement supplies at a time later than the 
initial surgical procedure and outside of the hospital would obtain 
them as they typically do from a DMEPOS supplier with payment for such 
supplies made under the DMEPOS Fee Schedule.
    In addition to prosthetic supplies that are components of device 
systems, part of which are implanted, many other prosthetic supplies on 
the DMEPOS Fee Schedule are typical medical and surgical supplies and 
of the type that are packaged in the OPPS under Sec.  419.2(b)(4). 
Consistent with our change from status indicator ``A'' to ``N'' for all 
nonprosthetic DMEPOS supplies in the CY 2014 OPPS final rule with 
comment period (78 FR 74947), in the CY 2015 OPPS/ASC proposed rule (79 
FR 40961), we proposed to package and change the status indicator from 
``A'' to ``N'' for all DMEPOS prosthetic supplies. With this proposed 
change, all medical and surgical supplies would be packaged in the 
OPPS.
    Therefore, we proposed to delete ``prosthetic supplies'' from the 
regulations at Sec.  419.22(j) because we proposed that prosthetic 
supplies be packaged covered OPD services in the OPPS for CY 2015. 
Prosthetic supplies provided in the HOPD would be included in ``medical 
and surgical supplies'' (as are all other supplies currently provided 
in the HOPD) under Sec.  419.2(b)(4). The HCPCS codes for prosthetic 
supplies that we proposed to

[[Page 66823]]

package for CY 2015 were displayed in Addendum B to the CY 2015 OPPS/
ASC proposed rule (which is available via the Internet on the CMS Web 
site). The supporting documents for the proposed rule, including but 
not limited to Addendum B, are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Comment: Many commenters agreed with CMS' proposal to conditionally 
package prosthetic supplies furnished in the HOPD.
    Response: We appreciate the commenters' support.
    Comment: A few commenters requested to be informed of the fund 
transfer amount from the DMEPOS Fee Schedule to the OPPS as a result of 
this proposed policy.
    Response: Our CY 2013 claims analysis shows that packaging payment 
for prosthetic supplies under the OPPS would redistribute approximately 
$1 million.
    Comment: Some commenters recommended that CMS implement an 
exception to the ``unbundling'' rule that currently exists for the 
inpatient prospective payment systems (IPPS). (We refer readers to the 
Medicare Claims Processing Manual, Pub. 100-04, Chapter 20--Durable 
Medical Equipment, Prosthetics, Orthotic Devices, and Supplies, Section 
110--General Billing Requirements--for DME, Prosthetics, Orthotic 
Devices, and Supplies.) The commenters believed that such an exception 
would allow DME suppliers to bill Medicare directly for prosthetic 
supplies furnished to patients during an outpatient visit when the 
supplies are intended primarily for home use.
    Response: We do not believe that an additional exception to the 
``unbundling'' rule is necessary for the provision of prosthetic 
supplies in the HOPD. We remind commenters that DME, prosthetics, and 
orthotics can be billed by hospitals for outpatients and are paid 
according to the DMEPOS Fee Schedule. Only prosthetic supplies are 
packaged in the OPPS. Unlike inpatient stays, hospital outpatient stays 
are typically brief and the need for replacement supplies during a 
hospital outpatient stay should be minimal. If a hospital wants to 
provide a patient with some basic supplies for immediate home use (for 
example, tape, a syringe, or gauze), such supplies are packaged into 
the payment for whatever service the patient received at the hospital. 
DME suppliers can furnish additional or replacement prosthetic supplies 
to the patient's home and receive payment under the DMEPOS Fee 
Schedule.
    After consideration of the public comments we received, we are 
adopting as final our proposed deletion of ``prosthetic supplies'' from 
the regulations at Sec.  419.22(j) because prosthetic supplies are 
packaged covered OPD services in the OPPS for CY 2015. Prosthetic 
supplies provided in the HOPD will be included in the packaged category 
of ``medical and surgical supplies'' (as are all other supplies 
currently provided in the HOPD) under Sec.  419.2(b)(4). The HCPCS 
codes for prosthetic supplies that we are packaging for CY 2015 are 
displayed in Addendum B to this CY 2015 OPPS/ASC final rule with 
comment period (which is available via Internet on the CMS Web site). 
The supporting documents for this final rule with comment period, 
including but not limited to Addendum B, are available at the CMS Web 
site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
4. Calculation of OPPS Scaled Payment Weights
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40961 through 40962), 
for CY 2015, we proposed to calculate the relative payment weights for 
each APC shown in Addenda A and B to the proposed rule (which are 
available via the Internet on the CMS Web site) using the APC costs 
discussed in sections II.A.1. and II.A.2. of the proposed rule. Prior 
to CY 2007, we standardized all the relative payment weights to APC 
0601 (Mid-Level Clinic Visit) because mid-level clinic visits were 
among the most frequently performed services in the hospital outpatient 
setting. We assigned APC 0601 a relative payment weight of 1.00 and 
divided the median cost for each APC by the median cost for APC 0601 to 
derive the relative payment weight for each APC.
    Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all 
of the relative payment weights to APC 0606 (Level 3 Clinic Visits) 
because we deleted APC 0601 as part of the reconfiguration of the 
clinic visit APCs. We selected APC 0606 as the base because it was the 
mid-level clinic visit APC (that is, Level 3 of five levels). For the 
CY 2013 OPPS (77 FR 68283), we established a policy of using geometric 
mean-based APC costs rather than median-based APC costs to calculate 
relative payment weights. For CY 2015, we proposed to continue this 
policy.
    For the CY 2014 OPPS, we standardized all of the relative payment 
weights to clinic visit APC 0634 as discussed in section VII. of the CY 
2015 OPPS/ASC proposed rule (79 FR 41008). For CY 2015, we proposed to 
continue this policy to maintain consistency in calculating unscaled 
weights that represent the cost of some of the most frequently provided 
services. We proposed to assign APC 0634 a relative payment weight of 
1.00 and to divide the geometric mean cost of each APC by the proposed 
geometric mean cost for APC 0634 to derive the proposed unscaled 
relative payment weight for each APC. The choice of the APC on which to 
base the proposed relative payment weights does not affect payments 
made under the OPPS because we scale the weights for budget neutrality.
    Section 1833(t)(9)(B) of the Act requires that APC reclassification 
and recalibration changes, wage index changes, and other adjustments be 
made in a budget neutral manner. Budget neutrality ensures that the 
estimated aggregate weight under the OPPS for CY 2015 is neither 
greater than nor less than the estimated aggregate weight that would 
have been made without the changes. To comply with this requirement 
concerning the APC changes, we proposed to compare the estimated 
aggregate weight using the CY 2014 scaled relative payment weights to 
the estimated aggregate weight using the proposed CY 2015 unscaled 
relative payment weights.
    We did not receive any public comments on our proposed policy for 
the CY 2015 unscaled relative payment weights. Therefore, we are 
finalizing our proposed policy to maintain consistency in calculating 
unscaled weights that represent the cost of some of the most frequently 
provided services by assigning APC 0634 a relative payment weight of 
1.00 and dividing the geometric mean cost of each APC by the geometric 
mean cost for APC 0634 to derive the unscaled relative payment weight 
for each APC for CY 2015.
    For CY 2014, we multiplied the CY 2014 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2013 claims to calculate the total relative 
payment weight for each service. We then added together the total 
relative payment weight for each of these services in order to 
calculate an estimated aggregate weight for the year. For CY 2015, we 
proposed to apply the same process using the CY 2015 unscaled relative 
payment weights rather than scaled relative payment weights. We 
proposed to calculate the weight scaler by dividing the CY 2014 
estimated aggregate weight by the CY 2015 estimated aggregate weight 
(79 FR

[[Page 66824]]

40962). The service-mix is the same in the current and prospective 
years because we use the same set of claims for service volume in 
calculating the aggregate weight for each year. We note that the CY 
2014 OPPS scaled relative weights incorporate the estimated payment 
weight from packaged laboratory tests previously paid at CLFS rates.
    For a detailed discussion of the weight scaler calculation, we 
refer readers to the OPPS claims accounting document available on the 
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2015 OPPS 
final rule link, then open the claims accounting document link at the 
bottom of the page.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40962), we proposed to 
include estimated payments to CMHCs in our comparison of the estimated 
unscaled relative payment weights in CY 2015 to the estimated total 
relative payment weights in CY 2014 using CY 2013 claims data, holding 
all other components of the payment system constant to isolate changes 
in total weight. Based on this comparison, we proposed to adjust the 
proposed CY 2015 unscaled relative payment weights for purposes of 
budget neutrality. The proposed CY 2015 unscaled relative payment 
weights were adjusted by multiplying them by a weight scaler of 1.3220 
to ensure that the proposed CY 2015 relative payment weights are budget 
neutral.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain SCODs. Section 1833(t)(14)(H) of the Act states that 
``Additional expenditures resulting from this paragraph shall not be 
taken into account in establishing the conversion factor, weighting, 
and other adjustment factors for 2004 and 2005 under paragraph (9), but 
shall be taken into account for subsequent years.'' Therefore, the cost 
of those SCODs (as discussed in section V.B.3. of this final rule with 
comment period) is included in the budget neutrality calculations for 
the CY 2015 OPPS.
    Comment: One commenter expressed concern that CMS did not provide 
detailed data on the weight scaling process. The commenter noted that 
it could not find the claims accounting document to which the proposed 
rule referenced.
    Response: The direct link to the proposed rule claims accounting 
document is located on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1613-P-claims-accounting-narrative.pdf.
    After consideration of the public comments we received, we are 
finalizing our proposed methodology for calculating the OPPS scaled 
relative payment weights without modification, including updating of 
the budget neutrality scaler for this final rule with comment period. 
Under this methodology, the final unscaled relative payment weights 
were adjusted by a weight scaler of 1.2977 for this final rule with 
comment period. The CY 2015 unscaled relative payment weights listed in 
Addenda A and B to this final rule with comment period (which are 
available via the Internet on the CMS Web site) 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

    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2015 IPPS/LTCH PPS 
final rule (79 FR 49994), consistent with current law, based on IHS 
Global Insight, Inc.'s second quarter 2014 forecast of the FY 2015 
market basket increase, the FY 2015 IPPS market basket update is 2.9 
percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the 
Act, as added by section 3401(i) of the Patient Protection and 
Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section 
10319(g) of that law and further amended by section 1105(e) of the 
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), 
provide adjustments to the OPD fee schedule increase factor for CY 
2015.
    Specifically, section 1833(t)(3)(F)(i) of the Act requires that, 
for 2012 and subsequent years, the OPD fee schedule increase factor 
under subparagraph (C)(iv) be reduced by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 
1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 
equal to the 10-year moving average of changes in annual economy-wide, 
private nonfarm business multifactor productivity (MFP) (as projected 
by the Secretary for the 10-year period ending with the applicable 
fiscal year, year, cost reporting period, or other annual period) (the 
``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 
51689 through 51692), we finalized our methodology for calculating and 
applying the MFP adjustment. In the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 49994), we discussed the calculation of the MFP adjustment for 
FY 2015, which is 0.5 percentage point.
    As we proposed, based on more recent data that became subsequently 
available after the publication of the CY 2015 OPPS/ASC proposed rule 
(for example, a more recent estimate of the market basket increase and 
the MFP adjustment), we are using such updated data, if appropriate, to 
determine the CY 2015 market basket update and the MFP adjustment, 
components in calculating the OPD fee schedule increase factor under 
sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY 
2015 OPPS/ASC final rule with comment period.
    In addition, section 1833(t)(3)(F)(ii) of the Act requires that, 
for each of years 2010 through 2019, the OPD fee schedule increase 
factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the 
adjustment described in section 1833(t)(3)(G) of the Act. For CY 2015, 
section 1833(t)(3)(G)(iv) of the Act provides a 0.2 percentage point 
reduction to the OPD fee schedule increase factor under section 
1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections 
1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the Act, as we proposed, we 
are applying a 0.2 percentage point reduction to the OPD fee schedule 
increase factor for CY 2015.
    We note that section 1833(t)(3)(F) of the Act provides that 
application of this subparagraph may result in the OPD fee schedule 
increase factor under section 1833(t)(3)(C)(iv) of the Act being less 
than 0.0 percent for a year, and may result in OPPS payment rates being 
less than rates for the preceding year. As described in further detail 
below, we are finalizing an OPD fee schedule increase factor of 2.2 
percent for the CY 2015 OPPS (which is 2.9 percent, the estimate of the 
hospital inpatient market basket percentage increase, less the 0.5 
percentage point MFP adjustment, and less the 0.2 percentage point 
additional adjustment).
    Hospitals that fail to meet the Hospital OQR Program reporting 
requirements are subject to an additional reduction of 2.0 percentage 
points from the OPD fee schedule increase factor adjustment to the 
conversion factor that would be used to calculate the OPPS payment 
rates for

[[Page 66825]]

their services, as required by section 1833(t)(17) of the Act. For 
further discussion of the Hospital OQR Program, we refer readers to 
section XIII. of this final rule with comment period.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40963), we proposed to 
amend 42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (6) to 
reflect the requirement in section 1833(t)(3)(F)(i) of the Act that, 
for CY 2015, we reduce the OPD fee schedule increase factor by the MFP 
adjustment as determined by CMS, and to reflect the requirement in 
section 1833(t)(3)(G)(iv) of the Act, as required by section 
1833(t)(3)(F)(ii) of the Act, that we reduce the OPD fee schedule 
increase factor by an additional 0.2 percentage point for CY 2015.
    We did not receive any public comments on our proposed adjustments 
to the OPD fee schedule increase factor or the proposed amendment to 
Sec.  419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the 
requirement in section 1833(t)(3)(F)(i) of the Act. Therefore, for the 
reasons discussed above, we are adjusting the OPD fee schedule increase 
factor for CY 2015 as proposed. We also are finalizing the amendment to 
Sec.  419.32(b)(1)(iv)(B) as proposed.
    To set the OPPS conversion factor for CY 2015, we proposed to 
increase the CY 2014 conversion factor of $72.672 by 2.1 percent. In 
accordance with section 1833(t)(9)(B) of the Act, we further adjusted 
the conversion factor for CY 2015 to ensure that any revisions made to 
the wage index and rural adjustment were made on a budget neutral 
basis. We proposed a calculated overall budget neutrality factor of 
0.9998 for wage index changes by comparing total estimated payments 
from our simulation model using the FY 2015 IPPS wage indexes to those 
payments using the FY 2014 IPPS wage indexes, as adopted on a calendar 
year basis for the OPPS.
    For CY 2015, we proposed to maintain current rural adjustment 
policy, as discussed in section II.E. of this final rule with comment 
period. Therefore, the budget neutrality factor for the rural 
adjustment would be 1.0000.
    For CY 2015, we proposed to continue previously established 
policies for implementing the cancer hospital payment adjustment 
described in section 1833(t)(18) of the Act, as discussed in section 
II.F. of this final rule with comment period. We calculated a CY 2015 
budget neutrality adjustment factor for the cancer hospital payment 
adjustment by comparing estimated total CY 2015 payments under section 
1833(t) of the Act, including the CY 2015 cancer hospital payment 
adjustment, to estimated CY 2015 total payments using the CY 2014 final 
cancer hospital payment adjustment as required under section 
1833(t)(18)(B) of the Act. The CY 2015 estimated payments applying the 
CY 2015 cancer hospital payment adjustment are identical to estimated 
payments applying the CY 2014 final cancer hospital payment adjustment. 
Therefore, we applied a budget neutrality adjustment factor of 1.0000 
to the conversion factor for the cancer hospital payment adjustment.
    For the proposed rule, we estimated that pass-through spending for 
drugs, biologicals, and devices for CY 2015 would equal approximately 
$15.5 million, which represented 0.03 percent of total projected CY 
2015 OPPS spending. Therefore, the proposed conversion factor would be 
adjusted by the difference between the 0.02 percent estimate of pass-
through spending for CY 2014 and the 0.03 percent estimate of pass-
through spending for CY 2015, resulting in a proposed adjustment for CY 
2015 of 0.01 percent. Finally, estimated payments for outliers would 
remain at 1.0 percent of total OPPS payments for CY 2015.
    For the proposed rule, we 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 would make all other 
adjustments discussed above, but use a reduced OPD fee schedule update 
factor of 0.2 percent (that is, the OPD fee schedule increase factor of 
2.1 percent further reduced by 2.0 percentage points). This resulted in 
a proposed reduced conversion factor for CY 2015 of $72.692 for 
hospitals that fail to meet the Hospital OQR requirements (a difference 
of -$1.484 in the conversion factor relative to hospitals that met the 
requirements).
    Comment: MedPAC noted that CMS is required by law to implement the 
2015 update to the conversion factor as stated in the Affordable Care 
Act. In its March 2014 Report to Congress, MedPAC recommended an update 
of 3.25 percent and Congressional action to direct the Secretary to 
reduce or eliminate differences in payment rates between HOPDs and 
physician offices, which is different from the Affordable Care Act 
requirement.
    Response: As discussed above, 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. Section 
1833(t)(3)(C)(iv) provides that the OPD fee schedule increase factor, 
subject to sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the Act, is 
equal to the hospital inpatient market basket percentage increase 
applicable to hospital discharges under section 1886(b)(3)(B)(iii) of 
the Act.
    After consideration of the public comment we received, we are 
finalizing the calculation of the CY 2015 OPPS conversion factor as 
proposed. We are finalizing the proposed amendment to Sec.  
419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the 
reductions to the OPD fee schedule increase factor that are required 
for CY 2015 to satisfy the statutory requirements of sections 
1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. We are using a reduced 
conversion factor of $72.661 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -$1.483 in the conversion factor relative to hospitals 
that met the requirements).
    For CY 2015, we are finalizing our proposal to continue previously 
established policies for implementing the cancer hospital payment 
adjustment described in section 1833(t)(18) of the Act, as discussed in 
section II.F. of this final rule with comment period.
    For this final rule with comment period, we estimate that pass-
through spending for drugs, biologicals, and devices for CY 2015 will 
equal approximately $82.8 million, which represents 0.15 percent of 
total projected CY 2015 OPPS spending. Therefore, the conversion factor 
is also adjusted by the difference between the 0.02 percent estimate of 
pass-through spending for CY 2014 and the 0.15 percent estimate of 
pass-through spending for CY 2015, resulting in an adjustment for CY 
2015 of -0.13 percent. Finally, estimated payments for outliers remain 
at 1.0 percent of total OPPS payments for CY 2015.
    As a result of these final policies, the OPD fee schedule increase 
factor for the CY 2015 OPPS is 2.2 percent (which is 2.9 percent, the 
estimate of the hospital inpatient market basket percentage increase, 
less the 0.5 percentage point MFP adjustment, and less the 0.2 
percentage point additional adjustment). For CY 2015, we are using a 
conversion factor of $74.144 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 2.2 percent for CY 2015, the required wage 
index budget neutrality adjustment of

[[Page 66826]]

approximately 0.9996, the cancer hospital payment adjustment of 1.0000, 
and the adjustment of -0.13 percent of projected OPPS spending for the 
difference in the pass-through spending result in a conversion factor 
for CY 2015 of $74.144.

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.B. 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). Therefore, in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40964), we proposed to continue this policy for 
the CY 2015 OPPS. We refer readers to section II.H. of this final rule 
with comment period for a description and example of how the wage index 
for a particular hospital is used to determine payment for the 
hospital.
    As discussed in section II.A.2.c. of this final rule with comment 
period, for estimating APC costs, we standardize 60 percent of 
estimated claims costs for geographic area wage variation using the 
same FY 2015 pre-reclassified wage index that the IPPS uses to 
standardize costs. This standardization process removes the effects of 
differences in area wage levels from the determination of a national 
unadjusted OPPS payment rate and copayment amount.
    Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the original 
OPPS April 7, 2000 final rule with comment period (65 FR 18495 and 
18545)), the OPPS adopted the final fiscal year IPPS wage index as the 
calendar year wage index for adjusting the OPPS standard payment 
amounts for labor market differences. Therefore, the wage index that 
applies to a particular acute care short-stay hospital under the IPPS 
also applies to that hospital under the OPPS. As initially explained in 
the September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that 
using the IPPS wage index as the source of an adjustment factor for the 
OPPS is reasonable and logical, given the inseparable, subordinate 
status of the HOPD within the hospital overall. In accordance with 
section 1886(d)(3)(E) of the Act, the IPPS wage index is updated 
annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74191). As discussed in that 
final rule with comment period, section 10324 of the Affordable Care 
Act added section 1886(d)(3)(E)(iii)(II) to the Act, which defines a 
``frontier State,'' and amended section 1833(t) of the Act to add new 
paragraph (19), which requires a ``frontier State'' wage index floor of 
1.00 in certain cases, and states that the frontier State floor shall 
not be applied in a budget neutral manner. We codified these 
requirements in Sec.  419.43(c)(2) and (c)(3) of our regulations. In 
the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to 
implement this provision in the same manner as we have since CY 2011. 
That is, frontier State hospitals would receive a wage index of 1.00 if 
the otherwise applicable wage index (including reclassification, rural 
and imputed floor, and rural floor budget neutrality) is less than 
1.00. Similar to our current policy for HOPDs that are affiliated with 
multicampus hospital systems, we proposed that the HOPD would receive a 
wage index based on the geographic location of the specific inpatient 
hospital with which it is associated. Therefore, if the associated 
hospital is located in a frontier State, the wage index adjustment 
applicable for the hospital also will apply for the affiliated HOPD. We 
refer readers to the following sections in the FY 2011 through FY 2015 
IPPS/LTCH PPS final rules for discussions regarding this provision, 
including our methodology for identifying which areas meet the 
definition of ``frontier States'' as provided for in section 
1886(d)(3)(E)(iii)(II) of the Act: For FY 2011, 75 FR 50160 through 
50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 
53369 through 53370; for FY 2014, 78 FR 50590 through 50591; and for FY 
2015, 79 FR 49971.
    In addition to the changes required by the Affordable Care Act, we 
note that the FY 2015 IPPS wage indexes continue to reflect a number of 
adjustments implemented over the past few years, including, but not 
limited to, reclassification of hospitals to different geographic 
areas, the rural and imputed floor provisions, an adjustment for 
occupational mix, and an adjustment to the wage index based on 
commuting patterns of employees (the out-migration adjustment). We 
refer readers to the FY 2015 IPPS/LTCH PPS proposed rule and final rule 
(79 FR 28054 through 28084 and 79 FR 49950 through 49991, respectively) 
for a detailed discussion of all changes to the FY 2015 IPPS wage 
indexes. In addition, we refer readers to the CY 2005 OPPS final rule 
with comment period (69 FR 65842 through 65844) and subsequent OPPS 
rules for a detailed discussion of the history of these wage index 
adjustments as applied under the OPPS.
    As discussed in the FY 2015 IPPS/LTCH PPS proposed rule and final 
rule (79 FR 28054 through 28055 and 79 FR 49951 through 49957, 
respectively), the Office of Management and Budget (OMB) issued 
revisions to the current labor market area delineations on February 28, 
2013, that included a number of significant changes such as new Core 
Based Statistical Areas (CBSAs), urban counties that become rural, 
rural counties that become urban, and existing CBSAs that are split 
apart (OMB Bulletin 13-01). This bulletin can be found at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. 
As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50586), in 
order to allow for sufficient time to assess the new revisions and 
their ramifications, we intended to propose changes to the IPPS wage 
index based on the newest CBSA delineations in the FY 2015 IPPS/LTCH 
PPS proposed rule. Similarly, in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74951), we stated that we intended to propose 
changes in the OPPS, which uses the IPPS wage index, based on the new 
OMB delineations in the CY 2015 OPPS/ASC proposed rule, consistent with 
any proposals in the FY 2015 IPPS/LTCH PPS proposed rule. We refer 
readers to proposed changes based on the new OMB delineations in the FY 
2015 IPPS/LTCH proposed rule at 79 FR 28054 through 28084 and the final 
changes based on the new OMB delineations in the FY 2015 IPPS/LTCH PPS 
final rule at 79 FR 49950 through 49966.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to 
use the FY 2015 hospital IPPS wage index for urban and rural areas as 
the wage index for the OPPS hospital to determine the wage adjustments 
for the OPPS payment rate and the copayment standardized amount for CY 
2015. (We

[[Page 66827]]

refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49850) and 
the final FY 2015 hospital wage index files posted on the CMS Web 
site.) We note that the final FY 2015 IPPS wage indexes reflect a 
number of changes as a result of the new OMB delineations as well as a 
1-year extension of the imputed rural floor. We proposed that the CY 
2015 OPPS wage index (for hospitals paid under the IPPS and OPPS) would 
be the final FY 2015 IPPS wage index. Thus, any adjustments, including 
the adjustments related to the new OMB delineations, that were 
finalized for the IPPS wage index would be reflected in the OPPS wage 
index. As stated earlier in this section, we continue to believe that 
using the IPPS wage index as the source of an adjustment factor for the 
OPPS is reasonable and logical, given the inseparable, subordinate 
status of the HOPD within the hospital overall. Therefore, we did not 
propose to change our existing regulations, which require that we use 
the FY 2015 IPPS wage indexes for calculating OPPS payments in CY 2015.
    Hospitals that are paid under the OPPS but not under the IPPS do 
not have a hospital wage index under the IPPS. Therefore, for non-IPPS 
hospitals paid under the OPPS, we assign the wage index that would be 
applicable if the hospital were paid under the IPPS, based on its 
geographic location and any applicable wage index adjustments. We 
proposed to adopt the final wage index changes from the FY 2015 IPPS/
LTCH PPS final rule for these hospitals. The following is a brief 
summary of the major changes in the FY 2015 IPPS wage indexes and any 
adjustments that we proposed to apply to these hospitals under the OPPS 
for CY 2015. We refer the reader to the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 49950 through 49991) for a detailed discussion of the 
changes to the wage indexes.
    For CY 2015, we proposed to continue our policy of allowing non-
IPPS hospitals paid under the OPPS to qualify for the out-migration 
adjustment if they are located in a section 505 out-migration county 
(section 505 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173)). We stated in the 
proposed rule that applying this adjustment is consistent with our 
proposed policy of adopting IPPS wage index policies for hospitals paid 
under the OPPS. We note that, because non-IPPS hospitals cannot 
reclassify, they would be eligible for the out-migration wage 
adjustment if they are located in a section 505 out-migration county. 
This is the same out-migration adjustment policy that would apply if 
the hospital were paid under the IPPS. Table 4J from the FY 2015 IPPS/
LTCH PPS final rule (available via the Internet on the CMS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) identifies counties eligible for the out-
migration adjustment and IPPS hospitals that will receive the 
adjustment for FY 2015.
    As we have done in prior years, we are including Table 4J from the 
FY 2015 IPPS/LTCH PPS 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 out-migration adjustment under the CY 2015 
OPPS. Addendum L is available via the Internet on the CMS Web site.
    In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed to adopt 
the new OMB labor market area delineations issued by OMB in OMB 
Bulletin No. 13-01 on February 28, 2013, based on standards published 
on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data 
to delineate labor market areas for purposes of the IPPS wage index. In 
the FY 2015 IPPS/LTCH PPS final rule, we finalized the adoption of the 
new OMB delineations. For IPPS wage index purposes, for hospitals that 
are designated as rural under the new OMB labor market area 
delineations that currently are located in urban CBSAs, we generally 
assigned them the urban wage index value of the CBSA in which they are 
physically located for FY 2014 for a period of 3 fiscal years (79 FR 
28060 through 28061 and 79 FR 49957 through 49960). To be consistent, 
we proposed to apply the same policy to hospitals paid under the OPPS 
but not under the IPPS so that such hospitals will maintain the wage 
index of the CBSA in which they are physically located for FY 2014 for 
the next 3 calendar years. As stated in the CY 2015 OPPS/ASC proposed 
rule (79 FR 40965), this proposed policy would impact six hospitals for 
purposes of OPPS payment.
    We believe that adopting the new OMB labor market area delineations 
creates a more accurate wage index system, but we also recognize that 
implementing the new OMB delineations may cause some short-term 
instability in hospital payments. Therefore, similar to the policy we 
adopted in the FY 2005 IPPS final rule (69 FR 49033), in the FY 2015 
IPPS/LTCH PPS final rule (79 FR 49960 through 49962), we finalized a 1-
year blended wage index for all hospitals that experience any decrease 
in their actual payment wage index exclusively due to the 
implementation of the new OMB delineations. Under this final IPPS 
policy, a post-reclassified wage index with the rural and imputed 
floors applied is computed based on the hospital's FY 2014 CBSA (that 
is, using all of its FY 2014 constituent county/ies), and another post-
reclassified wage index with the rural and imputed floors applied is 
computed based on the hospital's new FY 2015 CBSA (that is, the FY 2015 
constituent county/ies). We then compare these two wage indexes. If the 
FY 2015 wage index with FY 2015 CBSAs is lower than the FY 2015 wage 
index with FY 2014 CBSAs, we compute a blended wage index consisting of 
50 percent of each of the two wage indexes added together. This blended 
wage index will be the IPPS hospital's wage index for FY 2015. In the 
CY 2015 OPPS/ASC proposed rule, for purposes of the OPPS, we proposed 
to apply this 50-percent transition blend to hospitals paid under the 
OPPS but not under the IPPS. We stated that we believe a 1-year, 50/50 
blended wage index would mitigate the short-term instability and 
negative payment impacts due to the implementation of the new OMB 
delineations, providing hospitals with a transition period during which 
they may adjust to their new geographic CBSA. We believe that a longer 
transition period would reduce the accuracy of the overall labor market 
area wage index system, and generally would not be warranted for 
hospitals moving from one urban geographic labor market area to 
another.
    In addition, for the FY 2015 IPPS, we are continuing the extension 
of the imputed floor policy (both the original methodology and 
alternative methodology) for another year, through September 30, 2015 
(79 FR 49969 through 49971). For purposes of the CY 2015 OPPS, we also 
proposed to apply the imputed floor policy to hospitals paid under the 
OPPS but not under the IPPS.
    For CMHCs, 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. As with OPPS hospitals and for the same reasons, 
we proposed to apply a 1-year, 50/50 blended wage index to CMHCs that 
would receive a lower wage index due to the new CBSA delineations. In 
addition, as with OPPS hospitals and for the same reasons, for CMHCs 
currently located in urban CBSAs that are designated as rural under the 
new OMB labor market area delineations, we proposed to maintain the 
urban wage index value of the CBSA in which they are physically located 
for

[[Page 66828]]

CY 2014 for the next 3 calendar years. Consistent with our current 
policy, the wage index that applies to CMHCs includes both the imputed 
floor adjustment and the rural floor adjustment, but does not include 
the out-migration adjustment because that adjustment only applies to 
hospitals.
    With the exception of the out-migration wage adjustment table 
(Addendum L to this final rule with comment period, which is available 
via the Internet on the CMS Web site), which includes non-IPPS 
hospitals paid under the OPPS, we are not reprinting the FY 2015 IPPS 
wage indexes referenced in this discussion of the wage index. We refer 
readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the final FY 2015 
IPPS wage index tables.
    Comment: One commenter suggested that the IPPS rural floor should 
utilize State-specific budget neutrality rather than national budget 
neutrality to prevent it from being susceptible to gaming by hospitals. 
The commenter suggested that, under the current policy, an urban 
hospital can reclassify to rural status to improve the rural wage index 
in the State, which in some cases is used as a floor for urban 
hospitals.
    Response: As we stated in the FY 2015 IPPS/LTCH PPS final rule (79 
FR 50370), section 3141 of Public Law 111-148 requires that a national 
budget neutrality adjustment be applied in implementing the rural floor 
policy under the IPPS. Therefore, absent a legislative change enacted 
by Congress, we are unable to change the rural floor budget neutrality 
adjustment from a national adjustment to a State-specific adjustment. 
In this final rule with comment period, we are adopting the final 
fiscal year IPPS wage index as the calendar year wage index for 
adjusting the OPPS standard payment amounts for labor market 
differences. We refer readers to the FY 2015 IPPS/LTCH PPS final rule 
(79 FR 50370 through 50372) for further discussion and a detailed 
response to a similar comment.
    After considering the public comment we received, we are finalizing 
our proposals to use the FY 2015 IPPS final wage index as the CY 2015 
wage index for OPPS hospitals and CMHCs, as discussed above and as set 
forth in the CY 2015 OPPS/ASC proposed rule (79 FR 40963 through 
40965), without modification.

D. Statewide Average Default CCRs

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the hospital's most recent cost report to determine outlier 
payments, payments for pass-through devices, and monthly interim 
transitional corridor payments under the OPPS during the PPS year. MACs 
cannot calculate a CCR for some hospitals because there is no cost 
report available. For these hospitals, CMS uses the statewide average 
default CCRs to determine the payments mentioned above until a 
hospital's MAC is able to calculate the hospital's actual CCR from its 
most recently submitted Medicare cost report. These hospitals include, 
but are not limited to, hospitals that are new, have not accepted 
assignment of an existing hospital's provider agreement, and have not 
yet submitted a cost report. CMS also uses the statewide average 
default CCRs to determine payments for hospitals that appear to have a 
biased CCR (that is, the CCR falls outside the predetermined ceiling 
threshold for a valid CCR) or for hospitals in which the most recent 
cost report reflects an all-inclusive rate status (Medicare Claims 
Processing Manual (Pub. 100-04), Chapter 4, Section 10.11). In the CY 
2015 OPPS/ASC proposed rule (79 FR 40966), we proposed to update the 
default ratios for CY 2015 using the most recent cost report data. We 
discuss our policy for using default CCRs, including setting the 
ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68594 through 68599) in the context of our 
adoption of an outlier reconciliation policy for cost reports beginning 
on or after January 1, 2009.
    For CY 2015, we proposed to continue to use our standard 
methodology of calculating the statewide average default CCRs using the 
same hospital overall CCRs that we use to adjust charges to costs on 
claims data for setting the CY 2015 OPPS relative payment weights. 
Table 12 published in the proposed rule (79 FR 40966 through 40968) 
listed the proposed CY 2015 default urban and rural CCRs by State and 
compared them to the CY 2014 default CCRs. These proposed CCRs 
represented the ratio of total costs to total charges for those cost 
centers relevant to outpatient services from each hospital's most 
recently submitted cost report, weighted by Medicare Part B charges. We 
also proposed to adjust ratios from submitted cost reports to reflect 
the final settled status by applying the differential between settled 
to submitted overall CCRs for the cost centers relevant to outpatient 
services from the most recent pair of final settled and submitted cost 
reports. We then proposed to weight each hospital's CCR by the volume 
of separately paid line-items on hospital claims corresponding to the 
year of the majority of cost reports used to calculate the overall 
CCRs. We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66680 through 66682) and prior OPPS rules for a more 
detailed discussion of our established methodology for calculating the 
statewide average default CCRs, including the hospitals used in our 
calculations and our trimming criteria.
    We did not receive any public comments on our CY 2015 proposal. 
Therefore, we are finalizing our proposal, without modification, to 
apply our standard methodology of calculating the statewide average 
default CCRs using the same hospital overall CCRs that we used to 
adjust charges to costs on claims data for setting the CY 2015 OPPS 
relative payment weights. We used this methodology to calculate the 
statewide average default CCRs listed in Table 13 below.
    For Maryland, we used an overall weighted average CCR for all 
hospitals in the Nation as a substitute for Maryland CCRs. Few 
hospitals in Maryland are eligible to receive payment under the OPPS, 
which limits the data available to calculate an accurate and 
representative CCR. The weighted CCR is used for Maryland because it 
takes into account each hospital's volume, rather than treating each 
hospital equally. We refer readers to the CY 2005 OPPS final rule with 
comment period (69 FR 65822) for further discussion and the rationale 
for our longstanding policy of using the national average CCR for 
Maryland. In general, observed changes in the statewide average default 
CCRs between CY 2014 and CY 2015 are modest and the few significant 
changes are associated with areas that have a small number of 
hospitals.
    Table 13 below lists the statewide average default CCRs for OPPS 
services furnished on or after January 1, 2015.

[[Page 66829]]

                                    Table 13--CY 2015 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                CY 2015 default  default CCR (CY
                    State                                Urban/rural                  CCR        2014 OPPS final
                                                                                                      rule)
----------------------------------------------------------------------------------------------------------------
ALABAMA......................................  RURAL..........................           0.235            0.229
ALABAMA......................................  URBAN..........................           0.186            0.188
ALASKA.......................................  RURAL..........................           0.439            0.473
ALASKA.......................................  URBAN..........................           0.294            0.302
ARIZONA......................................  RURAL..........................           0.228            0.254
ARIZONA......................................  URBAN..........................           0.181            0.182
ARKANSAS.....................................  RURAL..........................           0.262            0.244
ARKANSAS.....................................  URBAN..........................           0.239            0.220
CALIFORNIA...................................  RURAL..........................           0.178            0.190
CALIFORNIA...................................  URBAN..........................           0.196            0.206
COLORADO.....................................  RURAL..........................           0.410            0.393
COLORADO.....................................  URBAN..........................           0.219            0.221
CONNECTICUT..................................  RURAL..........................           0.339            0.343
CONNECTICUT..................................  URBAN..........................           0.273            0.276
DELAWARE.....................................  URBAN..........................           0.314            0.356
DISTRICT OF COLUMBIA.........................  URBAN..........................           0.299            0.279
FLORIDA......................................  RURAL..........................           0.180            0.160
FLORIDA......................................  URBAN..........................           0.156            0.160
GEORGIA......................................  RURAL..........................           0.256            0.260
GEORGIA......................................  URBAN..........................           0.211            0.205
HAWAII.......................................  RURAL..........................           0.337            0.345
HAWAII.......................................  URBAN..........................           0.307            0.298
IDAHO........................................  RURAL..........................           0.353            0.359
IDAHO........................................  URBAN..........................           0.463            0.478
ILLINOIS.....................................  RURAL..........................           0.252            0.252
ILLINOIS.....................................  URBAN..........................           0.217            0.222
INDIANA......................................  RURAL..........................           0.334            0.326
INDIANA......................................  URBAN..........................           0.262            0.288
IOWA.........................................  RURAL..........................           0.321            0.308
IOWA.........................................  URBAN..........................           0.269            0.266
KANSAS.......................................  RURAL..........................           0.300            0.313
KANSAS.......................................  URBAN..........................           0.231            0.239
KENTUCKY.....................................  RURAL..........................           0.231            0.221
KENTUCKY.....................................  URBAN..........................           0.212            0.225
LOUISIANA....................................  RURAL..........................           0.272            0.257
LOUISIANA....................................  URBAN..........................           0.209            0.222
MAINE........................................  RURAL..........................           0.430            0.452
MAINE........................................  URBAN..........................           0.432            0.438
MARYLAND.....................................  RURAL..........................           0.296            0.283
MARYLAND.....................................  URBAN..........................           0.244            0.248
MASSACHUSETTS................................  RURAL..........................           0.326            0.395
MASSACHUSETTS................................  URBAN..........................           0.333            0.336
MICHIGAN.....................................  RURAL..........................           0.371            0.341
MICHIGAN.....................................  URBAN..........................           0.320            0.322
MINNESOTA....................................  RURAL..........................           0.485            0.462
MINNESOTA....................................  URBAN..........................           0.347            0.349
MISSISSIPPI..................................  RURAL..........................           0.247            0.233
MISSISSIPPI..................................  URBAN..........................           0.181            0.200
MISSOURI.....................................  RURAL..........................           0.267            0.263
MISSOURI.....................................  URBAN..........................           0.274            0.280
MONTANA......................................  RURAL..........................           0.501            0.481
MONTANA......................................  URBAN..........................           0.386            0.384
NEBRASKA.....................................  RURAL..........................           0.290            0.323
NEBRASKA.....................................  URBAN..........................           0.255            0.243
NEVADA.......................................  RURAL..........................           0.241            0.220
NEVADA.......................................  URBAN..........................           0.149            0.154
NEW HAMPSHIRE................................  RURAL..........................           0.362            0.326
NEW HAMPSHIRE................................  URBAN..........................           0.280            0.287
NEW JERSEY...................................  URBAN..........................           0.202            0.213
NEW MEXICO...................................  RURAL..........................           0.296            0.291
NEW MEXICO...................................  URBAN..........................           0.294            0.304
NEW YORK.....................................  RURAL..........................           0.333            0.345
NEW YORK.....................................  URBAN..........................           0.340            0.351
NORTH CAROLINA...............................  RURAL..........................           0.280            0.258
NORTH CAROLINA...............................  URBAN..........................           0.246            0.256
NORTH DAKOTA.................................  RURAL..........................           0.660            0.661
NORTH DAKOTA.................................  URBAN..........................           0.395            0.400
OHIO.........................................  RURAL..........................           0.317            0.327

[[Page 66830]]

 
OHIO.........................................  URBAN..........................           0.222            0.232
OKLAHOMA.....................................  RURAL..........................           0.282            0.258
OKLAHOMA.....................................  URBAN..........................           0.203            0.205
OREGON.......................................  RURAL..........................           0.287            0.311
OREGON.......................................  URBAN..........................           0.352            0.357
PENNSYLVANIA.................................  RURAL..........................           0.283            0.257
PENNSYLVANIA.................................  URBAN..........................           0.197            0.198
PUERTO RICO..................................  URBAN..........................           0.577            0.614
RHODE ISLAND.................................  URBAN..........................           0.297            0.295
SOUTH CAROLINA...............................  RURAL..........................           0.191            0.190
SOUTH CAROLINA...............................  URBAN..........................           0.207            0.203
SOUTH DAKOTA.................................  RURAL..........................           0.286            0.287
SOUTH DAKOTA.................................  URBAN..........................           0.214            0.219
TENNESSEE....................................  RURAL..........................           0.203            0.207
TENNESSEE....................................  URBAN..........................           0.188            0.190
TEXAS........................................  RURAL..........................           0.251            0.235
TEXAS........................................  URBAN..........................           0.203            0.197
UTAH.........................................  RURAL..........................           0.481            0.474
UTAH.........................................  URBAN..........................           0.335            0.334
VERMONT......................................  RURAL..........................           0.439            0.456
VERMONT......................................  URBAN..........................           0.353            0.397
VIRGINIA.....................................  RURAL..........................           0.219            0.226
VIRGINIA.....................................  URBAN..........................           0.241            0.238
WASHINGTON...................................  RURAL..........................           0.300            0.330
WASHINGTON...................................  URBAN..........................           0.330            0.360
WEST VIRGINIA................................  RURAL..........................           0.312            0.283
WEST VIRGINIA................................  URBAN..........................           0.300            0.319
WISCONSIN....................................  RURAL..........................           0.328            0.344
WISCONSIN....................................  URBAN..........................           0.294            0.291
WYOMING......................................  RURAL..........................           0.429            0.400
WYOMING......................................  URBAN..........................           0.262            0.269
----------------------------------------------------------------------------------------------------------------

E. Adjustment for Rural SCHs and EACHs Under Section 1833(t)(13)(B) of 
the Act

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural SCHs of 7.1 percent for all 
services and procedures paid under the OPPS, excluding drugs, 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy in accordance with section 1833(t)(13)(B) of the 
Act, as added by section 411 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). 
Section 1833(t)(13) of the Act provided the Secretary the authority to 
make an adjustment to OPPS payments for rural hospitals, effective 
January 1, 2006, if justified by a study of the difference in costs by 
APC between hospitals in rural areas and hospitals in urban areas. Our 
analysis showed a difference in costs for rural SCHs. Therefore, for 
the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 
7.1 percent for all services and procedures paid under the OPPS, 
excluding separately payable drugs and biologicals, brachytherapy 
sources, and devices paid under the pass-through payment policy, in 
accordance with section 1833(t)(13)(B) of the Act.
    In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 
and 68227), for purposes of receiving this rural adjustment, we revised 
Sec.  419.43(g) of the regulations to clarify that EACHs also are 
eligible to receive the rural SCH adjustment, assuming these entities 
otherwise meet the rural adjustment criteria. Currently, two hospitals 
are classified as EACHs, and as of CY 1998, under section 4201(c) of 
Public Law 105-33, a hospital can no longer become newly classified as 
an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2014. Further, in the CY 
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated 
the regulations at Sec.  419.43(g)(4) to specify, in general terms, 
that items paid at charges adjusted to costs by application of a 
hospital-specific CCR are excluded from the 7.1 percent payment 
adjustment.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for the CY 
2015 OPPS, we proposed to continue our policy of a 7.1 percent payment 
adjustment that is done in a budget neutral manner for rural SCHs, 
including EACHs, for all services and procedures paid under the OPPS, 
excluding separately payable drugs and biologicals, devices paid under 
the pass-through payment policy, and items paid at charges reduced to 
costs.
    Comment: Several commenters supported the proposed continuation of 
the 7.1 percent rural SCH adjustment. Several commenters, including 
MedPAC, also recommended that CMS update the analysis in the near 
future to assess if the 7.1 percent payment adjustment remains a valid 
figure.
    Response: We appreciate the commenters' support. We agree that it 
is appropriate to continue the 7.1 percent

[[Page 66831]]

adjustment for rural SCHs (including EACHs) as we proposed for CY 2015. 
As we indicated in the proposed rule (79 FR 40968), we may reassess the 
7.1 percent rural adjustment in the near future by examining 
differences between urban hospitals' costs and rural hospitals' costs 
using updated claims, cost reports, and provider information.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal to continue our policy of a 7.1 percent 
payment adjustment that is done in a budget neutral manner for rural 
SCHs, including EACHs, for all services and procedures paid under the 
OPPS, excluding separately payable drugs and biologicals, devices paid 
under the pass-through payment policy, and items paid at charges 
reduced to costs.

F. OPPS Payment to Certain Cancer Hospitals Described by Section 
1886(d)(1)(B)(v) of the Act

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals that meet the criteria for cancer hospitals identified 
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered 
outpatient hospital services. These cancer hospitals are exempted from 
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced 
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established 
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit 
Decline in Payment,'' to determine OPPS payments to cancer and 
children's hospitals based on their pre-BBA payment amount (often 
referred to as ``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held harmless to 
their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower under the OPPS than the payment they 
would have received before implementation of the OPPS, as set forth in 
section 1833(t)(7)(F) of the Act. The ``pre-BBA amount'' is the product 
of the hospital's reasonable costs for covered outpatient services 
occurring in the current year and the base payment-to-cost ratio (PCR) 
for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The 
``pre-BBA amount,'' including the determination of the base PCR, are 
defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet E, Part 
B, of the Hospital Cost Report or the Hospital Health Care Complex Cost 
Report (Form CMS-2552-96 and Form CMS-2552-10, respectively) as 
applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs 
from budget neutrality calculations.
    Section 3138 of the Affordable Care Act amended section 1833(t) of 
the Act by adding a new paragraph (18), which instructs the Secretary 
to conduct a study to determine if, under the OPPS, outpatient costs 
incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of 
the Act with respect to APC groups exceed outpatient costs incurred by 
other hospitals furnishing services under section 1833(t) of the Act, 
as determined appropriate by the Secretary. Section 1833(t)(18)(A) of 
the Act requires the Secretary to take into consideration the cost of 
drugs and biologicals incurred by cancer and other hospitals. Section 
1833(t)(18)(B) of the Act provides that if the Secretary determines 
that cancer hospitals' costs are greater than other hospitals' costs, 
the Secretary shall provide an appropriate adjustment under section 
1833(t)(2)(E) of the Act to reflect these higher costs. In 2011, after 
conducting the study required by section 1833(t)(18)(A) of the Act, we 
determined that outpatient costs incurred by the 11 specified cancer 
hospitals were greater than the costs incurred by other OPPS hospitals. 
For a complete discussion regarding the cancer hospital cost study, we 
refer readers to the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74200 through 74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most recent submitted or settled cost report data 
that are available at the time of final rulemaking for the calendar 
year. The amount of the payment adjustment is made on an aggregate 
basis at cost report settlement. We note that the changes made by 
section 1833(t)(18) of the Act do not affect the existing statutory 
provisions that provide for TOPs for cancer hospitals. The TOPs are 
assessed as usual after all payments, including the cancer hospital 
payment adjustment, have been made for a cost reporting period. For CYs 
2012 and 2013, the target PCR for purposes of the cancer hospital 
payment adjustment was 0.91. For CY 2014, the target PCR for purposes 
of the cancer hospital payment adjustment was 0.89.
2. Payment Adjustment for Certain Cancer Hospitals for CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for CY 2015, 
we proposed to continue our policy to provide additional payments to 
cancer hospitals so that each cancer hospital's final PCR is equal to 
the weighted average PCR (or ``target PCR'') for the other OPPS 
hospitals using the most recent submitted or settled cost report data 
that were available at the time of the development of the proposed 
rule. To calculate the proposed CY 2015 target PCR, we used the same 
extract of cost report data from HCRIS, as discussed in section II.A. 
of the proposed rule, used to estimate costs for the CY 2015 OPPS. 
Using these cost report data, we included data from Worksheet E, Part 
B, for each hospital, using data from each hospital's most recent cost 
report, whether as submitted or settled.
    We then limited the dataset to the hospitals with CY 2013 claims 
data that we used to model the impact of the proposed CY 2015 APC 
relative payment weights (3,881 hospitals) because it is appropriate to 
use the same set of hospitals that we used to calibrate the modeled CY 
2015 OPPS. The cost report data for the hospitals in this dataset were 
from cost report periods with fiscal year ends ranging from 2012 to 
2013. We then removed the cost report data of the 47 hospitals located 
in Puerto Rico from our dataset because we do not believe that their 
cost structure reflects the costs of most hospitals paid under the OPPS 
and, therefore, their inclusion may bias the calculation of hospital-
weighted statistics. We also removed the cost report data of 27 
hospitals because these hospitals had cost report data that were not 
complete (missing aggregate OPPS payments, missing aggregate cost data, 
or missing both), so that all cost reports in the study would have both 
the payment and cost data necessary to calculate a PCR for each 
hospital, leading to a proposed analytic file of 3,807 hospitals with 
cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on

[[Page 66832]]

average, the OPPS payments to other hospitals furnishing services under 
the OPPS were approximately 89 percent of reasonable cost (weighted 
average PCR of 0.89). Therefore, we proposed that the payment amount 
associated with the cancer hospital payment adjustment to be determined 
at cost report settlement would be the additional payment needed to 
result in a proposed target PCR equal to 0.89 for each cancer hospital. 
Table 13 of the proposed rule (79 FR 40969) indicated the estimated 
percentage increase in OPPS payments to each cancer hospital for CY 
2015 due to the cancer hospital payment adjustment policy.
    Comment: Several commenters noted that cancer hospitals have 
significantly higher costs than other OPPS hospitals and agreed with 
CMS' proposal to provide the proposed payment adjustment.
    Response: We appreciate the commenters' support of our proposal. As 
described in detail below, we performed the same analysis as in 
previous years comparing the PCR for these cancer hospitals relative to 
other OPPS hospitals. That study indicates that there is a difference 
in PCRs between these hospital types. Accordingly, we are finalizing a 
cancer hospital adjustment with a target PCR of 0.89 based on that 
analysis.
    After consideration of the public comments we received, we are 
finalizing our proposal to establish the target PCR equal to 0.89 for 
each cancer hospital. For this final rule with comment period, we have 
rerun our calculations to determine the target PCR using the latest 
available cost data and have determined that 0.89 is still the correct 
target PCR. We limited the dataset to the hospitals with CY 2013 claims 
data that we used to model the impact of the final CY 2015 APC relative 
payment weights (3,808 hospitals). The cost report data for the 
hospitals in this dataset were from cost report periods with fiscal 
year ends ranging from 2011 to 2013. We removed the cost report data of 
the 47 hospitals located in Puerto Rico from our dataset and also 
removed the cost report data of 14 hospitals that had cost report data 
that were not complete, leading to a final analytic file of 3,747 
hospitals with cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS are approximately 89 percent of reasonable cost 
(weighted average PCR of 0.89). Therefore, we are finalizing that the 
payment amount associated with the cancer hospital payment adjustment 
to be determined at cost report settlement would be the additional 
payment needed to result in a target PCR equal to 0.89 for each cancer 
hospital.
    Table 14 below indicates the estimated percentage increase in OPPS 
payments to each cancer hospital for CY 2015 due to the cancer hospital 
payment adjustment policy. The actual amount of the CY 2015 cancer 
hospital payment adjustment for each cancer hospital will be determined 
at cost report settlement and will depend on each hospital's CY 2015 
payments and costs. We note that the changes made by section 
1833(t)(18) of the Act do not affect the existing statutory provisions 
that provide for TOPs for cancer hospitals. The TOPs will be assessed 
as usual after all payments, including the cancer hospital payment 
adjustment, have been made for a cost reporting period.

  Table 14--Estimated CY 2015 Hospital-Specific Payment Adjustment for
        Cancer Hospitals To Be Provided at Cost Report Settlement
------------------------------------------------------------------------
                                                             Estimated
                                                            percentage
          Provider No.                Hospital name         increase in
                                                           OPPS payments
                                                            for CY 2015
------------------------------------------------------------------------
050146.........................  City of Hope                       15.5
                                  Comprehensive Cancer
                                  Center.
050660.........................  USC Norris Cancer                  22.0
                                  Hospital.
100079.........................  Sylvester Comprehensive            15.8
                                  Cancer Center.
100271.........................  H. Lee Moffitt Cancer              19.9
                                  Center & Research
                                  Institute.
220162.........................  Dana-Farber Cancer                 47.6
                                  Institute.
330154.........................  Memorial Sloan-                    46.7
                                  Kettering Cancer
                                  Center.
330354.........................  Roswell Park Cancer                16.6
                                  Institute.
360242.........................  James Cancer Hospital &            35.1
                                  Solove Research
                                  Institute.
390196.........................  Fox Chase Cancer Center            18.5
450076.........................  M.D. Anderson Cancer               60.1
                                  Center.
500138.........................  Seattle Cancer Care                53.9
                                  Alliance.
------------------------------------------------------------------------

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 2014 OPPS/ASC final rule with 
comment period (78 FR 74958 through 74960), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain amount of dollars). In CY 2014, the outlier 
threshold was met when the hospital's cost of furnishing a service 
exceeded 1.75 times (the multiplier threshold) the APC payment amount 
and exceeded the APC payment amount plus $2,900 (the fixed-dollar 
amount threshold). If the cost of a service exceeds both the multiplier 
threshold and the fixed-dollar threshold, the outlier payment is 
calculated as 50 percent of the amount by which the cost of furnishing 
the service exceeds 1.75 times the APC payment amount. Beginning with 
CY 2009 payments, outlier payments are subject to a reconciliation 
process similar to the IPPS outlier reconciliation process for cost 
reports, as discussed in the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68594 through 68599).

[[Page 66833]]

    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 current estimate of total outlier payments as a 
percent of total CY 2013 OPPS payment, using available CY 2013 claims 
and the revised OPPS expenditure estimate for the FY 2015 President's 
Budget Mid-Session Review, is approximately 1.4 percent of the total 
aggregated OPPS payments. Therefore, for CY 2013, we estimate that we 
paid 0.4 percent above the CY 2013 outlier target of 1.0 percent of 
total aggregated OPPS payments.
    Using CY 2013 claims data and CY 2014 payment rates, we currently 
estimate that the aggregate outlier payments for CY 2014 will be 
approximately 0.8 percent of the total CY 2014 OPPS payments. The 
difference between 0.8 percent and the 1.0 percent target is reflected 
in the regulatory impact analysis in section XXII. of this final rule 
with comment period. We provide estimated CY 2015 outlier payments for 
hospitals and CMHCs with claims included in the claims data that we 
used to model impacts in the Hospital-Specific Impacts--Provider-
Specific Data file on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
2. Outlier Calculation
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40970), for CY 2015, 
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 0.47 
percent of outlier payments (or 0.0047 percent of total OPPS payments) 
would be allocated to CMHCs for PHP outlier payments. This is the 
amount of estimated outlier payments that would result from the 
proposed CMHC outlier threshold as a proportion of total estimated OPPS 
outlier payments. As discussed in section VIII.D. of the proposed rule, 
for CMHCs, we proposed to continue our longstanding policy that if a 
CMHC's cost for partial hospitalization services, paid under either APC 
0172 (Level I Partial Hospitalization (3 services) for CMHCs) or APC 
0173 (Level II Partial Hospitalization (4 or more services) for CMHCs), 
exceeds 3.40 times the payment rate for APC 0173, the outlier payment 
would be calculated as 50 percent of the amount by which the cost 
exceeds 3.40 times the APC 0173 payment rate. For further discussion of 
CMHC outlier payments, we refer readers to section VIII.D. of the 
proposed rule and this final rule with comment period.
    To ensure that the estimated CY 2015 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 $3,100.
    We calculated the proposed fixed-dollar threshold of $3,100 using 
the standard methodology most recently used for CY 2014 (78 FR 74959 
through 74960). For purposes of estimating outlier payments for the 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2014 update to the Outpatient Provider-Specific 
File (OPSF). The OPSF contains provider-specific data, such as the most 
current CCRs, which are maintained by the MACs and used by the OPPS 
Pricer to pay claims. The claims that we use to model each OPPS update 
lag by 2 years.
    In order to estimate the CY 2015 hospital outlier payments for the 
proposed rule, we inflated the charges on the CY 2013 claims using the 
same inflation factor of 1.1146 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2015 IPPS/LTCH PPS proposed 
rule (79 FR 28321). We used an inflation factor of 1.0557 to estimate 
CY 2014 charges from the CY 2013 charges reported on CY 2013 claims. 
The methodology for determining this charge inflation factor is 
discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321) and 
final rule (79 FR 50374). As we stated in the CY 2005 OPPS final rule 
with comment period (69 FR 65845), we believe that the use of these 
charge inflation factors are appropriate for the OPPS because, with the 
exception of the inpatient routine service cost centers, hospitals use 
the same ancillary and outpatient cost centers to capture costs and 
charges for inpatient and outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we proposed to apply the same CCR 
inflation adjustment factor that we proposed to apply for the FY 2015 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2015 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2015, we proposed to apply an adjustment factor of 
0.9813 to the CCRs that were in the April 2014 OPSF to trend them 
forward from CY 2014 to CY 2015. The methodology for calculating this 
proposed adjustment was discussed in the FY 2015 IPPS/LTCH PPS proposed 
rule (79 FR 28321) and finalized in the FY 2015 IPPS/LTCH PS final rule 
(79 FR 50374).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2014 OPSF file after adjustment 
(using the proposed CCR inflation adjustment factor of 0.9813 to 
approximate CY 2015 CCRs) to charges on CY 2013 claims that were 
adjusted (using the proposed charge inflation factor of 1.1146 to 
approximate CY 2015 charges). We simulated aggregated CY 2015 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiple threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2015 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $3,100, combined 
with the proposed multiple threshold of 1.75 times the APC payment 
rate, would allocate 1.0 percent of aggregated total OPPS payments to 
outlier payments. For CMHCs, we proposed that, if a CMHC's cost for 
partial hospitalization services, paid under either APC 0172 or APC 
0173, exceeds 3.40 times the payment rate for APC 0173, the outlier 
payment would be calculated as 50 percent of the amount by which the 
cost exceeds 3.40 times the APC 0173 payment rate.
    Section 1833(t)(17)(A) of the Act, which applies to hospitals as 
defined under section 1886(d)(1)(B) of the Act, requires that hospitals 
that fail to report data required for the quality measures selected by 
the Secretary, in the form and manner required by the Secretary under 
1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to 
their OPD fee schedule increase factor, that is, the annual payment 
update factor. The application of a reduced OPD fee schedule increase 
factor results in reduced national unadjusted payment rates that will 
apply to certain outpatient items and services furnished by hospitals 
that are required to report outpatient quality data and that fail to 
meet the Hospital OQR Program requirements. For hospitals that fail to 
meet the Hospital OQR Program requirements, we proposed to continue the 
policy that we implemented in CY

[[Page 66834]]

2010 that the hospitals' costs will be compared to the reduced payments 
for purposes of outlier eligibility and payment calculation. For more 
information on the Hospital OQR Program, we refer readers to section 
XIII. of this final rule with comment period.
    Comment: A few commenters suggested that CMS not increase the 
outlier payment fixed dollar threshold from $2,900 to $3,100. One 
commenter suggested that CMS maintain the CY 2014 fixed-dollar 
threshold of $2,900, while another commenter suggested that CMS lower 
the CY 2014 fixed-dollar threshold because CMS' projection of CY 2014 
outlier payments in the proposed rule estimated that outlier payments 
would be below the target of 1.0 percent of OPPS payments.
    Response: We set the proposed CY 2015 outlier payment fixed-dollar 
threshold at $3,100 so that projected outlier payments would equal 1.0 
percent of total OPPS payments. We projected that CY 2014 outlier 
payments would fall below the 1.0 percent target with the $2,900 
threshold. However, we estimated that changes to recalibrate APCs and 
other payment policy changes would result in outlier payments greater 
than the 1.0 percent target in CY 2015 if we did not increase the 
fixed-dollar threshold. As discussed below, based on the more recent 
data available for this final rule with comment period, the CY 2015 
outlier payment fixed-dollar threshold will be $2,775. When combined 
with the multiple threshold of 1.75 times the APC payment rate, this 
fixed-dollar threshold will allocate an estimated 1.0 percent of 
projected total OPPS payments to outlier payments for CY 2015.
3. Final Outlier Calculation
    Consistent with historical practice, we used updated data for this 
final rule with comment period. For CY 2015, we are applying the 
overall CCRs from the July 2014 OPSF file after adjustment (using the 
CCR inflation adjustment factor of 0.9821 to approximate CY 2015 CCRs) 
to charges on CY 2013 claims that were adjusted (using the charge 
inflation factor of 1.1044 to approximate CY 2015 charges). These are 
the same CCR adjustment and charge inflation factors that were used to 
set the IPPS fixed-dollar threshold for the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 50379 through 50380). We simulated aggregated CY 2015 
hospital outlier payments using these costs for several different 
fixed-dollar thresholds, holding the 1.75 multiple threshold constant 
and assuming that outlier payments 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 
payments equaled 1.0 percent of aggregated estimated total CY 2015 OPPS 
payments. We estimate that a fixed-dollar threshold of $2,775, combined 
with the multiple threshold of 1.75 times the APC payment rate, will 
allocate 1.0 percent of aggregated total OPPS payments to outlier 
payments. For CMHCs, if a CMHC's cost for partial hospitalization 
services, paid under either APC 0172 or APC 0173, exceeds 3.40 times 
the payment rate for APC 0173, the outlier payment will be calculated 
as 50 percent of the amount by which the cost exceeds 3.40 times the 
APC 0173 payment rate.

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

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR Part 419, Subparts C and D. For this CY 2015 OPPS/ASC 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 
determined under section II.A. of this final rule with comment period. 
Therefore, the national unadjusted payment rate for most APCs contained 
in Addendum A to this final rule with comment period (which is 
available via the Internet on the CMS Web site) and for most HCPCS 
codes to which separate payment under the OPPS has been assigned in 
Addendum B to this final rule with comment period (which is available 
via the Internet on the CMS Web site) was calculated by multiplying the 
CY 2015 scaled weight for the APC by the CY 2015 conversion factor.
    We note that section 1833(t)(17) of the Act, which applies to 
hospitals as defined under section 1886(d)(1)(B) of the Act, requires 
that hospitals that fail to submit data required to be submitted on 
quality measures selected by the Secretary, in the form and manner and 
at a time specified by the Secretary, incur a reduction of 2.0 
percentage points to their OPD fee schedule increase factor, that is, 
the annual payment update factor. The application of a reduced OPD fee 
schedule increase factor results in reduced national unadjusted payment 
rates that apply to certain outpatient items and services provided by 
hospitals that are required to report outpatient quality data and that 
fail to meet the Hospital OQR Program (formerly referred to as the 
Hospital Outpatient Quality Data Reporting Program (HOP QDRP)) 
requirements. For further discussion of the payment reduction for 
hospitals that fail to meet the requirements of the Hospital OQR 
Program, we refer readers to section XIII. of this final rule with 
comment period.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40971 through 40972), 
we demonstrated the steps on how to determine the APC payments that 
will be made in a calendar year under the OPPS to a hospital that 
fulfills the Hospital OQR Program requirements and to a hospital that 
fails to meet the Hospital OQR Program requirements for a service that 
has any of the following status indicator assignments: ``J1,'' ``P,'' 
``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``U,'' or ``V'' (as 
defined in Addendum D1 to the proposed rule), in a circumstance in 
which the multiple procedure discount does not apply, the procedure is 
not bilateral, and conditionally packaged services (status indicator of 
``Q1'' and ``Q2'') qualify for separate payment. We are finalizing the 
methodology as proposed and demonstrate below how to calculate final CY 
2015 OPPS payments using the same parameters.
    We note that, although blood and blood products with status 
indicator ``R'' and brachytherapy sources with status indicator ``U'' 
are not subject to wage adjustment, they are subject to reduced 
payments when a hospital fails to meet the Hospital OQR Program 
requirements. We note that we are creating new status indicator ``J1'' 
to reflect the comprehensive APCs discussed in section II.A.2.e. of 
this final rule with comment period. We also note that we are deleting 
status indicator ``X'' as part of the CY 2015 packaging policy for 
ancillary services, discussed in section II.A.3. of this final rule 
with comment period.
    We did not receive any public comments on the proposed calculation 
of an adjusted Medicare payment. Therefore, we are finalizing the 
calculation of an adjusted Medicare payment, where appropriate, in the 
manner described as follows. Individual providers interested in 
calculating the payment amount that they will 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 Web site) 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

[[Page 66835]]

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 0.980 times the ``full'' national unadjusted payment rate. The 
national unadjusted payment rate used in the calculations below is 
either the full national unadjusted payment rate or the reduced 
national unadjusted payment rate, depending on whether the hospital met 
its Hospital OQR Program requirements in order to receive the full CY 
2015 OPPS fee schedule increase factor of 2.2 percent.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 
through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.

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

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. We note that under the CY 2015 OPPS policy for transitioning 
wage indexes into the new OMB labor market area delineations, a hold 
harmless policy for the wage index may apply, as discussed in section 
II.C. of this final rule with comment period. The wage index values 
assigned to each area reflect the geographic statistical areas (which 
are based upon OMB standards) to which hospitals are assigned for FY 
2015 under the IPPS, reclassifications through the MGCRB, section 
1886(d)(8)(B) ``Lugar'' hospitals, reclassifications under section 
1886(d)(8)(E) of the Act, as defined in Sec.  412.103 of the 
regulations, and hospitals designated as urban under section 601(g) of 
Public Law 98-21. (For further discussion of the changes to the FY 2015 
IPPS wage indices, as applied to the CY 2015 OPPS, we refer readers to 
section II.C. of this final rule with comment period.) As we proposed, 
we are continuing to apply a wage index floor of 1.00 to frontier 
States, in accordance with section 10324 of the Affordable Care Act of 
2010.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of Public Law 
108-173. Addendum L to this final rule with comment period (which is 
available via the Internet on the CMS Web site) contains the qualifying 
counties and the associated wage index increase developed for the FY 
2015 IPPS and listed as Table 4J in the FY 2015 IPPS/LTCH PPS final 
rule (79 FR 49854) and available via the Internet on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. This step is to be followed only if the 
hospital is not reclassified or redesignated under section 1886(d)(8) 
or section 1886(d)(10) of the Act.
    Step 4. Multiply the applicable wage index determined under Steps 2 
and 3 by the amount determined under Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
    The formula below is a mathematical representation of Step 4 and 
adjusts the labor-related portion of the national unadjusted payment 
rate for the specific service by the wage index.

Xa is the labor-related portion of the national unadjusted payment rate 
(wage adjusted).
Xa = .60 * (national unadjusted payment rate) * applicable wage index.

    Step 5. Calculate 40 percent (the nonlabor-related portion) of the 
national unadjusted payment rate and add that amount to the resulting 
product of Step 4. The result is the wage index adjusted payment rate 
for the relevant wage index area.
    The formula below is a mathematical representation of Step 5 and 
calculates the remaining portion of the national payment rate, the 
amount not attributable to labor, and the adjusted payment for the 
specific service.

Y is the nonlabor-related portion of the national unadjusted payment 
rate.
Y = .40 * (national unadjusted payment rate).
Adjusted Medicare Payment = Y + Xa.

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

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

    We are providing examples below of the calculation of both the full 
and reduced national unadjusted payment rates that will apply to 
certain outpatient items and services performed by hospitals that meet 
and that fail to meet the Hospital OQR Program requirements, using the 
steps outlined above. For purposes of this example, we used a provider 
that is located in Brooklyn, New York that is assigned to CBSA 35614. 
This provider bills one service that is assigned to APC 0019 (Level I 
Excision/Biopsy). The CY 2015 full national unadjusted payment rate for 
APC 0019 is approximately $378.41. The reduced national unadjusted 
payment rate for APC 0019 for a hospital that fails to meet the 
Hospital OQR Program requirements is approximately $370.84. This 
reduced rate is calculated by multiplying the reporting ratio of 0.980 
by the full unadjusted payment rate for APC 0019.
    The FY 2015 wage index for a provider located in CBSA 35614 in New 
York is 1.2973. This is based on the 1-year 50/50 transition blend 
between the wage index under the old CBSA 35644 (1.3115) and the wage 
index under the new CBSA 35614 (1.2831). The labor-related portion of 
the full national unadjusted payment is approximately $294.55 (.60 * 
$378.41 * 1.2973). The labor-related portion of the reduced national 
unadjusted payment is approximately $288.65 (.60 * $370.84 * 1.2973). 
The nonlabor-related portion of the full national unadjusted payment is 
approximately $151.36 (.40 * $378.41). The nonlabor-related portion of 
the reduced national unadjusted payment is approximately $148.34 (40 * 
$370.84). The sum of the labor-related and nonlabor-related portions of 
the full national adjusted payment is approximately $445.91 ($294.55 + 
$151.36). The sum of the reduced national adjusted payment is 
approximately $436.99 ($288.65 + $148.34).

[[Page 66836]]

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 calendar years thereafter, shall not exceed 40 percent of 
the APC payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure performed in a year to the amount of the inpatient 
hospital deductible for that year.
    Section 4104 of the Affordable Care Act eliminated the Part B 
coinsurance for preventive services furnished on and after January 1, 
2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. Our discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, may be found in section XII.B. of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. OPPS Copayment Policy
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40973), for CY 2015, 
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 (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 proposed national unadjusted copayment 
amounts for services payable under the OPPS that would be effective 
January 1, 2015, were shown in Addenda A and B to the proposed rule 
(which are available via the Internet on the CMS Web site). As 
discussed in section XII.G. of the proposed rule, for CY 2015, the 
Medicare beneficiary's minimum unadjusted copayment and national 
unadjusted copayment for a service to which a reduced national 
unadjusted payment rate applies equals the product of the reporting 
ratio and the national unadjusted copayment, or the product of the 
reporting ratio and the minimum unadjusted copayment, respectively, for 
the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS/ASC final rule with 
comment period, the development of the copayment methodology generally 
moves beneficiary copayments closer to 20 percent of OPPS APC payments 
(68 FR 63458 through 63459).
    We did not receive any public comments regarding the proposed 
methodology for calculating copayments for CY 2015. Therefore, for the 
reasons set forth in this final rule with comment period, we are 
finalizing our proposed CY 2015 copayment methodology without 
modification.
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 payment rate. 
For example, using APC 0019, approximately $75.68 is 20 percent of the 
full national unadjusted payment rate of approximately $378.41. 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 Web site), the beneficiary payment percentage is 20 
percent.
    The formula below is a mathematical representation of Step 1 and 
calculates the national copayment as a percentage of national payment 
for a given service.

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

    Step 2. Calculate the appropriate wage-adjusted payment rate for 
the APC for the provider in question, as indicated in Steps 2 through 4 
under section II.H. of this 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 0.980.
    The unadjusted copayments for services payable under the OPPS that 
will be effective January 1, 2015, are shown in Addenda A and B to this 
final rule with comment period (which are available via the Internet on 
the CMS Web site). We note that the national unadjusted payment rates 
and copayment rates shown in Addenda A and B to this final rule with 
comment period reflect the full CY 2015 OPD fee schedule increase 
factor discussed in section II.B. of this final rule with comment 
period.
    In addition, as noted above, section 1833(t)(8)(C)(i) of the Act 
limits the amount of beneficiary copayment that may be collected for a 
procedure performed in a year to the amount of the inpatient hospital 
deductible for that year.

[[Page 66837]]

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

    CPT and Level II HCPCS codes are used to report procedures, 
services, items, and supplies under the hospital OPPS. Specifically, 
CMS recognizes the following codes on OPPS claims:
     Category I CPT codes, which describe surgical procedures 
and medical services;
     Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
     Level II HCPCS codes, which are used primarily to identify 
products, supplies, temporary procedures, and services not described by 
CPT codes.
    CPT codes are established by the American Medical Association (AMA) 
and the Level II HCPCS codes are established by the CMS HCPCS 
Workgroup. These codes are updated and changed throughout the year. CPT 
and HCPCS code changes that affect the OPPS are published both through 
the annual rulemaking cycle and through the OPPS quarterly update 
Change Requests (CRs). CMS releases new Level II HCPCS codes to the 
public or recognizes the release of new CPT codes by the AMA and makes 
these codes effective (that is, the codes can be reported on Medicare 
claims) outside of the formal rulemaking process via OPPS quarterly 
update CRs. Based on our review, we assign the new CPT and Level II 
HCPCS codes to interim status indicator (SI) and APC assignments. These 
interim assignments are finalized in the OPPS/ASC final rules. This 
quarterly process offers hospitals access to codes that may more 
accurately describe items or services furnished and/or provides payment 
or more accurate payment for these items or services in a timelier 
manner than if CMS waited for the annual rulemaking process. We solicit 
public comments on these new codes and finalize our proposals related 
to these codes through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. Items, procedures, or 
services not paid separately under the hospital OPPS are assigned to 
the appropriate status indicators. Section XI. of the CY 2015 OPPS/ASC 
proposed rule provided a discussion of the various status indicators 
used under the OPPS. Assigning procedures to certain status indicators 
would generate separate payment for the service furnished, while 
assignment to other status indicators would not.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), in Table 14 
(Table 15 of this final rule with comment period), we summarized our 
process for updating codes through our OPPS quarterly update CRs, 
seeking public comments, and finalizing their treatment under the OPPS. 
We noted that because the payment rates associated with codes effective 
July 1 were not available to us in time for incorporation into the 
Addenda to the proposed rule, the Level II HCPCS codes and the Category 
III CPT codes implemented through the July 2014 OPPS quarterly update 
CR were not included in Addendum B of the proposed rule (which is 
available via the Internet on the CMS Web site), while those codes 
based upon the April 2014 OPPS quarterly update were included in 
Addendum B. Nevertheless, we requested public comments on the codes 
included in the July 2014 OPPS quarterly update and included these 
codes in the preamble of the proposed rule.

                           Table 15--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
    OPPS quarterly update CR         Type of code       Effective date      Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April l, 2014...................  Level II HCPCS      April 1, 2014.....  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
July 1, 2014....................  Level II HCPCS      July 1, 2014......  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2014......  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2014.................  Level II HCPCS      October 1, 2014...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2015.................  Level II HCPCS      January 1, 2015...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2015...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   CPT Codes.                              final rule with     final rule with
                                                                           comment period.     comment period.
----------------------------------------------------------------------------------------------------------------

    This process is discussed in detail below. We have separated our 
discussion into two sections based on whether we solicited public 
comments in the CY 2015 OPPS/ASC proposed rule or whether we will be 
soliciting public comments in this CY 2015 OPPS/ASC final rule with 
comment period. We note that we will be seeking public comments in this 
CY 2015 OPPS/ASC final rule with comment period on the interim APC and 
status indicator assignments for new CPT and Level II HCPCS codes that 
will be effective January 1, 2015. In the CY 2015 OPPS/ASC proposed 
rule (79 FR 40977), we also noted that we sought public comments in the 
CY 2014 OPPS/ASC final rule with comment period on the interim APC and 
status assignments for new Level II HCPCS codes that became effective 
October 1, 2013, or January 1, 2014. These new and revised codes, with 
an effective date of October 1, 2013, or January 1, 2014, were flagged 
with comment indicator ``NI'' (New code, interim APC assignment; 
comments will be accepted on the interim APC assignment for the new 
code) in Addendum B to the CY 2014 OPPS/ASC final rule with comment 
period to indicate that we were assigning them an interim payment 
status and an APC and payment rate, if applicable, and were subject to 
public comment following publication of the

[[Page 66838]]

CY 2014 OPPS/ASC final rule with comment period. We are responding to 
public comments and finalizing our interim OPPS treatment of these 
codes in this CY 2015 OPPS/ASC final rule with comment period.
    We received public comments on some new codes that were assigned to 
comment indicator ``NI'' in Addendum B of the CY 2014 OPPS/ASC final 
rule with comment period. We respond to those comments in sections 
III.C. of this CY 2015 OPPS/ASC final rule with comment period.
1. Treatment of New CY 2014 Level II HCPCS and CPT Codes Effective 
April 1, 2014 and July 1, 2014 for Which We Solicited Public Comments 
in the CY 2015 OPPS/ASC Proposed Rule
    Through the April 2014 OPPS quarterly update CR (Transmittal 2903, 
Change Request 8653, dated March 11, 2014) and the July 2014 OPPS 
quarterly update CR (Transmittal 2971, Change Request 8776, dated May 
23, 2014), we recognized several new HCPCS codes for separate payment 
under the OPPS.
    Effective April 1, 2014, we made effective four new Level II HCPCS 
codes and also assigned them to appropriate interim OPPS status 
indicators and APCs. Through the April 2014 OPPS quarterly update CR, 
we allowed separate payment for three of the four new Level II HCPCS 
codes. Specifically, as displayed in Table 15 in the proposed rule (79 
FR 40975), we provided separate payment for HCPCS codes C9021, C9739, 
and C9740. HCPCS code Q2052 was assigned to status indicator ``N'' to 
indicate the service described by this code is packaged under the OPPS.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), we solicited 
public comments on the proposed APC and status indicator assignments, 
where applicable, for the Level II HCPCS codes listed in Table 15 of 
that proposed rule (HCPCS codes C9021, C9739, C9740, and Q2052). We did 
not receive any public comments on the proposed APC and status 
indicator assignments for HCPCS codes C9021 and Q2052. Because HCPCS 
code Q2052 will only be billed by pharmacy suppliers, we are modifying 
our CY 2015 proposal to continue to assign HCPCS code Q2052 to status 
indicator ``N.'' Instead, for CY 2015, we are reassigning HCPCS code 
Q2052 from OPPS status indicator ``N'' to ``E'' (Not paid by Medicare 
when submitted on outpatient claims (any outpatient bill type)). We are 
adopting as final, without modification, the proposed APC and status 
indicator assignments for HCPCS code C9021 for CY 2015. We note that we 
received some public comments on HCPCS codes C9739 and C9740, which we 
address in section III.C.3.e. of this final rule with comment period.
    Effective for CY 2015, the HCPCS Workgroup replaced HCPCS code 
C9021 with HCPCS code J9301. Table 16 below shows the complete long 
descriptor for HCPCS code J9301. Consistent with our general policy of 
using permanent HCPCS codes (that is, ``J'' codes) rather than using 
temporary HCPCS codes (that is, ``C'' codes and ``Q'' codes) for the 
reporting of drugs under the OPPS in order to streamline coding, we are 
showing the replacement HCPCS code for C9021, which is effective 
January 1, 2015, in Table 16.
    In this final rule with comment period, we are assigning the Level 
II HCPCS codes listed in Table 16 below to the specified APCs and 
status indicators for CY 2015. The final payment rates for these codes, 
where applicable, can be found in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).

   Table 16--Final CY 2015 Status Indicators And APC Assignments for the Level II HCPCS Codes That Were Newly
                                            Implemented in April 2014
----------------------------------------------------------------------------------------------------------------
                                                       CY 2015 long        Final CY 2015 status    Final CY 2015
   CY 2014 HCPCS Code       CY 2015 HCPCS Code          descriptor               indicator              APC
----------------------------------------------------------------------------------------------------------------
C9021..................  J9301..................  Injection,              G.....................            1476
                                                   obinutuzumab, 10mg.
C9739..................  C9739..................  Cystourethroscopy,      T.....................            0162
                                                   with insertion of
                                                   transprostatic
                                                   implant; 1 to 3
                                                   implants.
C9740..................  C9740..................  Cystourethroscopy,      T.....................            1564
                                                   with insertion of
                                                   transprostatic
                                                   implant; 4 or more
                                                   implants.
Q2052..................  Q2052..................  Services, supplies and  E.....................             N/A
                                                   accessories used in
                                                   the home under the
                                                   Medicare intravenous
                                                   immune globulin
                                                   (IVIG) demonstration.
----------------------------------------------------------------------------------------------------------------

    Effective July 1, 2014, we made effective several new CPT and Level 
II HCPCS codes and also assigned them to appropriate interim OPPS 
status indicators and APCs. Through the July 2014 OPPS quarterly update 
CR, we allowed separate payment under the OPPS for four new Level II 
HCPCS codes and 17 new Category III CPT codes effective July 1, 2014. 
Specifically, as displayed in Table 16 in the proposed rule, we allowed 
separate payment for HCPCS codes C2644, C9022, C9134, and Q9970. We 
note that HCPCS code Q9970 replaced HCPCS code C9441 (Injection, ferric 
carboxymaltose, 1 mg), beginning July 1, 2014. HCPCS code C9441 was 
made effective January 1, 2014, but the code was deleted June 30, 2014, 
because it was replaced with HCPCS code Q9970. HCPCS code C9441 was 
granted pass-through payment status when the code was implemented on 
January 1, 2014. Because HCPCS code Q9970 describes the same drug as 
HCPCS code C9441, in the CY 2015 OPPS/ASC proposed rule (79 FR 40975), 
we proposed to continue the pass-through payment status for HCPCS code 
Q9970, and assign the HCPCS Q-code to the same APC and status indicator 
as its predecessor HCPCS C-code, as shown in Table 16 of the proposed 
rule. Specifically, we proposed to assign HCPCS code Q9970 to APC 9441 
(Inj, Ferric Carboxymaltose) and status indicator ``G.''
    In addition, the HCPCS Workgroup established HCPCS code Q9974, 
effective July 1, 2014, to replace HCPCS codes J2271 (Injection, 
morphine sulfate, 100mg) and J2275 (Injection, morphine sulfate 
(preservative-free sterile solution), per 10 mg). Both of these HCPCS 
J-codes were assigned to status indicator ``N'' (Packaged Services). As 
a result of the establishment of new HCPCS code Q9974 as a replacement 
for HCPCS codes J2271 and J2275, the payment indicator for HCPCS codes 
J2271 and J2275 was changed to ``E'' (Not Payable by Medicare), 
effective July 1, 2014. Also, because HCPCS code Q9974 describes the 
same services that were described by HCPCS codes J2271 and J2275, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we proposed to 
continue to assign HCPCS code Q9974 to the same status indicator as its 
predecessor HCPCS J-codes. Specifically, we proposed to assign HCPCS 
code Q9974 to status indicator ``N,'' effective July 1, 2014.

[[Page 66839]]

    In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we also 
proposed to assign the Level II HCPCS codes listed in Table 16 to the 
specified proposed APCs and status indicators set forth in Table 16 of 
the proposed rule. This table included a complete list of the Level II 
HCPCS codes that were made effective July 1, 2014. The codes that were 
made effective July 1, 2014, did not appear in Addendum B to the 
proposed rule, and as a result, the proposed payment rates along with 
the proposed status indicators and proposed APC assignments, where 
applicable, for CY 2015 were provided in Table 16 of the proposed rule.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we solicited 
public comments on the proposed status indicators and APC assignments 
for the HCPCS codes that were listed in Table 16 of the proposed rule. 
We did not receive any public comments on the proposed APC and status 
indicator assignments for HCPCS codes C9022, C9134, Q9970, and Q9974 
for CY 2015. Therefore, we are adopting as final, without modification, 
the proposed APC and status indicator assignments for these four Level 
II HCPCS codes for CY 2015. We note that we received a public comment 
on HCPCS code C2644, which is addressed in section II.A.2.d.3. of this 
final rule with comment period.
    The HCPCS Workgroup replaced HCPCS code C9022 with HCPCS code 
J1322, effective January 1, 2015. Because HCPCS code J1322 describes 
the same drug with the same dosage descriptor as its predecessor code, 
HCPCS code C9022, this drug will continue to receive pass-through 
payment status in CY 2015. Therefore, we are assigning HCPCS code J1322 
to the same APC and status indicator as its predecessor code, HCPCS 
code C9022, as shown in Table 17 below.
    In addition, the HCPCS Workgroup replaced HCPCS code C9134 with 
HCPCS code J7181, effective January 1, 2015. Because HCPCS code J7181 
does not describe the same dosage descriptor as its predecessor code, 
HCPCS code J7181 has been assigned to a new APC. Specifically, HCPCS 
code C9134 had a dosage descriptor of ``10 i.u.,'' while HCPCS code 
J7181 has a dosage descriptor of ``i.u.'' Therefore, effective January 
1, 2015, we are assigning HCPCS code J7181 to APC 1746, which is a 
different APC assignment than the APC assignment for HCPCS code C9134, 
to maintain data consistency for future rulemakings. Because the 
predecessor code, HCPCS code C9134, was granted pass-through payment 
status, HCPCS code J7181 will continue to be assigned to status 
indicator ``G'' for CY 2015.
    We also note that the HCPCS Workgroup replaced HCPCS code Q9970 
with HCPCS code J1439, effective January 1, 2015. Because HCPCS code 
J1439 describes the same drug with the same dosage descriptor as its 
predecessor code, HCPCS code Q9970, this drug will continue to receive 
pass-through payment status in CY 2015. Therefore, we are assigning 
HCPCS code J1439 to the same APC and status indicator as its 
predecessor code, HCPCS code Q9970, as shown in Table 17 below.
    Further, the HCPCS Workgroup replaced HCPCS code Q9974 with HCPCS 
code J2274, effective January 1, 2015. Because HCPCS code J2274 
describes the same drug with the same dosage descriptor as its 
predecessor code, HCPCS code Q9974, this drug will continue its 
packaged status indicator. Therefore, we are assigning HCPCS code J2274 
to the same status indicator as its predecessor code, HCPCS code Q9974, 
as also shown in Table 17 below.
    Table 17 below includes a complete list of the Level II HCPCS codes 
that were made effective July 1, 2014, with their final status 
indicators and APC assignments for CY 2015. The final payment rates for 
these codes, where applicable, can be found in Addendum B to this final 
rule with comment period (which is available via the Internet on the 
CMS Web site).

   Table 17--Final CY 2015 Status Indicators and APC Assignments for the Level II HCPCS Codes That Were Newly
                                            Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                       CY 2015 long        Final CY 2015 status    Final CY 2015
   CY 2014 HCPCS Code       CY 2015 HCPCS Code          descriptor               indicator              APC
----------------------------------------------------------------------------------------------------------------
C2644..................  C2644..................  Brachytherapy source,   U.....................            2644
                                                   cesium-131 chloride
                                                   solution, per
                                                   millicurie.
C9022..................  J1322..................  Injection, elosulfase   G.....................            1480
                                                   alfa, 1mg.
C9134..................  J7181..................  Factor XIII A-Subunit   G.....................            1746
                                                   (Recombinant), Per IU.
Q9970..................  J1439..................  Injection, ferric       G.....................            9441
                                                   carboxymaltose, 1mg.
Q9974..................  J2274..................  Injection, morphine     N.....................             N/A
                                                   sulfate, preservative-
                                                   free for epidural or
                                                   intrathecal use, 10
                                                   mg.
----------------------------------------------------------------------------------------------------------------

    In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), for CY 2015, 
we proposed to continue our established policy of recognizing Category 
I CPT vaccine codes for which FDA approval is imminent and Category III 
CPT codes that the AMA releases in January of each year for 
implementation in July through the OPPS quarterly update process. Under 
the OPPS, Category I CPT vaccine codes and Category III CPT codes that 
are released on the AMA Web site in January are made effective in July 
of the same year through the July quarterly update CR, consistent with 
the AMA's implementation date for the codes. For the July 2014 update, 
there were no new Category I CPT vaccine codes.
    Through the July 2014 OPPS quarterly update CR (Transmittal 2971, 
Change Request 8776, dated May 23, 2014), we assigned interim OPPS 
status indicators and APCs for 17 of the 27 new Category III CPT codes 
that were made effective July 1, 2014. Specifically, as displayed in 
Table 17 in the proposed rule, we made interim OPPS status indicators 
and APC assignments for Category III CPT codes 0347T, 0348T, 0349T, 
0350T, 0355T, 0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 
0370T, 0371T, 0372T, and 0373T. Table 17 of the proposed rule listed 
the Category III CPT codes that were implemented on July 1, 2014, along 
with the proposed status indicators, proposed APC assignments, and 
proposed payment rates, where applicable, for CY 2015. We did not 
receive any public comments on the proposed APC and status indicator 
assignments for Category III CPT codes 0347T, 0348T, 0349T, 0350T, 
0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 0370T, 0371T, 
0372T, and 0373T. Therefore, we are adopting as final, without 
modification, the proposed APC and status indicator assignments for 
these 16 CPT codes for CY 2015. We received a public comment on CPT 
codes 0335T, which we address

[[Page 66840]]

in section III.C.2.6. of this final rule with comment period. We also 
received specific public comments on CPT codes 0351T, 0352T, 0353T, and 
0354T, which are addressed in section II.C.6.b. of this final rule with 
comment period. Table 18 below lists the Category III CPT codes that 
were implemented in July 2014, along with their final status indicators 
and APC assignments for CY 2015. The final payment rates for these 
codes, where applicable, can be found in Addendum B to this final rule 
with comment period (which is available via the Internet on the CMS Web 
site).

                          Table 18--New Category III CPT Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                       CY 2015 long       Final CY 2015 status    Final CY 2015
    CY 2014 CPT code         CY 2015 CPT code           descriptor              indicator              APC
----------------------------------------------------------------------------------------------------------------
0347T..................  0347T..................  Placement of           Q1....................            0420
                                                   interstitial
                                                   device(s) in bone
                                                   for
                                                   radiostereometric
                                                   analysis (RSA).
0348T..................  0348T..................  Radiologic             Q1....................            0261
                                                   examination,
                                                   radiostereometric
                                                   analysis (RSA);
                                                   spine, (includes,
                                                   cervical, thoracic
                                                   and lumbosacral,
                                                   when performed).
0349T..................  0349T..................  Radiologic             Q1....................            0261
                                                   examination,
                                                   radiostereometric
                                                   analysis (RSA);
                                                   upper
                                                   extremity(ies),
                                                   (includes shoulder,
                                                   elbow and wrist,
                                                   when performed).
0350T..................  0350T..................  Radiologic             Q1....................            0261
                                                   examination,
                                                   radiostereometric
                                                   analysis (RSA);
                                                   lower
                                                   extremity(ies),
                                                   (includes hip,
                                                   proximal femur, knee
                                                   and ankle, when
                                                   performed).
0351T..................  0351T..................  Optical coherence      N.....................             N/A
                                                   tomography of breast
                                                   or axillary lymph
                                                   node, excised
                                                   tissue, each
                                                   specimen; real time
                                                   intraoperative.
0352T..................  0352T..................  Optical coherence      B.....................             N/A
                                                   tomography of breast
                                                   or axillary lymph
                                                   node, excised
                                                   tissue, each
                                                   specimen;
                                                   interpretation and
                                                   report, real time or
                                                   referred.
0353T..................  0353T..................  Optical coherence      N.....................             N/A
                                                   tomography of
                                                   breast, surgical
                                                   cavity; real time
                                                   intraoperative.
0354T..................  0354T..................  Optical coherence      B.....................             N/A
                                                   tomography of
                                                   breast, surgical
                                                   cavity;
                                                   interpretation and
                                                   report, real time or
                                                   referred.
0355T..................  0355T..................  Gastrointestinal       T.....................            0142
                                                   tract imaging,
                                                   intraluminal (eg,
                                                   capsule endoscopy),
                                                   colon, with
                                                   interpretation and
                                                   report.
0356T..................  0356T..................  Insertion of drug-     Q1....................            0698
                                                   eluting implant
                                                   (including punctal
                                                   dilation and implant
                                                   removal when
                                                   performed) into
                                                   lacrimal
                                                   canaliculus, each.
0358T..................  0358T..................  Bioelectrical          Q1....................            0340
                                                   impedance analysis
                                                   whole body
                                                   composition
                                                   assessment, supine
                                                   position, with
                                                   interpretation and
                                                   report.
0359T..................  0359T..................  Behavior               V.....................            0632
                                                   identification
                                                   assessment, by the
                                                   physician or other
                                                   qualified health
                                                   care professional,
                                                   face-to-face with
                                                   patient and
                                                   caregiver(s),
                                                   includes
                                                   administration of
                                                   standardized and non-
                                                   standardized tests,
                                                   detailed behavioral
                                                   history, patient
                                                   observation and
                                                   caregiver interview,
                                                   interpretation of
                                                   test results,
                                                   discussion of
                                                   findings and
                                                   recommendations with
                                                   the primary
                                                   guardian(s)/
                                                   caregiver(s), and
                                                   preparation of
                                                   report.
0360T..................  0360T..................  Observational          V.....................            0632
                                                   behavioral follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by one technician;
                                                   first 30 minutes of
                                                   technician time,
                                                   face-to-face with
                                                   the patient.
0361T..................  0361T..................  Observational          N.....................             N/A
                                                   behavioral follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by one technician;
                                                   each additional 30
                                                   minutes of
                                                   technician time,
                                                   face-to-face with
                                                   the patient (List
                                                   separately in
                                                   addition to code for
                                                   primary service).
0362T..................  0362T..................  Exposure behavioral    V.....................            0632
                                                   follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by physician or
                                                   other qualified
                                                   health care
                                                   professional with
                                                   the assistance of
                                                   one or more
                                                   technicians; first
                                                   30 minutes of
                                                   technician(s) time,
                                                   face-to-face with
                                                   the patient.
0363T..................  0363T..................  Exposure behavioral    N.....................             N/A
                                                   follow-up
                                                   assessment, includes
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   direction with
                                                   interpretation and
                                                   report, administered
                                                   by physician or
                                                   other qualified
                                                   health care
                                                   professional with
                                                   the assistance of
                                                   one or more
                                                   technicians; each
                                                   additional 30
                                                   minutes of
                                                   technician(s) time,
                                                   face-to-face with
                                                   the patient (List
                                                   separately in
                                                   addition to code for
                                                   primary procedure).
0364T..................  0364T..................  Adaptive behavior      S.....................            0322
                                                   treatment by
                                                   protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with one
                                                   patient; first 30
                                                   minutes of
                                                   technician time.
0365T..................  0365T..................  Adaptive behavior      N.....................             N/A
                                                   treatment by
                                                   protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with one
                                                   patient; each
                                                   additional 30
                                                   minutes of
                                                   technician time
                                                   (List separately in
                                                   addition to code for
                                                   primary procedure).
0366T..................  0366T..................  Group adaptive         S.....................            0325
                                                   behavior treatment
                                                   by protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with two or
                                                   more patients; first
                                                   30 minutes of
                                                   technician time.
0367T..................  0367T..................  Group adaptive         N.....................             N/A
                                                   behavior treatment
                                                   by protocol,
                                                   administered by
                                                   technician, face-to-
                                                   face with two or
                                                   more patients; each
                                                   additional 30
                                                   minutes of
                                                   technician time
                                                   (List separately in
                                                   addition to code for
                                                   primary procedure).
0368T..................  0368T..................  Adaptive behavior      S.....................            0322
                                                   treatment with
                                                   protocol
                                                   modification
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   with one patient;
                                                   first 30 minutes of
                                                   patient face-to-face
                                                   time.
0369T..................  0369T..................  Adaptive behavior      N.....................             N/A
                                                   treatment with
                                                   protocol
                                                   modification
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   with one patient;
                                                   each additional 30
                                                   minutes of patient
                                                   face-to-face time
                                                   (List separately in
                                                   addition to code for
                                                   primary procedure).

[[Page 66841]]

 
0370T..................  0370T..................  Family adaptive        S.....................            0324
                                                   behavior treatment
                                                   guidance,
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   (without the patient
                                                   present).
0371T..................  0371T..................  Multiple-family group  S.....................            0324
                                                   adaptive behavior
                                                   treatment guidance,
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   (without the patient
                                                   present).
0372T..................  0372T..................  Adaptive behavior      S.....................            0325
                                                   treatment social
                                                   skills group,
                                                   administered by
                                                   physician or other
                                                   qualified health
                                                   care professional
                                                   face-to-face with
                                                   multiple patients.
0373T..................  0373T..................  Exposure adaptive      S.....................            0323
                                                   behavior treatment
                                                   with protocol
                                                   modification
                                                   requiring two or
                                                   more technicians for
                                                   severe maladaptive
                                                   behavior(s); first
                                                   60 minutes of
                                                   technicians' time,
                                                   face-to-face with
                                                   patient.
0374T..................  0374T..................  Exposure adaptive      N.....................             N/A
                                                   behavior treatment
                                                   with protocol
                                                   modification
                                                   requiring two or
                                                   more technicians for
                                                   severe maladaptive
                                                   behavior(s); each
                                                   additional 30
                                                   minutes of
                                                   technicians' time
                                                   face-to-face with
                                                   patient (List
                                                   separately in
                                                   addition to code for
                                                   primary procedure).
----------------------------------------------------------------------------------------------------------------

    Further, in the CY 2015 OPPS/ASC proposed rule, we solicited public 
comments on the proposed CY 2015 status indicators, APC assignments, 
and payment rates for the Level II HCPCS codes and the Category III CPT 
codes that were made effective April 1, 2014, and July 1, 2014. These 
codes were listed in Tables 15, 16, and 17 of the proposed rule. We 
also proposed to finalize the status indicator and APC assignments and 
payment rates for these codes, if applicable, in this CY 2015 OPPS/ASC 
final rule with comment period. Because the new Category III CPT and 
Level II HCPCS codes that became effective for July were not available 
to us in time for incorporation into the Addenda to the proposed rule, 
our policy is to include the codes, the proposed status indicators, 
proposed APCs (where applicable), and proposed payment rates (where 
applicable) in the preamble of the proposed rule, but not in the 
Addenda to the proposed rule. These codes were listed in Tables 16 and 
17, respectively, of the proposed rule. We also proposed to incorporate 
these codes into Addendum B to this CY 2015 OPPS/ASC final rule with 
comment period, which is consistent with our annual OPPS update policy. 
The Level II HCPCS codes implemented or modified through the April 2014 
OPPS update CR and displayed in Table 15 were included in Addendum B to 
the proposed rule (which is available via the Internet on the CMS Web 
site), where the proposed CY 2015 payment rates for these codes were 
also shown.
    We did not receive any additional public comments on this process. 
The final APC and status indicator assignments and payment rates, if 
applicable, for the Level II HCPCS codes and the Category III CPT codes 
that were implemented or modified through the April 2014 or July 2014 
OPPS update CR can be found in Tables 16, 17, and 18, or in Addendum B 
to this final rule with comment period (which is available via the 
Internet on the CMS Web site).
2. Process for New Level II HCPCS Codes That Became Effective October 
1, 2014 and New CPT and Level II HCPCS Codes That Will Become Effective 
January 1, 2015 for Which We Are Soliciting Public Comments in This CY 
2015 OPPS/ASC Final Rule with Comment Period
    As has been our practice in the past, we incorporate those new 
Category I and III CPT codes and new Level II HCPCS codes that are 
effective January 1 in the final rule with comment period updating the 
OPPS for the following calendar year. These codes are released to the 
public via the CMS HCPCS (for Level II HCPCS codes) and AMA Web sites 
(for CPT codes), and also through the January OPPS quarterly update 
CRs. In the past, we also have released new Level II HCPCS codes that 
are effective October 1 through the October OPPS quarterly update CRs 
and incorporated these new codes in the final rule with comment period 
updating the OPPS for the following calendar year. For CY 2015, these 
codes are flagged with comment indicator ``NI'' in Addendum B to this 
OPPS/ASC final rule with comment period to indicate that we are 
assigning them an interim payment status which is subject to public 
comment. In addition, the CPT and Level II HCPCS codes that will become 
effective January 1, 2015, are flagged with comment indicator ``NI'' in 
Addendum B to this CY 2015 OPPS/ASC final rule with comment period. 
Specifically, the status indicator and the APC assignment and payment 
rate, if applicable, for all such codes flagged with comment indicator 
``NI'' are open to public comment in this final rule with comment 
period, and we will respond to these public comments in the OPPS/ASC 
final rule with comment period for the next year's OPPS/ASC update. In 
the CY 2015 OPPS/ASC proposed rule (79 FR 40977), we proposed to 
continue this process for CY 2015. Specifically, for CY 2015, we 
proposed to include in Addendum B to the CY 2015 OPPS/ASC final rule 
with comment period the following new HCPCS codes:
     New Level II HCPCS codes effective October 1, 2014, that 
would be incorporated in the October 2014 OPPS quarterly update CR;
     New Category I and III CPT codes effective January 1, 
2015, that would be incorporated in the January 2015 OPPS quarterly 
update CR; and
     New Level II HCPCS codes effective January 1, 2015, that 
would be incorporated in the January 2015 OPPS quarterly update CR.
    As stated above, the October 1, 2014 and January 1, 2015 codes are 
flagged with comment indicator ``NI'' in Addendum B to this CY 2015 
OPPS/ASC final rule with comment period to indicate that we have 
assigned the codes an interim OPPS payment status for CY 2015. We are 
inviting public comments on the interim status indicator and APC 
assignments and payment rates for these codes, if applicable, that will 
be finalized in the CY 2016 OPPS/ASC final rule with comment period.
3. Process for Soliciting Public Comments for New and Revised CPT Codes 
Released by the AMA
    We generally incorporate the new CPT codes that are effective 
January 1 in the OPPS/ASC final rule with comment period. We establish 
interim APC and status indicator assignments for these new codes for 
the coming year, and

[[Page 66842]]

request comments on the interim assignments in the OPPS/ASC final rule 
with comment period. Similarly, we establish interim APC and status 
indicator assignments for existing CPT codes that have substantial 
revision to their code descriptors that necessitate a change in the 
current APC assignments, and request comments on the interim 
assignments in the OPPS/ASC final rule with comment period. In both 
cases, we assign these new and revised codes to OPPS comment indicator 
``NI'' (New code for the next calendar year or existing code with 
substantial revision to its code descriptor in the next calendar year 
as compared to current calendar year, interim APC assignment; comments 
will be accepted on the interim APC assignment for the new code.) in 
the OPPS/ASC final rule with comment period. We respond to comments and 
finalize the APC and status indicator assignments for these CPT codes 
in the following year's OPPS/ASC final rule with comment period.
a. Current Process for Accepting Comments on New and Revised CPT Codes 
for a Year
    As described above, under the hospital OPPS, our current process 
for both new CPT codes and existing CPT codes with substantial 
revisions to the code descriptors that are released by the AMA for use 
beginning January 1 is to flag these codes with comment indicator 
``NI'' in Addendum B to the OPPS/ASC final rule with comment period to 
indicate that the codes are new for the calendar year and have been 
assigned interim APCs and status indicators, and that we are accepting 
public comments on the interim APC and status indicator assignments. We 
address public comments received and finalize the APC and status 
indicator assignments for the codes in the next year's OPPS/ASC final 
rule with comment period. For example, the new CPT codes that were 
effective January 1, 2014, were assigned to comment indicator ``NI'' in 
Addendum B to the CY 2014 OPPS/ASC final rule with comment period. We 
respond to public comments received on the CY 2014 OPPS/ASC final rule 
with comment period and finalize the APC and status indicator 
assignments for these codes in this CY 2015 OPPS/ASC final rule with 
comment period. We include the final APC and status indicator 
assignments for these codes in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
    Many stakeholders have expressed concern with the process we use to 
recognize new and revised CPT codes. They believe that CMS should 
publish proposed APC and status indicator assignments for the new and 
revised CPT codes that will be effective January 1 in the OPPS/ASC 
proposed rule for that calendar year, and request public comments prior 
to finalizing the assignments. Further, the stakeholders believe that 
seeking public input on the APC and status indicator assignments for 
these new and revised codes would assist CMS in assigning the CPT codes 
to appropriate APCs. Similar concerns have been expressed regarding our 
process for assigning interim payment values for revalued, and new and 
revised codes, under the Medicare Physician Fee Schedule (MPFS). We 
refer readers to the CY 2015 MPFS proposed rule for a detailed 
discussion of this issue as it relates to the MPFS (79 FR 40359 through 
40364).
    Like the MPFS, the OPPS and the ASC payment system rely principally 
upon the Current Procedural Terminology (CPT[supreg]) coding system 
maintained by the AMA to identify specific services for billing and 
payment purposes. CPT is the standard code set adopted under the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) for 
outpatient services. The AMA CPT Editorial Panel's coding cycle occurs 
concurrently with our calendar year rulemaking cycle for the OPPS and 
the ASC payment system. However, the OPPS/ASC proposed rules are 
published prior to the publication of the CPT codes that are made 
public in the Fall with a January 1 effective date, and we are 
currently unable to include these codes in the OPPS/ASC proposed rules. 
Consequently, we establish in the final rule with comment period 
interim APC and status indicator assignments for new and revised CPT 
codes that have an effective date of January 1, and we make payment 
based on those interim designations for one year, while accepting 
public comments on the final rule with comment period. We then respond 
to those public comments received and make final APC and status 
indicator assignments in the next year's final rule with comment 
period.
b. Modification of Process for New and Revised CPT Codes That Are 
Effective January 1
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40977 through 40979), 
we proposed to make changes in the process we use to establish APC 
assignments and status indicators for new and revised codes. We 
proposed that, for new and revised CPT codes that we receive from the 
AMA's CPT Editorial Panel too late for inclusion in the proposed rule 
for a year, we would delay adoption of the new and revised codes for 
that year, and instead, adopt coding policies and payment rates that 
conform, to the extent possible, to the policies and payment rates in 
place for the previous year. We proposed to adopt these conforming 
coding and payment policies on an interim basis pending the result of 
our specific proposals for status indicator and APC assignments for 
these new and revised codes through notice and comment rulemaking in 
the OPPS/ASC proposed rule for the following year. Because the changes 
in CPT codes are effective on January 1 of each year, and CMS would not 
have established status indicator or APC assignments for these new or 
revised codes, it would not be practicable for Medicare to use those 
CPT codes. In this circumstance, we proposed to create HCPCS G-codes to 
describe the predecessor codes for any codes that were revised or 
deleted as part of the annual CPT coding changes, but that we did not 
receive in time to include proposed APC and status indicator 
assignments in the proposed rule. However, if certain CPT codes are 
revised in a manner that would not affect the cost of inputs (for 
example, a minor change to CPT code descriptors), we would use these 
revised codes and continue to assign those codes to their current APC. 
For example, under this proposed process, if a single CPT code was 
separated into two codes and we did not receive those codes until May 
2015, we would assign each of those CPT codes to status indicator ``B'' 
in the final rule with comment period, to indicate that an alternate 
code is recognized under the OPPS. Hospitals could not use those two 
new CPT codes to bill Medicare for outpatient services the first year 
after the CPT effective date of the codes. Instead, we would create a 
HCPCS G-code with the same description as the single predecessor CPT 
code, and continue to use the same APC and status indicator assignment 
for the new G-code during the year. We would propose APC and status 
indicator assignments for the two new CPT codes during rulemaking in CY 
2016, accept and respond to public comments on the proposed 
assignments, and establish final APC and status indicator assignments 
for the codes in the final rule for payment beginning in CY 2017.
    For new codes that describe wholly new services, as opposed to new 
or revised codes that describe services for which APC and status 
indicator assignments are already established, we would make every 
effort to work with the AMA's CPT Editorial Panel to ensure that we 
received the codes in time to propose payment rates in the proposed 
rule. However, if we do not

[[Page 66843]]

receive the code for a wholly new service in time to include proposed 
APC and status indicator assignments in the proposed rule for a year, 
we would need to establish interim APC and status indicator assignments 
for the initial year because there would be no predecessor code we 
could use as a reference to establish a G-code in order to continue 
current payment policies for such a service. We proposed to continue to 
establish the initial APC and status indicator assignments for these 
wholly new services as interim final assignments, and to follow our 
current process to solicit and respond to public comments and finalize 
the APC and status indicator assignments in the subsequent year.
    We recognize that the use of HCPCS G-codes may place an 
administrative burden on those providers that bill for services under 
the OPPS and the ASC payment system. However, the proposed use of G-
codes would permit us to propose and accept public comment on the APC 
and status indicator assignments for the vast majority of new and 
revised codes before they take effect. We are hopeful that the AMA's 
CPT Editorial Panel ultimately will be able to adjust its timelines and 
processes so that most, if not all, of the annual coding changes can be 
addressed in the proposed rule before the new and revised CPT codes 
take effect on January 1. If the AMA's CPT Editorial Committee can make 
adjustments to its schedule, we would not need to use G-codes as 
described above for the purpose of maintaining outdated coding and APC 
and status indicator assignments for a year until we can include 
proposed APC and status indicator assignments for the new and revised 
codes in a proposed rule. We proposed to implement the revised CMS 
process for establishing APC and status indicator assignments for new 
and revised codes for CY 2016. However, we indicated in the proposed 
rule that we would consider alternative implementation dates if that 
would allow time for the AMA's CPT Editorial Panel to adjust its 
schedule in order to avoid the necessity to use numerous HCPCS G-codes.
    In summary, in conjunction with the proposals presented in the CY 
2015 MPFS proposed rule to revise the process used to address new, 
revised, and potentially misvalued codes under the MPFS, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40977 through 40979), we proposed to 
include in the OPPS/ASC proposed rule the proposed APC and status 
indicator assignments for the vast majority of new and revised CPT 
codes before they are used for payment purposes under the OPPS and ASC 
payment system. We would address new and revised CPT codes for the 
upcoming year that are available in time for the proposed rule by 
proposing APC and status indicator assignments for the codes. 
Otherwise, we will delay adoption of the new and revised codes for a 
year while using methods (including creating G-codes that describe the 
predecessor codes) to maintain the existing APC and status indicator 
assignments until the following year when we would include proposed 
assignments for the new and revised codes in the proposed rule. We 
proposed to follow this revised process except in the case of a new CPT 
code that describes a wholly new service (such as a new technology or 
new surgical procedure) that has not previously been addressed under 
the OPPS. For codes that describe wholly new services for which we do 
not receive timely information from the AMA, we proposed to establish 
interim APC and status indicator assignments in the OPPS/ASC final 
rules with comment period, as is our current process. The proposed 
revised process would eliminate our current practice of assigning 
interim APC and status indicators for the vast majority of new and 
revised CPT codes that take effect on January 1 each year. We invited 
public comments on this proposal. We indicated in the proposed rule 
that we were specifically interested in receiving public comments on 
the following topics:
     Is this proposal preferable to the present process? Are 
there other alternatives?
     If we were to implement this proposal, is it better to 
move forward with the changes or is more time needed to make the 
transition and, therefore, implementation should be delayed beyond CY 
2016?
     Are there alternatives other than the use of HCPCS G-codes 
that would allow us to address the annual CPT code changes through 
notice and comment rather than interim final rulemaking?
     Is the process we have proposed for wholly new services 
appropriate? How should we define new services?
     Are there any classes of services, other than new 
services, that should remain on an interim final schedule?
    Comment: The majority of the commenters supported the proposal to 
modify the current process of recognizing new and revised CPT codes 
because it would provide an opportunity for the public to comment on 
specific APC and status indicator assignments prior to those 
assignments being finalized. However, several commenters disagreed with 
our proposed implementation date of CY 2016 and requested that CMS work 
with the AMA to determine an appropriate implementation date. Other 
commenters suggested that CMS finalize the proposal but urged CMS to 
work with the AMA on an appropriate timeline that considers the AMA's 
CPT and RUC (Specialty Society Relative Value Update Committee) meeting 
dates as well as CMS' OPPS and MPFS regulation schedule. The AMA 
supported the proposal but requested that CMS finalize the proposal for 
CY 2017 rather than CY 2016 because the CPT codes for the CY 2016 
update are almost complete.
    Response: We appreciate the commenters' support for our proposal. 
We believe that publishing our proposed status indicator and APC 
assignments for the new and revised CPT codes in the proposed rule 
would alleviate some concerns expressed by stakeholders in the past 
that some of our interim APC assignments were not appropriate, and that 
the APC assignment process could be improved if we had the benefit of 
public comments before adopting final APC and status indicator 
assignments for new and revised codes. This new process of proposing 
and requesting public comments before finalizing the APC and status 
indicator assignments for new and revised codes allows both CMS and 
stakeholders the benefit of public notice and comment prior to the use 
of the new and revised codes for payment purposes. When we receive 
information on the new and revised codes from the AMA in time to 
include proposals for new and revised codes in the proposed rule before 
the codes are effective the following January 1, the revised process 
allows public notice and comment before finalizing APC and status 
indicator assignments for the codes during the calendar year before the 
CPT codes become effective. In addition, this new process eliminates 
the need to make interim APC and status indicator assignments for new 
and revised CPT codes, which has been unpopular among some providers 
because the interim assignments are used for payment for a year before 
we address public comments and make any appropriate changes to an APC 
or status indicator assignment in the subsequent year's final rule.
    Although the AMA and several commenters requested that we modify 
our proposal by finalizing this new process for the CY 2017 OPPS 
update, we disagree with this recommendation. We believe the new 
process that permits an opportunity for public comment on

[[Page 66844]]

proposed APC and status indicator assignments for the vast majority of 
new and revised codes before they are finalized and used for payment 
purposes will be beneficial to CMS and to hospitals and other 
stakeholders, and we see no reason to delay implementation of this 
policy change. Therefore, beginning with the CY 2016 OPPS update, we 
will publish proposed APC and status indicator assignments for any new 
and revised CPT codes for January 1, 2016 that are publicly released by 
the AMA in time for us to consider them for inclusion in the OPPS/ASC 
proposed rule. After review of the public comments received on the 
proposed rule, we will finalize the status indicator and APC 
assignments for those new and revised CPT codes in the CY 2016 OPPS/ASC 
final rule. Because the APC assignments would be final, we would no 
longer request comments in the OPPS/ASC final rules for these new and 
revised CPT codes that are included in the proposed rule. For any new 
and revised codes released too late for us to consider them for 
inclusion in the CY 2016 OPPS/ASC proposed rule, we will create HCPCS 
G-codes that reflect the same description(s), and APC and status 
indicator assignments, as their predecessor codes. These HCPCS G-codes 
will be used during CY 2016, and then we will include proposals for the 
corresponding new and revised codes and APC and status indicator 
assignments in the CY 2017 OPPS/ASC proposed rule.
    Comment: Most commenters opposed the use of temporary HCPCS G-codes 
and requested that CMS not implement the HCPCS G-code process if it 
finalizes the proposal to change to process for new and revised CPT 
codes. The commenters recommended not establishing temporary HCPCS G-
codes because these codes would be extremely burdensome for providers 
to use. The commenters stated that establishing HCPCS G-codes for 
services or procedures that are already described by existing CPT codes 
would be too confusing for hospitals, physicians, and other third party 
insurers to accurately claim costs for these procedures, and that using 
two different sets of codes for the same procedure or service could 
result in erroneous claims.
    Response: As described above, we plan to publish the new and 
revised CPT codes that are publicly available and provided to us in 
time for evaluation in the CY 2016 OPPS/ASC proposed rule. 
Specifically, in the CY 2016 OPPS/ASC proposed rule, we expect to 
publish new and revised CPT codes that would be effective January 1, 
2016, with the proposed status indicator and APC assignments, and 
request public comments on these proposed assignments as long as we 
receive them in time for inclusion in the proposed rule. We would 
finalize the status indicator and APC assignments for these new and 
revised CPT codes in the CY 2016 OPPS/ASC final rule.
    However, for those new and revised CPT codes that are not publicly 
available in time for the OPPS/ASC proposed rule, we will create HCPCS 
G-codes that mirror the predecessor CPT codes and retain the current 
APC and status indicator assignments for a year until we can include 
proposed status indicator and APC assignments in the following year's 
proposed rule. These HCPCS G-codes will be assigned to comment 
indicator ``NI'' to indicate that the codes are new and open for 
comment for 60 days after display of the OPPS/ASC final rule with 
comment period. This is consistent with our current policy of seeking 
public comments on new CPT and Level II HCPCS codes with interim APC 
and status indicator assignments that were not previously published in 
the proposed rule. For new and revised codes, we recognize that there 
is a trade-off between the benefit of considering public comments on 
the proposed APC and status indicator assignments before they take 
effect and the potential confusion caused by the use of HCPCS G-codes. 
We anticipate that the use of HCPCS G-codes will be largely a temporary 
solution or may not be necessary in the OPPS, and we expect to work 
closely with the AMA to minimize the need for them. We note that, under 
the MPFS, we generally do not develop values for new and revised CPT 
codes until we receive recommendations provided by the AMA's RUC. In 
contrast, under the OPPS, we use only the publicly available new and 
revised CPT codes and their descriptors to develop APC and status 
indicator assignments. As such, we anticipate that the need to use 
HCPCS G-codes under the OPPS will be less frequent than under the MPFS.
    After consideration of the public comments we received, we are 
finalizing our proposal. For the new and revised CPT codes that we 
receive timely from the AMA's CPT Editorial Panel, we are finalizing 
our proposal to include these 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 and revised CPT codes that we receive 
too late for inclusion in the OPPS/ASC proposed rule, we are finalizing 
our proposal to create and use HCPCS G-codes that mirror the 
predecessor CPT codes and retain the current APC and status indicator 
assignments for a year until we 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 MPFS proposed rule, we do not anticipate that these HCPCS 
G-codes will always be necessary for OPPS purposes. We will make every 
effort to include proposed APC and status indicator assignments for all 
new and revised CPT codes that the AMA makes publicly available in time 
for us to include them in the proposed rule, and to avoid the resort to 
HCPCS G-codes and the resulting delay in utilization of the most 
current CPT codes. We also are finalizing our proposal to make interim 
APC and status indicator assignments for CPT codes that are not 
available in time for the proposed rule and that describe wholly new 
services (such as new technologies or new surgical procedures), solicit 
public comments, and finalize the specific APC and status indicator 
assignments for those codes in the following year's final rule.

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. 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 Sec.  419.31 of the regulations. We use Level I and Level II HCPCS 
codes to identify and group the services within each APC. The APCs are 
organized such that each group is homogeneous both clinically and in 
terms of resource use. Using this classification system, we have 
established distinct groups of similar services. We also have developed 
separate APC groups for certain medical devices, drugs, biologicals, 
therapeutic radiopharmaceuticals, and brachytherapy devices that are 
not

[[Page 66845]]

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 Sec.  419.2(b) of the regulations. A further 
discussion of packaged services is included in section II.A.3. of this 
final rule with comment period.
    In CY 2008, we implemented composite APCs to provide a single 
payment for groups of services that are typically performed together 
during a single clinical encounter and that result in the provision of 
a complete service (72 FR 66650 through 66652). For CY 2014, we 
provided composite APC payments for nine categories of services:

 Mental Health Services Composite (APC 0034)
 Cardiac Electrophysiologic Evaluation and Ablation Composite 
(APC 8000)
 Low Dose Rate (LDR) Prostate Brachytherapy Composite (APC 
8001)
 Ultrasound Composite (APC 8004)
 CT and CTA without Contrast Composite (APC 8005)
 CT and CTA with Contrast Composite (APC 8006)
 MRI and MRA without Contrast Composite (APC 8007)
 MRI and MRA with Contrast Composite (APC 8008)
 Extended Assessment & Management Composite (APC 8009)

    A further discussion of composite APCs is included in section 
II.A.2.f. of this final rule with comment period. We note that, as a 
consequence of the new comprehensive APC policy, APC 8000 (Cardiac 
Electrophysiologic Evaluation and Ablation Composite) is being deleted.
    Under the OPPS, we generally pay for hospital outpatient services 
on a rate-per-service basis, where the service may be reported with one 
or more HCPCS codes. Payment varies according to the APC group to which 
the independent service or combination of services is assigned. Each 
APC relative payment weight represents the hospital cost of the 
services included in that APC, relative to the hospital cost of the 
services included in APC 0634 (Hospital Clinic Visits). The APC 
relative payment weights are scaled to APC 0634 because it is the 
hospital clinic visit APC and clinic visits are among the most 
frequently furnished services in the hospital outpatient setting.
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
no less 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. 
Section 1833(t)(9)(A) of the Act also requires the Secretary to consult 
with an expert outside advisory panel composed of an appropriate 
selection of representatives of providers to review (and advise the 
Secretary concerning) the clinical integrity of the APC groups and the 
relative payment weights (the Panel recommendations for specific 
services for the CY 2015 OPPS and our responses to them are discussed 
in the relevant specific sections throughout this final rule with 
comment period).
    Finally, section 1833(t)(2) of the Act provides that, subject to 
certain exceptions, the items and services within an APC group cannot 
be considered comparable with respect to the use of resources if the 
highest cost for an item or service in the group is more than 2 times 
greater than the lowest cost for an item or service within the same 
group (referred to as the ``2 times rule''). The statute authorizes the 
Secretary to make exceptions to the 2 times rule in unusual cases, such 
as low-volume items and services (but the Secretary may not make such 
an exception in the case of a drug or biological that has been 
designated as an orphan drug under section 526 of the Federal Food, 
Drug, and Cosmetic Act).
2. Application of the 2 Times Rule
    In accordance with section 1833(t)(2) of the Act and Sec.  419.31 
of the regulations, we annually review the items and services within an 
APC group to determine, with respect to comparability of the use of 
resources, if the cost of the highest cost item or service within an 
APC group is more than 2 times greater than the cost of the lowest cost 
item or service within that same group. In making this determination, 
we consider only those HCPCS codes that are significant based on the 
number of claims. We note that, for purposes of identifying significant 
procedure codes for examination under the 2 times rule, we consider 
procedure codes that have more than 1,000 single major claims or 
procedure codes that have both greater than 99 single major claims and 
contribute at least 2 percent of the single major claims used to 
establish the APC cost to be significant (75 FR 71832). This 
longstanding definition of when a procedure code is significant for 
purposes of the 2 times rule was selected because we believe that a 
subset of 1,000 claims (or less than 1,000 claims) is negligible within 
the set of approximately 100 million single procedure or single session 
claims we use for establishing costs. Similarly, a procedure code for 
which there are fewer than 99 single bills and which comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC cost. In the CY 2015 OPPS/ASC proposed 
rule (79 FR 40981), for CY 2015, we proposed to make exceptions to this 
limit on the variation of costs within each APC group in unusual cases, 
such as low-volume items and services.
    In the CY 2015 OPPS/ASC proposed rule, we identified the APCs with 
violations of the 2 times rule for CY 2015 (79 FR 40980). Therefore, we 
proposed changes to the procedure codes assigned to these APCs in 
Addendum B to the CY 2015 OPPS/ASC proposed rule. We noted that 
Addendum B did not appear in the printed version of the Federal 
Register as part of the CY 2015 OPPS/ASC proposed rule. Rather, it was 
published and made available via the Internet on the CMS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a 
violation of the 2 times rule or to improve clinical and resource 
homogeneity, 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 
2015 included in the proposed rule are related to changes in costs of 
services that were observed in the CY 2013 claims data newly available 
for CY 2015 ratesetting. We also proposed changes to the status 
indicators for some procedure codes that were not specifically and 
separately discussed in the proposed rule. In these cases, we proposed 
to change the status indicators for these procedure codes because we 
believe that another status indicator would more accurately describe 
their payment status from an OPPS perspective based on the policies 
that we proposed for CY 2015. In addition, we proposed to rename 
existing APCs or create new clinical APCs to complement the proposed 
procedure code reassignments. Addendum B to the CY 2015 OPPS/ASC

[[Page 66846]]

proposed rule identified 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 April 
2014 Addendum B Update (available via the Internet on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html). In contrast, Addendum B to this 
final rule with comment period (available via the Internet on the CMS 
Web site) identifies with the ``CH'' comment indicator the final CY 
2015 changes compared to the HCPCS codes' status as reflected in the 
October 2014 Addendum B update.
3. Exceptions to the 2 Times Rule
    As discussed earlier, we may make exceptions to the 2 times rule 
limit on the variation of costs within each APC group in unusual cases 
such as low-volume items and services. Taking into account the APC 
changes that we proposed for CY 2015, we reviewed all of the APCs to 
determine which APCs would not meet the requirements of the 2 times 
rule. We used the following criteria to evaluate whether to propose 
exceptions to the 2 times rule for affected APCs:
     Resource homogeneity;
     Clinical homogeneity;
     Hospital outpatient setting utilization;
     Frequency of service (volume); and
     Opportunity for upcoding and code fragments.
    Based on the CY 2013 claims data available for the CY 2015 OPPS/ASC 
proposed rule, we found 9 APCs with violations of the 2 times rule. We 
applied the criteria as described above to identify the APCs that we 
proposed to make exceptions for under the 2 times rule for CY 2015, and 
identified 9 APCs that met the criteria for an exception to the 2 times 
rule based on the CY 2013 claims data available for the proposed rule. 
We did not include in that determination those APCs where a 2 times 
rule violation was not a relevant concept, such as APC 0375 (Ancillary 
Outpatient Services when Patient Expires), which has an APC cost set 
based on multiple procedure claims. Therefore, we only identified those 
APCs, including those with criteria-based costs, such as device-
dependent APCs, with violations of the 2 times rule. For a detailed 
discussion of these criteria, we refer readers to the April 7, 2000 
OPPS final rule with comment period (65 FR 18457 and 18458).
    We note that, for cases in which a recommendation by the Panel 
appears to result in or allow a violation of the 2 times rule, we 
generally accept the Panel's recommendation because those 
recommendations are based on explicit consideration (that is, a review 
of the latest OPPS claims data and group discussion of the issue) of 
resource use, clinical homogeneity, site of service, and the quality of 
the claims data used to determine the APC payment rates.
    Table 18 of the proposed rule (79 FR 40981) listed the 9 APCs that 
we proposed to make exceptions for under the 2 times rule for CY 2015 
based on the criteria cited above and claims data submitted between 
January 1, 2013, and December 31, 2013, and processed on or before 
December 31, 2013. For the final rule with comment period, we stated 
that we intend to use claims data for dates of service between January 
1, 2013, and December 31, 2013, that were processed on or before June 
30, 2014, and updated CCRs, if available. Therefore, after considering 
the public comments we received on the CY 2015 OPPS/ASC proposed rule 
and making changes to APC assignments based on those comments, we 
analyzed the CY 2013 claims data used for this final rule with comment 
period to identify the APCs with violations of the 2 times rule. Based 
on the final CY 2013 claims data, we found 12 APCs with violations of 
the 2 times rule for this final rule with comment period, which is 3 
more APCs that violated the 2 times rule compared to those indicated in 
the proposed rule. We applied the criteria as described earlier to 
identify the APCs that are exceptions to the 2 times rule for CY 2015, 
and identified three new APCs that meet the criteria for exception to 
the 2 times rule for this final rule with comment period, but that did 
not meet the criteria using proposed rule claims data. Specifically, we 
found that the following three new APCs violated the 2 times rule:
     APC 0095 (Cardiac Rehabilitation);
     APC 0388 (Discography); and
     APC 0420 (Level III Minor Procedures).
    After consideration of the public comments we received and our 
review of the CY 2013 costs from hospital claims and cost report data 
available for this final rule with comment period, we are finalizing 
our proposals with some modifications. Specifically, we are finalizing 
our proposal to except 7 of the 9 proposed APCs from the 2 times rule 
for CY 2015: APCs 0057, 0066, 0330, 0433, 0450, 0634, and 0661. In 
contrast, we are not finalizing our proposal to except 2 of the 9 
proposed APCs from the 2 times rule: APC 0012 (Level I Debridement & 
Destruction) and APC 0015 (Level II Debridement & Destruction). Our 
data analysis for this final rule with comment period revealed that 
these two APCs no longer violate the 2 times rule. Table 19 below lists 
10 APCs that we are excepting from the 2 times rule for CY 2015 based 
on the criteria above and a review of updated claims data. 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 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 Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

     TABLE 19--Final APC Exceptions to the 2 Times Rule for CY 2015
------------------------------------------------------------------------
          CY 2015 APC                       CY 2015 APC Title
------------------------------------------------------------------------
0057...........................  Bunion Procedures.
0066...........................  Level V Radiation Therapy.
0095...........................  Cardiac Rehabilitation.
0330...........................  Dental Procedures.
0388...........................  Discography.
0420...........................  Level III Minor Procedures.
0433...........................  Level II Pathology.
0450...........................  Level I Minor Procedures.
0634...........................  Hospital Clinic Visits.
0661...........................  Level III Pathology.
------------------------------------------------------------------------

    The final 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 Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

C. OPPS APC-Specific Policies

1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 0213)
    For CY 2015, we proposed to reassign CPT code 93229 (External 
mobile cardiovascular telemetry with electrocardiographic recording, 
concurrent computerized real time data analysis and greater than 24 
hours of accessible ECG data storage (retrievable with query) with ECG 
triggered and patient selected events transmitted to a remote attended 
surveillance center for up to 30 days; technical support for connection 
and patient instructions for use, attended surveillance, analysis and

[[Page 66847]]

transmission of daily and emergent data reports as prescribed by a 
physician or other qualified health care professional) from APC 0209 
(Level II Extended EEG, Sleep, and Cardiovascular Studies), with a 
proposed rule payment rate of approximately $239 to APC 0213 (Level I 
Extended EEG, Sleep, and Cardiovascular Studies), with a proposed 
payment rate of approximately $175.
    Comment: One commenter opposed CMS' proposal to reassign CPT code 
93229 to APC 0213 and stated that the hospital costs used to set the CY 
2015 proposed payment rate is based on faulty claims data, which 
include miscoded claims reporting the service submitted by hospitals. 
The commenter indicated that based on its internal analysis of the CY 
2013 hospital claims data, which were used as the basis for the CY 2015 
proposed APC reassignment, several hospitals reported costs of under 
$100 for the procedure described by CPT code 93229. The commenter 
stated that the service described by CPT code 93229 involves the use of 
sophisticated technology requiring attended surveillance on a 24-hour, 
7 days a week basis by a technician for up to 30 days. According to the 
commenter, this particular service requires resources that are greater 
than $100. The commenter further explained that the service described 
by CPT code 93229 requires up to 30 days of electrocardiogram (ECG) 
monitoring through an external device worn by the patient at home that 
captures, stores, and transmits ECG data in real-time through wireless 
technology to a receiving or monitoring center (the hospital outpatient 
facility). These data are then reviewed by certified cardiac 
technicians and the ordering physician is provided with daily reports. 
The commenter added that this procedure is performed primarily 
(approximately 90 percent of the time) by independent diagnostic 
testing facilities (IDTFs) and infrequently performed by hospitals, 
typically under arrangements with IDTFs. The commenter believed that 
the CY 2015 proposed payment rate of approximately $175 for APC 0213 is 
significantly lower than the CY 2014 MPFS payment rate of $669. The 
commenter stated that the actual cost of providing the service is 
approximately $795. Therefore, the commenter recommended that CMS 
either reassign CPT code 93229 to APC 0435 (Level III Extended EEG, 
Sleep, and Cardiovascular Studies), which has a proposed payment rate 
of approximately $853, or establish a new APC for outpatient cardiac 
telemetry services that accurately reflects the costs associated with 
providing this service.
    Response: CPT code 93229 became effective January 1, 2009. We 
believe that 5 years is sufficient time to understand what procedure 
CPT code 93229 describes and how to appropriately report this service 
on hospital claims. Based on our analysis of the CY 2013 hospital 
outpatient claims data used for this final rule with comment period, we 
are unable to determine whether hospitals are miscoding the claims 
reporting this service. For all APCs whose payment rates are based upon 
relative payment weights, we note that the quality and accuracy of 
reported units and charges influence the geometric mean costs that are 
the basis for our payment rates, especially the geometric mean costs 
for low volume items and services. Beyond our standard OPPS trimming 
methodology (described in section II.A.2. of this final rule with 
comment period) that we apply to those claims that have passed various 
types of claims processing edits, it is not our general policy to 
determine the accuracy of hospital coding and charging practices for 
the purposes of ratesetting (75 FR 71838). We rely on hospitals to 
accurately report all of the services provided to beneficiaries using 
the established HCPCS and CPT codes that appropriately describe the 
procedures performed in accordance with their code descriptors and the 
CPT Editorial Panel's and CMS' instructions, as applicable, and to 
include these charges and costs on their Medicare hospital cost report 
appropriately. In addition, we do not specify the methodologies that 
hospitals must use to set charges for this or any other service.
    We recognize that the MPFS pays separately for CPT code 93229. 
However, the MPFS and the OPPS are very different payment systems. Each 
system is established under a different set of statutory and regulatory 
principles, and the policies established under the MPFS do not 
necessarily affect the payment policies under the OPPS. Moreover, we do 
not agree with the commenter that CPT code 93229 should be reassigned 
to APC 0435. Based on the claims data available for this final rule 
with comment period, we believe that APC 0213 is the most appropriate 
APC to reassign CPT code 93229 based on the clinical homogeneity and 
resource costs in relation to the other procedures assigned to this 
APC. Our analysis of the latest hospital outpatient CY 2013 claims data 
shows a final geometric mean cost of approximately $105 for CPT code 
93229 based on 3,505 single claims (out of 3,579 total claims), which 
is not inconsistent with the geometric mean cost of approximately $183 
for APC 0213, which is the lowest cost APC in the extended EEG, sleep, 
and cardiovascular studies series of APCs.
    In response to the commenter's concern regarding miscoding of 
hospital claims reporting the service described by CPT code 93229, we 
remind hospitals that CPT code 93229 is not the appropriate procedure 
code to use to report Holter monitoring (CPT codes 93224 through 
93227), or event monitoring (CPT codes 93268 through 93278) procedures. 
CPT code 93229 should be used to report continuous outpatient 
cardiovascular monitoring that includes up to 30 consecutive days of 
real-time cardiac monitoring. In particular, the 2014 CPT Code Book 
describes the procedure described by CPT code 93229 as a mobile 
cardiovascular telemetry service and defines it as:
    ``Mobile cardiovascular telemetry (MCT): Continuously records the 
electrocardiographic rhythm from external electrodes placed on the 
patient's body. Segments of the ECG data are automatically (without 
patient intervention) transmitted to a remote surveillance location by 
cellular or landline telephone signal. The segments of the rhythm, 
selected for transmission, are triggered automatically (MCT device 
algorithm) by rapid and slow heart rates or by the patient during a 
symptomatic episode. There is continuous real time data analysis by 
preprogrammed algorithms in the device and attended surveillance of the 
transmitted rhythm segments by a surveillance center technician to 
evaluate any arrhythmias and to determine signal quality. The 
surveillance center technician reviews the data and notifies the 
physician or other qualified health care professional depending on the 
prescribed criteria'' (2014 CPT Professional Edition; page 549).
    We expect that hospitals would only report CPT code 93229 on 
hospital claims for providing the mobile telemetry service that is 
described above.
    In summary, after consideration of the public comment we received, 
we are finalizing our CY 2015 proposal, without modification, to 
reassign CPT code 93229 to APC 0213 for CY 2015. Consistent with our 
policy of reviewing APC assignments annually, we will reevaluate the 
cost of CPT code 93229 and its APC assignment for the CY 2016 
rulemaking.

[[Page 66848]]

2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 0142, 
0361, 0419, and 0422)
    In the CY 2014 OPPS/ASC final rule with comment period, we assigned 
CPT codes 43211 (Esophagoscopy, flexible transoral; with endoscopic 
mucosal resection), and 43254 (Esophagogastroduodenoscopy, flexible, 
transoral; with endoscopic mucosal resection) to APC 0141 (Level I 
Upper GI Procedures) on an interim basis. In addition, we assigned CPT 
code 43240 (Upper gastrointestinal endoscopy including esophagus, 
stomach, and either the duodenum and/or jejunum as appropriate; with 
transmural drainage of pseudocyst) to APC 0419 (Level II Upper GI 
Procedures), CPT code 91035 (Esophagus, gastroesophageal reflux test; 
with mucosal attached telemetry ph electrode placement, recording, 
analysis and interpretation) to APC 0361 (Level II Alimentary Tests), 
and CPT code 0355T (Gastrointestinal tract imaging, intraluminal (eg, 
capsule endoscopy), colon, with interpretation and report) to APC 0142 
(Level I Small Intestine Endoscopy).
    For CY 2015, we proposed to reassign CPT codes 43211 and 43254 from 
APC 0141 to APC 0419. We also proposed to continue to assign CPT code 
43240 to APC 0419; CPT code 91035 to APC 0361; and CPT code 0355T to 
APC 0142.
    Comment: Several commenters requested that CMS reassign CPT codes 
43211 and 43254 from APC 0141 to APC 0419 in response to the CY 2014 
OPPS/ASC final rule with comment period. The commenters believed that 
the reassignment would be consistent with the resource and clinical 
homogeneity principles used to assign services to appropriate 
classification groupings. In response to the CY 2015 OPPS/ASC proposed 
rule, the same commenters supported CMS' proposal to reassign CPT codes 
43211 and 43254 to APC 0419 for the CY 2015 OPPS update, and applauded 
CMS for considering the suggestions made in response to the commenters' 
concerns. One commenter requested that CMS consider reassigning CPT 
codes 43211 and 43254 from APC 0141 to APC 0422 (Level III Upper GI 
Procedures) instead of from APC 0141 to APC 0419 as proposed. Based on 
an analysis of the CY 2013 OPPS claims data performed by the commenter, 
the commenter believed that the geometric mean costs associated with 
endoscopic mucosal resection (EMR) procedures are more closely aligned 
with the geometric mean cost of APC 0422 than APC 0419.
    Response: EMR CPT codes 43211 and 43254 became effective January 1, 
2014. As with all new codes, our policy has been to assign the service 
to an APC based on input from a variety of sources, including but not 
limited to, a review of the clinical similarity of the service in 
comparison to existing procedures; input from CMS medical advisors; 
information from interested specialty societies; and a review of all 
other information available to us. Based on the complexity of these 
procedures and input from our medical advisors, we believe that APC 
0419 appropriately reflects the clinical homogeneity and resource costs 
associated with performing EMR procedures. Therefore, after 
consideration of the public comments we received, we are finalizing our 
CY 2015 proposal, without modification, to reassign CPT codes 43211 and 
43254 from APC 0141 to APC 0419 for the CY 2015 OPPS update. As we do 
every year, we will review our claims data for these services for the 
CY 2016 OPPS rulemaking.
    Comment: Several commenters expressed concern with CMS' proposal to 
continue to assign CPT code 43240 to APC 0419, and requested that CMS 
reassign the CPT code to APC 0384 (GI Procedures with Stents) based on 
the clinical similarity of the service to other procedures assigned to 
this APC.
    Response: Based on our analysis of the latest hospital outpatient 
claims data used for this final rule with comment period, we agree with 
the commenters that a more appropriate APC reassignment is necessary 
for CPT code 43240. However, we believe that the most appropriate APC 
reassignment is APC 0422 (Level III Upper GI Procedures) rather than 
APC 0384. Our claims data show a geometric mean cost of approximately 
$1,574 for CPT code 43240 based on 44 single claims (out of 142 total 
claims), which is more comparable to the geometric mean cost of 
approximately $1,987 for APC 0422 than to the geometric mean cost of 
approximately $3,294 for APC 0384. Therefore, after consideration of 
the public comments we received, we are modifying our proposal 
regarding the APC reassignment of CPT code 43240. Specifically, we are 
reassigning CPT code 43240 from APC 0419 to APC 0422 for CY 2015.
    Comment: Several commenters expressed concern regarding the 
inadequate payment rate for CPT code 91035 under Medicare's ASC payment 
system, and requested that CMS reassign CPT code 91035 from APC 0361 to 
APC 0142 as a means to increase the payment rate in the ASC setting. 
The commenters noted that APC 0142 includes other capsule-based 
procedures that are clinically similar to the procedure described by 
CPT code 91035, such as the procedure described by CPT code 91112 
(Gastrointestinal transit and pressure measurement, stomach through 
colon, wireless capsule, with interpretation and report). The 
commenters further explained that the procedures described by CPT codes 
91035 and 91112 both involve the use of a capsule to collect pH and 
other data from the patient's gastrointestinal tract over a period of 
several days.
    Response: Based on our analysis of the latest hospital outpatient 
claims data used for this final rule with comment period, we believe 
that CPT code 91035 is appropriately assigned to APC 0361 to ensure 
adequate payment for the service in any hospital outpatient setting. 
Our claims data show a geometric mean cost of approximately $466 for 
CPT code 91035 based on 1,272 single claims (out of 5,099 total 
claims), while claims data for CPT code 91112 show a geometric mean 
cost of approximately $774 based on 353 single claims (out of 412 total 
claims). The geometric mean cost of APC 0361 is approximately $341 and 
the geometric mean cost of APC 0142 is approximately $884, which is 
almost twice the geometric cost of CPT code 91035. In addition, 
assigning CPT code 91035 to APC 0142 would create a violation of the 2 
times rule within APC 0142 because the geometric mean cost of the 
highest cost significant procedure assigned to APC 0142 (CPT code 
44361, with a geometric mean cost of approximately $1,019) is 2.2 times 
the geometric mean cost of CPT code 91035. Therefore, APC 0142 would 
not be an appropriate assignment for CPT code 91035. We are finalizing 
our CY 2015 proposal to continue to assign CPT code 91035 to APC 0361.
    Comment: In response to the CY 2014 OPPS/ASC final rule with 
comment period, several commenters requested that CMS assign CPT code 
0355T, which became effective July 1, 2014, to APC 0142 for the CY 2015 
OPPS update. The commenters believed that the procedure described by 
CPT code 0355T is similar to the procedures described by existing GI 
capsule endoscopy CPT codes 91110 (Gastrointestinal tract imaging, 
intraluminal (eg, capsule endoscopy), esophagus through ileum, with 
interpretation and report), 91111 (Gastrointestinal tract imaging, 
intraluminal (eg, capsule endoscopy), esophagus with interpretation and 
report), and 91112 (Gastrointestinal transit and pressure measurement, 
stomach through colon, wireless capsule, with interpretation and 
report), which are all assigned to APC 0142.
    Response: As published in Table 17 of the CY 2015 OPPS/ASC proposed 
rule (79 FR 40976), we proposed to continue

[[Page 66849]]

to assign this new code to APC 0142. We agree with the commenters that 
GI endoscopy CPT codes 0355T, 91110, 91111, and 91112 are clinically 
similar. Therefore, we are finalizing our CY 2015 proposal, without 
modification, to continue to assign CPT code 0355T to APC 0142, As a 
result, all four GI endoscopy procedures described by CPT codes 0355T, 
91110, 91111, and 91112 will be assigned to APC 0142 for the CY 2015 
OPPS update.
    We remind hospitals that because the payment rates associated with 
new codes that become effective July 1 are not available to us in time 
for incorporation into the Addenda to the proposed rule, the Level II 
HCPCS codes and the Category III CPT codes implemented through the July 
2014 OPPS quarterly update CR were not included in Addendum B to the 
proposed rule (which is available via the Internet on the CMS Web 
site). However, we listed the codes and their proposed APC assignments 
in the preamble of the proposed rule.
    The final CY 2015 payment rate for all of the CPT codes discussed 
can be found in Addendum B to this CY 2015 OPPS/ASC final rule with 
comment period (which is available via the Internet on the CMS Web 
site).
3. Genitourinary Services
a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 0202)
    For the CY 2014 OPPS update, we made several changes to specific 
APC assignments, which included the female reproductive APCs; APC 0192, 
APC 0193, and APC 0195. These proposed changes were listed in Addendum 
B to the CY 2014 OPPS/ASC proposed rule (which is available via the 
Internet on the CMS Web site). With respect to these three APCs, based 
on claims data available for the CY 2014 OPPS/ASC proposed rule, only 
APC 0193 showed a violation of the 2 times rule. We note that, under 
the OPPS, we may make exceptions to the 2 times rule based on the 
variation of costs within each APC group in unusual cases such as low-
volume items and services. In the case of APC 0193, we believed that it 
was necessary to make an exception to the 2 times rule for the CY 2014 
OPPS update because this APC sufficiently reflected the clinical and 
resource coherence of the Level V female reproductive procedures.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40982), we discussed 
our proposal to make further changes to the existing female 
reproductive APCs; APC 0188, APC 0189, APC 0191, APC 0192, APC 0193, 
APC 0195, and APC 0202 based on a presentation made at the March 10, 
2014 Panel meeting. Specifically, one presenter expressed concern 
regarding the reassignment of the female reproductive procedures within 
existing APCs 0192 (Level IV Female Reproductive Procedures), 0193 
(Level V Female Reproductive Procedures), and 0195 (Level VI Female 
Reproductive Procedures) that became effective with the CY 2014 OPPS 
update. The presenter stated that the proposed changes would compromise 
beneficiary access to pelvic floor repair procedures, and urged the 
Panel to request that CMS reconsider its packaging policy for the 
procedures assigned to APCs 0193 and 0195 and allow stakeholders the 
opportunity to work with CMS to appropriately reassign these procedures 
to accurately account for the clinical complexity associated with 
providing these services. In addition, the presenter requested that CMS 
delay the conversion of existing APC 0202 (Level VII Female 
Reproductive Procedures) to a C-APC to allow for further study of the 
complexity of pelvic floor repair procedures. After review of the 
information provided by the presenter and examination of the hospital 
outpatient claims data available for the CY 2015 OPPS/ASC proposed 
rule, the Panel did not make any recommendations regarding any of the 
female reproductive APCs.
    For the CY 2015 OPPS update, based on our review of the latest 
hospital outpatient claims data available for the CY 2015 OPPS/ASC 
proposed rule, there were no violations of the 2 times rule within any 
of the female reproductive APCs (79 FR 40982). However, we proposed to 
restructure the female reproductive APCs to more appropriately reflect 
the resource and clinical characteristics of the procedures assigned to 
each APC. The proposed restructuring resulted in the use of five APCs 
for the CY 2015 OPPS update, as compared to the seven APCs used for the 
CY 2014 OPPS update. We believe that the proposed five-level APC 
structure will provide more accurate payments for the female 
reproductive procedures furnished to Medicare beneficiaries.
    Tables 21 and 22 of the proposed rule (79 FR 40983) showed the 
current CY 2014 and proposed CY 2015 female reproductive APCs. 
Specifically, Table 21 showed the female reproductive APCs, APC titles, 
and their status indicator assignments for CY 2014, while Table 22 
showed the proposed female reproductive APCs, APC titles, and their 
status indicator assignments for CY 2015. In the proposed rule, we 
noted that one of the five levels of the female reproductive APCs, APC 
0202, is proposed to be converted to a C-APC. We refer readers to 
section II.A.2.e. of this final rule with comment period for further 
discussion of our comprehensive APC policy.
    In addition, for CY 2015, we proposed to consolidate the two 
existing hysteroscopy APCs; APC 0190 (Level I Hysteroscopy) and APC 
0387 (Level II Hysteroscopy). Specifically, we proposed to delete APC 
0387 and to reassign the procedures currently assigned to this APC to 
APC 0190. In conjunction with this proposed reassignment, we proposed 
to rename APC 0190 from ``Level II Hysteroscopy'' to ``Hysteroscopy.'' 
Based on the hospital outpatient claims data available for the CY 2015 
OPPS/ASC proposed rule, we believe that the two-leveled structure of 
the hysteroscopy APCs is no longer necessary because the single-leveled 
hysteroscopy APC sufficiently reflects the resources and clinical 
similarities of all the hysteroscopic procedures. We note that, for CY 
2014, the payment rates for APCs 0190 and 0387 are $1,763 and $2,818, 
respectively. For CY 2015, the proposed payment rate for APC 0190 was 
approximately $2,014.
    Comment: Many commenters supported CMS' proposal to reassign 
several of the female reproductive procedures to APC 0202 and stated 
that the proposed restructuring of these APCs more appropriately 
reflects clinical and resource homogeneity among similar procedures.
    Response: We appreciate the commenters' support.
    Comment: Some commenters opposed CMS' proposal to reassign CPT code 
57155 (Insertion of uterine tandem and/or vaginal ovoids for clinical 
brachytherapy) from APC 0193 (Level IV Female Reproductive Procedures) 
to APC 0192 (Level III Female Reproductive Procedures) for the CY 2015 
OPPS update. According to the commenters, the proposed CY 2015 OPPS 
payment rate of approximately $501 for CPT code 57155 is significantly 
lower than the CY 2014 OPPS payment rate of approximately $1,375, which 
represents a 63-percent reduction in the payment for this service. The 
commenters noted that the APC assignment for this procedure has varied 
between APC 0192 and APC 0193 since the inception of the code, and 
recommended that CMS reexamine the procedures assigned to APCs 0192, 
0193, and 0202 to ensure that the proposed structure of these APCs 
provides the most appropriate payment for the services assigned to each 
APC.

[[Page 66850]]

Some commenters requested that CMS continue to assign CPT code 57155 to 
APC 0193 for the CY 2015 update. The commenters also recommended that 
CMS closely monitor medical practice patterns to ensure beneficiary 
access to this treatment if CMS finalizes the proposal to reassign CPT 
code 57155 to APC 0192.
    Response: CPT code 57155 became effective January 1, 2002. Since 
that time, CPT code 57155 has been assigned to either APC 0192 or APC 
0193. For CYs 2002, 2003, and 2006 through 2013, CPT code 57155 was 
assigned to APC 0192. For CYs 2004, 2005, and 2014, CPT code 57155 was 
assigned to APC 0193. Consistent with CMS' statutory requirement under 
section 1833(t)(9) of the Act to review and revise APC assignments 
annually and to construct the most appropriate APC groupings as well 
as, to the extent desirable, correct any 2 times rule violations, we 
evaluated the resource consumption and clinical coherence associated 
with the female reproductive APCs for the CY 2015 OPPS update. Based on 
an analysis of the latest hospital outpatient claims data for this 
final rule with comment period, CPT code 57155 has a geometric mean 
cost of approximately $731 based on 858 single claims (out of 2,461 
total claims). The geometric mean costs for the significant procedures 
assigned to APC 0192 range between approximately $398 (for CPT code 
56605) and $731 (for CPT code 57155). Therefore, we believe that CPT 
code 57155 is appropriately assigned to APC 0192 based on the 
comparable resource costs associated with the other procedures assigned 
to this APC and are not making any changes to our proposal for this 
final rule with comment period. We note that APC 0192 had a proposed 
payment rate of approximately $501, which was based on hospital 
outpatient claims data submitted between January 1, 2013, and December 
31, 2013, and processed on or before December 31, 2013. For this final 
rule with comment period, the final payment rate for APC 0192 is 
approximately $487, which is based on hospital outpatient claims data 
submitted between January 1, 2013, and December 31, 2013, and processed 
on or before June 30, 2014.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reassign CPT code 
57155 from APC 0193 to APC 0192 for CY 2015.
    Comment: Several commenters requested that CMS not finalize the 
proposal to consolidate the two existing hysteroscopy APCs. Instead, 
the commenters suggested that CMS maintain the two-leveled structure of 
the hysteroscopy APCs to differentiate the less costly diagnostic 
hysteroscopic services from the more resource-intensive hysteroscopic 
procedures. One commenter stated that the reconfiguration of these APCs 
for CY 2015 is premature and warrants more discussion prior to 
finalizing a proposal regarding this issue. Another commenter believed 
that it is not clinically coherent to combine the diagnostic 
hysteroscopy procedure described by CPT code 58555 with a significant 
therapeutic procedure, such as a hysteroscopic myomectomy described by 
CPT code 58561. The commenter explained that all of the gynecology 
specialty societies recommend minimally invasive alternatives to 
hysterectomy when available. In addition, the commenter believed that 
the proposal to consolidate the hysteroscopy APCs would provide 
incentives for hospitals to encourage treatment that is not the 
standard of care.
    Response: Based on a review of the latest hospital outpatient 
claims data for the CY 2015 OPPS update, we believe that restructuring 
and consolidating the gynecology APCs is prudent in order to improve 
the comparability of resource and clinical similarity of all the 
hysteroscopy procedures assigned to a specific APC. In addition, we 
disagree with the commenter's assertion regarding hospitals' incentives 
to deliver substandard care for the purposes of financial gain. We 
believe that hospitals and physicians will offer their patients the 
appropriate care and treatment, which may or may not employ an 
expensive medical device.
    Comment: Several commenters suggested that modifications to the 
proposed APC assignments for certain related procedures be considered 
if CMS finalizes the proposal to restructure and consolidate the female 
reproductive APCs. One commenter suggested that CMS reassign CPT codes 
58561 and 58563 to APC 0202 instead of APC 0190 based on the clinical 
similarities in relation to the other procedures assigned to APC 0202.
    Response: Based on input from our medical advisors, we agree with 
the commenter that APC 0202 is the most appropriate APC assignment for 
CPT codes 58561 and 58563 based on their clinical similarity in 
relation to the other procedures assigned to this APC. We note that APC 
0202 is designated as a C-APC for the CY 2015 OPPS update. Further 
information on C-APCs can be found in section II.A.2.e. of this final 
rule with comment period.
    Comment: One commenter suggested that CMS reconsider the proposal 
to consolidate the hysteroscopy APCs and establish two separate APCs 
for female reproductive procedures; one for the more resource-intensive 
hysteroscopic procedures and another for the lower-cost and less 
complex hysteroscopic procedures. Specifically, the commenter 
recommended assigning the following seven resource-intensive female 
reproductive procedures to a higher-paying APC, with a geometric mean 
cost ranging between approximately $3,010 and $4,350: CPT codes 58353, 
58356, 58561, 58563, 58565, 58559, and 58560. The commenter also 
suggested assigning the following four less complex female reproductive 
procedures to a lower-paying APC, with a geometric mean cost ranging 
between approximately $1,758 and $2,099: CPT codes 58555, 58558, 58562, 
and 58579. Another commenter believed that the necessary resources 
required to provide the service described by CPT code 58555 are 
significantly less than the resources required to provide the service 
described by CPT code 58561. The commenter stated that the resource 
costs for providing the services described by CPT codes 58353, 58561, 
58563, and 58565 are similar and recommended that these procedures be 
assigned to the same APC.
    Response: We reviewed our latest hospital outpatient claims data 
used for this final rule with comment period for all of the 
hysteroscopic procedures. Based on our review and after consideration 
of the public comments we received, we are modifying our proposal 
regarding the proposed APC assignments for several of the hysteroscopic 
procedures for the CY 2015 OPPS update. Specifically, we are deleting 
APC 0190 and reassigning the eight procedures that were proposed to be 
assigned to this APC to APC 0188, APC 0193, or APC 0202.
    In summary, after consideration of the public comments received, we 
are finalizing our proposals with some modifications. For the 
hysteroscopy procedure APCs, we proposed to reassign all of the 
procedures assigned to APC 0387 to APC 0190, which resulted in a one-
leveled APC containing all of the hysteroscopy procedures. 
Specifically, we proposed to delete APC 0387 (Level II Hysteroscopy), 
and to rename APC 0190 ``Hysteroscopy.'' However, based on our analysis 
of the hospital outpatient claims data available for this final rule 
with comment period, we are modifying our proposal. Instead, we are 
reassigning all of the hysteroscopy procedures that we proposed to 
assign

[[Page 66851]]

to APC 0190 to one of the female reproductive APCs. That is, we are 
reassigning all of the procedures proposed for reassignment to APC 0190 
to APC 0188, APC 0193, or APC 0202. Consequently, with no procedures 
remaining in APC 0190, we deleted this APC for CY 2015. In addition, we 
are finalizing our proposal to restructure the female reproductive APCs 
to more appropriately reflect the resource and clinical characteristics 
of the procedures assigned to each APC. Specifically, we are finalizing 
our proposal to assign all of the female reproductive procedures to 
APCs 0188, 0189, 0192, 0193, or 0202. In addition, because of our 
revision to the hysteroscopy procedures APCs, we are revising the APC 
titles for the five female reproductive APCs; APC 0188, APC 0189, APC 
0192, APC 0193, and APC 0202, from ``Female Reproductive Procedures'' 
to ``Gynecologic Procedures'' to more appropriately describe the 
procedures assigned to these APCs. Table 20 below lists the 
hysteroscopic procedures CPT codes, along with their long descriptors, 
proposed CY 2015 OPPS status indicators and APC assignments, as well as 
their final CY 2015 OPPS status indicators and APC assignments. Table 
21 below lists the final APC titles and status indicators for the 
gynecologic procedure APCs. The final CY 2015 payment rates for the 
gynecologic procedures APCs, as well as the hysteroscopic procedures 
CPT codes listed in Table 21 can be found in Addendum B to this CY 2015 
OPPS/ASC final rule with comment period (which is available via the 
Internet on the CMS Web site).

                    Table 20--Final CY 2015 APC Assignments for the Hysteroscopic Procedures
----------------------------------------------------------------------------------------------------------------
                                                                          Proposed CY    Final  CY     Final CY
         CPT Code                   Long descriptor          Proposed CY   2015 OPPS    2015  OPPS    2015 OPPS
                                                            2015 OPPS SI      APC           SI           APC
----------------------------------------------------------------------------------------------------------------
58353.....................  Endometrial ablation, thermal,           J1          0202           J1          0202
                             without hysteroscopic
                             guidance.
58356.....................  Endometrial cryoablation with            J1          0202           J1          0202
                             ultrasonic guidance,
                             including endometrial
                             curettage, when performed.
58555.....................  Hysteroscopy, diagnostic                  T          0190            T          0193
                             (separate procedure).
58558.....................  Hysteroscopy, surgical; with              T          0190            T          0193
                             sampling (biopsy) of
                             endometrium and/or
                             polypectomy, with or without
                             d & c.
58559.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             lysis of intrauterine
                             adhesions (any method).
58560.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             division or resection of
                             intrauterine septum (any
                             method).
58561.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             removal of leiomyomata.
58562.....................  Hysteroscopy, surgical; with              T          0190            T          0193
                             removal of impacted foreign
                             body.
58563.....................  Hysteroscopy, surgical; with              T          0190           J1          0202
                             endometrial ablation (eg,
                             endometrial resection,
                             electrosurgical ablation,
                             thermoablation).
58565.....................  Hysteroscopy, surgical; with             J1          0202           J1          0202
                             bilateral fallopian tube
                             cannulation to induce
                             occlusion by placement of
                             permanent implants.
58579.....................  Unlisted hysteroscopy                     T          0190            T          0188
                             procedure, uterus.
----------------------------------------------------------------------------------------------------------------

                          Table 21--Final CY 2015 APC Titles for Gynecologic Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                                      Final CY
         CY 2015 APC               Proposed CY 2015 APC title          Final CY 2015 APC title       2015 status
                                                                                                      indicator
----------------------------------------------------------------------------------------------------------------
0188.........................  Level I Female Reproductive        Level I Gynecologic Procedures..            T
                                Procedures.
0189.........................  Level II Female Reproductive       Level II Gynecologic Procedures.            T
                                Procedures.
0192.........................  Level III Female Reproductive      Level III Gynecologic Procedures            T
                                Procedures.
0193.........................  Level IV Female Reproductive       Level IV Gynecologic Procedures.            T
                                Procedures.
0202.........................  Level V Female Reproductive        Level V Gynecologic Procedures..           J1
                                Procedures.
----------------------------------------------------------------------------------------------------------------

b. Cystourethroscopy, Transprostatic Implant Procedures, and Other 
Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and 1564)
    For the CY 2015 OPPS update, based on our review of the latest 
hospital outpatient claims data available for the CY 2015 OPPS/ASC 
proposed rule, we proposed to restructure the APCs containing 
cystourethroscopy and other genitourinary procedures to more 
appropriately reflect the resource costs and clinical characteristics 
of the procedures assigned within each APC (79 FR 40987). We note that, 
for the CY 2014 OPPS update, there are five levels of APCs that contain 
cystourethroscopy and genitourinary procedures. These APCs were listed 
in Table 26 of the CY 2015 OPPS/ASC proposed rule (79 FR 40986), along 
with their status indicator assignments for CY 2014. The proposed 
restructuring resulted in the use of four APCs for the CY 2015 OPPS 
update, as compared to the five APCs used for the CY 2014 OPPS update. 
Specifically, based on our review and evaluation of the procedures 
assigned to these APCs and the latest hospital outpatient claims data 
available, in the CY 2015 OPPS/ASC proposed rule, we proposed to delete 
APC 0429 (Level V Cystourethroscopy and Other Genitourinary Procedures) 
and reassign the procedures that were previously assigned to this APC 
to either APC 0161 (Level I Cystourethroscopy and Other Genitourinary 
Procedures) or APC 0163 (Level IV Cystourethroscopy and Other 
Genitourinary Procedures). We believe that the procedures currently 
assigned to APC 0429 would be more appropriately assigned to either APC 
0161 or APC 0163 based on their geometric mean costs for the CY 2015 
OPPS update. Further, we believe that this proposed restructuring 
appropriately categorizes all of the cystourethroscopy and other 
genitourinary procedures that are comparable clinically and with 
respect to resource use within an APC group. We also proposed to delete 
APC 0169 (Lithotripsy) because the one procedure,

[[Page 66852]]

specifically the procedure described by CPT code 50590 (Lithotripsy, 
extracorporeal shock wave), that was assigned to this APC was proposed 
for reassignment to APC 0163 (79 FR 40987). Table 27 of the CY 2015 
OPPS/ASC proposed rule (79 FR 40987) listed the proposed APCs that 
contain cystourethroscopy and other genitourinary procedures, the APC 
titles, and the proposed status indicator assignments for CY 2015. The 
proposed payment rates for the specific APCs listed in Table 27 were 
listed in Addendum A to the proposed rule. The proposed payment rates 
for the specific cystourethroscopy and other genitourinary procedure 
codes were listed in Addendum B to the proposed rule. (Addenda A and B 
to the proposed rule are available via the Internet on the CMS Web 
site.)
    Comment: Several commenters opposed CMS' proposal to delete APC 
0169 and reassign the extracorporeal shock wave lithotripsy (ESWL) CPT 
code 50590 to APC 0163. The commenters noted that the procedure 
described by CPT code 50590 is classified as a noninvasive therapy and 
is not similar, clinically or with respect to resource costs, to the 
other more invasive surgical urological procedures that are proposed 
for assignment to APC 0163. One commenter stated that the ESWL 
procedure does not involve the use of an endoscope and, therefore, 
should not be assigned to APC 0163. This commenter believed that the 
payment rate for APC 0163 would be influenced by dominating the claims 
data for CPT code 50590 because ESWL is a commonly performed procedure 
resulting in a significant high volume of single frequency claims. The 
commenter requested that CMS delay finalizing this proposal or, 
alternatively, reassign CPT code 50590 to APC 0162 (Level III 
Cystourethroscopy and Other Genitourinary Procedures) because this APC 
encompasses a broader and more diverse grouping of procedures than APC 
0163.
    Response: As part of our standard annual OPPS update process, we 
review each APC assignment for the clinical similarity and resource 
homogeneity of the procedures assigned to each APC. An analysis of our 
latest hospital outpatient claims data available for this final rule 
with comment period revealed a geometric mean cost of approximately 
$3,094 based on 32,370 single claims (out of 44,816 total claims) for 
CPT code 50590, which is comparable to the geometric mean cost of 
approximately $3,230 for APC 0163. The significant procedures assigned 
to APC 0163 have geometric mean costs ranging between $2,946 and 
$4,088. We do not agree with the commenters that APC 0162 is the more 
appropriate APC assignment because the geometric mean cost for this 
APC, approximately $2,163, is significantly lower than the geometric 
mean cost of approximately $3,094 for CPT code 50590. In addition, the 
geometric mean cost of APC 0163 (using proposed rule data) and without 
CPT code 50590 assigned to this APC was approximately $3,058, which is 
close to the final rule geometric mean cost of CPT code 50590 of 
$3,094. Although the ESWL procedure does not involve the use of an 
endoscope, we note that not every procedure proposed for reassignment, 
or ultimately reassigned, to APC 0163 uses an endoscope. In addition, 
we do not agree with the commenters that the ESWL procedure is not 
clinically similar to the other procedures assigned to APC 0163. There 
are no general rules for clinical similarity that apply to all APCs. 
Instead, the evaluation of clinical similarity depends upon the 
particular characteristics of the services being evaluated for a 
particular APC assignment. The use of single procedure APCs, like APC 
0169, the APC to which CPT code 50590 is assigned for CY 2014, 
generally is not considered appropriate under the OPPS because payment 
rates based on a single procedure code's geometric mean cost is more 
consistent with a fee schedule than a prospective payment system. 
However, there are limited circumstances in which we assign a single 
procedure code to an APC; for example, the intraocular procedures 
assigned to an APC series. Specifically, APC 0673 (Level III 
Intraocular Procedures) has a geometric mean cost of approximately 
$3,239. APC 0293 (Level IV Intraocular Procedures) is the next higher 
level APC in the intraocular procedures APC series, and it has a single 
procedure (CPT code 65770 (Keratoprosthesis)) assigned to it, which has 
a geometric mean cost of approximately $8,766. The highest cost 
procedure assigned to APC 0673 is CPT code 67113 (Repair of complex 
retinal detachment), which has a geometric mean cost of approximately 
$4,065. The geometric mean cost of CPT code 65770 is significantly 
higher, 2.2 times the geometric mean cost of CPT code 67113. Therefore, 
we assigned CPT code 65770 to a different APC because the resource 
costs are not similar. Because the procedure described by CPT code 
65770 is an intraocular surgery and there are no other APCs that 
contain clinically similar procedures, we assigned CPT code 65770 to 
APC 0293 without any other procedures. Continuing in this series, we 
assigned CPT code 0308T (Insertion of intraocular telescope prosthesis 
including removal of crystalline lens) to APC 0351 (Level V Intraocular 
Procedures) without any other procedures. CPT code 0308T has a 
geometric mean cost of approximately $23,947, which is 2.73 times the 
geometric mean cost of the procedure described by CPT code 65770, which 
is assigned to APC 0293, which is one level lower than APC 0351 in the 
intraocular procedures APC series. CPT code 0308T is the only procedure 
code assigned to APC 0351 because there are no other procedures that 
are similar in terms of resource costs. We do not believe that similar 
APC series assignment is applicable to CPT code 50590. Therefore, we 
proposed to reassign CPT code 50590 to APC 0163 and delete APC 0169 (79 
FR 40986 through 40987). In summary, based on our review of the latest 
hospital outpatient claims data for this final rule with comment 
period, we believe that CPT code 50590 would be appropriately assigned 
to APC 0163 based on its clinical and resource similarity to the other 
procedures assigned to APC 0163, several of which are dedicated to 
kidney stone removal. Therefore, we are finalizing our proposal, 
without modification, to assign CPT code 50590 to APC 0163 for CY 2015.
    Comment: One commenter requested that CMS not finalize the proposal 
to delete APC 0429, and suggested that CMS maintain this APC until data 
become available for CPT code 52356 (Cystourethroscopy, with 
ureteroscopy and/or pyeloscopy; with lithotripsy including insertion of 
indwelling ureteral stent (eg., Gibbons or double-J type)), which 
became effective January 1, 2014.
    Response: We believe that CPT code 52356 is appropriately 
categorized by APC 0163 based on its similarity to the other procedures 
assigned to this APC. Because CPT code 52356 became effective January 
1, 2014, we expect to have claims data for the procedure described by 
this code available for the CY 2016 OPPS rulemaking cycle. We note 
that, consistent with CMS' policy of reviewing APC assignments annually 
in accordance with the statutory requirement, we will reevaluate the 
APC assignment for CPT code 52356 for the CY 2016 OPPS update. 
Therefore, after consideration of the public comment we received, we 
are finalizing our proposals, without modification, to delete APC 0429 
and to assign CPT code 52356 to APC 0163 for CY 2015.
    Comment: Some commenters disagreed with CMS' proposal to

[[Page 66853]]

reassign CPT code 55875 (Transperineal placement of needles or 
catheters into prostate for interstitial radioelement application, with 
or without cystoscopy) from APC 0163 to APC 0162. The commenters stated 
that the proposal would result in a 28-percent reduction in the payment 
for this service when the CY 2014 payment rate of approximately $2,905 
for APC 0163 is compared to the CY 2015 proposed payment rate of 
approximately $2,091 for APC 0162. The commenters noted that CPT code 
55875 has been assigned to APC 0163 since the code's inception in CY 
2007, and believed that the proposed payment rate for APC 0163 more 
accurately reflects the resources necessary to provide this service. 
The commenters urged CMS to maintain the APC assignment of CPT code 
55875 to APC 0163.
    Response: Analysis of our latest hospital claims data used for this 
final rule with comment period revealed a geometric mean cost of 
approximately $2,501 for CPT code 55875 based on 703 single claims (out 
of 4,681 total claims), which is comparable to the geometric mean cost 
of approximately $2,163 for APC 0162. We do not agree with the 
commenters that APC 0163 is the more appropriate APC because its 
geometric mean cost of approximately $3,230 is significantly higher 
than the geometric mean cost of approximately $2,501 for CPT code 
55875. We believe that CPT code 55875 is appropriately assigned to APC 
0162 based on its clinical homogeneity and resource costs to the 
procedures currently assigned to this APC. Therefore, after 
consideration of the public comments we received, we are finalizing our 
proposal, without modification, to reassign CPT code 55875 to APC 0162 
for CY 2015.
    Comment: One commenter opposed CMS' proposal to reassign CPT code 
53850 (Transurethral destruction of prostate tissue; by microwave 
thermotherapy) from APC 0429 to APC 0161. The commenter stated that the 
CY 2015 proposed payment rate for APC 0161 is approximately $1,235, 
which is significantly lower than the CY 2014 payment rate of 
approximately $3,304 for APC 0429. The commenter suggested that CMS 
reassign CPT code 53850 to APC 0163, the APC to which CPT code 53852 
(Transurethral destruction of prostate tissue; by radiofrequency 
thermotherapy) is proposed to be reassigned. The commenter explained 
that both procedures are similar in clinical technique because both 
procedures use a thermal approach as an alternative to open 
prostatectomy or transurethral resection of the prostate for the 
treatment of benign prostatic hyperplasia (BPH).
    Response: As has been our practice since the implementation of the 
OPPS in 2000, we review, on an annual basis, the APC assignments for 
the procedures and services paid under the OPPS. Based on the latest 
hospital outpatient claims data used for this final rule with comment 
period, our analysis does not support the reassignment of CPT code 
53850 to APC 0163. Our analysis of the claims data shows a geometric 
mean cost of approximately $1,542 for CPT code 53850 based on 107 
single claims (out of 142 total claims), which is relatively similar to 
the geometric mean cost of approximately $1,273 for APC 0161. While we 
acknowledge that both procedures are similar, our analysis of the 
claims data shows that the resource costs of providing the procedure 
described by CPT code 53852 is significantly higher than the resource 
cost of providing the procedure described by CPT code 53850. 
Specifically, the geometric mean cost for CPT code 53852 is 
approximately $3,339 based on 98 single claims (out of 156 total 
claims), which is comparable to the geometric mean cost of APC 0163 of 
approximately $3,230. We do not agree with the commenters that APC 0163 
is the more appropriate APC assignment because its geometric mean cost 
is significantly higher than the geometric mean cost of CPT code 53850 
of approximately $1,542. We believe that CPT code 53850 would be 
appropriately assigned to APC 0161 based on its clinical homogeneity 
and resource costs to the procedures currently assigned to this APC. 
Therefore, after consideration of the public comment we received, we 
are finalizing our proposal, without modification, to reassign CPT code 
53850 from APC 0429 to APC 0161 for CY 2015.
    In addition, effective April 1, 2014, we created HCPCS codes C9739 
(Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 
implants) and C9740 (Cystourethroscopy, with insertion of 
transprostatic implant; 4 or more implants) as a result of an 
application to assign the transprostatic implant procedures (TIPs) to a 
New Technology APC. We assigned HCPCS codes C9739 and C9740 to APCs 
0162 (Level III Cystourethroscopy and other Genitourinary Procedures) 
and 1564 (New Technology--Level XXVII), respectively, based on the 
estimated costs of the procedures, which include 1 to 3 implants in the 
case of procedures described by HCPCS code C9739, and 4 or more 
implants in the case of procedures described by HCPCS code C9740. We 
based the number of implants for HCPCS codes C9739 and C9740 on the 
number of implant utilization data per patient that the New Technology 
applicant provided within its approved application. The CY 2014 payment 
rates for APCs 0162 and 1564 are $2,007.32 and $4,750.00, respectively.
    The AMA's CPT Editorial Panel recently created two new codes for 
this technology, which become effective on January 1, 2015: CPT codes 
52441 (Cystourethroscopy, with insertion of permanent adjustable 
transprostatic implant; single implant) and 52442 (Cystourethroscopy, 
with insertion of permanent adjustable transprostatic implant; each 
additional permanent adjustable transprostatic implant (List separately 
in addition to code for primary procedure)).
    Comment: One commenter stated that the TIPs described by HCPCS 
codes C9739 and C9740 do not receive adequate payment under the OPPS 
because of the code descriptors for these procedure codes as they 
relate to the number of implants allowed in each respective code (1 to 
3 implants for HCPCS code C9739 and 4 or more implants for HCPCS code 
C9740), when categorized by the APCs in which these services are 
assigned. The commenter also believed that the TIPs are unable to be 
performed in the ASC setting because of the inadequate payment rate for 
the specific APCs. The commenter believed that the procedures described 
by HCPCS codes C9739 and C9740 are device dependent because a majority 
of the procedures' costs are associated with the costs of the implants, 
with a mean of 4.9 implants per procedure. The commenter also believed 
that there is considerable variation in the number of implants used for 
each procedure. The commenter believed that the ASC payment is 
extremely low because the procedures are not designated as ``device 
intensive'' in the ASC setting (that is, the procedures are not 
assigned to ASC payment indicator ``J8''), nor are the procedures 
assigned to a C-APC under the OPPS, which would most likely allow for 
the performance of the device-intensive treatment in the ASC setting, 
similar to most of the proposed C-APCs that are defined as device-
intensive APCs. The commenter stated that the proposed OPPS payments 
for HCPCS codes C9739 and C9740 are inadequate to cover both the costs 
of the number of implants required and the cost of the procedure. The 
commenter recommended several possible APC assignments to improve the 
payments for TIPs. The commenter recommended using new CPT codes 52441 
and 52442

[[Page 66854]]

to report the TIPs under the OPPS, and assigning the procedures to C-
APC 0385 (Level I Urogenital Procedures) because the proposed payment 
rate for C-APC 0385 of approximately $7,659 is comparable to the 
estimated cost of performing TIPs using 5 implants, which is 
approximately $7,519. The commenter's second recommendation was to 
continue to report the performance of the TIPs using HCPCS codes C9739 
and C9740, and to assign HCPCS code C9740 to APC 0385, as described 
previously, and HCPCS code C9739 to APC 0202 (Level V Female 
Reproductive Procedures) and remove ``Female'' from the title of APC 
0202. According to the commenter, the proposed payment for APC 0202 of 
approximately $4,366 is equivalent to the cost of a TIP using 2 or 3 
implants. The commenter believed that because APC 0202 is designated as 
a C-APC, the ASC payment for the procedure would also prove to be 
adequate. The commenter's third recommendation was to use new CPT codes 
52441 and 52442 to report TIPs and to assign the procedure codes to APC 
0168 (Level II Urethral Procedures) on an interim basis until OPPS 
claims data are available for these codes. The commenter believed that 
the proposed payment rate for APC 0168 of approximately $2,533 more 
appropriately equates to the cost of a single implant procedure 
described by CPT code 52441, while additional implant procedures 
described by CPT code 52442 would be paid at 50 percent, or 
approximately $1,267, because APC 0168 is subject to the multiple 
procedure discount (that is, the APC is assigned to status indicator 
``T''), which, the commenter claimed, more appropriately equates to the 
estimated cost of providing the procedure described by CPT code 52442 
of approximately $1,248. However, the commenter noted that, because APC 
0168 is not a C-APC, payment for the procedure may not be designated as 
``device intensive'' to ensure adequate ASC payment. The commenter 
recommended that CMS consider any procedure that has device costs that 
are greater than 40 percent as device intensive.
    Response: We agree with the commenter that the cost of the implants 
associated with the procedures described by HCPCS codes C9739 and C9740 
represents the majority of the costs of the procedures. We considered 
those costs and the variation in the number of implants per procedure 
when we created HCPCS codes C9739 and C9740 and assigned the procedure 
codes to APCs 0162 and 1564, respectively. We believe that HCPCS codes 
C9739 and C9740 are preferable to the new CPT codes 52441 and 52442 
with respect to OPPS and ASC payments because the new codes describe 
complete procedures instead of the insertion of individual implants, 
which are almost always incomplete procedures because patients usually 
receive multiple implants. We do not believe that any of the APCs 
recommended by the commenter are appropriate for assignment of HCPCS 
codes C9739 and C9740 at this time because our usual policy with new 
codes is to wait until we have OPPS claims data available before making 
an APC reassignment. In regard to the ASC payment for the procedures, 
neither APC 0162 nor APC 1564 is designated as device intensive. 
Therefore, the multiple procedure payment reduction under OPPS applies 
to the entire payment amount under the ASC payment as well. Currently, 
there is no policy regarding designating services that are assigned to 
a New Technology APC as device intensive for the ASC setting. We may 
consider such a policy in future rulemakings.
    We will maintain payment for the cystourethroscopy with insertion 
of TIPs using HCPCS codes C9739 and C9740 because we believe that the 
code descriptors more appropriately reflect complete procedures and the 
distribution of implant utilization per patient. For CY 2015, we are 
maintaining our APC assignments for HCPCS codes C9739 and C9740 to APCs 
0162 and 1564, respectively. The APC assignments for HCPCS codes C9739 
and C9740 are initial APC assignments until we obtain claims data for 
these two codes for the CY 2016 OPPS update. The final CY 2015 
geometric mean costs for APC 0162 is approximately $2,163, and the 
final CY 2015 payment rate (there are no geometric mean costs for New 
Technology APCs, only payment bands) for APC 1564 is approximately 
$4,750. CPT codes 52441 and 52442 will not be payable under the OPPS 
for CY 2015; we are assigning these two CPT codes to status indicator 
``B'' (Codes that are not recognized by OPPS when submitted on an 
outpatient hospital Part B bill type (12x and 13x)).
    After consideration of the public comments we received, we also are 
finalizing our proposal to restructure the APCs containing 
cystourethroscopy, transprostatic implant procedures, and other 
genitourinary procedures, and to use a four-level APC grouping to 
classify the procedures based on our analysis of the latest hospital 
outpatient claims data available for this final rule with comment 
period. The final payment rates for the cystourethroscopy, 
transprostatic implant procedures, and other genitourinary procedure 
codes, as well as the specific CPT codes on which we received public 
comments and that are discussed in this section, can be found in 
Addendum B to this final rule with comment period, which is available 
via the Internet on the CMS Web site. The final payment rates for APCs 
0160, 0161, 0162, and 0163, which are the final CY 2015 
cystourethroscopy, transprostatic implant procedures, and other 
genitourinary APCs, can be found in Addendum A to this final rule with 
comment period, which is also available via the Internet on the CMS Web 
site.
    We remind commenters that every year we revise, if necessary, the 
APC assignments for procedure codes based on our analysis of the latest 
hospital outpatient claims data. We anticipate that there will be 
further significant revisions to the urology-related APCs in futures 
years because the current overall APC structure is suboptimal and can 
be improved with respect to the clinical similarity and resource 
similarity of the groupings. In addition, we note that section 
1833(t)(9)(A) of the Act requires the Secretary to review, on a 
recurring basis occurring no less than annually, and revise the groups, 
the relative payment weights, and the wage and other adjustments to 
take into account changes in medical practice, changes in technology, 
the addition of new services, new cost data, and other relevant 
information and factors. Although we do not discuss every APC change in 
the proposed and final rules with comment period, these changes are 
listed in Addendum B to the proposed and final rules with comment 
period. Specifically, procedure codes with proposed revisions to the 
APC and/or status indicator assignments are assigned to comment 
indicator ``CH'' (Active HCPCS code in current year and next calendar 
year, status indicator and/or APC assignment has changed) in Addendum B 
to the proposed rule.
c. Level IV Anal/Rectal Procedures (APC 0150)
    We created HCPCS code C9735 (Anoscopy; with directed submucosal 
injection(s), any substance) effective April 1, 2013, and assigned the 
service to APC 0150 (Level IV Anal/Rectal Procedures) for CY 2013, 
which had a payment rate of $2,365.97. We maintained the assignment of 
HCPCS code C9735 to APC 0150 for CY 2014, with a payment rate of 
$2,501.31. HCPCS code C9735 involves injection of a bulking agent, 
L8605 (Injectable bulking agent dextranomer/hyaluronic

[[Page 66855]]

acid copolymer implant, anal canal, 1 ml, includes shipping and 
necessary supplies). One commenter in response to the CY 2014 OPPS/ASC 
proposed rule believed that the proposed assignment for HCPCS code 
C9735 to APC 0150 was inappropriate, and asserted that the entire HCPCS 
code C9735 procedure costs far more than the proposed payment rate for 
APC 0150. The commenter recommended creating a new Level V Anal/Rectal 
Procedures APC, composed of HCPCS code C9735, and two other procedures. 
CMS responded in the CY 2014 OPPS/ASC final rule with comment period 
that HCPCS code C9735 became effective April 1, 2013, so there were no 
claims data yet on this procedure, and that our longstanding policy is 
to wait until there are claims data on a new procedure before 
reassigning the service to another clinical APC (78 FR 74981). We did 
not agree with the commenters that creating a Level V Anal/Rectal 
Procedures APC was warranted for CY 2014. We believed that the 
suggested Level V APC would have a low volume of single frequency 
claims, and HCPCS code C9735 had no claims volume at that time. We 
stated that the low volume of claims for such an APC would contribute 
to APC cost and payment volatility.
    For CY 2015, we proposed to maintain the assignment of HCPCS code 
C9735 to APC 0150, which had a proposed payment rate of $2,612.71. The 
AMA's CPT Editorial Panel created new Category III CPT code 0377T 
(Anoscopy with directed submucosal injection of bulking agent for fecal 
incontinence), which describes the procedure performed by HCPCS code 
C9735, to be effective January 1, 2015.
    Comment: A few commenters recommended that CMS divide APC 0150 into 
two APCs by creating a higher cost Level V Anal/Rectal Procedures APC. 
The commenters stated that there are four procedure codes that have a 
geometric mean cost that is more than $500 higher than the proposed 
geometric mean cost of APC 0150, which is $2,735.52, and one procedure 
code that has a geometric mean cost that is approximately $300 higher 
than the proposed geometric mean cost of APC 0150. One commenter 
specifically stated that the proposed payment rate for APC 0150 is 
insufficient to cover the cost of the procedure described by HCPCS code 
C9735, which is one of the five procedure codes recommended for 
assignment to the suggested Level V Anal/Rectal Procedures APC, because 
the proposed payment rate for APC 0150 is lower than the total cost of 
the procedure. The commenter pointed out that the proposed geometric 
mean cost of HCPCS code C9735 is $3,241.32, which is considerably 
higher that the proposed geometric mean cost of APC 0150, which is 
$2,735.52. The commenter also recommended creating a Level V Anal/
Rectal Procedures APC, and assigning HCPCS code C9735 and other codes 
to this recommended APC. In addition, the commenter recommended that 
CMS use new CPT code 0377T for hospitals to report the anoscopy with 
directed submucosal injection of bulking agent for fecal incontinence 
procedure, effective January 1, 2015.
    Response: The claims data available for this final rule with 
comment period, which are used to establish final payment rates for the 
CY 2015 OPPS, show a geometric mean cost of approximately $2,698 for 
APC 0150, while the geometric mean cost for HCPCS code C9735 is 
approximately $2,863 based on 56 single frequency claims. We believe 
that the geometric mean cost of HCPCS code C9735 is similar to the 
geometric mean cost of APC 0150. Further, the procedure described by 
HCPCS code C9735 is no longer one of the five highest cost procedures 
assigned to APC 0150 based on claims data available for this final rule 
with comment period. Similarly, there are other higher cost, lower 
volume procedures with geometric mean costs that are greater than the 
geometric mean cost of APC 0150, but do not create a violation of the 2 
times rule because of the APC assignment. For instance, CPT code 46762 
(Sphincteroplasty, anal, for incontinence, adult; implantation 
artificial sphincter) has a final rule geometric mean cost of 
approximately $11,873 based on 9 single frequency claims. The volume of 
claims for this CPT code is too low to consider this procedure 
significant for purposes of evaluating a potential violation of the 2 
times rule. Therefore, we do not believe that the range of costs for 
the significant procedures assigned to APC 0150 warrants the creation 
of a higher level APC. Based on claims data available for this final 
rule with comment period, the five highest cost procedures assigned to 
APC 0150 have a total number of single frequency claims that equals 
less than 220 claims. The suggested Level V Anal/Rectal Procedures APC 
would have a low volume of single frequency claims and would contribute 
to APC cost and payment volatility, as was the case when based on CY 
2014 claims data. As we stated in the CY 2014 OPPS/ASC final rule with 
comment period, we are not accepting the commenter's recommendation 
because a low volume APC will contribute to the APC's cost volatility, 
which in turn contributes to payment volatility for the procedures 
assigned to the low volume APC (78 FR 74981).
    After consideration of the public comments we received regarding 
the composition of APC 0150, we are finalizing our proposal to continue 
to assign HCPCS code C9735 to APC 0150 for CY 2015. The CY 2015 final 
geometric mean cost of APC 0150 is approximately $2,698. In addition, 
new CPT code 0377T also is assigned to APC 0150 for CY 2015 because we 
agree with the commenters that HCPCS code C9735 should be deleted after 
December 31, 2014. We are instructing hospitals to use CPT code 0377T 
to report this service beginning with the code's effective date, 
January 1, 2015.
d. Percutaneous Renal Cryoablation (APC 0423)
    For CY 2014, we assigned CPT codes 50593 (Ablation, renal tumor(s), 
unilateral, percutaneous, cryotherapy) and 0340T (Ablation, pulmonary 
tumor(s), including pleura or chest wall when involved by tumor 
extension, percutaneous, cryoablation, unilateral, includes imaging 
guidance) to APC 0423 (Level II Percutaneous Abdominal and Biliary 
Procedures), which has a payment rate of $4,106.19. For CY 2015, we 
proposed to continue to assign these two CPT codes to APC 0423, with a 
proposed payment rate of $4,053.32.
    Comment: One commenter believed that CMS' proposal to continue to 
assign CPT codes 50593 and 0340T to APC 0423 does not accurately 
reflect the costs incurred when performing these cryoablation 
procedures. The commenter noted that APC 0423 includes several other 
radiofrequency ablation and endoscopy procedures, which do not include 
high-cost device systems like the cryoablation procedures described by 
CPT codes 50593 and 0340T. Although the commenter acknowledged that 
there is no violation of the 2 times rule, the commenter stated that 
the proposed geometric mean cost of CPT code 50593 is significantly 
higher than the proposed geometric mean cost of APC 0423. In addition, 
the commenter asserted that the cryoablation procedures described by 
CPT codes 50593 and 0340T are not clinically similar to other 
procedures assigned to APC 0423. The commenter further noted that less 
than half of claims used to establish the proposed geometric mean cost 
of CPT code 50593 were correctly coded, and did not include the device 
HCPCS code C2618 (Probe, cryoablation). The commenter

[[Page 66856]]

recommended that CMS create a new Level III Percutaneous Abdominal and 
Biliary Procedures APC, and assign CPT codes 50593 and 0340T to this 
APC.
    Response: We disagree with the commenter that the proposed 
geometric mean cost of CPT code 50593, which is $4,937.12 is 
significantly higher than the proposed geometric mean cost of APC 0423, 
which is $4,243.84. The claims data available for this final rule with 
comment period show a geometric mean cost of approximately $4,249 for 
APC 0423, and approximately $4,985 for CPT code 50593, which is based 
on 749 single frequency claims. The geometric mean cost of CPT code 
50593 is the highest cost procedure assigned to APC 0423, but is well 
within a normal range of costs associated with the other procedures 
assigned to this APC, and does not approach the 2 times limit that 
would create a violation of the 2 times rule. CPT code 0340T has no 
claims at this time because the procedure code became effective 
beginning in CY 2014. Therefore, we do not believe that a new Level III 
Percutaneous Abdominal and Biliary Procedures APC is warranted based on 
the geometric mean cost of CPT code 50593 relative to the geometric 
mean cost of APC 0423. We also remind the commenter that we typically 
do not investigate allegations of hospital cost underreporting or 
incorrect coding. As we stated in the CY 2011 OPPS/ASC final rule with 
comment period, ``Beyond our standard OPPS trimming methodology . . . 
that we apply to those claims that have passed various types of claims 
processing edits, it is not our general policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting'' (75 FR 
71838). We believe that the cryoablation procedures described by CPT 
codes 50593 and 0340T are clinically similar to the other procedures 
assigned to APC 0423. Many of the procedures assigned to APC 0423 are 
ablative procedures, and all of the procedures assigned to this APC are 
abdominal or biliary. Therefore, we are finalizing the CY 2015 
proposal, without modification, to continue to assign CPT codes 50593 
and 0340T to APC 0423. We will specifically review the APC assignment 
of CPT code 0340T when claims data for this service become available.
4. Nervous System Services
a. Chemodenervation (APC 0206)
    For CY 2015, we proposed to continue to assign CPT code 64616 
(Chemodenervation of muscle(s); neck muscle(s), excluding muscles of 
the larynx, unilateral (eg, for cervical dystonia, spasmodic 
torticollis)) to APC 0204 (Level I Nerve Injections), with a proposed 
payment rate of approximately $218. We note that CPT code 64616 became 
effective January 1, 2014.
    Comment: One commenter requested that CMS reassign CPT code 64616 
from APC 0204 to APC 0206 (Level II Nerve Injections), which had a 
proposed payment rate of approximately $375. The commenter noted that 
this recommendation for APC reassignment was also submitted in response 
to the CY 2014 OPPS/ASC final rule with comment period. The commenter 
stated that APC 0206 is the APC that was assigned to CPT code 64613 
(Chemodenervation of muscle(s); neck muscle(s) (eg, for spasmodic 
torticollis, spasmodic dysphonia), which is the predecessor code for 
CPT code 64616 in effect prior to January 1, 2014. Based on the 
commenter's analysis of the CY 2013 hospital outpatient claims data 
that was used for the CY 2015 OPPS/ASC proposed rule, the commenter 
believed that APC 0206 is the most appropriate APC assignment for CPT 
code 64616 based on the resource costs and clinical homogeneity of the 
predecessor code, CPT code 64613, in relation to the other procedures 
assigned to APC 0206.
    Response: We reviewed the latest hospital outpatient claims data 
reporting the service described by predecessor code, CPT code 64613, 
and the replacement code, CPT code 64616. We acknowledge that the 
procedure described by CPT code 64616 was previously described by CPT 
code 64613. Based on our analysis of the latest hospital outpatient 
claims data available for this final rule with comment period, we agree 
with the commenter's recommendation that CPT code 64616 should be 
reassigned from APC 0204 to APC 0206 for the CY 2015 update. 
Specifically, we reviewed the latest hospital outpatient claims data 
for CPT code 64613 based on claims submitted by hospitals for dates of 
service between January 1, 2013, and December 31, 2013, that were 
processed on or before June 30, 2014. Our review of the latest claims 
data shows a geometric mean cost of approximately $322 for CPT code 
64613 based on 11,177 single claims (out of 13,743 total claims), which 
is comparable to the geometric mean cost of approximately $387 for APC 
0206. There are 21 procedures assigned to APC 0206 and the geometric 
mean costs for the procedures with significant claims data range 
approximately between $322 (for CPT code 64613) and $536 (for CPT code 
62270). Based on these data, we agree with the commenter that APC 0206 
is the most appropriate APC assignment for CPT code 64616 based on 
clinical homogeneity to the other procedures assigned to this APC and 
the resource similarity of the predecessor code, CPT code 64613, to the 
other procedures assigned to APC 0206.
    Therefore, after consideration of the public comment we received, 
we are not adopting our proposal to continue to assign CPT code 64616 
to APC 0204. Instead, we are reassigning CPT code 64616 to APC 0206 for 
the CY 2015 OPPS update. The final CY 2015 payment rate for CPT code 
64616 can be found in Addendum B to this CY 2015 OPPS/ASC final rule 
with comment period (which is available via the Internet on the CMS Web 
site).
b. Epidural Lysis (APCs 0203 and 0207)
    For CY 2015, we proposed to continue to assign CPT code 62263 
(Percutaneous lysis of epidural adhesions using solution injection (eg, 
hypertonic saline, enzyme) or mechanical means (eg, catheter) including 
radiologic localization (includes contrast when administered), multiple 
adhesiolysis sessions; 2 or more days) to APC 0203 (Level IV Nerve 
Injections), with a proposed payment rate of approximately $1,524. We 
also proposed to continue to assign CPT code 62264 (Percutaneous lysis 
of epidural adhesions using solution injection (eg, hypertonic saline, 
enzyme) or mechanical means (eg, catheter) including radiologic 
localization (includes contrast when administered), multiple 
adhesiolysis sessions; 1 day) to APC 0207 (Level III Nerve Injections), 
with a proposed payment rate of approximately $683.
    Comment: One commenter opposed CMS' proposals to continue to assign 
CPT code 62263 to APC 0203 and CPT code 62264 to APC 0207. The 
commenter stated that CMS has overcompensated for the cost of providing 
the service described by CPT code 62263 by assigning the procedure to 
APC 0203. Alternatively, the commenter believed that CMS has 
undercompensated the cost of providing the service described by CPT 
code 62264 by assigning the procedure to APC 0207. The commenter stated 
that the resources utilized during the performance of the services 
described by both CPT codes are comparable, and each CPT code should be 
reassigned to a more appropriate APC to ensure adequate payment for the 
services provided.
    Response: We reviewed the latest hospital outpatient claims data 
reporting services described by CPT codes 62263 and 62264 for dates of 
service between January 1, 2013, and December 31, 2013, that were 
processed

[[Page 66857]]

on or before June 30, 2014. For CPT code 62263, our analysis of the 
claims data shows a geometric mean cost of approximately $1,215 based 
on 70 single claims (out of 88 total claims), which is comparable to 
the geometric mean cost of approximately $1,525 for APC 0203. For CPT 
code 62264, our analysis of the claims data shows a geometric mean cost 
of approximately $798 based on 1,971 single claims (out of 4,174 total 
claims), which is comparable to the geometric mean cost of 
approximately $697 for APC 0207. Therefore, we believe that the 
procedures described by CPT code 66263 and CPT code 62264 are 
appropriately assigned to APCs 0203 and 0207, respectively, based on 
clinical and resource similarities in relation to the other procedures 
assigned to these APCs. We remind the commenter that the OPPS is a 
system of averages, in which the costs of services, calculated from the 
most recent year's claims data, are weighted relative to the other 
services in the system, for that given year. Furthermore, as has been 
our practice since the implementation of the OPPS, we annually review 
all the items and services within an APC group to determine, with 
respect to comparability of the use of resources, any violations of the 
2 times rule. In making this determination, we review our claims data 
and determine whether we need to make changes to the current APC 
assignments for the following year. We will reevaluate the APC 
assignment for CPT codes 62263 and 62264 for the CY 2016 OPPS 
rulemaking.
    After consideration of the public comment that we received, we are 
finalizing our CY 2015 proposal, without modification, to continue to 
assign CPT code 62263 to APC 0203 and CPT code 62264 to APC 0207. The 
final CY 2015 payment rates for the two procedures can be found in 
Addendum B to this CY 2015 OPPS/ASC final rule with comment period 
(which is available via the Internet on the CMS Web site).
c. Transcranial Magnetic Stimulation (TMS) Therapy (APC 0218)
    Since July 2006, CPT codes have existed to describe Transcranial 
Magnetic Stimulation (TMS) therapy. The initial CPT codes were 
temporary Category III CPT codes, specifically, CPT codes 0160T 
(Therapeutic repetitive transcranial magnetic stimulation treatment 
planning) and 0161T (Therapeutic repetitive transcranial magnetic 
stimulation treatment delivery and management, per session), that 
became effective July 1, 2006. For CY 2011, the CPT Editorial Panel 
deleted CPT code 0160T on December 31, 2010, and replaced this 
procedure code with CPT code 90867 (Therapeutic repetitive transcranial 
magnetic stimulation (tms) treatment; initial, including cortical 
mapping, motor threshold determination, delivery and management), 
effective January 1, 2011. Similarly, CPT code 0161T was deleted on 
December 31, 2010, and was replaced with CPT code 90868 (Therapeutic 
repetitive transcranial magnetic stimulation (tms) treatment; 
subsequent delivery and management, per session), effective January 1, 
2011. In CY 2012, the CPT Editorial Panel established an additional TMS 
therapy code, specifically, CPT code 90869 (Therapeutic repetitive 
transcranial magnetic stimulation (tms) treatment; subsequent motor 
threshold re-determination with delivery and management), that became 
effective January 1, 2012.
    For the CY 2014 update, CPT codes 90867 and 90868 were assigned to 
APC 0216 (Level II Nerve and Muscle Tests), with a payment rate of 
$216.79, and CPT code 90869 was assigned to APC 0218 (Level II Nerve 
and Muscle Tests), with a payment rate of $127.75. For the CY 2015 
update, as listed in Addendum B to the CY 2015 OPPS/ASC proposed rule, 
we proposed to continue to assign CPT code 90869 to APC 0218, with a 
proposed payment rate of approximately $160. In addition, we proposed 
to reassign CPT codes 90867 and 90868 from APC 0216 to APC 0218, the 
same APC assignment for CPT code 90869.
    Comment: One commenter disagreed with CMS' proposal to reassign CPT 
codes 90867 and 90868 from APC 0216 to APC 0218, and to continue to 
assign CPT code 90869 to APC 0218. The commenter stated that the 
proposed addition of certain nerve conduction study codes to APC 0218 
for the CY 2015 update has negatively affected the proposed payment 
rate for APC 0218. The commenter believed that this proposal resulted 
in a decreased payment rate of approximately $160 for APC 0218, 
compared to the CY 2014 payment rate of approximately $217; thereby 
effectuating a potential financial loss for the provider with each 
treatment because a typical course of TMS therapy includes a total of 
25 daily treatment sessions. In addition, the commenter stated that 
assigning CPT codes 90867, 90868, and 90869 to APC 0218 is clinically 
inappropriate because these CPT codes describe therapy services, 
whereas the other procedure codes assigned to APC 0218 describe 
diagnostic tests (simple nerve conduction and electromyography 
studies). To correct the perceived clinical and resource discrepancies, 
the commenter suggested that CMS establish a new APC specifically for 
the TMS therapy codes, and that CMS title the APC ``Transcranial 
Magnetic Stimulation.''
    Response: We believe that APC 0218 is the most appropriate APC 
assignment for the three TMS therapy CPT codes. The CPT codes 
describing the procedures assigned to APC 0218 all describe noninvasive 
services that affect the nervous system. Based on the latest hospital 
outpatient claims data used for this final rule with comment period, 
our analysis revealed that the resources associated with providing the 
services described by CPT codes 90867, 90868, and 90869 are comparable 
to the other services assigned to APC 0218. Specifically, based on CY 
2013 claims data used for this final rule with comment period, the 
geometric mean cost for CPT code 90867 is approximately $210 based on 
72 single claims (out of 72 total claims), the geometric mean cost for 
CPT code 90868 is approximately $201 based on 2,513 single claims (out 
of 2,516 total claims), and the geometric mean cost for CPT code 90869 
is approximately $194 based on 28 single claims (out of 30 total 
claims). In addition, a review of the procedures assigned to APC 0218 
shows that the range of geometric mean cost for the services assigned 
to APC 0218 is approximately between $95 (for CPT code 95937) and $327 
(for CPT code 95875), which is comparable to the geometric mean costs 
for all three TMS therapy CPT codes. Based on the clinical and resource 
similarities in relation to the other procedures currently assigned to 
APC 0218, we believe that the TMS therapy codes would be appropriately 
assigned to APC 0218.
    After consideration of the public comment we received, we are 
finalizing our CY 2015 proposal, without modification, to reassign CPT 
codes 90867 and 90868 from APC 0216 to APC 0218, and to continue to 
assign CPT code 90869 to APC 0218 for CY 2015.
5. Ocular Services: Ophthalmic Procedures and Services
    For the CY 2015 OPPS update, based on our evaluation of the latest 
hospital outpatient claims data, we proposed to restructure all of the 
ophthalmic APCs to better reflect the costs and clinical 
characteristics of the procedures within each APC. This proposed 
restructuring resulted in the use of 13 APCs for the ophthalmology-
related procedures for the CY 2015 OPPS update, as compared to the 24 
APCs used for the CY 2014 OPPS update. We believe that this major

[[Page 66858]]

restructuring and consolidation of APCs more appropriately categorizes 
all of the ophthalmology-related procedures and services within an APC 
group, such that the services within each newly-configured APC are more 
comparable clinically and with respect to resource use. Tables 19 and 
20 in the proposed rule showed the current CY 2014 and proposed CY 2015 
ophthalmology-related APCs. Specifically, Table 19 of the CY 2015 OPPS/
ASC proposed rule (79 FR 40981) showed the CY 2014 ophthalmology-
related APCs and status indicator assignments, while Table 20 showed 
the proposed restructured ophthalmology-related APCs and their status 
indicator assignments for CY 2015 (79 FR 40981 through 40982). The 
proposed payment rates for the ophthalmology-related APCs listed in 
Table 20 were listed in Addendum B to the proposed rule (which is 
available via the Internet on the CMS Web site).
    In the CY 2015 OPPS/ASC proposed rule, we invited public comments 
on this proposal.
    Comment: Several commenters stated that the proposed restructuring 
and consolidation of the CY 2015 ophthalmic APC is substantial, and 
requested that CMS not finalize this proposal. The commenters also 
stated that CMS has not provided information regarding the criteria 
used to differentiate the various levels of treatments or procedures 
for the restructured 13 ophthalmic APCs. The commenters stated that the 
configuration and structure of the existing 24 APCs do not appear to be 
inconsistent with the requirements for clinical coherence or resource 
use. The commenters disagreed with CMS' proposal to establish broader 
categories within these APCs, and indicated that such a change in APC 
groupings has the potential to aggregate procedures that vary 
significantly in resource costs and clinical coherence. In addition, 
the commenters stated that some of the procedures in the restructured 
ophthalmic APCs appear to be inappropriately categorized. For example, 
the restructuring of the ophthalmic APCs has resulted in the 
consolidation of cornea procedures within one of the restructured APCs, 
and the procedures are no longer assigned to a separate classification 
grouping based on the previous APC configurations. The commenters 
pointed out that the major cornea transplant codes have been reassigned 
to restructured APC 0673 (Level III Intraocular Procedures), along with 
procedures that treat glaucoma and retina conditions. The commenters 
further explained that the equipment used for these services when 
performed in alternative settings and the depths of the condition of 
the eye and the appropriate treatments vastly differ, as does the time 
and other resources necessary to perform these types of surgeries. As a 
result, the commenters believed that additional APCs are needed to 
appropriately categorize ophthalmic procedures based on clinical 
homogeneity and resource consumption. The commenters also requested the 
opportunity to work with CMS to make appropriate adjustments to the 
restructured ophthalmic APC groupings to ensure clinical coherence and 
to minimize payment variances for these procedures.
    Response: Consistent with CMS' statutory requirement under section 
1833(t)(9) of the Act to review and revise APC assignments annually and 
to construct the most appropriate APC groupings, as well as, to the 
extent desirable, correct any 2 times rule violations, we evaluated the 
resource consumption and clinical coherence associated with the 
ophthalmic APCs for the CY 2015 update. Based on our analysis of the 
latest hospital outpatient claims data used for this final rule with 
comment period and understanding of the clinical aspects of these 
procedures, we believe that the restructured and consolidated 
ophthalmic APCs more appropriately group these ophthalmology-related 
services according to their current resource costs, as well as their 
clinical characteristics. The former ophthalmic procedures APC 
structure unnecessarily separated, from a clinical and resource 
similarity prospective, ophthalmic procedures based on disease state or 
traditional subdivisions within ophthalmic surgery. APC groupings were 
never intended to precisely track traditional ophthalmology 
subspecialty divisions, such as cornea surgery, retina surgery, or 
glaucoma surgery, as the commenters suggested. We also believe that 
larger APC groupings are more consistent with a prospective payment 
system than smaller groupings. We note that we regularly accept 
meetings from interested parties throughout the year, and we encourage 
stakeholders to continue a dialogue with us during the rulemaking cycle 
and throughout the year on our continuing efforts to improve the 
coherence of the OPPS APC groupings.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to restructure and 
consolidate the ophthalmic APCs. Table 22 below shows the final 
ophthalmology-related APCs and their status indicator assignments for 
CY 2015. The final payment rates for these APCs can be found in 
Addendum B to this CY 2015 OPPS/ASC final rule with comment period 
(which is available via the Internet on the CMS Web site). We also 
remind the public that we review the OPPS and APC structures and 
assignments annually and may propose additional restructurings of the 
APCs and procedure code assignments for other clinical areas and APC 
groupings in CY 2016 and future rulemakings.

  Table 22--Final CY 2015 APC Assignments for the Ophthalmic Procedures
                              and Services
------------------------------------------------------------------------
                                                              Final CY
        Final CY 2015 APC          Final CY 2015 APC title   2015 status
                                         description          indicator
------------------------------------------------------------------------
0230............................  Level I Eye Tests &                 S
                                   Treatments.
0231............................  Level III Eye Tests &               S
                                   Treatments.
0233............................  Level II Intraocular                T
                                   Procedures.
0238............................  Level I Extraocular,                T
                                   Repair, and Plastic Eye
                                   Procedures.
0239............................  Level II Extraocular,               T
                                   Repair, and Plastic Eye
                                   Procedures.
0240............................  Level III Extraocular,              T
                                   Repair, and Plastic Eye
                                   Procedures.
0242............................  Level IV Extraocular,               T
                                   Repair, and Plastic Eye
                                   Procedures.
0247............................  Laser Eye Procedures....            T
0255............................  Level I Intraocular                 T
                                   Procedures.
0293............................  Level IV Intraocular               J1
                                   Procedures.
0351............................  Level V Intraocular                J1
                                   Procedures.
0673............................  Level III Intraocular               T
                                   Procedures.

[[Page 66859]]

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

6. Imaging
a. Echocardiography Services Without Contrast (APCs 0269, 0270, and 
0697)
    We proposed to continue to use for the CY 2015 update the three 
APCs that describe echocardiography services without contrast, APC 0697 
(Level I Echocardiogram Without Contrast), APC 0269 (Level II 
Echocardiogram Without Contrast), and APC 0270 (Level III 
Echocardiogram Without Contrast), and to maintain the CY 2014 HCPCS 
code assignments for these APCs.
    Comment: One commenter requested that CMS reexamine the services 
assigned to the APCs for echocardiography services without contrast. In 
particular, the commenter requested that CMS reassign CPT codes 76825 
(Echocardiography, fetal, cardiovascular system, real time with image 
documentation (2D), with or without M-mode recording); and 76826 
(Echocardiography, fetal, cardiovascular system, real time with image 
documentation (2D), with or without M-mode recording; follow-up or 
repeat study) from APC 0697 to APC 0269 based on the clinical and 
resource similarities to the other echocardiography procedures assigned 
to APC 0269.
    Response: Based on our review of the latest hospital outpatient 
claims data available for this final rule with comment period, we agree 
with the commenter that CPT codes 76825 and 76826 should be reassigned 
to APC 0269, which more appropriately supports the clinical and 
resource homogeneity of the APCs rather than reassigning the procedure 
codes to APC 0697. The geometric mean cost of CPT code 76825 is 
approximately $384, and the geometric mean cost of CPT code 76826 is 
approximately $285. These costs are sufficiently close to the geometric 
mean cost of CPT code 93306 (Echocardiography, transthoracic, real time 
with image documentation (2D), includes M-mode recording, when 
performed, complete, with spectral Doppler echocardiography, and with 
color flow Doppler echocardiography), which is approximately $430. CPT 
code 93306 comprises 93 percent of the service volume within APC 0269. 
By reassigning CPT codes 76825 and 76826 to APC 0269, only one 
procedure code would remain in APC 0697. Therefore, we also are 
reassigning CPT code 93308 (Echocardiography, transthoracic, real time 
with image documentation (2D), includes M-mode recording, when 
performed, follow-up or limited study) from APC 0697 to APC 0267 (Level 
III Diagnostic and Screening Ultrasound) for CY 2015. We are deleting 
APC 0697 for the CY 2015 OPPS update because all of the procedure codes 
previously assigned to APC 0697 have been reassigned to more 
appropriate APCs to ensure adequate payment for the services provided 
and the clinical and resource homogeneity of APCs.
b. Optical Coherence Tomography (OCT) Procedures of the Breast
    For the July 2014 quarterly update, the CPT Editorial Panel 
established four new Category III CPT codes to describe optical 
coherence tomography (OCT) procedures of the breast: CPT code 0351T 
(Optical coherence tomography of breast or axillary lymph node, excised 
tissue, each specimen; real time intraoperative); CPT code 0352T 
(Optical coherence tomography of breast or axillary lymph node, excised 
tissue, each specimen; interpretation and report, real time or 
referred); CPT code 0353T (Optical coherence tomography of breast, 
surgical cavity; real time intraoperative); and CPT code 0354T (Optical 
coherence tomography of breast, surgical cavity; interpretation and 
report, real time or referred). As listed in Table 17 of the CY 2015 
OPPS/ASC proposed rule (79 FR 40976), we proposed to assign CPT codes 
0351T and 0353T to OPPS status indicator ``N'' (paid under OPPS; 
payment is packaged into payment for other services; there is no 
separate APC payment), and CPT codes 0352T and 0354T to OPPS status 
indicator ``B'' (codes that are not recognized by OPPS when submitted 
on an outpatient hospital Part B bill type (12x and 13x)).
    Comment: Some commenters expressed concern regarding CMS' proposal 
to assign CPT codes 0351T and 0353T to OPPS status indicator ``N'' and 
noted that both procedures describe independent, unique services and 
should be assigned to specific APCs. The commenters recommended 
assigning CPT codes 0351T and 0353T to any one of the following APCs: 
APC 0028 (Level I Breast and Skin Surgery), which had a proposed 
payment rate of approximately $2,176; APC 0029 (Level II Breast and 
Skin Surgery), which had a proposed payment rate of approximately 
$3,018; or APC 0030 (Level III Breast and Skin Surgery), which had a 
proposed payment rate of approximately $4,150.
    Response: Consistent with our packaging policy for intraoperative 
procedures, we proposed to assign CPT codes 0351T and 0353T to OPPS 
status indicator ``N'' because both procedure codes describe supportive 
dependent services that are performed during independent procedures. As 
clarified in the CY 2008 OPPS final rule with comment period (72 FR 
66627), we define ``intraoperative'' procedures as services that are 
provided during and, therefore, on the same date of service as another 
procedure that is separately payable under the OPPS. We further define 
intraoperative as services that support the performance of an 
independent procedure and are provided in the same operative session as 
the independent procedure. Both of the procedures described by CPT 
codes 0351T and 0353T must always be performed in conjunction with 
another procedure; specifically, the surgical procedure is performed 
followed by the breast OCT to improve the surgical outcome. We believe 
that these procedure codes clearly describe services that conform to 
the definition of ``intraoperative'' procedures. For further 
information on our policy for intraoperative services under the 
hospital OPPS, we refer readers to the CY 2008 OPPS final rule with 
comment period (72 FR 66627 through 66630).
    In summary, we believe that CPT codes 0351T and 0353T are 
procedures that support the performance of an independent procedure and 
are provided in the same operative session as the independent 
procedure. Specifically, we believe that both procedures are provided 
during and, therefore, on the same date of service as another procedure 
that is separately payable under the OPPS. In addition, we believe that 
CPT codes 0351T and 0353T are always integral to, and dependent upon, 
the independent procedure that they support. Therefore, payment for 
these services will be

[[Page 66860]]

packaged because the procedures would generally be performed on the 
same date as another procedure that is separately payable under the 
OPPS. After consideration of the public comments we received, we are 
finalizing our proposals to assign CPT codes 0351T and 0353T to OPPS 
status indicator ``N'' and CPT codes 0352T and 0354T to OPPS status 
indicator ``B'' for CY 2015.
c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, and 0414)
    For CY 2015, we proposed to assign CPT code 78071 (Parathyroid 
planar imaging (including subtraction, when performed); with 
tomographic (SPECT)) to APC 0263 (Level I Miscellaneous Radiology 
Procedures), for which we proposed a CY 2015 geometric mean cost of 
approximately $357. We also proposed to assign CPT code 78072 
(Parathyroid planar imaging (including subtraction, when performed); 
with tomographic (SPECT), and concurrently acquired computed tomography 
(CT) for anatomical localization) to APC 0317 (Level II Miscellaneous 
Radiology Procedures), for which we proposed a CY 2015 geometric mean 
cost of approximately $577. In addition, we proposed to change the 
status indicators for CPT codes 78071 and 78072 from ``X'' to ``S.''
    Comment: Commenters agreed with CMS' proposal to assign CPT codes 
78071 and 78072 to status indicator ``S,'' but opposed the proposal to 
assign CPT code 78071 to APC 0263. The commenters believed that CPT 
codes 78071 and 78072 should be assigned to the nuclear medicine APCs 
instead of the radiology APCs because the nuclear medicine APCs are 
more representative of the resources utilized in the performance of 
these procedures. The commenters suggested that CMS assign CPT codes 
78071 and 78072 to either APC 0414 (Level II Tumor/Infection Imaging) 
or 0408 (Level III Tumor/Infection Imaging).
    Response: We agree with the commenters that the resources utilized 
in the performance of the procedures described by CPT codes 78071 and 
78072 are more comparable to the procedures assigned to the nuclear 
medicine APCs. However, we do not agree with the commenters that CPT 
codes 78071 and 78072 are more appropriately assigned to either APC 
0408 or APC 0414. We believe that APC 0406 (Level I Tumor/Infection 
Imaging) is the most appropriate APC assignment for CPT codes 78071 and 
78072 because the procedures currently assigned to APC 0406 are similar 
to the procedures described by CPT codes 78071 and 78072 in clinical 
nature and resource utilization. The final CY 2015 APC geometric mean 
costs of approximately $362 for CPT code 78071 and approximately $427 
for CPT code 78072 are similar to the geometric mean costs of the 
significant procedures assigned to APC 0406, which range between 
approximately $307 and approximately $427.
    After consideration of the public comments we received, we are not 
finalizing our CY 2015 proposal to assign CPT codes 78071 and 78072 to 
APCs 0263 and 0317, respectively. Instead, based on consideration of 
the public comments we received, for CY 2015, we are assigning CPT 
codes 78071 and 78072 to APC 0406, which has a final CY 2015 APC 
geometric mean cost of approximately $391.
7. Radiology Oncology
a. Proton Beam Therapy and Magnetoencephalography (MEG) Services (APCs 
0065, 0412, 0446, 0664, and 0667)
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed 
several changes to the radiation therapy APCs for CY 2015. To correct a 
violation of the 2 times rule within APC 0664 (Level I Proton Beam 
Radiation Therapy), we proposed to reassign CPT code 77520 from APC 
0664 to APC 0412 (Level III Radiation Therapy). We believe that CPT 
code 77520 is both clinically similar and comparable in geometric mean 
cost to the other services assigned to APC 0412. We also proposed to 
reassign CPT code 77522 from APC 0664 to proposed newly renamed APC 
0667 (Level IV Radiation Therapy) because we believe that the procedure 
described by CPT code 77522 is both clinically similar and comparable 
in geometric mean cost to the other services assigned to APC 0667. 
Because there would be no other codes assigned to APC 0664 if these 
proposed reassignments are finalized, we also proposed to delete APC 
0664 for CY 2015 (79 FR 40989). In addition, we proposed to rename 
existing APC 0667 to ``Level IV Radiation Therapy'' (instead of using 
the existing title of ``Level II Proton Beam Radiation Therapy''), to 
make the title consistent with other APCs in the radiation therapy 
series. In conjunction with this proposed change, we proposed to 
reassign the following three services to proposed newly renamed APC 
0667 for CY 2015: CPT codes 77522, 77523, and 77525.
    Comment: Commenters generally supported CMS' proposals regarding 
the radiation therapy APCs, with one exception. The commenters 
supported the proposal to reassign CPT code 77520 from APC 0664 to APC 
0412. However, the commenters expressed concern regarding the proposal 
to reassign CPT code 77522 from APC 0664 to proposed newly renamed APC 
0667. Commenters disagreed with CMS' determination that the procedure 
described by CPT code 77522 is clinically similar and comparable in 
geometric mean cost to the other services assigned to APC 0667 in 2014, 
specifically the procedures described by CPT codes 77523 and 77525. The 
commenters recommended that CMS maintain the assignment of CPT code 
77522 to APC 0664 and not delete the classification grouping, which 
would result in CPT code 77522 being the only service assigned to this 
APC.
    Response: We appreciate the commenters' support for our proposals 
regarding the radiation therapy APCs, specifically our proposal to 
reassign CPT code 77520 from APC 0664 to APC 0412. In regard to the 
proposed reassignment of CPT code 77522 from APC 0664 to APC 0667, we 
disagree with the commenters for the following reasons. The three CPT 
codes, 77522, 77523, and 77525, are similar clinically. All three of 
these CPT codes describe procedures that involve proton beam therapy 
delivery services with a continuum of complexity. The procedure 
described by CPT code 77520 is the least complex. The procedure 
described by CPT code 77522 is more complex than the procedure 
described by CPT code 77520, and the procedure described by CPT code 
77523 is more complex than the procedure described by CPT code 77522. 
The procedure described by CPT code 77525 is the most complex procedure 
of the series proposed to be reassigned to APC 0667. We proposed to 
reassign CPT code 77520 from APC 0664 to APC 0412 because of the 
resource comparability with respect to the other procedures involving 
proton beam therapy delivery services assigned to APC 0412, not based 
on the clinical dissimilarity with respect to the procedures assigned 
to APC 0664. In regard to the remaining three procedures involving 
proton beam therapy delivery services (the procedures described by CPT 
codes 77522, 77523, and 77525), we believe that these procedures are 
clinically similar, but each has a slightly varying level of complexity 
relative to the others. The proposed configuration of APC 0667 only 
contains the three proton beam therapy delivery services described by 
CPT codes 77522, 77523, and 77525, and does not include any other 
service codes. APC 0667 is the most clinically homogeneous APC

[[Page 66861]]

under the OPPS to assign these services that would ensure adequate 
payment, with the exception of single service APCs. With regard to the 
resource comparability of the procedures described by CPT codes 77522, 
77523 and 77525, the lowest geometric mean cost among these procedures 
is associated with the procedure described by CPT code 77522, which is 
approximately $1,033, and the highest geometric mean cost is associated 
with the procedure described by CPT code 77525, which is approximately 
$1,244. The statutory prong that dictates when resources become 
dissimilar between two services is the 2 times rule. Based on the 
limitations imposed by the 2 times rule, the highest cost significant 
service assigned to an APC cannot exceed the lowest cost by greater 
than two times. In this case, the geometric mean cost of the procedure 
described by CPT code 77525 is only 1.2 times the geometric mean cost 
of the procedure described by CPT code 77522, which is well within the 
2 times limit. Therefore, we determined that the resource similarity 
among the services proposed to be reassigned to APC 0667 is comparable. 
In addition, we generally prefer to assign procedures to the most 
appropriate APC that would ensure adequate payment, as opposed to using 
single-service APCs, which the commenters recommended for the procedure 
described by CPT code 77522, unless no other reasonable options exist, 
because single-service APCs are more consistent with a fee schedule 
than a prospective payment system.
    Therefore, we are finalizing the following proposals affecting the 
proton beam therapy services for CY 2015: (1) We are reassigning CPT 
code 77520 from APC 0664 to APC 0412; (2) we are reassigning CPT code 
77522 from 0664 to APC 0667;(3) we are reassigning CPT codes 77523 and 
77525 to APC 0667; (4) we are deleting APC 0664; and (5) we are 
renaming APC 0667 to ``Level IV Radiation Therapy.''
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we also 
proposed to delete APC 0065 (IORT, MRgFUS, and MEG) because we proposed 
to reassign the services assigned to this APC to more appropriate APCs 
based on clinical similarities and comparable geometric mean cost. With 
respect to MEG services, we proposed to reassign the MEG CPT codes 
95965 and 95966 from APC 0065 to APC 0446 (Level IV Nerve and Muscle 
Services), which would only contain MEG services.
    Comment: One commenter applauded CMS for the establishment of new 
APC 0446, the APC to which the MEG procedures are proposed to be 
reassigned. The commenter believed that the reassignment of CPT codes 
95965 and 95966 would produce more accurate data related to MEG usage. 
Alternatively, one commenter expressed concern that the current 
proposal does not adequately cover the costs associated with providing 
MEG services, and urged CMS to work with hospitals and other 
stakeholders to ensure that HOPDs submit claims correctly to capture 
the full costs of providing these services.
    Response: Based on our analysis of the latest hospital outpatient 
claims data used for this final rule with comment period, we believe 
that the establishment of APC 0446 is necessary to ensure clinical and 
resource homogeneity and adequate payment for MEG services. Therefore, 
after consideration of the public comments we received, we are 
finalizing our CY 2015 proposal without modification. As we do every 
year, we will review our claims data for these services for the CY 2016 
OPPS rulemaking.
    b. Stereotactic Radiosurgery Services (SRS) and Magnetic Resonance 
Image Guided Focused Ultrasound (MRgFUS) (APC 0066)
    For CY 2015, for SRS, we proposed to continue to assign CPT code 
77373 (Stereotactic body radiation therapy, treatment delivery, per 
fraction to 1 or more lesions, including image guidance, entire course 
not to exceed 5 fractions) to APC 0066, with a proposed payment rate of 
approximately $1,893. We also proposed to rename APC 0066 from ``Level 
I Stereotactic Radiosurgery'' to ``Level V Radiation Therapy'' (79 FR 
40989).
    In addition, we proposed to continue to assign CPT codes 77371 
(Radiation treatment delivery, stereotactic radiosurgery (SRS), 
complete course of treatment of cranial lesion(s) consisting of 1 
session; multi-source cobalt 60 based) and 77372 (Radiation treatment 
delivery, stereotactic radiosurgery (SRS), complete course of treatment 
of cranial lesion(s) consisting of 1 session; linear accelerator based) 
to APC 0067 (Single Session Cranial Stereotactic Radiosurgery), with a 
proposed payment rate of approximately $9,768. We also proposed to 
rename APC 0067 from ``Level II Stereotactic Radiosurgery'' to ``Single 
Session Cranial Stereotactic Radiosurgery,'' which we proposed as a C-
APC. For further discussion regarding C-APCs and SRS CPT codes 77371 
and 77372 assigned to C-APC 0067, we refer readers to section II.A.2.e. 
of this final rule with comment period.
    Comment: Several commenters requested that CMS reinstate the use of 
SRS G-codes because the SRS CPT codes do not accurately describe 
current clinical practices or adequately cover the cost of providing 
fractionated linac-based SRS.
    Response: For the CY 2014 update, we finalized our proposal to 
adopt the full range of SRS CPT codes and to discontinue the use of the 
remaining SRS G-codes under the OPPS. HOPDs must use and report SRS CPT 
codes 77371, 77372, and 77371 to describe the delivery of stereotactic 
radiosurgery treatment services under the OPPS. For a full discussion 
of this issue, we refer readers to the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 74989 through 749995). In addition, for the CY 
2015 update, HCPCS code G0173 (Linear accelerator based stereotactic 
radiosurgery, complete course of therapy in one session), and HCPCS 
code G0251 ((Linear accelerator based stereotactic radiosurgery, 
delivery including collimator changes and custom plugging, fractionated 
treatment, all lesions, per session, maximum five sessions per course 
of treatment)) will be deleted, effective December 31, 2014, because 
these codes will no longer be used under the MPFS. However, HCPCS code 
G0339 (Image-guided robotic linear accelerator-based stereotactic 
radiosurgery, complete course of therapy in one session or first 
session of fractionated treatment) and HCPCS code G0340 (Image-guided 
robotic linear accelerator-based stereotactic radiosurgery, delivery 
including collimator changes and custom plugging, fractionated 
treatment, all lesions, per session, second through fifth sessions, 
maximum five sessions per course of treatment) will continue to be used 
under the MPFS and, therefore, will continue to be active codes for the 
CY 2015 MPFS update. However, HCPCS codes G0339 and G0340 will not be 
active codes for the CY 2015 OPPS update. Instead, HOPDs must use and 
report SRS CPT codes 77371, 77372, and 77373 to describe the delivery 
of stereotactic radiosurgery treatment services under the OPPS.
    Comment: Many commenters requested that CMS reassign HCPCS code 
G0251 to a different APC to resolve a violation of the 2 times rule 
within APC 0066. Several commenters recommended excluding the claims 
data for HCPCS code G0251 prior to determining the final payment rate 
for APC 0066. The commenters indicated that HCPCS code G0251 is used 
most often for fractionated cranial SRS, not for stereotactic body 
radiation therapy (SBRT), as described by CPT code 77373.

[[Page 66862]]

    Response: Both HCPCS code G0251 and CPT code 77373 describe 
fractionated cranial stereotactic radiosurgery services that involve 
between 2 and 5 fractions of treatment. Single-session cranial SRS are 
reported using either CPT code 77371 or 77372. Based on the code 
descriptor, we believe that the service described by HCPCS code G0251 
is appropriately crosswalked to the service described by CPT code 
77373. We explained the code crosswalk in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 74991).
    We note that, under the OPPS, we may make exceptions to the 2 times 
rule in unusual cases, such as low-volume items or services. For the CY 
2015 update (taking into consideration the APC changes that we proposed 
for CY 2015), we reviewed all of the APCs to determine which APCs would 
not satisfy the requirement of the 2 times rule. In the case of APC 
0066, we believe that it is necessary to make an exception to the 2 
times rule for this APC because the three G-codes that caused the 
violation of the 2 times rule to occur have been crosswalked to CPT 
code 77373. We expect to have claims data for only CPT code 77373 
available for the CY 2016 rulemaking. At that time, we will reevaluate 
the APC assignments for all of the SRS CPT codes.
    In addition to our proposal to continue to assign SRS CPT code 
77373 to APC 0066, we proposed to assign all four of the MRgFUS 
procedures to APC 0066 because in the past MRgFUS services were 
assigned to the same APC as some of the former SRS G-codes for 
fractionated linac-based SRS. Specifically, for CY 2015, we proposed to 
reassign HCPCS codes 0071T (Focused ultrasound ablation of uterine 
leiomyomata, including mr guidance; total leiomyomata volume less than 
200 cc of tissue), 0072T (Focused ultrasound ablation of uterine 
leiomyomata, including mr guidance; total leiomyomata volume greater or 
equal to 200 cc of tissue), C9734 (Focused ultrasound ablation/
therapeutic intervention, other than uterine leiomyomata, with magnetic 
resonance (mr) guidance), and 0301T (Destruction/reduction of malignant 
breast tumor with externally applied focused microwave, including 
interstitial placement of disposable catheter with combined temperature 
monitoring probe and microwave focusing sensocatheter under ultrasound 
thermotherapy guidance) from APC 0065 (IORT, MRgFUS, and MEG) to APC 
0066. We proposed to delete APC 0065 for CY 2015.
    Comment: Several commenters stated that the proposed payment rate 
for APC 0066 of approximately $1,893 does not adequately reflect the 
level of resources required to perform MRgFUS procedures. Instead, the 
commenters believed that the MRgFUS procedures are similar to the 
stereotactic radiosurgery procedures that are assigned to C-APC 0067 in 
terms of treatment set-up, delivery of radiation, and post-procedure 
recovery. The commenters further believed that the MRgFUS procedures 
would be more appropriately assigned to a C-APC from a clinical and 
resource perspective. The commenters explained that certain procedures 
are commonly reported in conjunction with MRgFUS procedures, similar to 
stereotactic radiosurgery procedures. Therefore, the commenters 
recommended that CMS reassign the MRgFUS procedures to C-APC 0067.
    Response: CPT codes 0071T and 0072T became effective January 1, 
2005. CPT code 0301T became effective January 1, 2012. HCPCS code C9734 
became effective April 1, 2013. Currently, we do not have any single 
claims reporting any of the four MRgFUS procedures. However, because we 
are deleting APC 0065, we believe that reassigning these procedures to 
APC 0066 for the CY 2015 update is more appropriate because, in the 
past, MRgFUS services were assigned to the same APC as some of the 
former fractionated linac-based SRS G-codes. We also believe that the 
MRgFUS procedures are clinically dissimilar to single-session cranial 
SRS because MRgFUS procedures may involve more than one treatment 
session. However, we will review and consider the comments related to 
C-APC 0067 in a future annual update.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification. Specifically, for SRS CPT 
code 77373, we are finalizing our proposal to continue to assign this 
code to APC 0066 for the CY 2015 update. In addition, we are finalizing 
our proposal to reassign MRgFUS HCPCS codes 0071T, 0072T, 0301T, and 
C9734 from APC 0065 to APC 0066 for CY 2015. We are deleting APC 0065 
for CY 2015. Because we are deleting APC 0065, we are renaming APC 0066 
from ``Level I Stereotactic Radiosurgery'' to ``Level V Radiation 
Therapy.'' The final payment rates for SRS CPT code 77373 and MRgFUS 
HCPCS codes 0071T, 0072T, 0301T, and C9734 can be found in Addendum B 
to this final rule with comment period, which is available via the 
Internet on the CMS Web site.
8. Respiratory Services: Level II Endoscopy Lower Airway (APC 0415)
    In the CY 2015 OPPS/ASC proposed rule, we proposed to continue the 
APC assignment of the procedure codes that have been historically 
assigned to APC 0415 (Level II Endoscopy Lower Airway). Commenters 
responding to the CY 2014 OPPS/ASC proposed rule had recommended that 
CMS split the procedure codes assigned to APC 0415 into two levels of 
lower airway endoscopy APCs. We did not split APC 0415 into two levels 
for CY 2014, as the commenters suggested, because the geometric mean 
costs would have been based on a relatively low volume of single 
frequency claims and would have potentially effectuated APC and cost 
volatility (78 FR 74996). In the CY 2015 OPPS/ASC proposed rule, we did 
not propose any changes to the composition of APC 0415. There were not 
any violations of the 2 times rule for the services assigned to APC 
0415 based on claims data available for the proposed rule. The proposed 
geometric mean cost of APC 0415 was approximately $2,368.
    Comment: Several commenters recommended that CMS create a Level III 
Lower Airway Endoscopy APC and assign the procedure codes currently 
assigned and proposed for continued assignment to APC 0415 to this 
newly created APC based on geometric mean costs, procedure complexity, 
and clinical similarity. Specifically, one commenter recommended that 
CMS assign 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 recommended Level III APC. 
Another commenter recommended that CMS assign CPT code 31626 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with placement of fiducial markers, single or multiple) to 
the recommended Level III APC. One commenter recommended that seven 
specific procedure codes be assigned to the newly created Level III 
APC, namely: CPT codes 31634 (Bronchoscopy, rigid or flexible, 
including fluoroscopic guidance, when performed; with balloon 
occlusion, with assessment of air leak, with administration of 
occlusive substance (eg, fibrin glue), if performed), 31638 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with revision of tracheal or bronchial stent inserted at 
previous session (includes tracheal/bronchial dilation as required)), 
31626, 31631

[[Page 66863]]

(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with placement of tracheal stent(s) (includes tracheal/
bronchial dilation as required)), 31636 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
placement of bronchial stent(s) (includes tracheal/bronchial dilation 
as required), initial bronchus), 31660 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
bronchial thermoplasty, 1 lobe), and 31661 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
bronchial thermoplasty, 2 or more lobes). The commenters believed that 
a new Level III Lower Airway Endoscopy APC would more accurately 
reflect the costs of expensive lower airway procedures that utilize new 
technologies.
    Response: We believe that there is considerable clinical similarity 
in regard to the procedures assigned to APC 0415. All of the procedures 
are lower airway bronchoscopy procedures and are generally clinically 
more complex than the lower airway endoscopy procedures assigned to APC 
0076 (Level I Endoscopy Lower Airway). We do not believe that the range 
of costs for the significant procedures assigned to APC 0415 warrants 
the creation of a Level III lower airway endoscopy APC. The final rule 
geometric mean cost for APC 0415 is approximately $2,341. Several of 
the procedures that the commenters recommended for assignment to the 
recommended Level III APC have final rule geometric mean costs 
comparable to the geometric mean cost of APC 0415. For CY 2015, CPT 
code 31634 has a final geometric mean cost of approximately $1,539; CPT 
code 31638 has a final geometric mean cost of approximately $2,320; and 
CPT code 31626 has a final geometric mean cost of approximately $2,897. 
The other CPT codes recommended by the commenters have somewhat higher 
approximate geometric mean costs, namely: CPT code 31631 (which has a 
geometric mean cost of approximately $3,488), CPT code 31661 (which has 
a geometric mean cost of approximately $3,789), CPT code 31660 (which 
has a geometric mean cost of approximately $3,840), and CPT code 31636 
(which has a geometric mean cost of approximately $4,090). Assigning 
any of these procedures to APC 0415 does not create a violation of the 
2 times rule when compared to the geometric mean cost of the lowest 
significant procedure assigned to this APC, CPT code 31629 
(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 
performed; with transbronchial needle aspiration biopsy(s), trachea, 
main stem and/or lobar bronchus(i)), which is approximately $2,186. 
Among the procedures discussed above, CPT codes 31626 and 31660 
describe the only significant procedures assigned to this APC and are 
the procedures that we would normally apply the 2 times rule 
provisions. There are not any violations of the 2 times rule in regard 
to these procedures' costs. Although CPT code 31647 has a considerably 
higher geometric mean cost of approximately $5,373 based on 11 single 
frequency claims, it is not a significant procedure. We would not 
reassign this procedure to another APC based on a violation of the 2 
times rule. Moreover, considering the final rule claims data for the 
five highest cost procedures assigned to APC 0415, the total number of 
single frequency claims is 649. The possible composition of a Level III 
lower airway endoscopy APC would still be based on a low volume of 
claims, similar to the low volume of claims in regard to the Level III 
lower airway endoscopy APC recommended by the commenters in CY 2014. As 
we stated in the CY 2014 OPPS/ASC final rule with comment period, a 
low-volume APC would contribute to the APC's cost volatility, which in 
turn contributes to payment volatility for the procedures assigned to 
the low-volume APC (78 FR 74996).
    After consideration of the public comments we received regarding 
the composition of APC 0415, we are finalizing our proposal to continue 
the assignment of the procedure codes that have been historically 
assigned to APC 0415 for CY 2015. However, for CY 2016, we will explore 
possible changes to the lower airway endoscopy APCs as a part of our 
broader efforts to thoroughly review, revise, and consolidate APCs to 
improve both clinical and resource homogeneity. The CY 2015 final 
geometric mean cost of APC 0415 is approximately $2,341.
9. Other Services
    a. Epidermal Autograft (APC 0327)
    In the CY 2014 OPPS/ASC final rule with comment period, we assigned 
CPT code 15110 to APC 0329 (Level IV Skin Repair), with a payment rate 
of approximately $2,260. The payment rate for CPT code 15110 was 
derived from the latest hospital outpatient claims data used for the CY 
2014 ratesetting, which showed a geometric mean cost of approximately 
$2,174 based on 10 single claims (out of 29 total claims).
    As stated in section III.B. of this final rule with comment period, 
we review, on an annual basis, the APC assignments for all services and 
items paid under the OPPS. Analysis of the latest hospital outpatient 
claims data available for the CY 2015 OPPS/ASC proposed rule showed a 
geometric mean cost for CPT code 15110 of approximately $774 based on 
90 single claims (out of 122 total claims). Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40987), we proposed to reassign CPT code 
15110 from APC 0329 to APC 0327 (Level II Skin Procedures), which has a 
geometric mean cost of approximately $451. We believe that APC 0327 is 
the most appropriate APC assignment for CPT code 15110 when considering 
the similarities in relation to the other procedures assigned to this 
APC.
    In addition, we proposed to revise the APC titles for the four skin 
repair APCs (79 FR 40987). Specifically, we proposed to rename APC 0326 
from ``Level I Skin Repair'' to ``Level I Skin Procedures,'' APC 0327 
from ``Level II Skin Repair'' to ``Level II Skin Procedures,'' APC 0328 
from ``Level III Skin Repair'' to ``Level III Skin Procedures,'' and 
APC 0329 from ``Level IV Skin Repair'' to ``Level IV Skin Procedures.''
    Table 28 of the proposed rule (79 FR 40987) showed the long 
descriptor, as well as the proposed CY 2015 APC and status indicator 
assignment for CPT code 15110. The proposed CY 2015 payment rate for 
CPT code 15110 can be found in Addendum B to the proposed rule (which 
is available via the Internet on the CMS Web site).
    Comment: Several commenters requested that CMS reevaluate the 
claims data for CPT code 15110, and recommended that CMS not finalize 
the proposal to reassign the procedure code to APC 0327. The commenters 
stated that the procedure described by CPT code 15110 allows patients 
with chronic or non-healing wounds to recover much sooner and without 
the use of expensive surgical interventions, which has resulted in cost 
savings for hospitals, patients, and payers. Other commenters suggested 
that CMS reassign CPT code 15110 to APC 0328 (Level III Skin 
Procedures), which has a proposed CY 2015 payment rate of approximately 
$1,408. The commenters believed that APC 0328 has clinically similar 
procedures and is more comparable to the geometric mean costs of CPT 
code 15110. Another commenter believed that the low volume of claims 
data for CPT code 15110 is attributable to providers and hospitals 
miscoding the performance of the service by not including the cost of 
the device.
    Response: We reviewed the historical claims data for CPT code 
15110, dating

[[Page 66864]]

back to CY 2008, which is the first year that claims data for this code 
became available. As listed in Table 23 below, for CY 2008 through CY 
2013, the payment rate for CPT code 15110 has ranged between $288.30 
and $393.38 based on a range of single claims between 3 and 8. In 
addition, for the CY 2014 update, which was based on hospital 
outpatient claims data that were submitted between January 1, 2012, and 
December 31, 2012, and processed on or before June 30, 2013, the 
payment rate for CPT code 15110 was significantly higher (approximately 
$2,260.46) based on 10 single claims. However, as has been our practice 
since the implementation of the OPPS in 2000, we review, on an annual 
basis, the APC assignments for the procedures and services paid under 
the OPPS. Based on the latest hospital outpatient claims data used for 
this final rule with comment period, our analysis does not support the 
continued assignment of CPT code 15110 to APC 0329, which is the APC to 
which the procedure was assigned during CY 2014, or the suggested APC 
0328. We examined the latest hospital outpatient claims data for CPT 
code 15110 for dates of service between January 1, 2013, and December 
31, 2013, that were processed on or before June 30, 2014. Our analysis 
of the claims data shows a geometric mean cost for CPT code 15110 of 
approximately $748 based on 127 single claims (out of 165 total 
claims). We do not believe that APC 0328 is the most appropriate APC 
assignment because the geometric mean cost for this APC is 
approximately $1,460, which is significantly higher than the geometric 
mean cost for CPT code 15110, which is approximately $748. Assigning 
CPT code 15110 to APC 0328 would result in an overpayment for the 
service provided. We believe that APC 0327 is the most appropriate APC 
assignment for CPT code 15110 based on clinical homogeneity to the 
other skin-related procedures assigned to this APC.

             Table 23--Historical and Current Opps Claims and Payment Information for CPT Code 15110
----------------------------------------------------------------------------------------------------------------
                                                                   OPPS payment
                       Calendar year (CY)                              rate        Single claims   Total claims
----------------------------------------------------------------------------------------------------------------
2008............................................................         $288.30               3              16
2009............................................................          292.68               3              15
2010............................................................          299.19               8              22
2011............................................................          319.74               5              16
2012............................................................          344.98               4              19
2013............................................................          393.38               4              30
2014............................................................        2,260.46              10              29
2015............................................................          429.95             127             165
----------------------------------------------------------------------------------------------------------------

    Further, based on our analysis of the CY 2013 hospital outpatient 
claims data used for this final rule with comment period, we are unable 
to determine whether hospitals are miscoding claims reporting this 
service. For all APCs whose payment rates are based upon relative 
payment weights, we note that the quality and accuracy of reported 
units and charges influence the geometric mean costs that are the basis 
for our payment rates, especially for low-volume items and services. 
Beyond our standard OPPS trimming methodology (described in section 
II.A.2. of this final rule with comment period) that we apply to those 
claims that have passed various types of claims processing edits, it is 
not our general policy to determine the accuracy of hospital coding and 
charging practices for purposes of ratesetting (75 FR 71838). We rely 
on hospitals to bill all HCPCS codes accurately in accordance with 
their code descriptors and CPT and CMS instructions, as applicable, and 
to report charges on claims and charges and costs on their Medicare 
hospital cost report appropriately. In addition, we do not specify the 
methodologies that hospitals must use to set charges for this or any 
other service.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to reassign CPT code 
15110 to APC 0327 for CY 2015. The final payment rate for CPT code 
15110 can be found in Addendum B to this final rule with comment 
period, which is available via the Internet on the CMS Web site.
b. Image-Guided Breast Biopsy Procedures and Image-Guided Abscess 
Drainage Procedures (APCs 0005 and 0007)
    For the CY 2014 OPPS update, the AMA's CPT Editorial Panel deleted 
the image-guided breast biopsy CPT codes 19102 and 19103 and replaced 
these procedure codes with six new CPT codes that ``bundled'' payment 
for associated imaging services, effective January 1, 2014. As shown in 
Table 23 of the proposed rule (79 FR 40983), CPT codes 19102 and 19103 
described percutaneous image-guided breast biopsies using specific 
devices. Specifically, CPT code 19102 described a breast biopsy 
performed using a core needle, and CPT code 19103 described a breast 
biopsy performed using either a vacuum-assisted or rotating device.
    In CY 2013, to appropriately report the performance of an image-
guided breast biopsy using a core needle, an automated vacuum-assisted 
device, or a rotating biopsy device, multiple procedure codes were 
required to identify the specific service performed. That is, a 
procedure code describing the device-related breast biopsy procedure 
was required to be reported in combination with the procedure code 
describing the localization device used during the procedures, as well 
as the specific image-guidance procedure codes describing the imaging 
service. Table 23 of the proposed rule showed how image-guided breast 
biopsy procedures were reported prior to CY 2014. Table 23 of the 
proposed rule also showed the CY 2013 OPPS status indicators, APC 
assignments, and payment rates for the breast biopsy procedure codes, 
the localization devices used during the procedures, and the specific 
image-guidance procedure codes describing the imaging service.
    For the CY 2014 OPPS update, the AMA's CPT Editorial Panel grouped 
the multiple procedures that describe these imaging services into 
single comprehensive service codes; specifically, CPT codes 19081, 
19082, 19083, 19084, 19085, and 19086. Table 24 of the proposed rule 
showed the six new CPT codes that replaced obsolete CPT codes 19102 and 
19103. These comprehensive breast biopsy procedure codes are 
differentiated based on the use of specific imaging-guidance devices--
specifically imaging services performed using stereotactic guidance, 
ultrasound

[[Page 66865]]

guidance, or magnetic-resonance guidance.
    As has been our practice since the implementation of the OPPS in 
2000, we review all new procedure codes before assigning the codes to 
an APC. Consistent with our longstanding policy for the treatment of 
new codes, we assigned these new replacement CPT codes to interim APCs 
for CY 2014. Based on our understanding of the resources required to 
furnish the service as defined in the code descriptor, as well as input 
from our medical advisors, we assigned replacement CPT codes 19081, 
19083, and 19085 to APC 0005 (Level II Needle Biopsy/Aspiration Except 
Bone Marrow) for the CY 2014 OPPS update. In addition, we assigned new 
CPT codes 19081, 19083, and 19085 to comment indicator ``NI'' in 
Addendum B to the CY 2014 OPPS/ASC final rule with comment period 
(which is available via the CMS Web site) to indicate that the codes 
were new with an interim APC assignment that was subject to public 
comment. We note that, for the CY 2014 OPPS update, we finalized our 
policy to package all add-on codes (except those for drug 
administration), effective January 1, 2014. Consequently, payment for 
replacement CPT codes 19082, 19084, and 19086, which describe add-on 
procedures, was packaged for CY 2014.
    At the Panel's March 10, 2014 meeting, one presenter requested that 
CMS reassign comprehensive CPT codes 19081, 19083, and 19085 from APC 
0005 (Level II Needle Biopsy/Aspiration Except Bone Marrow), which has 
a CY 2014 OPPS payment rate of $702.08, to APC 0037 (Level IV Needle 
Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS payment 
rate of $1,223.25. The presenter indicated that it is inappropriate to 
combine all of the new replacement CPT codes into one APC without 
regard for the imaging modality or device used to perform the 
procedure. The presenter also requested that CMS maintain the historic 
assignment of the predecessor CPT codes cost data until claims data 
become available for the new comprehensive CPT codes. The Panel agreed 
with the presenter and recommended that CMS reassign the new 
replacement comprehensive CPT codes, as the presenter suggested.
    In light of the public presentation, the Panel's recommendation, 
and our longstanding policy of reviewing, on an annual basis, the APC 
assignments for all services and items paid under the OPPS, we 
evaluated the geometric mean costs associated with all of the 
procedures assigned to the existing four needle biopsy APCs, 
specifically, APCs 0004 (Level I Needle Biopsy/Aspiration Except Bone 
Marrow), 0005, 0685 (Level III Needle Biopsy/Aspiration Except Bone 
Marrow), and 0037. In the CY 2015 OPPS/ASC proposed rule (79 FR 40984), 
based on our review of the latest hospital outpatient claims data 
available for the proposed rule, we proposed to reassign all of the 
procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 
0005 based on clinical and resource homogeneity. If CMS finalizes this 
proposed revision, there would be no procedures assigned to APCs 0685 
or 0037. Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 
40984), we proposed to delete APCs 0685 and 0037 for CY 2015.
    Consequently, for the CY 2015 OPPS update, we proposed to only use 
two needle biopsy APCs, specifically, APCs 0004 and 0005. The proposed 
reassignment of all of the procedures assigned to APCs 0685 and 0037 
results in increased payment rates for both APCs 0004 and 0005. For CY 
2015, the proposed payment rate for APC 0004 is approximately $494, 
which is 20 percent higher than the CY 2014 OPPS payment rate of 
approximately $411. Similarly, the proposed payment rate for APC 0005 
is approximately $1,062, which is 51 percent higher than the CY 2014 
OPPS payment rate of approximately $702. Therefore, we proposed to 
continue to assign CPT codes 19081, 19083, and 19085 to APC 0005 for 
the CY 2015 OPPS update (79 FR 40985). In addition, we proposed to 
continue to package payment for add-on CPT codes 19082, 19084, and 
19086 under the OPPS for CY 2015, consistent with our packaging policy 
for add-on codes that was implemented on January 1, 2014. Because we 
proposed to delete APC 0037 we believe that the proposed increased 
payment rate for APC 0005 is consistent with the Panel's recommendation 
to reassign CPT codes 19081, 19083, and 19085 to an appropriate APC 
based on resource utilization and clinical coherence.
    Comment: Commenters supported CMS' proposal to continue to assign 
CPT codes 19081, 19083, and 19085 to APC 0005. The commenters stated 
that the assignment of these CPT codes to APC 0005 is clinically 
coherent and more accurately captures the resource cost associated with 
providing these services when compared to the CY 2014 APC assignment.
    Response: We appreciate the commenters' support.
    Comment: Some commenters expressed concern regarding the inadequate 
payment for ancillary services associated with multiple biopsies that 
may be performed on the same date of service. The commenters indicated 
that patients sometimes present with multiple lesions, which requires a 
biopsy of each lesion. According to the commenters, prior to the 
establishment of the comprehensive CY 2014 breast biopsy CPT codes, 
hospitals would report each biopsy, imaging guidance, and marker or 
localization placements separately. The commenters requested that CMS 
provide guidance on how to report multiple biopsies performed on the 
same date of service.
    Response: We expect hospitals to report the performance of breast 
biopsies using the comprehensive breast biopsy CPT codes, consistent 
with the latest CPT coding guidelines. As stated in the CY 2014 CPT 
code book, image-guided breast biopsies, including the placement of 
localization devices when performed, are reported using the 
comprehensive breast biopsy CPT codes 19081 through 19086. Image-guided 
placement of localization devices without the performance of a biopsy 
are required to be reported using CPT codes 19281 through 19288. In 
addition, when more than one biopsy is performed using the same imaging 
modality, hospitals are required to report each biopsy using an add-on 
code. However, if more than one biopsy is performed using different 
imaging modalities, hospitals are required to report a separate primary 
code for each additional imaging modality.
    We note that it is extremely important that hospitals use all of 
the required HCPCS codes to report the performance of all services they 
furnish, consistent with the code descriptors, CPT and/or CMS 
instructions, and correct coding principles, whether payment for the 
services is made separately or packaged. The accuracy of the OPPS 
payment rates depends on the quality and completeness of the claims 
data that hospitals submit for the services they furnish to Medicare 
beneficiaries.
    After consideration of the public comments we received, we are 
finalizing our proposal to continue to assign CPT codes 19081, 19083, 
and 19085 to APC 0005 for CY 2015. In addition, we are finalizing our 
proposal to continue to package payment for add-on CPT codes 19082, 
19084, and 19086 under the OPPS for CY 2015, consistent with our 
packaging policy for add-on codes that was implemented on January 1, 
2014. Furthermore, we are finalizing our proposal to delete APC 0037 
because we believe that the proposed increased payment rate for APC 
0005 is consistent with the Panel's recommendation to reassign CPT 
codes 19081, 19083, and 19085 to an

[[Page 66866]]

appropriate APC based on resource utilization and clinical coherence. 
Table 24 below shows the final status indicators, APC assignments, and 
payment rates for the image-guided breast biopsy CPT codes 19081 
through 19086.

                              Table 24--Final CY 2015 APCs to Which Image-Guided Breast Biopsy Procedure Codes are Assigned
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               Final CY
             CPT Code                         Long descriptor              CY 2014 SI   CY 2014 APC    CY 2014      Final CY      Final CY       2015
                                                                                                       Payment       2015 SI      2015 APC     payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
19081............................  Biopsy, breast, with placement of                T          0005       702.08            T          0005    $1,052.22
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including stereotactic guidance.
19082............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; each additional
                                    lesion, including stereotactic
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
19083............................  Biopsy, breast, with placement of                T          0005      $702.08            T          0005     1,052.22
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including ultrasound guidance.
19084............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; each additional
                                    lesion, including ultrasound
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
19085............................  Biopsy, breast, with placement of                T          0005      $702.08            T          0005     1,052.22
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including magnetic resonance
                                    guidance.
19086............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; each additional
                                    lesion, including magnetic resonance
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition to the proposal to maintain the APC assignment of the 
breast biopsy comprehensive CPT codes to APC 0005, we also discussed in 
the CY 2015 OPPS/ASC proposed rule our proposal to reassign CPT code 
10030 from APC 0006 (Level I Incision & Drainage) to APC 0007 (Level II 
Incision and Drainage). We note that, for the CY 2014 OPPS update, the 
AMA's CPT Editorial Panel established CPT code 10030 to report the 
bundled service of image-guided fluid collection drainage by catheter 
for percutaneous soft tissue, and CPT code 49407 to report the bundled 
service of image-guided fluid collection drainage by catheter for 
peritoneal, retroperitoneal, transvaginal or transrectal collections, 
effective January 1, 2014. As shown in Table 25 of the CY 2015 OPPS/ASC 
proposed rule, which showed the long descriptors for CPT codes 10030 
and 49407, and as listed in Addendum B to the CY 2014 OPPS/ASC final 
rule with comment period, we assigned CPT code 10030 to APC 0006, with 
a payment rate of $159.66 and CPT code 49407 to APC 0685, with a 
payment rate of $757.76. As listed in Addendum B to the CY 2014 OPPS/
ASC final rule with comment period, both procedure codes were assigned 
to comment indicator ``NI'' to indicate that the codes were new codes 
and assigned interim APC and status indicator assignments that were 
subject to public comment.
    At the Panel's March 10, 2014 meeting, one presenter requested that 
CMS reassign CPT codes 10030 and 49407 from APC 0006 and APC 0685, 
respectively, to APC 0037 (Level IV Needle Biopsy/Aspiration Except 
Bone Marrow), which has a CY 2014 OPPS payment rate of $1,223.25. The

[[Page 66867]]

commenter noted that similar procedures also are assigned to APC 0037. 
Specifically, the presenter indicated that all the image-guided fluid 
collection drainage procedures should be treated as one clinically 
cohesive group and assigned to APC 0037. The Panel agreed with the 
presenter and recommended that CMS reassign CPT code 49407 to APC 0037. 
However, the Panel did not agree with the presenter that CPT code 10030 
would be more appropriately assigned to APC 0037. Rather, the Panel 
believed that the most appropriate APC assignment for CPT code 10030 
would be APC 0007. We agreed with the Panel's recommendation that CPT 
code 10030 should be assigned to APC 0007. Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 40986), we proposed to reassign CPT code 
10030 from APC 0006 to APC 0007 for the CY 2015 OPPS update. In light 
of the Panel's recommendation to reassign CPT code 49407 and the image-
guided breast biopsy procedures to APC 0037 and APC 0007, respectively, 
and our longstanding policy of reviewing, on an annual basis, the APC 
assignments for all services and items paid under the OPPS, we 
evaluated the geometric mean costs associated with the procedures 
assigned to the existing four needle biopsy APCs, as previously stated, 
and proposed to reassign the procedures assigned to APCs 0685 and 0037 
to either APC 0004 or APC 0005 based on clinical and resource 
homogeneity and to delete APCs 0685 and 0037 for CY 2015. Specifically, 
we proposed to reassign CPT code 49407 from APC 0685 to APC 0005 for CY 
2015, and to delete APCs 0037 and 0685. Table 25 of the proposed rule 
also showed the long descriptors for CPT codes 10030 and 49407, and 
their proposed status indicator and APC assignments for the CY 2015 
OPPS update. The proposed CY 2015 payment rate for CPT codes 10030 and 
49407 can be found in Addendum B to this CY 2015 OPPS/ASC proposed rule 
(which is available via the Internet on the CMS Web site).
    Comment: Some commenters recommended that CMS reassign CPT code 
10030 from APC 0006 to APC 0005. The commenters stated that, according 
to an internal analysis, CPT code 10030 is comparable with respect to 
clinical and resource characteristics and costs to the other abscess 
drainage procedures assigned to APC 0005.
    Response: In light of the Panel's recommendation to reassign the 
procedure to APC 0007 and because CPT code 10030 is a new code for CY 
2014, we are not accepting the commenters' suggestion to assign this 
procedure to APC 0005. Rather, we are reassigning CPT code 10030 from 
APC 0006 to APC 0007 for the CY 2015 OPPS update, as recommended by the 
Panel. We note that we will have CY 2014 hospital claims data available 
for CPT codes 10030 and 49407 in preparation for the CY 2016 OPPS 
rulemaking. At that time, we will reevaluate the APC assignments for 
all the abscess drainage CPT codes.
    Therefore, after consideration of the public comments we received, 
we are finalizing our proposal, without modification, to reassign CPT 
code 10030 from APC 0006 to APC 0007. In addition, we are finalizing 
our proposal to reassign the procedures assigned to APCs 0685 and 0037 
to either APC 0004 or APC 0005 based on clinical and resource 
homogeneity. Because there would be no other procedures assigned to 
APCs 0685 and 0037 as a result of this reassignment, we are finalizing 
our proposal to delete APCs 0685 and 0037 for CY 2015. The final CY 
2015 payment rate for CPT codes 10030 and 49407 can be found in 
Addendum B to this CY 2015 OPPS/ASC final rule (which is available via 
the Internet on the CMS Web site).
c. Negative Pressure Wound Therapy (NPWT) (APCs 0012, 0013, 0015 and 
0016)
    For CY 2015, we proposed to assign all of the NPWT services to APC 
0015 (Level II Debridement & Destruction), with a proposed payment rate 
of $141.66. We proposed to continue to assign CPT code 97606 (Negative 
pressure wound therapy (eg, vacuum assisted drainage collection), 
including topical application(s), wound assessment, and instruction(s) 
for ongoing care, per session; total wound(s) surface area greater than 
50 square centimeters) to APC 0015. In addition, for the CY 2015 OPPS 
update, we proposed to reassign CPT code 97605 (Negative pressure wound 
therapy (eg, vacuum assisted drainage collection), including topical 
application(s), wound assessment, and instruction(s) for ongoing care, 
per session; total wound(s) surface area less than or equal to 50 
square centimeters) from APC 0013 (Level II Debridement & Destruction), 
the APC to which the procedure is assigned for CY 2014, to APC 0015. As 
listed in Table 29 of the CY 2015 OPPS/ASC proposed rule (79 FR 40916), 
we also proposed to reassign HCPCS codes G0456 (Negative pressure wound 
therapy (e.g. vacuum assisted drainage collection) using a 
mechanically-powered device, not durable medical equipment, including 
provision of cartridge and dressing(s), topical application(s), wound 
assessment, and instructions for ongoing care, per session; total 
wounds(s) surface area less than or equal to 50 square centimeters) and 
G0457 (Negative pressure wound therapy (e.g. vacuum assisted drainage 
collection) using a mechanically-powered device, not durable medical 
equipment, including provision of cartridge and dressing(s), topical 
application(s), wound assessment, and instructions for ongoing care, 
per session; total wounds(s) surface area greater than 50 square 
centimeters) from APC 0016 (Level III Debridement & Destruction) to APC 
0015.
    We note that CPT codes 97605 and 97606 became effective on January 
1, 2005, and describe the type of NPWT services that employ durable 
medical equipment (DME). Alternatively, HCPCS codes G0456 and G0457, 
which are relatively new codes that became effective on January 1, 
2013, were established by CMS to provide a payment mechanism for NPWT 
services furnished using disposable supplies instead of DME. We 
proposed to maintain the assignment of status indicator ``T'' to these 
two codes.
    For the CY 2013 OPPS update, we assigned CPT code 97605 to APC 0013 
(Level II Debridement & Destruction), with a payment rate of $71.54 and 
CPT code 97606 to APC 0015 (Level III Debridement & Destruction), with 
a payment rate of $106.96. In addition, we assigned HCPCS codes G0456 
and G0457 to APC 0016 (Level IV Debridement & Destruction), with a 
payment rate of $209.65.
    For the CY 2014 OPPS update, we continued to assign CPT code 97605 
to APC 0013 and CPT code 97606 to APC 0015. We also continued to assign 
HCPCS codes G0456 and G0457 to APC 0016, with a payment rate of 
$274.81. We note that we stated in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75001) that some commenters requested the 
reassignment of HCPCS codes G0456 and G0457 to a higher paying APC, 
with a payment rate specifically ranging between $450 and $500. The 
commenters believed that a higher paying APC would be more reflective 
of the cost of providing NPWT services using disposable supplies. We 
further stated that because HCPCS codes G0456 and G0457 were new codes 
for the CY 2013 OPPS update, we expected to have claims data available 
for these codes during the CY 2015 rulemaking cycle and, at that time, 
we would reevaluate the APC assignments for these services in 
preparation for the CY 2015 OPPS update.

[[Page 66868]]

    For the CY 2015 OPPS update, we analyzed the latest hospital 
outpatient claims data available for the CY 2015 OPPS/ASC proposed 
rule, which was based on claims submitted between January 1, 2013 and 
December 31, 2013, and processed on or before December 31, 2013. The 
data indicated that the geometric mean cost of APC 0013 was comparable 
to the geometric mean cost of APC 0015. Therefore, in the CY 2015 OPPS/
ASC proposed rule (79 FR 40988), we proposed to combine these APCs by 
reassigning all of the procedures from APC 0013 to APC 0015; delete APC 
0013, and retain APC 0015 for the CY 2015 OPPS update. In addition, we 
proposed to rename the Debridement and Destruction APC series 
(excluding APC 0012) as follows: APC 0015 (Level II Debridement and 
Destruction); APC 0016 (Level III Debridement and Destruction); and APC 
0017 (Level IV Debridement and Destruction).
    Furthermore, the CY 2013 claims data available for the proposed 
rule also indicated that the geometric mean cost for HCPCS code G0456 
was approximately $152 based on 4,509 single claims (out of 5,772 total 
claims), and approximately $193 for HCPCS code G0457 based on 386 
single claims (out of 591 total claims). The claims data also showed 
that the geometric mean cost for CPT code 97605 was approximately $101 
based on 58,901 single claims (out of 75,378 total claims), and 
approximately $140 for CPT code 97606 based on 6,722 single claims (out 
of 9,063 total claims). The proposed geometric mean costs of HCPCS 
codes G0456 and G0457, and CPT codes 97605 and 97606 were all 
comparable to the proposed geometric mean cost for APC 0015 of 
approximately $148. Based on analysis of the most recent claims data 
available for the proposed rule, we stated that we believed that the 
most appropriate assignment for all of the NPWT services was APC 0015 
based on the clinical and resource homogeneity of the services assigned 
to this APC. The next higher cost APC in the series, APC 0016, had a 
proposed geometric mean cost of approximately $284, which was 
significantly higher than the proposed geometric mean cost of any of 
the NPWT services. Therefore, in the CY 2015 OPPS/ASC proposed rule, we 
proposed to continue to assign CPT code 97606 to APC 0015, reassign CPT 
code 97605 from APC 0013 to APC 0015, and reassign HCPCS codes G0456 
and G0457 from APC 0016 to APC 0015 for the CY 2015 OPPS update.
    Comment: Most commenters requested that CMS continue to assign the 
disposable NPWT HCPCS codes G0456 and G0457 to APC 0016 for the CY 2015 
OPPS update, which is the same APC to which these services are assigned 
for CY 2014. The commenters believed that hospitals may have miscoded 
claims reporting these services and, consequently, the CY 2015 proposed 
payment rate of approximately $142 for HCPCS codes G0456 and G0457 is 
insufficient because the CY 2013 OPPS claims data do not accurately 
capture the cost of the disposable supplies that is included in 
providing the service. One commenter stated that the cost of the 
disposable NPWT supplies range between $200 and $700 per case. The 
commenter provided copies of individual invoices that were forwarded to 
various hospitals from the manufacturer that showed a cost of 
approximately $220 for one disposable NPWT system. In addition, based 
on its analysis of charges reported by hospitals, the commenter 
believed that hospitals failed to understand the differences between 
the type of NPWT services that employ DME, which are described by CPT 
codes 97605 and 97606, and the type of disposable NPWT services 
described by HCPCS G-codes. The commenter stated that, according to its 
data analysis, there was no difference in hospital charges for the two 
types of NPWT services reported on claims. The commenter believed that 
hospitals miscoded these claims because they may have believed that the 
services described by the CPT codes for the type of NPWT services that 
use DME are similar to the services described by the disposable NPWT 
HCPCS G-codes. Several commenters explained that the cost of the type 
of NPWT services that use DME does not include the cost of the devices 
and supplies that are used to provide the services described by the 
HCPCS G-codes. The commenter speculated that, although it appeared that 
hospitals did not include the cost of the disposable devices when 
reporting their charges for the services described by the disposable 
NPWT HCPCS G-codes, hospitals should have included such costs. 
Therefore, the commenters urged CMS to continue to assign HCPCS codes 
G0456 and G0457 to APC 0016 for the CY 2015 OPPS update.
    Response: Based on the significant number of claims that are 
available for this final rule with comment period, we believe that APC 
0015 best reflects the clinical characteristics and resource costs of 
HCPCS codes G0456 and G0457. In addition, we do not believe that 
continuing to assign HCPCS codes G0456 and G0457 to APC 0016 would be 
appropriate for CY 2015. Our analysis of the latest hospital outpatient 
claims data available for this CY 2015 OPPS/ASC final rule with comment 
period, which is based on claims submitted between January 1, 2013 and 
December 31, 2013, and processed on or before June 30, 2014, indicates 
that the geometric mean costs for both HCPCS codes (G0456 and G0457) 
are very similar to the geometric mean cost of APC 0015. Specifically, 
our latest hospital outpatient claims data for this final rule with 
comment period show a geometric mean cost of approximately $158 for 
HCPCS code G0456 based on 5,198 single claims (out of 6,645 total 
claims), which is close to the geometric mean cost of APC 0015, which 
is approximately $152. Similarly, our claims data show a geometric mean 
cost of approximately $202 for HCPCS code G0457 based on 476 single 
claims (out of 676 total claims), which is also closer to the geometric 
mean cost of APC 0015, which is approximately $152 than the geometric 
mean cost of APC 0016, which is approximately $294.
    In addition, we are not convinced that hospitals are reporting the 
same charges for the two types of NPWT services (DME-based and 
disposable) because a review of the latest claims data shows that the 
geometric mean costs for the most highly utilized procedures described 
by HCPCS code G0456 (geometric mean cost of approximately $158) and CPT 
code 97605 (geometric mean cost of approximately $101) are 
significantly different. This difference in costs captured in the 
claims data demonstrates that hospitals are not reporting identical 
charges for the different types of NPWT services, DME and disposable-
based. Furthermore, we note that for all APCs whose payment rates are 
based upon relative payment weights, the quality and accuracy of 
reported units and charges influence the geometric mean costs that are 
the basis for our payment rates, especially for low volume items and 
services. However, beyond our standard OPPS trimming methodology 
(described in section II.A.2. of this final rule with comment period) 
that we apply to those claims that have passed various types of claims 
processing edits, it is not our general policy to judge the accuracy of 
hospital coding and charging for purposes of ratesetting (75 FR 71838). 
We rely on hospitals to bill all HCPCS codes accurately in accordance 
with their code descriptors and CPT and CMS instructions, as 
applicable, and to report charges on claims and charges and costs on 
their Medicare hospital cost reports appropriately. In addition, we do 
not specify the methodologies that hospitals

[[Page 66869]]

must use to set charges for this or any other service. Therefore, based 
on the latest hospital outpatient claims data available for this final 
rule with comment period, we believe that APC 0015 best reflects the 
clinical characteristics and resource costs of HCPCS codes G0456 and 
G0457.
    Comment: One commenter recommended that CMS make certain changes to 
APCs 0015 and 0016. Specifically, the commenter recommended that CMS 
lower the geometric mean cost for APC 0016 to $190, which would result 
in reassigning certain codes that were in APC 0015 whose geometric mean 
cost met or exceeded this amount to APC 0016. This commenter stated 
that such reassignment would retain HCPCS codes G0456 and G0457 in APC 
0016.
    Response: We believe that the proposed structures of APCs 0015 and 
0016 (aside from the few code reassignments that are being made for the 
purpose of resolving a violation of the 2 times rule in APC 0015 that 
are discussed below) are optimal in terms of clinical and resource 
homogeneity. The geometric mean cost range for significant procedures 
assigned to APC 0015 is between approximately $110 (for CPT code 17250) 
and approximately $201 (for CPT code 11100). The geometric mean cost 
range for significant procedures assigned to APC 0016 is between 
approximately $230 (for CPT code 17282) and approximately $368 (for CPT 
code 11043). Reassigning HCPCS code G0456 from APC 0015 to APC 0016 
would either violate the 2 times rule in APC 0016 or necessitate 
dividing APC 0016 into two APCs, which we do not believe is appropriate 
or necessary. Both of these options are undesirable, especially given 
that the geometric mean cost of HCPCS code G0456 (approximately $158) 
is comparable to the geometric mean cost of APC 0015 (approximately 
$152).
    In summary, based on the latest claims data used for this final 
rule with comment period, we believe that HCPCS codes G0456 and G0457 
are appropriately assigned in APC 0015 for the CY 2015 update based on 
the clinical and resource similarity to the other procedures in APC 
0015. As has been our practice since the implementation of the OPPS in 
2000, we review, on an annual basis, the APC assignments for the 
procedures and services paid under the OPPS. We will again review the 
APC assignments for all the NPWT services in light of the CY 2014 
claims data and the proposed APC structures for clinically relevant 
APCs and determine whether an APC reassignment for any of the NPWT 
codes would be appropriate in the CY 2016 rulemaking.
    In addition, in the CY 2015 OPPS/ASC proposed rule, there were 
violations of the 2 times rule noted for both APCs 0012 and 0015 (79 FR 
40981). Every year we make every effort to minimize the number of APCs 
that are listed as exceptions to the 2 times rule. To resolve the 
violations of the 2 times rule in APCs 0012 and 0015, we are making the 
following code reassignments:
     CPT codes 11719, 11720, 11721, 11740, and 17340, and HCPCS 
code G0127 from APC 0012 to APC 0340.
     CPT codes 11901, 12014, 96920, and 97605 from APC 0015 to 
APC 0012.
    These code reassignments eliminated the 2 times rule violations 
that existed in APCs 0012 and 0015 in the CY 2015 OPPS/ASC proposed 
rule. We note that APC 0012 is one of the APCs included in the 
ancillary services packaging policy that is discussed in section 
II.A.3.c.(1) of this final rule with comment period. Because CPT code 
97605 is assigned to APC 0012, the code will be conditionally packaged 
and assigned to status indicator ``Q1'' for CY 2015.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal, with modification. Specifically, we 
are finalizing our proposal to assign CPT code 97606 and HCPCS codes 
G0456 and G0457 to APC 0015. However, we are reassigning CPT code 97605 
from our proposed APC 0015 to APC 0012 for the CY 2015 update to 
eliminate the violation of the 2 times rule that existed in APC 0015 
based on claims data available for the proposed rule.
    In addition, for the CY 2015 update, the CPT Editorial Panel 
established two new CPT codes to describe disposable NPWT services and 
revised the long descriptors for existing CPT codes 97605 and 97606, 
effective January 1, 2015. Consistent with our general policy of using 
permanent codes rather than using temporary HCPCS G-codes in order to 
streamline coding, we are deleting HCPCS codes G0456 and G0457 because 
they are replaced with two new CPT codes effective January 1, 2015. 
Table 25 below shows the replacement CPT codes for HCPCS codes G0456 
and G0457 as well as the revised long descriptors for existing CPT 
codes 97605 and 97606. The final CY 2015 payment rate for the NPWT 
services codes can be found in Addendum B to this final rule with 
comment period (which is available via the Internet on the CMS Web 
site). Like all new codes effective January 1, 2015, the APC 
assignments for the new disposable NPWT CPT codes are open for comment 
for 60 days after display of this CY 2015 OPPS/ASC final rule with 
comment period.

                                            Table 25--Final APC Assignments for the NPWT Services for CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Proposed CY                  Final CY
     CY 2014 CPT/HCPCS Code               CY 2015 CPT Code             CY 2015 Long descriptor       Proposed CY   2015 OPPS     Final CY     2015 OPPS
                                                                                                    2015 OPPS SI      APC      2015 OPPS SI      APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
97605...........................  97605..........................  Negative pressure wound therapy            T          0015           Q1          0012
                                                                    (eg, vacuum assisted drainage
                                                                    collection), utilizing durable
                                                                    medical equipment (DME),
                                                                    including topical
                                                                    application(s), wound
                                                                    assessment, and instruction(s)
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    less than or equal to 50
                                                                    square centimeters.
97606...........................  97606..........................  Negative pressure wound therapy            T          0015            T          0015
                                                                    (eg, vacuum assisted drainage
                                                                    collection), utilizing durable
                                                                    medical equipment (DME),
                                                                    including topical
                                                                    application(s), wound
                                                                    assessment, and instruction(s)
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    greater than 50 square
                                                                    centimeters.

[[Page 66870]]

 
G0456...........................  97607..........................  Negative pressure wound                    T          0015            T          0015
                                                                    therapy, (eg, vacuum assisted
                                                                    drainage collection),
                                                                    utilizing disposable, non-
                                                                    durable medical equipment
                                                                    including provision of exudate
                                                                    management collection system,
                                                                    topical application(s), wound
                                                                    assessment, and instructions
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    less than or equal to 50
                                                                    square centimeters.
G0457...........................  97608..........................  Negative pressure wound                    T          0015            T          0015
                                                                    therapy, (eg, vacuum assisted
                                                                    drainage collection),
                                                                    utilizing disposable, non-
                                                                    durable medical equipment
                                                                    including provision of exudate
                                                                    management collection system,
                                                                    topical application(s), wound
                                                                    assessment, and instructions
                                                                    for ongoing care, per session;
                                                                    total wound(s) surface area
                                                                    greater than 50 square
                                                                    centimeters.
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. Platelet Rich Plasma (PRP) (APC 0327)
    For CY 2015, we proposed to continue to assign HCPCS code G0460 
(Autologous platelet rich plasma for chronic wounds/ulcers, including 
phlebotomy, centrifugation, and all other preparatory procedures, 
administration and dressings, per treatment) to APC 0327 (Level II 
Debridement & Destruction), with a proposed payment rate of 
approximately $431. We note that HCPCS code G0460, which became 
effective July 1, 2013, describes both the procedure and product 
components associated with the autologous platelet rich plasma service.
    Comment: One commenter requested that CMS exempt HCPCS code G0460 
from the geographic wage index variations to enable hospitals to more 
willingly participate in the AutoloGel Coverage with Evidence 
Development (CED) protocols. According to the commenter, HOPDs are 
reluctant to enroll in the CED protocols because they are concerned 
that the proposed APC payment rate will not cover the cost of the 
product, the procedure, the overhead, and the additional administrative 
effort associated with CED data collection requirements. In addition, 
the commenter requested that CMS establish a final payment rate for APC 
0327 based on the geometric mean cost of $496.99 to help achieve some 
stability regarding the payment for the procedures assigned to this 
APC.
    Response: We note that comments related to CED protocols or data 
collection are outside the scope of the proposed rule. With regard to 
the geographic wage index exemption requested by the commenter, we have 
never made such an exception. Under the hospital OPPS, all procedures 
and services that include devices are wage adjusted. Moreover, the 
payment rates for procedures and APCs are not based on a specific 
projected amount. The final payment rate for APC 0327 is based on the 
geometric mean cost of all the procedures described by the HCPCS codes 
assigned to this APC. We believe that the procedure described by HCPCS 
code G0460 is appropriately assigned to APC 0327 for the CY 2015 OPPS 
update based on the clinical and resource similarities in relation to 
the other procedures assigned to APC 0327. We note that, for this final 
rule with comment period, which is based on hospital outpatient claims 
submitted between January 1, 2013, and December 31, 2013, that were 
processed on or before June 30, 2014, our latest hospital outpatient 
claims data show no claims reporting the service described by HCPCS 
code G0460. As has been our practice since the implementation of the 
OPPS in 2000, we review, on an annual basis, the APC assignments for 
the procedures and services paid under the OPPS. We will review the APC 
assignment for HCPCS code G0460 when sufficient claims data become 
available to determine whether a reassignment to a more appropriate APC 
is necessary for the CY 2016 update. After consideration of the public 
comment we received, we are finalizing our proposal, without 
modification, to continue to assign HCPCS code G0460 to APC 0327 for CY 
2015. The final CY 2015 payment rate for HCPCS code G0460 can be found 
in Addendum B to this CY 2015 OPPS/ASC final rule (which is available 
via the Internet on the CMS Web site).

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
    Section 1833(t)(6)(B)(iii) of the Act sets forth the period for 
which a device category eligible for transitional pass-through payments 
under the OPPS may be in effect. The implementing regulation at 42 CFR 
419.66(g) provides that this pass-through payment eligibility period 
begins on the date CMS establishes a particular transitional pass-
through category of devices. We may establish a new device category for 
pass-through payment in any quarter, and under our established policy, 
we base the pass-through status expiration date for a device category 
on the date on which pass-through payment is effective for the 
category; that is, the date CMS establishes a particular category of 
devices eligible for transitional pass-through payments. We propose and 
finalize the dates for expiration of pass-through status for device 
categories as part of the OPPS annual update.
    We also have an established policy to package the costs of the 
devices that are no longer eligible for pass-through payments into the 
costs of the procedures with which the devices are reported in the 
claims data used to set the payment rates (67 FR 66763). Brachytherapy 
sources, which are now separately paid in accordance with section 
1833(t)(2)(H) of the Act, are an exception to this established policy.
b. CY 2015 Policy
    There currently is one device category eligible for pass-through 
payment, which we established effective October 1, 2013: HCPCS code 
C1841 (Retinal

[[Page 66871]]

prosthesis, includes all internal and external components). Recognizing 
that this device category has been eligible for at least 2 years, but 
not more than 3 years, of pass-through status by the end of CY 2015, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed the 
expiration of pass-through payment for HCPCS code C1841 devices on 
December 31, 2015. Therefore, in accordance with our established 
policy, beginning with CY 2016, we proposed to package the costs of the 
HCPCS code C1841 devices into the costs related to the procedures with 
which the device is reported in the hospital claims data (79 FR 40989 
through 40990).
    Comment: A few commenters requested that CMS extend the pass-
through payment period for the device described by HCPCS code C1841 due 
to delay of the first date of sale of the device until January 2014. 
The commenters asserted that the delay was due to various regulatory 
delays, including the Food and Drug Administration's (FDA's) 
Humanitarian Device Exemption (HDE) approval process and Federal 
Communications Commission (FCC) regulations regarding utilization of a 
radiofrequency (RF) band approval. The commenters therefore requested 
that CMS use the date of the first sale or the date of the first HCPCS 
code C1841 device implant (January 16, 2014) to ``reset'' the start 
date for pass-through payment eligibility, which would result in 
another year of pass-through payment status.
    Response: According to 42 CFR 419.66(g), ``CMS limits the 
eligibility for a pass-through payment established under this section 
to a period of at least 2 years, but not more than 3 years, beginning 
on the date that CMS establishes a category of devices'' (emphasis 
added). We cannot extend the pass-through payment status of HCPCS code 
C1841 beyond CY 2015 because such an extension would make the pass-
through payment status effective longer than the maximum 3-year period 
permitted under 42 CFR 419.66(g). Moreover, the HCPCS code C1841 device 
category was made effective in the OPPS on October 1, 2013. The HCPCS 
code C1841 device category will have had more than 2 years of pass-
through payment status as of December 31, 2015. Extending pass-through 
payment status through December 31, 2016, as requested by the 
commenter, would afford the HCPCS code C1841 device category longer 
than the 3-year maximum pass-through payment period. Therefore, after 
consideration of the public comments we received, we are finalizing our 
proposal to expire HCPCS code C1841 device category from pass-through 
payment status after December 31, 2015. We are finalizing our proposal 
to package the costs for devices described by HCPCS code C1841 into the 
costs of the procedure with which the device is reported in the 
hospital claims data used in the development of the OPPS relative 
payment weights that will be used to establish the ASC payment rates 
for CY 2016.
    With the expiration of HCPCS code C1841 device category from pass-
through payment status at the end of CY 2015, there are no other 
currently active categories for which we would expire pass-through 
status in CY 2015. If we create new device categories for pass-through 
payment status during the remainder of CY 2014 or during CY 2015, we 
will propose future expiration dates in accordance with 42 CFR 
419.66(g).
2. Provisions for Reducing Transitional Pass-Through Payments To Offset 
Costs Packaged Into APC Groups
a. Background
    Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional 
pass-through payment for an eligible device as the amount by which the 
hospital's charges for a device, adjusted to cost (the cost of the 
device) exceeds the portion of the otherwise applicable Medicare 
outpatient department fee schedule amount (the APC payment amount) 
associated with the device. We have an established policy to estimate 
the portion of each APC payment rate that could reasonably be 
attributed to the cost of the associated devices that are eligible for 
pass-through payments (66 FR 59904) for purposes of estimating the 
portion of the otherwise applicable APC payment amount associated with 
pass-through devices. For eligible device categories, we deduct an 
amount that reflects the portion of the APC payment amount that we 
determine is associated with the cost of the device, defined as the 
device APC offset amount, from the charges adjusted to cost for the 
device, as provided by section 1833(t)(6)(D)(ii) of the Act, to 
determine the pass-through payment amount for the eligible device. We 
have consistently used an established methodology to estimate the 
portion of each APC payment rate that could reasonably be attributed to 
the cost of an associated device eligible for pass-through payment, 
using claims data from the period used for the most recent 
recalibration of the APC rates (72 FR 66751 through 66752). We 
establish and update the applicable device APC offset amounts for 
eligible pass-through device categories through the transmittals that 
implement the quarterly OPPS updates.
    We published a list of all procedural APCs with the CY 2014 
portions (both percentages and dollar amounts) of the APC payment 
amounts that we determined are associated with the cost of devices on 
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The dollar amounts 
are used as the device APC offset amounts. In addition, in accordance 
with our established practice, the device APC offset amounts in a 
related APC are used in order to evaluate whether the cost of a device 
in an application for a new device category for pass-through payment is 
not insignificant in relation to the APC payment amount for the service 
related to the category of devices, as specified in our regulations at 
Sec.  419.66(d).
    Beginning in CY 2010, we include packaged costs related to 
implantable biologicals in the device offset calculations in accordance 
with our policy that the pass-through evaluation process and payment 
methodology for implantable biologicals that are surgically inserted or 
implanted (through a surgical incision or a natural orifice) and that 
are newly approved for pass-through status beginning on or after 
January 1, 2010, be the device pass-through process and payment 
methodology only (74 FR 60476).
b. CY 2015 Policy
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), we proposed to 
continue, for CY 2015, our established methodology to estimate the 
portion of each APC payment rate that could reasonably be attributed to 
(that is, reflect) the cost of an associated device eligible for pass-
through payment, using claims data from the period used for the most 
recent recalibration of the APC payment rates. We proposed to continue 
our policy, for CY 2015, that the pass-through evaluation process and 
pass-through payment methodology for implantable biologicals that are 
surgically inserted or implanted (through a surgical incision or a 
natural orifice) and that are newly approved for pass-through status, 
be the device pass-through process and payment methodology only. The 
rationale for this policy is provided in the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60471 through 60477). We also proposed 
to continue our established policies for calculating and setting the 
device APC offset amounts for each device category eligible for pass-
through payment. In addition, we

[[Page 66872]]

proposed to continue to review each new device category on a case-by-
case basis to determine whether device costs associated with the new 
category are already packaged into the existing APC structure. If 
device costs packaged into the existing APC structure are associated 
with the new category, we proposed to deduct the device APC offset 
amount from the pass-through payment for the device category. As stated 
earlier, these device APC offset amounts also would be used in order to 
evaluate whether the cost of a device in an application for a new 
device category for pass-through payment is not insignificant in 
relation to the APC payment amount for the service related to the 
category of devices (Sec.  419.66(d)).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), for CY 2015, 
we also proposed to continue our policy established in CY 2010 to 
include implantable biologicals in our calculation of the device APC 
offset amounts. In addition, we proposed to continue to calculate and 
set any device APC offset amount for any new device pass-through 
category that includes a newly eligible implantable biological 
beginning in CY 2015, using the same methodology we have historically 
used to calculate and set device APC offset amounts for device 
categories eligible for pass-through payment, and to include the costs 
of implantable biologicals in the calculation of the device APC offset 
amounts (79 FR 40990).
    In addition, in the CY 2015 OPPS/ASC proposed rule (79 FR 40900), 
we proposed to update the list of all procedural APCs with the final CY 
2015 portions of the APC payment amounts that we determine are 
associated with the cost of devices on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html so that this information is available 
for use by the public in developing potential CY 2015 device pass-
through payment applications and by CMS in reviewing those 
applications.
    Comment: One commenter objected to CMS' proposal to continue its 
policy of evaluating implantable biological pass-through applications 
through the device evaluation process. The commenter believed that all 
biologicals should be evaluated through the drug and biological pass-
through process, which is intended for the evaluation of drugs and 
biologicals.
    Response: We have discussed our rationale for this policy in the CY 
2010 OPPS/ASC final rule (74 FR 60463). Implantable biologicals 
function as implantable medical devices and are used in the HOPD in 
surgical procedures in a manner similar to implantable medical devices. 
Therefore, since CY 2010, we have treated them as medical devices for 
pass-through payment purposes. In addition, like implantable medical 
devices, implantable biologicals are treated as packaged surgical 
supplies in the OPPS under 42 CFR 419.2(b)(16). For these reasons, we 
will continue to treat implantable biologicals as devices for pass-
through payment purposes in CY 2015.
    After consideration of the public comment we received, we are 
finalizing, without modification, the aforementioned proposed policies 
for calculation of the device APC offset amounts for CY 2015. In 
addition, we are updating, on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, the list of all procedural APCs with the final CY 2015 
portions of the APC payment amounts that we determine are associated 
with the cost of devices so that this information is available for use 
by the public in developing potential CY 2015 device pass-through 
payment applications and by CMS in reviewing those applications.

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

1. 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 are 
instructed to report no cost/full credit 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, the hospital is instructed 
to report a token device charge of less than $1.01. In cases in which 
the device being inserted is an upgrade (either of the same type of 
device or to a different type of device) with a full credit for the 
device being replaced, the hospital is instructed to report as the 
device charge the difference between its usual charge for the device 
being implanted and its usual charge for the device for which it 
received full credit. In CY 2008, we expanded this payment adjustment 
policy to include cases in which hospitals receive partial credit of 50 
percent or more of the cost of a specified device. Hospitals are 
instructed to append the ``FC'' modifier to the procedure code that 
reports the service provided to furnish the device when they receive a 
partial credit of 50 percent or more of the cost of the new device. We 
refer readers to the CY 2008 OPPS/ASC final rule with comment period 
for more background information on the ``FB'' and ``FC'' payment 
adjustment policies (72 FR 66743 through 66749).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 
through 75007), beginning in CY 2014, we modified our policy of 
reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. For CY 
2013 and prior years, our policy had been to reduce OPPS payment by 100 
percent of the device offset amount when a hospital furnishes a 
specified device without cost or with a full credit and by 50 percent 
of the device offset amount when the hospital receives partial credit 
in the amount of 50 percent or more of the cost for the specified 
device. For CY 2014, we reduced OPPS payment, for the applicable APCs, 
by the full or partial credit a hospital receives for a replaced 
device. Specifically, under this modified policy, hospitals are 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' (Credit Received from the Manufacturer 
for a Replaced Medical Device) when the hospital receives a credit for 
a replaced device that is 50 percent or greater than the cost of the 
device. For CY 2014, we also limited the OPPS payment deduction for the 
applicable APCs to the total amount of the device offset when the 
``FD'' value code appears on a claim.
2. Policy for CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992), 
for CY 2015, we proposed to continue our existing policy of reducing 
OPPS payment for specified APCs when a hospital furnishes a specified 
device without cost or with a full or partial credit. Specifically, for 
CY 2015, we proposed to continue to reduce the OPPS payment, for the 
applicable APCs listed in Table 31 of the proposed rule, by the full or 
partial credit a provider receives for a replaced device. Under this 
proposed policy, hospitals would continue to be required to report on 
the claim the amount of the credit in the amount portion for ``FD'' 
when the

[[Page 66873]]

hospital receives a credit for a replaced device listed in Table 32 of 
the proposed rule that is 50 percent or greater than the cost of the 
device.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992), 
for CY 2015, we also proposed to continue using the three criteria 
established in the CY 2007 OPPS/ASC final rule with comment period for 
determining the APCs to which our proposed CY 2015 policy would apply 
(71 FR 68072 through 68077). Specifically: (1) All procedures assigned 
to the selected APCs must involve implantable devices that would be 
reported if device insertion procedures were performed; (2) the 
required devices must be surgically inserted or implanted devices that 
remain in the patient's body after the conclusion of the procedure (at 
least temporarily); and (3) the device offset amount must be 
significant, which, for purposes of this policy, is defined as 
exceeding 40 percent of the APC cost. We also proposed to continue to 
restrict the devices to which the APC payment adjustment would apply to 
a specific set of costly devices to ensure that the adjustment would 
not be triggered by the implantation of an inexpensive device whose 
cost would not constitute a significant proportion of the total payment 
rate for an APC. We stated that we continue to believe these criteria 
are appropriate because no cost devices and device credits are likely 
to be associated with particular cases only when the device must be 
reported on the claim and is of a type that is implanted and remains in 
the body when the beneficiary leaves the hospital. We believe that the 
reduction in payment is appropriate only when the cost of the device is 
a significant part of the total cost of the APC into which the device 
cost is packaged, and that the 40-percent threshold is a reasonable 
definition of a significant cost.
    Comment: One commenter urged CMS to discontinue its current policy 
of reducing OPPS payment for specified APCs when a hospital furnishes a 
specified device without cost or with a full or partial credit. The 
commenter stated that procedures which involve the replacement of a 
device are of greater complexity than the original insertion of the 
device. The commenter recommended that, because the replacement 
procedures are not paid at a higher rate, CMS not further penalize the 
hospital by reducing the OPPS payment when the device is furnished 
without cost or with a full or partial credit to the hospital.
    Response: We do not agree with the commenter and believe that it is 
appropriate to reduce the OPPS payment for specified APCs when a 
hospital furnishes a specified device without cost or with a full or 
partial credit.
    After consideration of the public comments we received, we are 
finalizing our proposals to continue our existing policy of reducing 
OPPS payment for specified APCs when a hospital furnishes a specified 
device without cost or with a full or partial credit, and to continue 
using 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.
    We examined the offset amounts calculated from the CY 2015 final 
rule with comment period data and the clinical characteristics of the 
final CY 2015 APCs to determine which APCs meet the criteria for CY 
2015. Table 26 below lists the APCs to which the payment adjustment 
policy for no cost/full credit and partial credit devices will apply in 
CY 2015. Table 27 below lists the devices to which the payment 
adjustment policy for no cost/full credit and partial credit devices 
will apply in CY 2015.
    Based on the final CY 2013 claims data available for this CY 2015 
OPPS/ASC final rule with comment period, we have updated the lists of 
APCs and devices to which the no cost/full credit and partial credit 
device adjustment policy will apply for CY 2015, consistent with the 
three criteria discussed earlier in this section.

   Table 26--APCs to Which the No Cost/Full Credit and Partial Credit
         Device Payment Adjustment Policy Will Apply in CY 2015
------------------------------------------------------------------------
            CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0039..............................  Level III Neurostimulator & Related
                                     Procedures.
0061..............................  Level II Neurostimulator & Related
                                     Procedures.
0064..............................  Level III Treatment Fracture/
                                     Dislocation.
0089..............................  Level III Pacemaker and Similar
                                     Procedures.
0090..............................  Level II Pacemaker and Similar
                                     Procedures.
0107..............................  Level I ICD and Similar Procedures.
0108..............................  Level II ICD and Similar Procedures.
0227..............................  Implantation of Drug Infusion
                                     Device.
0229..............................  Level II Endovascular Procedures.
0259..............................  Level VII ENT Procedures.
0293..............................  Level IV Intraocular Procedures.
0318..............................  Level IV Neurostimulator & Related
                                     Procedures.
0319..............................  Level III Endovascular Procedures.
0351..............................  Level V Intraocular Procedures.
0385..............................  Level I Urogenital Procedures.
0386..............................  Level II Urogenital Procedures.
0425..............................  Level V Musculoskeletal Procedures
                                     Except Hand and Foot.
0655..............................  Level IV Pacemaker and Similar
                                     Procedures.
------------------------------------------------------------------------

  Table 27--Devices to Which the No Cost/Full Credit and Partial Credit
         Device Payment Adjustment Policy Will Apply in CY 2015
------------------------------------------------------------------------
     CY 2015 Device HCPCS code            CY 2015 Short descriptor
------------------------------------------------------------------------
C1721.............................  AICD, dual chamber.
C1722.............................  AICD, single chamber.
C1728.............................  Cath, brachytx seed adm.
C1764.............................  Event recorder, cardiac.
C1767.............................  Generator, neurostim, imp.
C1771.............................  Rep dev, urinary, w/sling.
C1772.............................  Infusion pump, programmable.
C1776.............................  Joint device (implantable).
C1777.............................  Lead, AICD, endo single coil.
C1778.............................  Lead, neurostimulator.
C1779.............................  Lead, pmkr, transvenous VDD.
C1785.............................  Pmkr, dual, rate-resp.
C1786.............................  Pmkr, single, rate-resp.
C1789.............................  Prosthesis, breast, imp.
C1813.............................  Prosthesis, penile, inflatab.
C1815.............................  Pros, urinary sph, imp.
C1818.............................  Integrated keratoprosthesis.
C1820.............................  Generator, neuro rechg bat sys.
C1840.............................  Lens, intraocular (telescopic).
C1881.............................  Dialysis access system.
C1882.............................  AICD, other than sing/dual.
C1891.............................  Infusion pump, non-prog, perm.
C1895.............................  Lead, AICD, endo dual coil.
C1896.............................  Lead, AICD, non sing/dual.
C1897.............................  Lead, neurostim, test kit.
C1898.............................  Lead, pmkr, other than trans.
C1899.............................  Lead, pmkr/AICD combination.
C1900.............................  Lead coronary venous.
C2619.............................  Pmkr, dual, non rate-resp.
C2620.............................  Pmkr, single, non rate-resp.
C2621.............................  Pmkr, other than sing/dual.
C2622.............................  Prosthesis, penile, non-inf.
C2626.............................  Infusion pump, non-prog, temp.
C2631.............................  Rep dev, urinary, w/o sling.
------------------------------------------------------------------------

[[Page 66874]]

V. OPPS Payment Changes 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. ``Biological'' as used in this final rule 
with comment period includes ``biological product'' or ``biologic'' as 
defined in the Public Health Service Act. As enacted by the Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. 
L. 106-113), this provision requires the Secretary to make additional 
payments to hospitals for: current orphan drugs, as designated under 
section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs 
and biologicals and brachytherapy sources used in cancer therapy; and 
current radiopharmaceutical drugs and biologicals. ``Current'' refers 
to drugs or biologicals that are outpatient hospital services under 
Medicare Part B for which payment was made on the first date the 
hospital OPPS was implemented.
    Transitional pass-through payments also are provided for certain 
``new'' drugs and biologicals that were not being paid for as an HOPD 
service as of December 31, 1996 and whose cost is ``not insignificant'' 
in relation to the OPPS payments for the procedures or services 
associated with the new drug or biological. For pass-through payment 
purposes, radiopharmaceuticals are included as ``drugs.'' As required 
by statute, transitional pass-through payments for a drug or biological 
described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a 
period of at least 2 years, but not more than 3 years, after the 
payment was first made for the product as a hospital outpatient service 
under Medicare Part B. CY 2015 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 via 
the Internet on the CMS Web site.
    Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through 
payment amount, in the case of a drug or biological, is the amount by 
which the amount determined under section 1842(o) of the Act for the 
drug or biological exceeds the portion of the otherwise applicable 
Medicare OPD fee schedule that the Secretary determines is associated 
with the drug or biological. If the drug or biological is covered under 
a competitive acquisition contract under section 1847B of the Act, the 
pass-through payment amount is determined by the Secretary to be equal 
to the average price for the drug or biological for all competitive 
acquisition areas and the year established under such section as 
calculated and adjusted by the Secretary. However, we note that the 
Part B drug competitive acquisition program (CAP) has been postponed 
since CY 2009, and such a program has not been reinstated for CY 2015.
    This methodology for determining the pass-through payment amount is 
set forth in regulations at 42 CFR 419.64. These regulations specify 
that the 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 the CMS 
Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Drugs and Biologicals With Expiring Pass-Through Payment Status in 
CY 2014
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40992), we proposed 
that the pass-through status of 9 drugs and biologicals would expire on 
December 31, 2014, as listed in Table 33 of the proposed rule (79 FR 
40993). All of these drugs and biologicals will have received OPPS 
pass-through payment for at least 2 years and no more than 3 years by 
December 31, 2014. These drugs and biologicals were approved for pass-
through status on or before January 1, 2013. With the exception of 
those groups of drugs and biologicals that are always packaged when 
they do not have pass-through status (specifically, diagnostic 
radiopharmaceuticals; contrast agents; anesthesia drugs; drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure; and drugs and biologicals that 
function as supplies when used in a surgical procedure), our standard 
methodology for providing payment for drugs and biologicals with 
expiring pass-through status in an upcoming calendar year is to 
determine the product's estimated per day cost and compare it with the 
OPPS drug packaging threshold for that calendar year (which is $95 for 
CY 2015), as discussed further in section V.B.2. 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 would package payment for the drug or biological into the 
payment for the associated procedure in the upcoming calendar year. If 
the estimated per day cost of the drug or biological is greater than 
the OPPS drug packaging threshold, we would provide separate payment at 
the applicable relative ASP-based payment amount (which is ASP+6 
percent for CY 2015, as discussed further in section V.B.3. of this 
final rule with comment period).
    Comment: Commenters, including several hospitals, physicians, and a 
manufacturer, requested that CMS continue to pay separately for 
Exparel[supreg] (bupivacaine liposome injectable suspension) described 
by HCPCS code C9290 (Injection, bupivicaine liposome, 1 mg) once pass-
through payment status expires on December 31, 2014. Commenters 
disagreed with CMS' proposal to package Exparel[supreg] as a surgical 
supply and stated that the drug is used to control postoperative pain 
and is not used in the actual surgical procedure. In addition, 
commenters noted that the product cost of Exparel[supreg] exceeds the 
proposed CY 2015 packaging threshold of $90 and is not FDA-approved as 
a local anesthetic.
    Response: We disagree with the commenters' characterization of 
Exparel[supreg] as not functioning as a surgical supply because it is 
indicated for the alleviation of postoperative pain. The indications 
and usage of Exparel[supreg] as listed in the FDA-approved label are as 
follows: ``Exparel[supreg] is a liposome injection of bupivacaine, an 
amide-type local anesthetic, indicated for administration into the 
surgical site to produce postsurgical analgesia.''

[[Page 66875]]

Exparel[supreg] is injected immediately after the surgical procedure 
while the patient is still on the operating room table at the surgical 
wound site to control postoperative pain, which is an important part of 
the surgical care of the patient affecting the surgical outcome. In the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 74925 through 
74939), we finalized our policy at 42 CFR 419.2(b)(16) to 
unconditionally package all drugs and biologicals that function as 
supplies in a surgical procedure. According to OPPS policy, drugs, 
biologicals, radiopharmaceuticals, implantable medical devices, and 
other items and products that are not equipment can be supplies in the 
OPPS (78 FR 43571 and 43575). While the commenter stated that the cost 
of Exparel[supreg] exceeds the drug packaging threshold, we emphasize 
that cost consideration is not a factor in determining whether an item 
is a surgical supply. 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. Therefore, for CY 2015, we are finalizing our 
proposal to package Exparel[supreg] described by HCPCS code C9290 and 
to assign status indicator ``N'' to the code for CY 2015.
    Comment: A few commenters recommended that CMS continue pass-
through payment status for new drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents, for a full 3 years. The 
commenters asserted that providing pass-through payment status for 3 
years would help provide a more current and accurate data set on which 
to base payment amounts of the procedure when the diagnostic 
radiopharmaceutical or contrast agent is subsequently packaged. The 
commenters further recommended that CMS expire pass-through payment 
status for drugs and biologicals on a quarterly as opposed to an annual 
basis.
    Response: As we stated in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74287), the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68363), and the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75010), and as described in section V.A. of this 
final rule with comment period, section 1833(t)(6)(c)(i)(II) of the Act 
permits CMS to make pass-through payments for a period of at least 2 
years, but not more than 3 years, after the product's first payment as 
a hospital outpatient service under Medicare Part B OPPS. We continue 
to believe that this period of payment appropriately facilitates 
dissemination of these new products into clinical practice and 
facilitates the collection of sufficient hospital claims data 
reflective of their costs for future OPPS ratesetting. Our longstanding 
practice has been to provide pass-through payment for a period of 2 to 
3 years, with expiration of pass-through payment status proposed and 
finalized through the annual rulemaking process. Each year, when 
proposing to expire the pass-through payment status of certain drugs 
and biologicals, we examine our claims data for these products. We 
observe that hospitals typically have incorporated these products into 
their chargemasters based on the utilization and costs observed in our 
claims data. Under the existing pass-through payment policy, we begin 
pass-through payment on a quarterly basis, depending on when 
applications are submitted to us for consideration. We are confident 
that the period of time for which drugs, biologicals, contrast agents, 
and radiopharmaceuticals receive pass-through payment status, which is 
at least 2 but no more than 3 years, is appropriate for CMS to collect 
the sufficient amount of data to make a packaging determination.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to expire the pass-
through payment status of the nine drugs and biologicals listed in 
Table 28 below. Table 28 lists the drugs and biologicals for which 
pass-through payment status will expire on December 31, 2014, the 
status indicators, and the assigned APCs for CY 2015.

         Table 28--Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2014
----------------------------------------------------------------------------------------------------------------
                                                                                  Final CY 2015    Final CY 2015
           CY 2015 HCPCS Code                    CY 2015 Long descriptor                SI              APC
----------------------------------------------------------------------------------------------------------------
C9290..................................  Injection, bupivicaine liposome, 1 mg.               N              N/A
C9293..................................  Injection, glucarpidase, 10 units.....               K             9293
J0178..................................  Injection, aflibercept, 1 mg vial.....               K             1420
J0716..................................  Injection, centruroides (scorpion)                   K             1431
                                          immune f(ab)2, up to 120 milligrams.
J9019..................................  Injection, asparaginase (erwinaze),                  K             9289
                                          1,000 iu.
J9306..................................  Injection, pertuzumab, 1 mg...........               K             1471
Q4131..................................  EpiFix, per square centimeter.........               N              N/A
Q4132..................................  Grafix core, per square centimeter....               N              N/A
Q4133..................................  Grafix prime, per square centimeter...               N              N/A
----------------------------------------------------------------------------------------------------------------

3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing 
Pass-Through Payment Status in CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40993), we proposed to 
continue pass-through payment status in CY 2015 for 22 drugs and 
biologicals. None of these drugs and biologicals will have received 
OPPS pass-through payment for at least 2 years and no more than 3 years 
by December 31, 2014. These drugs and biologicals, which were approved 
for pass-through status between January 1, 2013 and July 1, 2014, were 
listed in Table 34 of the proposed rule (79 FR 40994). The APCs and 
HCPCS codes for these drugs and biologicals approved for pass-through 
status through July 1, 2014 were assigned status indicator ``G'' in 
Addenda A and B to the proposed rule. Addenda A and B to the proposed 
rule are available via the Internet on the CMS Web site.
    Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through 
payment for pass-through drugs and biologicals (the pass-through 
payment amount) as the difference between the amount authorized under 
section 1842(o) of the Act and the portion of the otherwise applicable 
OPD fee schedule that the Secretary determines is associated with the 
drug or biological. Payment for drugs and biologicals with pass-through 
status under the OPPS is currently made at the physician's office 
payment rate of ASP+6 percent. We stated in the proposed rule that we 
believe it is

[[Page 66876]]

consistent with the statute to propose to continue to provide payment 
for drugs and biologicals with pass-through status at a rate of ASP+6 
percent in CY 2015, which is the amount that drugs and biologicals 
receive under section 1842(o) of the Act.
    Therefore, for CY 2015, we proposed to pay for pass-through drugs 
and biologicals at ASP+6 percent, equivalent to the rate these drugs 
and biologicals would receive in the physician's office setting in CY 
2015. We proposed that a $0.00 pass-through payment amount would be 
paid for most pass-through drugs and biologicals under the CY 2015 OPPS 
because the difference between the amount authorized under section 
1842(o) of the Act, which is ASP+6 percent, and the portion of the 
otherwise applicable OPD fee schedule that the Secretary determines is 
appropriate, proposed at ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Contrast agents; diagnostic radiopharmaceuticals; anesthesia drugs; 
drugs, biologicals, and radiopharmaceuticals that function as supplies 
when used in a diagnostic test or procedure and drugs; and biologicals 
that function as supplies when used in a surgical procedure), we 
proposed that their pass-through payment amount would be equal to ASP+6 
percent for CY 2015 because, if not on pass-through status, payment for 
these products would be packaged into the associated procedure.
    In addition, we proposed to continue to update pass-through payment 
rates on a quarterly basis on the CMS Web site during CY 2015 if later 
quarter ASP submissions (or more recent WAC or AWP information, as 
applicable) indicate that adjustments to the payment rates for these 
pass-through drugs or biologicals are necessary. For a full description 
of this policy, we refer readers to the CY 2006 OPPS/ASC final rule 
with comment period (70 FR 68632 through 68635).
    In CY 2015, as is consistent with our CY 2014 policy for diagnostic 
and therapeutic radiopharmaceuticals, we proposed to provide payment 
for both diagnostic and therapeutic radiopharmaceuticals that are 
granted pass-through payment status based on the ASP methodology. As 
stated above, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2015, we proposed to follow the standard ASP 
methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is ASP+6 percent. If 
ASP data are not available for a radiopharmaceutical, we proposed to 
provide pass-through payment at WAC+6 percent, the equivalent payment 
provided to pass-through drugs and biologicals without ASP information. 
If WAC information also is not available, we proposed to provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP.
    Comment: Several commenters supported CMS' proposal to provide 
payment at ASP+6 percent for drugs, biologicals, contrast agents, and 
radiopharmaceuticals that are granted pass-through payment status. A 
few commenters requested that CMS provide an additional payment for 
radiopharmaceuticals that are granted pass-through payment status.
    Response: As discussed above, the statute provides that mandated 
pass-through payment for pass-through drugs and biologicals for CY 2015 
equals the amount determined under section 1842(o) of the Act minus the 
portion of the otherwise applicable APC payment that CMS determines is 
associated with the drug or biological. Therefore, the pass-through 
payment is determined by subtracting the otherwise applicable payment 
amount under the OPPS (ASP+6 percent for CY 2015) from the amount 
determined under section 1842(o) of the Act (ASP+6 percent).
    Regarding the commenters' request that CMS provide an additional 
payment for radiopharmaceuticals that are granted pass-through payment 
status, we note that, for CY 2015, consistent with our CY 2014 payment 
policy for diagnostic and therapeutic radiopharmaceuticals, we proposed 
to provide payment for both diagnostic and therapeutic 
radiopharmaceuticals with pass-through payment status based on the ASP 
methodology. As stated above, the ASP methodology, as applied under the 
OPPS, uses several sources of data as a basis for payment, including 
the ASP, the WAC if the ASP is unavailable, and 95 percent of the 
radiopharmaceutical's most recent AWP if the ASP and WAC are 
unavailable. 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 2015, we proposed to follow the standard ASP 
methodology to determine its pass-through payment rate under the OPPS 
to account for the acquisition and pharmacy overhead costs, including 
compounding costs. We continue to believe that a single payment is 
appropriate for diagnostic radiopharmaceuticals with pass-through 
payment status in CY 2015, and that the payment rate of ASP+6 percent 
(or payment based on the ASP methodology) is appropriate to provide 
payment for both the radiopharmaceutical's acquisition cost and any 
associated nuclear medicine handling and compounding costs. We refer 
readers to section V.B.3. of this final rule with comment period for 
further discussion of payment for therapeutic radiopharmaceuticals 
based on ASP information submitted by manufacturers, and readers also 
may refer to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    After consideration of the public comments we received, we are 
finalizing our proposal to provide payment for drugs, biologicals, 
diagnostic and therapeutic radiopharmaceuticals, and contrast agents 
that are granted pass-through payment status based on the ASP 
methodology. If a diagnostic or therapeutic radiopharmaceutical 
receives pass- through status during CY 2015, we will follow the 
standard ASP methodology to determine the pass-through payment rate 
that drugs receive under section 1842(o) of the Act, which is ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
will provide pass-through payment at WAC+6 percent, the equivalent 
payment provided to pass-through drugs and biologicals without ASP 
information. If WAC information also is not available, we will provide 
payment for the pass-through radiopharmaceutical at 95 percent of its 
most recent AWP.
    As discussed in more detail in section II.A.3. of this final rule 
with comment period, we implemented a policy whereby payment for the 
following nonpass-through items is packaged into payment for the 
associated procedure: diagnostic radiopharmaceuticals; contrast agents; 
anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure; and 
drugs and biologicals that function as supplies when used in a surgical 
procedure. As stated earlier, pass-through payment is the difference 
between the amount authorized under section 1842(o) of the Act and the 
portion of the otherwise applicable OPD fee schedule that the Secretary 
determines is associated with the drug or biological. Because payment 
for a drug that is policy-packaged would otherwise be packaged if the 
product did not have pass-through payment

[[Page 66877]]

status, we believe the otherwise applicable OPPS payment amount would 
be equal to the policy-packaged drug APC offset amount for the 
associated clinical APC in which the drug or biological is utilized. 
The calculation of the policy-packaged drug APC offset amounts is 
described in more detail in section V.A.4. of this final rule with 
comment period. It follows that the copayment for the nonpass-through 
payment portion (the otherwise applicable fee schedule amount that we 
would also offset from payment for the drug or biological if a payment 
offset applies) of the total OPPS payment for those drugs and 
biologicals, therefore, would be accounted for in the copayment for the 
associated clinical APC in which the drug or biological is used.
    According to section 1833(t)(8)(E) of the Act, the amount of 
copayment associated with pass-through items is equal to the amount of 
copayment that would be applicable if the pass-through adjustment was 
not applied. Therefore, as we did in CY 2014, in the CY 2015 OPPS/ASC 
proposed rule, we proposed to continue to set the associated copayment 
amount to zero for CY 2015 for pass-through drugs and biologicals that 
would otherwise be packaged if the item did not have pass-through 
payment status. The 22 drugs and biologicals that we proposed would 
continue to have pass-through payment status for CY 2015 or have been 
granted pass-through payment status as of January 2015 were shown in 
Table 34 of the proposed rule (79 FR 40994).
    Comment: Commenters supported the CY 2015 proposal to continue to 
set the associated copayment amounts for pass-through diagnostic 
radiopharmaceuticals and contrast agents that would otherwise be 
packaged if the product did not have pass-through payment status to 
zero. The commenters noted that this policy is consistent with 
statutory requirements and provides cost-saving benefits to Medicare 
beneficiaries.
    Response: We appreciate the commenters' support of our proposal. As 
discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40993 through 
40994), we believe that for drugs and biologicals that are ``policy-
packaged,'' the copayment for the nonpass-through payment portion of 
the total OPPS payment for this subset of drugs and biologicals is 
accounted for in the copayment of the associated clinical APC in which 
the drug or biological is used. According to section 1833(t)(8)(E) of 
the Act, the amount of copayment associated with pass-through items is 
equal to the amount of copayment that would be applicable if the pass-
through adjustment was not applied. Therefore, we believe that the 
copayment amount should be zero for drugs and biologicals that are 
``policy-packaged,'' including diagnostic radiopharmaceuticals and 
contrast agents. We also believe that the copayment amount should be 
zero for anesthesia drugs that would otherwise be packaged if the item 
did not have pass-through payment status.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to set the 
associated copayment amount for pass-through diagnostic 
radiopharmaceuticals, contrast agents, and anesthesia drugs that would 
otherwise be packaged if the item did not have pass-through payment 
status to zero for CY 2015.
    The 35 drugs and biologicals that will continue to have pass-
through payment status for CY 2015 or have been granted pass-through 
payment status as of January 1, 2015 are shown in Table 29 below. As is 
our standard methodology, we annually review new permanent HCPCS codes 
and delete temporary HCPCS C-codes if an alternate permanent HCPCS code 
is available for purposes of OPPS billing and payment. Table 29 below 
includes those coding changes.

                   Table 29--Drugs and Biologicals With Pass-Through Payment Status in CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                        Final CY      Final CY
 CY 2014 HCPCS code      CY 2015 HCPCS code           CY 2015 Long descriptor            2015 SI      2015 APC
----------------------------------------------------------------------------------------------------------------
A9520...............  A9520..................  Technetium Tc 99m tilmanocept,                   G          1463
                                                diagnostic, up to 0.5 millicuries.
N/A.................  A9586..................  Florbetapir f18, diagnostic, per                 G          1664
                                                study dose, up to 10 millicuries.
C9021...............  J9301..................  Injection, obinutuzumab, 10 mg.......            G          1476
C9022...............  J1322..................  Injection, elosulfase alfa, 1mg......            G          1480
C9023...............  J3145..................  Injection, testosterone undecanoate,             G          1487
                                                1 mg.
C9025...............  C9025..................  Injection, ramucirumab, 5 mg.........            G          1488
C9026...............  C9026..................  Injection, vedolizumab, 1 mg.........            G          1489
N/A.................  C9027..................  Injection, pembrolizumab, 1 mg.......            G          1490
C9132...............  C9132..................  Prothrombin complex concentrate                  G          9132
                                                (human), Kcentra, per i.u. of Factor
                                                IX activity.
C9133...............  J7200..................  Factor ix (antihemophilic factor,                G          1467
                                                recombinant), Rixubus, per i.u.
C9134...............  J7181..................  Injection, Factor XIII A-subunit,                G          1746
                                                (recombinant), per i.u.
C9135...............  J7201..................  Injection, factor ix, fc fusion                  G          1486
                                                protein (recombinant), per i.u.
N/A.................  C9136..................  Injection, factor viii, fc fusion                G          1656
                                                protein, (recombinant), per i.u.
C9441...............  J1439..................  Injection, ferric carboxymaltose, 1              G          9441
                                                mg.
N/A.................  C9349..................  FortaDerm, and FortaDerm                         G          1657
                                                Antimicrobial, any type, per square
                                                centimeter.
N/A.................  C9442..................  Injection, belinostat, 10 mg.........            G          1658
N/A.................  C9443..................  Injection, dalbavancin, 10 mg........            G          1659
N/A.................  C9444..................  Injection, oritavancin, 10 mg........            G          1660
N/A.................  C9446..................  Injection, tedizolid phosphate, 1 mg.            G          1662
N/A.................  C9447..................  Injection, phenylephrine and                     G          1663
                                                ketorolac, 4 ml vial.
C9497...............  C9497..................  Loxapine, inhalation powder, 10 mg...            G          9497
J1446...............  J1446..................  Injection, tbo-filgrastim, 5                     G          1477
                                                micrograms.
J1556...............  J1556..................  Injection, immune globulin (Bivigam),            G          9130
                                                500 mg.
J3060...............  J3060..................  Injection, taliglucerase alfa, 10                G          9294
                                                units.
J7315...............  J7315..................  Mitomycin, ophthalmic, 0.2 mg........            G          1448
J7316...............  J7316..................  Injection, Ocriplasmin, 0.125 mg.....            G          9298
J7508...............  J7508..................  Tacrolimus, Extended Release, Oral,              G          1465
                                                0.1 mg.
J9047...............  J9047..................  Injection, carfilzomib, 1 mg.........            G          9295
J9262...............  J9262..................  Injection, omacetaxine mepesuccinate,            G          9297
                                                0.01 mg.
J9354...............  J9354..................  Injection, ado-trastuzumab emtansine,            G          9131
                                                1 mg.
J9371...............  J9371..................  Injection, Vincristine Sulfate                   G          1466
                                                Liposome, 1 mg.

[[Page 66878]]

 
J9400...............  J9400..................  Injection, Ziv-Aflibercept, 1 mg.....            G          9296
Q4121...............  Q4121..................  Theraskin, per square centimeter.....            G          1479
Q4122...............  Q4122..................  Dermacell, per square centimeter.....            G          1419
Q4127...............  Q4127..................  Talymed, per square centimeter.......            G          1449
----------------------------------------------------------------------------------------------------------------

4. Provisions for Reducing Transitional Pass-Through Payments for 
Policy-Packaged Drugs and Biologicals To Offset Costs Packaged Into APC 
Groups
a. Background
    Prior to CY 2008, diagnostic radiopharmaceuticals and contrast 
agents were paid separately under the OPPS if their mean per day costs 
were greater than the applicable year's drug packaging threshold. In CY 
2008 (72 FR 66768), we began a policy of packaging payment for all 
nonpass-through diagnostic radiopharmaceuticals and contrast agents as 
ancillary and supportive items and services into their associated 
nuclear medicine procedures. Therefore, beginning in CY 2008, nonpass-
through diagnostic radiopharmaceuticals and contrast agents were not 
subject to the annual OPPS drug packaging threshold to determine their 
packaged or separately payable payment status, and instead all nonpass-
through diagnostic radiopharmaceuticals and contrast agents were 
packaged as a matter of policy.
    For CY 2014, in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74925), we continued to package payment for all nonpass-through 
diagnostic radiopharmaceuticals, contrast agents, and anesthesia drugs, 
and we began packaging all nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure and drugs and biologicals that function as 
supplies when used in a surgical procedure. These packaging policies 
are codified at 42 CFR 419.2(b).
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
    As previously noted, radiopharmaceuticals are considered to be 
drugs for OPPS pass-through payment purposes. As described above, 
section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
and the otherwise applicable OPD fee schedule amount. Because a payment 
offset is necessary in order to provide an appropriate transitional 
pass-through payment, we deduct from the pass-through payment for 
diagnostic radiopharmaceuticals an amount reflecting the portion of the 
APC payment associated with predecessor radiopharmaceuticals in order 
to ensure no duplicate radiopharmaceutical payment is made.
    In CY 2009, we established a policy to estimate the portion of each 
APC payment rate that could reasonably be attributed to the cost of 
predecessor diagnostic radiopharmaceuticals when considering a new 
diagnostic radiopharmaceutical for pass-through payment (73 FR 68638 
through 68641). Specifically, we use the policy-packaged drug offset 
fraction for APCs containing nuclear medicine procedures, calculated as 
1 minus the following: The cost from single procedure claims in the APC 
after removing the cost for policy-packaged drugs divided by the cost 
from single procedure claims in the APC. To determine the actual APC 
offset amount for pass-through diagnostic radiopharmaceuticals that 
takes into consideration the otherwise applicable OPPS payment amount, 
we multiply the policy-packaged drug offset fraction by the APC payment 
amount for the nuclear medicine procedure with which the pass-through 
diagnostic radiopharmaceutical is used and, accordingly, reduce the 
separate OPPS payment for the pass-through diagnostic 
radiopharmaceutical by this amount. For CY 2015, as we did in CY 2014, 
we proposed to continue to apply the diagnostic radiopharmaceutical 
offset policy to payment for pass-through diagnostic 
radiopharmaceuticals.
    There is currently one diagnostic radiopharmaceutical with pass-
through status under the OPPS. HCPCS code A9520 (Technetium Tc 99m 
tilmanocept, diagnostic, up to 0.5 millicuries) was granted pass-
through payment status beginning October 1, 2013. We currently apply 
the established radiopharmaceutical payment offset policy to pass-
through payment for this product.
    Table 35 of the CY 2015 OPPS/ASC proposed rule (79 FR 40995) 
displayed the proposed APCs to which nuclear medicine procedures would 
be assigned in CY 2015 and for which we expect that an APC offset could 
be applicable in the case of diagnostic radiopharmaceuticals with pass-
through status.
    Comment: A few commenters requested that CMS reinstate the ``FB'' 
modifier to specified nuclear medicine procedures in cases in which the 
diagnostic radiopharmaceutical is received at no cost or full credit. 
The commenters requested that the policy be maintained for CY 2015 and 
beyond.
    Response: As we discussed in the CY2014 OPPS/ASC final rule with 
comment period (78 FR 75016), our review of claims data showed that 
hospitals rarely received diagnostic radiopharmaceuticals at no cost or 
full credit. Therefore, we do not believe that the ``FB'' modifier 
policy is warranted for diagnostic radiopharmaceuticals.
    Comment: A few commenters agreed that pass-through payment status 
for HCPCS code A9520 should be extended for CY 2015.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to apply the 
diagnostic radiopharmaceutical offset policy to payment for pass-
through diagnostic radiopharmaceuticals, as described in the CY 2015 
OPPS/ASC proposed rule (79 FR 40994 through 40995). We will continue to 
reduce the payment amount for procedures in the APCs listed in Table 30 
in this final rule with comment period by the full policy-packaged 
offset amount appropriate for diagnostic radiopharmaceuticals.
    Table 30 below displays the APCs to which nuclear medicine 
procedures will be assigned in CY 2015 and for which we expect that an 
APC offset could be applicable in the case of diagnostic 
radiopharmaceuticals with pass-through payment status.

[[Page 66879]]

 Table 30--APCs To Which a Diagnostic Radiopharmaceutical Offset May Be
                          Applicable in CY 2015
------------------------------------------------------------------------
          CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0308...........................  Positron Emission Tomography (PET)
                                  Imaging.
0377...........................  Level II Cardiac Imaging.
0378...........................  Level II Pulmonary Imaging.
0389...........................  Level I Non-imaging Nuclear Medicine.
0390...........................  Level I Endocrine Imaging.
0391...........................  Level II Endocrine Imaging.
0392...........................  Level II Non-imaging Nuclear Medicine.
0393...........................  Hematologic Processing & Studies.
0394...........................  Hepatobiliary Imaging.
0395...........................  GI Tract Imaging.
0396...........................  Bone Imaging.
0398...........................  Level I Cardiac Imaging.
0400...........................  Hematopoietic Imaging.
0401...........................  Level I Pulmonary Imaging.
0402...........................  Level II Nervous System Imaging.
0403...........................  Level I Nervous System Imaging.
0404...........................  Renal and Genitourinary Studies.
0406...........................  Level I Tumor/Infection Imaging.
0408...........................  Level III Tumor/Infection Imaging.
0414...........................  Level II Tumor/Infection Imaging.
------------------------------------------------------------------------

c. Payment Offset Policy for Contrast Agents
    Section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
and the otherwise applicable OPD fee schedule amount. Because a payment 
offset is necessary in order to provide an appropriate transitional 
pass-through payment, we deduct from the pass-through payment for 
contrast agents an amount reflecting the portion of the APC payment 
associated with predecessor contrast agents in order to ensure no 
duplicate contrast agent payment is made.
    In CY 2010, we established a policy to estimate the portion of each 
APC payment rate that could reasonably be attributed to the cost of 
predecessor contrast agents when considering new contrast agents for 
pass-through payment (74 FR 60482 through 60484). Specifically, we use 
the policy-packaged drug offset fraction for procedural APCs, 
calculated as 1 minus the following: The cost from single procedure 
claims in the APC after removing the cost for policy packaged drugs 
divided by the cost from single procedure claims in the APC. To 
determine the actual APC offset amount for pass-through contrast agents 
that takes into consideration the otherwise applicable OPPS payment 
amount, in the CY 2015 OPPS/ASC proposed rule (79 FR 40995), we 
proposed to multiply the policy packaged drug offset fraction by the 
APC payment amount for the procedure with which the pass-through 
contrast agent is used and, accordingly, reduce the separate OPPS 
payment for the pass-through contrast agent by this amount. For CY 
2015, as we did in CY 2014, we proposed to continue to apply our 
standard contrast agents offset policy to payment for pass-through 
contrast agents (we refer readers to the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75017) for the final CY 2014 policy and the 
CY 2015 OPPS/ASC proposed rule (79 FR 40995 through 40996) for the 
proposed CY 2015 policy).
    Although there are currently no contrast agents with pass-through 
payment status under the OPPS, we believe that a payment offset is 
necessary in the event that a new contrast agent is approved for pass-
through status during CY 2015 in order to provide an appropriate 
transitional pass-through payment for new contrast agents. We proposed 
to identify procedural APCs for which we expect a contrast offset could 
be applicable in the case of a pass-through contrast agent as any 
procedural APC with a policy-packaged drug amount greater than $20 that 
is not a nuclear medicine APC identified in Table 35 of the proposed 
rule, and these APCs were displayed in Table 36 of the proposed rule. 
The methodology used to determine a proposed threshold cost for 
application of a contrast agent offset policy is described in detail in 
the CY 2010 OPPS/ASC final rule with comment period (74 FR 60483 
through 60484). For CY 2015, we proposed to continue to recognize that 
when a contrast agent with pass-through status is billed with any 
procedural APC listed in Table 36 of the proposed rule (79 FR 40995 
through 40996), a specific offset based on the procedural APC would be 
applied to payment for the contrast agent to ensure that duplicate 
payment is not made for the contrast agent.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our proposal for CY 2015 without modification. We 
will continue to recognize that when a contrast agent with pass-through 
payment status is billed with any procedural APC listed in Table 31 
below, a specific offset based on the procedural APC will be applied to 
the payment for the contrast agent to ensure that duplicate payment is 
not made for the contrast agent.

Table 31--APCs To Which a Contrast Agent Offset May Be Applicable for CY
                                  2015
------------------------------------------------------------------------
          CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0080...........................  Diagnostic Cardiac Catheterization.
0083...........................  Coronary Angioplasty, Valvuloplasty,
                                  and Level I Endovascular
                                  Revascularization.
0093...........................  Vascular Reconstruction/Fistula Repair.
0152...........................  Level I Percutaneous Abdominal and
                                  Biliary Procedures.
0177...........................  Level I Echocardiogram With Contrast.
0178...........................  Level II Echocardiogram With Contrast.
0229...........................  Level II Endovascular Revascularization
                                  of the Lower Extremity.
0278...........................  Diagnostic Urography.
0279...........................  Level II Angiography and Venography.
0280...........................  Level III Angiography and Venography.
0283...........................  Computed Tomography with Contrast.
0284...........................  Magnetic Resonance Imaging and Magnetic
                                  Resonance Angiography with Contrast.
0333...........................  Computed Tomography without Contrast
                                  followed by Contrast.
0334...........................  Combined Abdomen and Pelvis CT with
                                  Contrast.
0337...........................  Magnetic Resonance Imaging and Magnetic
                                  Resonance Angiography without Contrast
                                  followed by Contrast.
0375...........................  Ancillary Outpatient Services When
                                  Patient Expires.
0383...........................  Cardiac Computed Tomographic Imaging.
0388...........................  Discography.
0442...........................  Dosimetric Drug Administration.
0662...........................  CT Angiography.
0668...........................  Level I Angiography and Venography.
8006...........................  CT and CTA with Contrast Composite.
8008...........................  MRI and MRA with Contrast Composite.
------------------------------------------------------------------------

d. Payment Offset Policy for Drugs, Biologicals, and 
Radiopharmaceuticals That Function as Supplies When Used in a 
Diagnostic Test or Procedure and Drugs and Biologicals That Function as 
Supplies When Used in a Surgical Procedure
    Section 1833(t)(6)(D)(i) of the Act specifies that the transitional 
pass-through payment amount for pass-through drugs and biologicals is 
the difference between the amount paid under section 1842(o) of the Act 
and the otherwise applicable OPD fee schedule amount. In the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74925), we finalized our 
policy to

[[Page 66880]]

package drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure and drugs and 
biologicals that function as supplies when used in a surgical 
procedure. As a part of this policy, we specifically finalized that 
skin substitutes and stress agents used in myocardial perfusion imaging 
(MPI) be policy packaged in CY 2014, in addition to diagnostic 
radiopharmaceuticals, contrast agents, and anesthesia drugs (78 FR 
75019). Because a payment offset is necessary in order to provide an 
appropriate transitional pass-through payment, we finalized a policy 
for CY 2014 to deduct from the pass-through payment for skin 
substitutes and stress agents an amount reflecting the portion of the 
APC payment associated with predecessor skin substitutes and stress 
agents in order to ensure no duplicate skin substitute or stress agent 
payment is made (78 FR 75019).
    In CY 2014, we established a policy to estimate the portion of each 
APC payment rate that could reasonably be attributed to the cost of 
predecessor skin substitutes or stress agents when considering a new 
skin substitute or stress agent for pass-through payment (78 FR 75019). 
Specifically, in the case of pass-through skin substitutes, we use the 
policy-packaged drug offset fraction for skin substitute procedural 
APCs, calculated as 1 minus the following: The cost from single 
procedure claims in the APC after removing the cost for policy-packaged 
drugs divided by the cost from single procedure claims in the APC. 
Because policy packaged radiopharmaceuticals also would be included in 
the drug offset fraction for the APC to which MPI procedures are 
assigned, in the case of pass-through stress agents, we use the policy-
packaged drug offset fraction for the procedural APC, calculated as 1 
minus the following: The cost from single procedure claims in the APC 
after removing the cost for policy-packaged drugs excluding policy-
packaged diagnostic radiopharmaceuticals divided by the cost from 
single procedure claims in the APC. To determine the actual APC offset 
amount for pass-through skin substitutes and pass-through stress agents 
that takes into consideration the otherwise applicable OPPS payment 
amount, we multiply the policy-packaged drug offset fraction by the APC 
payment amount for the procedure with which the pass-through skin 
substitute or pass-through stress agent is used and, accordingly, 
reduce the separate OPPS payment for the pass-through skin substitute 
or pass-through stress agent by this amount (78 FR 75019). In the CY 
2015 OPPS/ASC proposed rule (79 FR 40996), for CY 2015, as we did in CY 
2014, we proposed to continue to apply the skin substitute and stress 
agent offset policy to payment for pass-through skin substitutes and 
stress agents.
    There are currently six skin substitutes (HCPCS codes Q4121, Q4122, 
Q4127, Q4131, Q4132, and Q4133) with pass-through payment status under 
the OPPS. We currently apply the established skin substitute payment 
offset policy to pass-through payment for these products. Table 37 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 40996) displayed the proposed 
APCs to which skin substitute procedures would be assigned in CY 2015 
and for which we expect that an APC offset could be applicable in the 
case of skin substitutes with pass-through status.
    Although there are currently no stress agents with pass-through 
status under the OPPS, we believe that a payment offset is necessary in 
the event that a new stress agent is approved for pass-through status 
during CY 2015 in order to provide an appropriate transitional pass 
through payment for new stress agents. Table 38 of the CY 2015 OPPS/ASC 
proposed rule (79 FR 40996) displayed the proposed APCs to which MPI 
procedures would be assigned in CY 2015 and for which we expect that an 
APC offset could be applicable in the case of a stress agent with pass-
through status.
    We did not receive any public comments on these proposals. 
Therefore, we are finalizing our proposal, without modification, to 
recognize that when a skin substitute with pass-through payment status 
is billed with any procedural APC listed in Table 32 below, a specific 
offset based on the procedural APC will be applied to the payment for 
the skin substitute to ensure that duplicate payment is not made for 
the skin substitute. In addition, when a stress agent with pass-through 
payment status is billed with any procedural APC listed in Table 33 
below, a specific offset based on the procedural APC will be applied to 
the payment for the stress agent to ensure that duplicate payment is 
not made for the stress agent. Table 32 below displays the APCs to 
which skin substitute procedures will be assigned in CY 2015 and for 
which we expect that an APC offset could be applicable in the case of 
skin substitutes with pass-through payment status. Table 33 below 
displays the APCs to which MPI procedures will be assigned in CY 2015 
and for which we expect that an APC offset could be applicable in the 
case of a stress agent with pass-through payment status.

 Table 32--APCs To Which a Skin Substitute Offset May Be Applicable For
                                 CY 2015
------------------------------------------------------------------------
            CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0328..............................  Level III Skin Repair.
0329..............................  Level IV Skin Repair.
------------------------------------------------------------------------

 Table 33--APCs To Which a Stress Agent Offset May Be Applicable For CY
                                  2015
------------------------------------------------------------------------
            CY 2015 APC                       CY 2015 APC title
------------------------------------------------------------------------
0100..............................  Cardiac Stress Tests.
0377..............................  Level II Cardiac Imaging.
------------------------------------------------------------------------

    As we proposed, we will continue to post annually on the CMS Web 
site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html a file that contains the APC offset 
amounts that will be used for that year for purposes of both evaluating 
cost significance for candidate pass-through device categories and 
drugs and biologicals and establishing any appropriate APC offset 
amounts. Specifically, the file will continue to provide the amounts 
and percentages of APC payment associated with packaged implantable 
devices, policy-packaged drugs, and threshold packaged drugs and 
biologicals for every OPPS clinical APC.

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

1. Background
    Under the CY 2013 OPPS, we currently pay for drugs, biologicals, 
and radiopharmaceuticals that do not have pass-through payment status 
in one of two ways: as a packaged payment included in the payment for 
the associated service, or as a separate payment (individual APCs). We 
explained in the April 7, 2000 OPPS final rule with comment period (65 
FR 18450) that we generally package the cost of drugs and 
radiopharmaceuticals into the APC payment rate for the procedure or 
treatment with which the products are usually furnished. Hospitals do 
not receive separate payment for packaged items and supplies, and 
hospitals may not bill beneficiaries separately for any packaged items 
and supplies whose costs are recognized and paid within the

[[Page 66881]]

national OPPS payment rate for the associated procedure or service.
    Packaging costs into a single aggregate payment for a service, 
procedure, or episode-of-care is a fundamental principle that 
distinguishes a prospective payment system from a fee schedule. In 
general, packaging the costs of items and services into the payment for 
the primary procedure or service with which they are associated 
encourages hospital efficiencies and also enables hospitals to manage 
their resources with maximum flexibility.
2. Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Background
    As indicated in section V.B.1. of this final rule with comment 
period, in accordance with section 1833(t)(16)(B) of the Act, the 
threshold for establishing separate APCs for payment of drugs and 
biologicals was set to $50 per administration during CYs 2005 and 2006. 
In CY 2007, we used the four quarter moving average Producer Price 
Index (PPI) levels for Pharmaceutical Preparations (Prescription) to 
trend the $50 threshold forward from the third quarter of CY 2005 (when 
the Pub. L. 108-173 mandated threshold became effective) to the third 
quarter of CY 2007. We then rounded the resulting dollar amount to the 
nearest $5 increment in order to determine the CY 2007 threshold amount 
of $55. Using the same methodology as that used in CY 2007 (which is 
discussed in more detail in the CY 2007 OPPS/ASC final rule with 
comment period (71 FR 68085 through 68086)), we set the packaging 
threshold for establishing separate APCs for drugs and biologicals at 
$90 for CY 2014.
    Following the CY 2007 methodology, for the CY 2015 OPPS/ASC 
proposed rule (79 FR 40997), we used the most recently available four 
quarter moving average PPI levels to trend the $50 threshold forward 
from the third quarter of CY 2005 to the third quarter of CY 2015 and 
rounded the resulting dollar amount ($91.46) to the nearest $5 
increment, which yielded a figure of $90. In performing this 
calculation, we used the most recent forecast of the quarterly index 
levels for the PPI for Pharmaceuticals for Human Use (Prescription) 
(Bureau of Labor Statistics (BLS) series code WPUSI07003) from CMS' 
Office of the Actuary (OACT). We refer below to this series generally 
as the PPI for Prescription Drugs.
    Based on the calculations described above, we proposed a packaging 
threshold for CY 2015 of $90. (For a more detailed discussion of the 
OPPS drug packaging threshold and the use of the PPI for Prescription 
Drugs, we refer readers to the CY 2007 OPPS/ASC final rule with comment 
period (71 FR 68085 through 68086).)
    Following the CY 2007 methodology, for this CY 2015 OPPS/ASC final 
rule with comment period, we used the most recently available four 
quarter moving average PPI levels to trend the $50 threshold forward 
from the third quarter of CY 2005 to the third quarter of CY 2015 and 
rounded the resulting dollar amount ($93.48) to the nearest $5 
increment, which yielded a figure of $95. In performing this 
calculation, we used the most recent forecast of the quarterly index 
levels for the PPI for Pharmaceuticals for Human Use (Prescription) 
(Bureau of Labor Statistics (BLS) series code WPUSI07003) from CMS' 
Office of the Actuary (OACT). Therefore, for this CY 2015 OPPS/ASC 
final rule with comment period, using the CY 2007 OPPS methodology, we 
are establishing a packaging threshold for CY 2015 of $95.
b. Cost Threshold for Packaging of Payment for HCPCS Codes That 
Describe Certain Drugs, Certain Biologicals, and Therapeutic 
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    In the CY 2015 OPPS/ASC proposed rule (79 FR 40997), to determine 
the proposed CY 2015 packaging status for all nonpass-through drugs and 
biologicals that are not policy packaged, we calculated, on a HCPCS 
code-specific basis, the per day cost of all drugs, biologicals, and 
therapeutic radiopharmaceuticals (collectively called ``threshold-
packaged'' drugs) that had a HCPCS code in CY 2013 and were paid (via 
packaged or separate payment) under the OPPS. We used data from CY 2013 
claims processed before January 1, 2014 for this calculation. However, 
we did not perform this calculation for those drugs and biologicals 
with multiple HCPCS codes that include different dosages, as described 
in section V.B.2.c. of the proposed rule, or for the following policy-
packaged items that we proposed to continue to package in CY 2015: 
diagnostic radiopharmaceuticals; contrast agents; anesthesia drugs; 
drugs, biologicals, and radiopharmaceuticals that function as supplies 
when used in a diagnostic test or procedure; and drugs and biologicals 
that function as supplies when used in a surgical procedure.
    In order to calculate the per day costs for drugs, biologicals, and 
therapeutic radiopharmaceuticals to determine their proposed packaging 
status in CY 2015, we used the methodology that was described in detail 
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and 
finalized in the CY 2006 OPPS final rule with comment period (70 FR 
68636 through 68638). For each drug and biological HCPCS code, we used 
an estimated payment rate of ASP+6 percent (which is the payment rate 
we proposed for separately payable drugs and biologicals for CY 2015, 
as discussed in more detail in section V.B.3.b. of the proposed rule) 
to calculate the CY 2015 proposed rule per day costs. We used the 
manufacturer submitted ASP data from the fourth quarter of CY 2013 
(data that were used for payment purposes in the physician's office 
setting, effective April 1, 2014) to determine the proposed rule per 
day cost.
    As is our standard methodology, for CY 2015, we proposed to use 
payment rates based on the ASP data from the fourth quarter of CY 2013 
for budget neutrality estimates, packaging determinations, impact 
analyses, and completion of Addenda A and B to the proposed rule (which 
are available via the Internet on the CMS Web site) because these were 
the most recent data available for use at the time of development of 
the proposed rule. These data also were the basis for drug payments in 
the physician's office setting, effective April 1, 2014. For items that 
did not have an ASP-based payment rate, such as some therapeutic 
radiopharmaceuticals, we used their mean unit cost derived from the CY 
2013 hospital claims data to determine their per day cost.
    We proposed to package items with a per day cost less than or equal 
to $90, and identify items with a per day cost greater than $90 as 
separately payable. Consistent with our past practice, we crosswalked 
historical OPPS claims data from the CY 2013 HCPCS codes that were 
reported to the CY 2014 HCPCS codes that we displayed in Addendum B to 
the proposed rule (which is available via the Internet on the CMS Web 
site) for payment in CY 2015.
    Comment: The majority of the commenters opposed the continuation of 
the OPPS packaging threshold of $90 for CY 2015. The commenters 
believed that, over the past 5 years, CMS has rapidly increased the 
packaging threshold, which contradicts Congressional intent. As such, 
the commenters recommended that CMS eliminate the packaging threshold 
and provide separate payment for all drugs with HCPCS codes or freeze 
the packaging threshold at the current level ($90).

[[Page 66882]]

    Response: As stated in the CY 2007 OPPS/ASC final rule with comment 
period (71 FR 68086), we believe that packaging certain items is a 
fundamental component of a prospective payment system, that updating 
the packaging threshold of $50 for the CY 2005 OPPS is consistent with 
industry and government practices, and that the PPI for Prescription 
Drugs is an appropriate mechanism to gauge Part B drug inflation. 
Therefore, because of our continued belief that packaging is a 
fundamental component of a prospective payment system that continues to 
provide important flexibility and efficiency in the delivery of high 
quality hospital outpatient services, we are not adopting commenters' 
recommendations to pay separately for all drugs, biologicals, and 
radiopharmaceuticals for CY 2015 or to eliminate the packaging 
threshold or to freeze the packaging threshold at $90.
    Since publication of the CY 2015 OPPS/ASC proposed rule, consistent 
with our policy of updating the packaging threshold with more recently 
available data for this final rule with comment period, we have again 
followed the CY 2007 methodology for CY 2015 and used updated four 
quarter moving average PPI index levels provided by the CMS Office of 
the Actuary to trend the $50 threshold forward from the third quarter 
of CY 2005 to the third quarter of CY 2015. We then rounded the 
resulting updated dollar amount ($93.48) to the nearest $5 increment, 
which yielded a figure of $95. Therefore, after consideration of the 
public comments we received, and consistent with our methodology for 
establishing the packaging threshold using the most recent PPI forecast 
data, we are adopting a CY 2015 packaging threshold of $95.
    Our policy during previous cycles of the OPPS has been to use 
updated ASP and claims data to make final determinations of the 
packaging status of HCPCS codes for drugs, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs and biologicals in this CY 2015 OPPS/ASC final 
rule with comment period, we used ASP data from the first quarter of CY 
2014, which is the basis for calculating payment rates for drugs and 
biologicals in the physician's office setting using the ASP 
methodology, effective July 1, 2014, along with updated hospital claims 
data from CY 2013. We note that we also used these data for budget 
neutrality estimates and impact analyses for this CY 2015 OPPS/ASC 
final rule with comment period.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B to this final rule with comment 
period are based on ASP data from the second quarter of CY 2014. 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, 2014. These payment rates will then 
be updated in the January 2015 OPPS update, based on the most recent 
ASP data to be used for physician's office and OPPS payment as of 
January 1, 2015. For items that do not currently have an ASP-based 
payment rate, we recalculated their mean unit cost from all of the CY 
2013 claims data and updated cost report information available for this 
CY 2015 final rule with comment period to determine their final per day 
cost.
    Consequently, the packaging status of some HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals in the CY 2015 OPPS/
ASC proposed rule may be different from the same drug HCPCS code's 
packaging status determined based on the data used for this CY 2015 
OPPS/ASC final rule with comment period. Under such circumstances, we 
proposed to continue to follow the established policies initially 
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably 
pay for those drugs whose cost fluctuates relative to the proposed CY 
2015 OPPS drug packaging threshold and the drug's payment status 
(packaged or separately payable) in CY 2014. Specifically, for CY 2015, 
consistent with our historical practice, we proposed to apply the 
following policies to these HCPCS codes for drugs, biologicals, and 
therapeutic radiopharmaceuticals whose relationship to the drug 
packaging threshold changes based on the updated drug packaging 
threshold and on the final updated data:
     HCPCS codes for drugs and biologicals that were paid 
separately in CY 2014 and that were proposed for separate payment in CY 
2015, and that then have per day costs equal to or less than the CY 
2015 final rule drug packaging threshold, based on the updated ASPs and 
hospital claims data used for the CY 2015 final rule, would continue to 
receive separate payment in CY 2015.
     HCPCS codes for drugs and biologicals that were packaged 
in CY 2014 and that were proposed for separate payment in CY 2015, and 
that then have per day costs equal to or less than the CY 2015 final 
rule drug packaging threshold, based on the updated ASPs and hospital 
claims data used for the CY 2015 final rule, would remain packaged in 
CY 2015.
     HCPCS codes for drugs and biologicals for which we 
proposed packaged payment in CY 2015 but then have per day costs 
greater than the CY 2015 final rule drug packaging threshold, based on 
the updated ASPs and hospital claims data used for the CY 2015 final 
rule, would receive separate payment in CY 2015.
    We did not receive any public comments on our proposal to apply the 
established policies initially adopted for the CY 2005 OPPS (69 FR 
65780) in order to more equitably pay for those drugs whose cost 
fluctuates relative to the CY 2015 OPPS drug packaging threshold and 
the drug's payment status (packaged or separately payable) in CY 2013. 
Therefore, we are finalizing our proposal, without modification, for CY 
2015.
c. High Cost/Low Cost Threshold for Packaged Skin Substitutes
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. The adoption of this policy, to package all drugs 
and biologicals that function as supplies when used in a surgical 
procedure, followed these packaging policies: (1) Packaging of medical 
and surgical supplies into the related procedure under 42 CFR 
419.2(b)(4) (68 FR 18543); (2) packaging of implantable devices (68 FR 
18444); and (3) packaging of implantable biologicals (73 FR 68634). As 
noted in the CY 2014 OPPS/ASC final rule with comment period, we 
believe these policies represented an example of a broader category of 
drugs and biologicals that should be packaged in the OPPS, that is, 
drugs and biologicals that function as supplies in a surgical procedure 
(78 FR 74930). As part of the policy to finalize the packaging of skin 
substitutes, we also finalized a methodology that divides the skin 
substitutes into a high cost group and a low cost group, in order to 
ensure adequate resource homogeneity among APC assignments

[[Page 66883]]

for the skin substitute application procedures (78 FR 74933). For the 
CY 2014 update, assignment to the high cost or low cost skin substitute 
group depended upon a comparison of the July 2013 ASP+6 percent payment 
amount for each skin substitute to the weighted average payment per 
unit for all skin substitutes. The weighted average was calculated 
using the skin substitute utilization from the CY 2012 claims data and 
the July 2013 ASP+6 percent payment amounts. The high cost/low cost 
skin substitute threshold for CY 2014 is $32 per cm\2\. Skin 
substitutes that had a July 2013 ASP+6 percent amount above $32 per 
cm\2\ were classified in the high cost group, and skin substitutes that 
had a July 2013 ASP+6 percent amount at or below $32 per cm\2\ were 
classified in the low cost group. Any new skin substitutes without 
pricing information are assigned to the low cost category until pricing 
information is available to compare to the $32 per cm\2\ threshold for 
CY 2014. Skin substitutes with pass-through payment status are assigned 
to the high cost category, with an offset applied as described in 
section V.A.4.d. of the CY 2015 OPPS/ASC proposed rule (79 FR 40996).
    As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40998 
through 40999), after the effective date of the CY 2014 packaging 
policy, some skin substitute manufacturers brought the following issues 
to our attention regarding the CY 2014 methodology for determining the 
high cost/low cost threshold:
     Using ASP to determine a product's placement in the high 
or low cost category may unfairly disadvantage the limited number of 
skin substitute products that are sold in large sizes (that is, above 
150 cm\2\). Large size skin substitute products are primarily used for 
burns that are treated on an inpatient basis. These manufacturers 
contend that nonlinear pricing for skin substitute products sold in 
both large and small sizes results in lower per cm\2\ prices for large 
sizes. Therefore, the use of ASP data to categorize products into high 
and low cost categories can result in placement of products that have 
significant inpatient use of the large, lower-priced (per cm\2\) sizes 
into the low cost category, even though these large size products are 
not often used in the hospital outpatient department.
     Using a weighted average ASP to establish the high/low 
cost categories, combined with the drug pass-through policy, will lead 
to unstable high/low cost skin substitute categories in the future. 
According to one manufacturer, under our CY 2014 policy, manufacturers 
with products on pass-through payment status have an incentive to set a 
very high price because hospitals are price-insensitive to products 
paid with pass-through payments. As these new high priced pass-through 
skin substitutes capture more market share, the weighted average ASP 
high cost/low cost threshold could escalate rapidly, resulting in a 
shift in the assignment of many skin substitutes from the high cost 
category to the low cost category.
    As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40998), we 
agree with stakeholder concerns regarding the potential instability of 
the high/low cost categories associated with the drug pass-through 
policy, as well as stakeholder concerns about the inclusion of large-
sized products that are primarily used for inpatients in the ASP 
calculation, when ASP is used to establish the high cost/low cost 
categories. As an alternative to using ASP data, we believe that 
establishing the high cost/low cost threshold using an alternative 
methodology (that is, the weighted average mean unit cost (MUC) for all 
skin substitute products from claims data) may provide more stable 
high/low cost categories and will resolve the issue associated with 
large sized products because the MUC will be derived from hospital 
outpatient claims only. The threshold would be based on costs from 
hospital outpatient claims data instead of manufacturer reported sales 
prices that would not include larger sizes primarily used for inpatient 
burn cases.
    Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 40999), we 
proposed to maintain the high cost/low cost APC structure for skin 
substitute procedures in CY 2015. However, we proposed to revise the 
current methodology used to establish the high cost/low cost threshold, 
and to establish the high cost/low cost threshold based on the weighted 
average MUC for all skin substitutes using CY 2013 claims (which was 
proposed to be $27 per cm\2\). Skin substitutes with an MUC above $27 
per cm\2\ using CY 2013 claims were proposed to be classified in the 
high cost group and those with an MUC at or below $27 per cm\2\ were 
proposed to be classified in the low cost group. Table 39 of the CY 
2015 OPPS/ASC proposed rule (79 FR 40999) showed the CY 2014 high cost/
low cost status for each skin substitute product and the proposed CY 
2015 high cost/low cost status based on the weighted average MUC 
threshold of $27. We proposed to continue the CY 2014 policy that skin 
substitutes with pass-through payment status would be assigned to the 
high cost category for CY 2015. Skin substitutes with pricing 
information but without claims data to calculate an MUC would be 
assigned to either the high or low cost category based on the product's 
ASP+6 percent payment rate. If ASP is not available we would use WAC+6 
percent or 95 percent of AWP to assign a product to either the high 
cost or low cost category. We also proposed that any new skin 
substitute without pricing information be assigned to the low cost 
category until pricing information is available to compare to the CY 
2015 threshold.
    Comment: Several commenters supported CMS' proposal to revise the 
methodology used to establish the high cost/low cost threshold from an 
ASP-based methodology to a methodology based on the weighted average 
MUC for all skin substitutes using CY 2013 claims data. The commenters 
agreed that the MUC methodology would promote stability of assignments 
to the high and low cost categories and not disadvantage certain skin 
substitutes that are sold in especially large sizes.
    Response: We appreciate the commenters' support.
    Comment: Other commenters requested that CMS retain the ASP-based 
methodology for calculating the high cost/low cost threshold because, 
in their opinion, the ASP is a better metric for skin substitute costs 
than hospital outpatient claims data.
    Response: We disagree with the assertion that ASP better represents 
the hospital costs for skin substitutes than hospital claims data. ASP 
is a blend of sales prices from a variety of purchasers, including 
various nonhospital entities. ASP also excludes a significant number of 
hospital sales, for example sales to 340B hospitals. Hospital claims 
data are specific to hospitals, and are used in assessing the costs of 
almost all other items and services in the OPPS, including other 
similar surgical supplies, such as implantable devices and implantable 
biologicals, which we package for payment purposes in the OPPS. 
Furthermore, as stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
40998), we believe that using MUC will better promote stability versus 
ASP for high and low cost category assignments for skin substitutes, 
because ASP can be set very high by skin substitute manufacturers and 
disproportionally impact the threshold calculation.
    Comment: Two commenters recommended an alternative high cost/low 
cost threshold calculation methodology. Instead of basing the threshold 
on the unit cost the commenters urged CMS to calculate the high cost/
low cost threshold based on the total skin substitute costs per

[[Page 66884]]

patient, per day, which is currently the mechanism used to set the 
general OPPS drug, biological, and radiopharmaceutical packaging 
threshold, which was proposed as $90 for CY 2015. These commenters 
believed that calculating the threshold cost per cm\2\ does not 
accurately reflect the true cost of products as they are used 
clinically, and could result in displacing larger single-size skin 
substitutes approved through a Premarket Approval (PMA) into the low-
cost skin substitute group beginning in CY 2016. They believed that 
this is partly a consequence of CMS' broad categorization of products 
as skin substitutes that, according to the commenters, includes 510(k)-
cleared wound dressings and human cell, tissue, and cellular and 
tissue-based products (HCT/Ps) under section 361 of the Public Health 
Service Act (PHSA) (for example, cadaver skin or placental tissue). 
According to these commenters, manufacturers of products regulated 
through these processes can market different sizes of their skin 
substitutes with greater ease than can manufacturers of skin 
substitutes approved through a PMA, who must reapply for an updated 
label through the FDA to change or add a different product size. The 
commenters are concerned that a unit cost threshold may result in large 
products with lower per cm\2\ costs, but with higher total costs per 
case, being assigned to the low cost category in the future. One of 
these commenters, although generally supportive of the change from an 
ASP-based methodology to an MUC-based methodology, also submitted a 
hypothetical predictive model comparing per unit high cost/low cost 
calculations with per day threshold calculations for the various skin 
substitutes and requested that CMS adopt a per day high cost/low cost 
calculation methodology beginning in CY 2016 to prevent their skin 
substitutes from moving from the high cost to the low cost group in CY 
2016.
    Response: As we explained in the CY 2014 OPPS/ASC final rule with 
comment period, the FDA treatment of the various skin substitutes does 
not affect how skin substitutes are treated under our policy of 
packaging drugs and biologicals that function as supplies in a surgical 
procedure (78 FR 74932 through 74933). The 61 skin substitutes listed 
in Table 34 below are available in many different sizes. Product 
sizing, product packaging, quantity per package, and other such 
individual product attributes are manufacturer business decisions that 
do not concern the agency. We also believe that the commenters' analogy 
between the general drug, biological, and radiopharmaceutical packaging 
threshold and the high cost/low cost skin substitute threshold is 
imperfect. Per day costs are used for the general drug, biological, and 
radiopharmaceutical packaging threshold because this threshold applies 
to the entire spectrum of drugs, biologicals, and radiopharmaceuticals, 
which have a wide variety of dosing units and dose descriptors, among 
others, such that per unit comparisons are not possible and therefore a 
total per day dollar amount is calculated. On the contrary, skin 
substitutes divided into the high and low cost categories are all dosed 
per cm\2\, which is also the standard measurement for sizing wounds. 
Therefore, notwithstanding the various sizes of the 61 skin substitutes 
listed in Table 34, meaningful unit cost comparisons can be made for 
skin substitutes. As discussed earlier, we believe that the MUC 
methodology will help mitigate or eliminate the effect of high skin 
substitute ASPs on the high cost/low cost threshold. However, using a 
per day cost methodology as suggested by the commenters could adversely 
affect the majority of products that are tailored to the wound size. We 
will evaluate the per day cost methodology and compare it to the MUC 
methodology next year once CY 2014 claims data are available.
    After consideration of the public comments we received, we are 
finalizing our proposal to maintain the high cost/low cost APC 
structure for skin substitute procedures in CY 2015, and our proposal 
to revise the current methodology used to establish the high/low cost 
threshold with the alternative MUC methodology. We also are finalizing 
for CY 2015 the policy that skin substitutes with pass-through payment 
status would be assigned to the high cost category. Skin substitutes 
with pricing information but without claims data to calculate an MUC 
will be assigned to either the high cost or low cost category based on 
the product's ASP+6 percent payment rate. If ASP is not available, we 
will use WAC+6 percent or 95 percent of AWP to assign a product to 
either the high cost or low cost category. We also are finalizing our 
proposal that any new skin substitutes without pricing information will 
be assigned to the low cost category until pricing information is 
available to compare to the CY 2015 threshold. New skin substitute 
manufacturers must submit pricing information to CMS no later than the 
15th of the third month prior to the effective date of the next OPPS 
quarterly update. For example, for a new skin substitute with new 
pricing information to be included in the July 1 OPPS update and 
designated as included in the high cost group, verifiable pricing 
information must be provided to CMS no later than April 15. Table 34 
below shows the CY 2014 high cost/low cost status for each skin 
substitute product and the final CY 2015 high cost/low cost status 
based on the weighted average MUC threshold of $25, which decreased 
slightly from the proposed $27 threshold due to updated final rule 
claims data. Skin substitutes with an MUC above $25 are assigned to the 
high cost group for CY 2015. For 2014 there are 16 high cost skin 
substitutes and 27 low cost skin substitutes. For CY 2015, there are 62 
skin substitute codes, which represent the following products: 30 high 
cost skin substitutes; 24 low cost skin substitutes; 7 powdered, 
liquid, or micronized skin substitutes; and 1 miscellaneous skin 
substitute code.

                     Table 34--Skin Substitute Assignments to High Cost and Low Cost Groups
----------------------------------------------------------------------------------------------------------------
                                                                                   CY 2014 High/   CY 2015 High/
                                      CY 2015 Short        HCPCS Code    CY 2015    low status      low status
       CY 2015 HCPCS Code               descriptor           dosage        SI        based on        based on
                                                                                   weighted ASP    weighted MUC
----------------------------------------------------------------------------------------------------------------
C9358..........................  SurgiMend, fetal.......  0.5 cm\2\...  N         Low...........  Low.
C9360..........................  SurgiMend, neonatal....  0.5 cm\2\...  N         Low...........  Low.
C9363..........................  Integra Meshed Bil       1 cm\2\.....  N         Low...........  High.
                                  Wound Mat.
Q4100..........................  Skin substitute, NOS...  N/A.........  N         Low...........  Low.
Q4101..........................  Apligraf...............  1 cm\2\.....  N         High..........  High.

[[Page 66885]]

 
Q4102..........................  Oasis wound matrix.....  1 cm\2\.....  N         Low...........  Low.
Q4103..........................  Oasis burn matrix......  1 cm\2\.....  N         Low...........  Low.
Q4104..........................  Integra BMWD...........  1 cm\2\.....  N         Low...........  High.
Q4105..........................  Integra DRT............  1 cm\2\.....  N         Low...........  High.
Q4106..........................  Dermagraft.............  1 cm\2\.....  N         High..........  High.
Q4107..........................  Graftjacket............  1 cm\2\.....  N         High..........  High.
Q4108..........................  Integra Matrix.........  1 cm\2\.....  N         Low...........  High.
Q4110..........................  Primatrix..............  1 cm\2\.....  N         High..........  High.
Q4111..........................  Gammagraft.............  1 cm\2\.....  N         Low...........  Low.
Q4112..........................  Cymetra injectable.....  1 cc........  N         N/A...........  N/A.
Q4113..........................  GraftJacket Xpress.....  1 cc........  N         N/A...........  N/A.
Q4114..........................  Integra Flowable Wound   1 cc........  N         N/A...........  N/A.
                                  Matrix.
Q4115..........................  Alloskin...............  1 cm\2\.....  N         Low...........  Low.
Q4116..........................  Alloderm...............  1 cm\2\.....  N         High..........  High.
Q4117..........................  Hyalomatrix............  1 cm\2\.....  N         Low...........  Low.
Q4118..........................  Matristem Micromatrix..  1 mg........  N         N/A...........  N/A.
Q4119..........................  Matristem Wound Matrix.  1 cm\2\.....  N         Low...........  Low.
Q4120..........................  Matristem Burn Matrix..  1 cm\2\.....  N         Low...........  Low.
Q4121..........................  Theraskin..............  1 cm\2\.....  G         High..........  High.
Q4122..........................  Dermacell..............  1 cm\2\.....  G         High..........  High.
Q4123..........................  Alloskin...............  1 cm\2\.....  N         Low...........  High.
Q4124..........................  Oasis Tri-layer Wound    1 cm\2\.....  N         Low...........  Low.
                                  Matrix.
Q4125..........................  Arthroflex.............  1 cm\2\.....  N         High..........  High.
Q4126..........................  Memoderm/derma/tranz/    1 cm\2\.....  N         High..........  High.
                                  integup.
Q4127..........................  Talymed................  1 cm\2\.....  G         High..........  High.
Q4128..........................  Flexhd/Allopatchhd/      1 cm\2\.....  N         Low...........  High.
                                  matrixhd.
Q4129..........................  Unite Biomatrix........  1 cm\2\.....  N         Low...........  High.
Q4131..........................  Epifix.................  1 cm\2\.....  N         High..........  High.
Q4132..........................  Grafix core............  1 cm\2\.....  N         High..........  High.
Q4133..........................  Grafix prime...........  1 cm\2\.....  N         High..........  High.
Q4134..........................  HMatrix................  1 cm\2\.....  N         High..........  High.
Q4135..........................  Mediskin...............  1 cm\2\.....  N         Low...........  Low.
Q4136..........................  EZderm.................  1 cm\2\.....  N         Low...........  Low.
Q4137..........................  Amnioexcel or            1 cm\2\.....  N         Low...........  High.
                                  Biodexcel, 1cm.
Q4138..........................  BioDfence DryFlex, 1cm.  1 cm\2\.....  N         Low...........  High.
Q4139..........................  Amniomatrix or           1 cc........  N         N/A...........  N/A.
                                  Biodmatrix, 1cc.
Q4140..........................  Biodfence 1cm..........  1 cm\2\.....  N         Low...........  High.
Q4141..........................  Alloskin ac, 1 cm......  1 cm\2\.....  N         Low...........  Low.
Q4142..........................  Xcm biologic tiss        1 cm\2\.....  N         Low...........  Low.
                                  matrix 1cm.
Q4143..........................  Repriza, 1cm...........  1 cm\2\.....  N         Low...........  Low.
Q4145..........................  Epifix, 1mg............  1 mg........  N         N/A...........  N/A.
Q4146..........................  Tensix, 1cm............  1 cm\2\.....  N         Low...........  Low.
Q4147..........................  Architect ecm px fx 1    1 cm\2\.....  N         High..........  High.
                                  sq cm.
Q4148..........................  Neox 1k, 1cm...........  1 cm\2\.....  N         High..........  High.
Q4149..........................  Excellagen, 0.1 cc.....  0.1 cc......  N         N/A...........  N/A.
Q4150..........................  Allowrap DS or Dry 1 sq  1 cm\2\.....  N         N/A...........  Low.
                                  cm.
Q4151..........................  AmnioBand, Guardian 1    1 cm\2\.....  N         N/A...........  Low.
                                  sq cm.
Q4152..........................  Dermapure 1 square cm..  1 cm\2\.....  N         N/A...........  Low.
Q4153..........................  Dermavest 1 square cm..  1 cm\2\.....  N         N/A...........  Low.
Q4154..........................  Biovance 1 square cm...  1 cm\2\.....  N         N/A...........  High.
Q4155..........................  NeoxFlo or ClarixFlo 1   1 mg........  N         N/A...........  N/A.
                                  mg.
Q4156..........................  Neox 100 1 square cm...  1 cm\2\.....  N         N/A...........  High.
Q4157..........................  Revitalon 1 square cm..  1 cm\2\.....  N         N/A...........  Low.
Q4158..........................  MariGen 1 square cm....  1 cm\2\.....  N         N/A...........  Low.
Q4159..........................  Affinity 1 square cm...  1 cm\2\.....  N         N/A...........  Low.
Q4160..........................  NuShield 1 square cm...  1 cm\2\.....  N         N/A...........  High.
C9349..........................  Fortaderm, fortaderm     1 cm\2\.....  G         N/A...........  High.
                                  antimic.
----------------------------------------------------------------------------------------------------------------

d. Pass-Through Evaluation Process for Skin Substitutes
    At the beginning of the OPPS, skin substitutes were originally 
evaluated for pass-through status using the medical device pass-through 
process (65 FR 67839). Since mid-2001, skin substitutes have been 
evaluated for pass-through payment status through the drug, biological, 
and radiopharmaceutical pass-through payment process. In 2001, there 
were two distinct HCPCS codes describing skin substitutes. For the CY 
2015 update, there are 61 distinct HCPCS codes describing skin 
substitutes (not including the not otherwise classified HCPCS code, 
Q4100), and of these 61 products, 18

[[Page 66886]]

products that are listed in Table 35 below have had, currently have, or 
will have pass-through payment status.

       Table 35--Skin Substitutes That Have Had, Currently Have, or Will Have Pass-Through Payment Status
----------------------------------------------------------------------------------------------------------------
                                                                                                   Pass-through
         CY 2015 HCPCS code                            CY 2015 short descriptor                  expiration date
----------------------------------------------------------------------------------------------------------------
C9358...............................  SurgiMend, fetal.........................................      12/31/2010
C9360...............................  SurgiMend, neonatal......................................      12/31/2011
C9363...............................  Integra Meshed Bil Wound Mat.............................      12/31/2011
C9349...............................  FortaDerm, FortaDerm Antimic.............................      12/31/2017
Q4101...............................  Apligraf.................................................      12/31/2002
Q4104...............................  Integra BMWD.............................................      12/31/2006
Q4105...............................  Integra DRT..............................................      12/31/2006
Q4106...............................  Dermagraft...............................................      03/31/2005
Q4107...............................  Graftjacket..............................................      12/31/2006
Q4108...............................  Integra matrix...........................................      12/31/2010
Q4110...............................  Primatrix................................................      12/31/2008
Q4121...............................  Theraskin................................................      12/31/2016
Q4122...............................  Dermacell................................................      12/31/2015
Q4124...............................  Oasis tri-layer wound matrix.............................      12/31/2013
Q4127...............................  Talymed..................................................      12/31/2015
Q4131...............................  Epifix...................................................      12/31/2014
Q4132...............................  Grafix core..............................................      12/31/2014
Q4133...............................  Grafix prime.............................................      12/31/2014
----------------------------------------------------------------------------------------------------------------

    As discussed earlier, and as we stated in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40999 through 41001) and in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74938), we packaged all skin 
substitutes not on pass-through payment status under the policy that 
packages all drugs and biologicals that function as supplies when used 
in a surgical procedure (78 FR 74938), because we consider skin 
substitutes to be a type of surgical supply in the HOPD. The adoption 
of the policy to package all drugs and biologicals that function as 
supplies when used in a surgical procedure, followed the packaging 
policies for implantable biologicals, implantable devices, and more 
broadly, the policy to package medical and surgical supplies into the 
related procedure under 42 CFR 419.2(b)(4). Further, as noted in the CY 
2014 OPPS/ASC final rule with comment period, we believe these policies 
represented an example of a broader category of drugs and biologicals 
that should be packaged in the OPPS, that is, drugs and biologicals 
that function as supplies in a surgical procedure (78 FR 74930).
    Separately, in the CY 2010 OPPS/ASC final rule with comment period, 
we finalized a policy to evaluate implantable biologicals that are 
surgically inserted or implanted (through a surgical incision or a 
natural orifice) for pass-through payment through the medical device 
pass-through evaluation process, because implantable biologicals 
function as implantable devices (74 FR 60473), which have historically 
been considered supplies in the OPPS (65 FR 18443), and have been 
evaluated for pass-through payment through the medical device pass-
through evaluation process since CY 2010. As noted earlier, the 
finalized packaging policy in the CY 2014 OPPS/ASC final rule with 
comment period to package all drugs and biologicals that function as 
supplies when used in a surgical procedure included skin substitutes as 
a type of surgical supply, and, notably, the similarities between 
implantable biologicals and skin substitutes were a key factor in 
packaging (like we did beginning in 2009 with implantable biologicals) 
skin substitutes into the associated surgical procedure (78 FR 74932). 
We also note that many skin substitutes are FDA-approved or cleared as 
devices, even though skin substitutes have traditionally been treated 
as biologicals under the OPPS. The similarities between these classes 
of products (implantable devices, implantable biologicals, and skin 
substitutes) informed our proposal to similarly treat applications for 
pass-through payment for skin substitutes using the OPPS device pass-
through process, described below.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41000), we proposed 
that applications for pass-through payment for skin substitutes be 
evaluated using the medical device pass-through process and payment 
methodology. As a result of this proposal, we proposed that the last 
skin substitute pass-through applications evaluated using the drug and 
biological pass-through payment evaluation process would be those with 
an application deadline of the first business date in September 2014, 
and an effective date of January 1, 2015. In light of this proposal, we 
would change the December 1, 2014 pass-through payment application 
deadline (for an effective date of April 1, 2015) for both drugs and 
biologicals and devices to January 15, 2015, in order to provide 
sufficient time for applicants to adjust to the new policies and 
procedures in effect as of January 1, 2015. Any applications submitted 
after the first business date in September 2014, through January 15, 
2015, would be evaluated for the April 1, 2015 cycle. We believe that 
requiring skin substitutes seeking pass-through payment to use the OPPS 
device pass-through evaluation process is more appropriate because, 
although skin substitutes have characteristics of both surgical 
supplies and biologicals, we believe skin substitutes are best 
characterized as surgical supplies or devices because of their required 
surgical application and because they share significant clinical 
similarity with other surgical devices and supplies, including 
implantable biologicals. Therefore, we stated in the proposed rule that 
if this proposal is finalized, beginning with applications seeking 
pass-through payment effective April 1, 2014, new skin substitutes 
would no longer be eligible to submit biological pass-through 
applications; rather, such applications for pass-through payment would 
be evaluated using the medical device pass-through payment evaluation 
process, for which payment is based on charges reduced to cost from 
claims. We

[[Page 66887]]

refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/ to view the 
device pass-through payment application requirements and review 
criteria that would apply to the evaluation of all skin substitute 
product applications for pass-through payment status beginning on or 
after January 1, 2015. Those skin substitutes that are approved for 
pass-through payment status as biologicals effective on or before 
January 1, 2015, would continue to be paid as pass-through biologicals 
for the duration of their period of pass-through payment.
    We also proposed to revise our regulations at Sec. Sec.  419.64 and 
419.66 to reflect this proposed new policy. Specifically, we proposed 
to revise Sec.  419.64 by deleting the existing paragraph (a)(4)(iv) 
text because it is currently outdated and adding new text at paragraph 
(a)(4)(iv) to exclude skin substitutes from consideration for drug and 
biological pass-through payment. We proposed to modify the regulation 
at Sec.  419.66(b)(3) to add that a pass-through device may be applied 
in or on a wound or other skin lesion, and we proposed to simplify the 
language that ``whether or not it remains with the patient when the 
patient is released from the hospital'' to read ``either permanently or 
temporarily.'' We also proposed to delete the current example in Sec.  
419.66(b)(4)(iii) of the regulations regarding the exclusion of 
materials, for example, biological or synthetic materials, that may be 
used to replace human skin from device pass-through payment 
eligibility. We invited public comment on these proposals.
    Comment: Several commenters supported CMS' proposal to evaluate 
skin substitute pass-through applications through the medical device 
pass-through process and pay for pass-through skin substitutes 
according to the medical device pass-through payment methodology 
beginning January 1, 2015. The commenters believed that this policy 
change will limit instability in the high cost/low cost groups from 
pass-through skin substitutes with very high ASPs. The commenter stated 
that instability could occur because manufacturers set ASP and 
hospitals are relatively insensitive to price for separately paid pass-
through skin substitutes. Therefore, the commenter added, a new high 
priced pass-through skin substitute could gain significant sales and 
move the high cost/low cost threshold significantly higher from year to 
year.
    Response: We agree with the commenters and appreciate their 
support.
    Comment: Several commenters opposed CMS' proposal to evaluate skin 
substitute pass-through applications through the medical device pass-
through process. Some of these commenters argued that CMS lacks the 
authority to change the process for evaluating skin substitute pass-
through applications. The commenters also believed that biologicals 
approved by the FDA under section 351 of the PHSA (those approved by 
the FDA under biologics license applications (BLAs)) cannot be treated 
as devices for pass-through payment evaluation purposes according to 
the Social Security Act and Congressional intent. The commenters also 
claimed that changing the pass-through payment process for skin 
substitutes will stifle innovation of new wound care products.
    Response: We disagree with the commenters' assertion that the 
agency lacks the authority to change the process for evaluating skin 
substitutes for pass-through and that biologicals approved by the FDA 
under section 351 of the PHSA (BLA process) cannot be treated as 
devices for pass-through payment evaluation purposes according to the 
Social Security Act and Congressional intent. As we stated in the 2010 
OPPS final rule in response to a similar comment on the proposal to 
change the pass-through evaluation process for implantable biologicals: 
``We do not agree with the commenters who asserted that Congress 
intended biologicals approved under BLAs to be paid under the specific 
OPPS statutory provisions that apply to SCODs, including the pass-
through provisions'' (74 FR 60476). Similarly, Congress did not specify 
that we must pay for skin substitutes as separately payable biologicals 
rather than devices or supplies, if they also meet our criteria for 
payment as a device. We believe that skin substitutes can satisfy the 
definitions applied under the OPPS of a device or supply and a 
biological and that, for OPPS payment purposes, it is appropriate for 
us to consider skin substitutes as devices or supplies under both pass-
through and nonpass-through payment policies, and not as separately 
payable biologicals. For example, beginning in CY 2014, we package the 
costs of skin substitutes into the costs of the surgical procedures in 
which they are used, as we do for implantable biologicals and other 
implantable devices. Therefore, we do not believe that we must pay for 
skin substitutes under our OPPS payment methodologies for separately 
payable biologicals, rather than our device payment methodologies.
    In addition, for the skin substitute packaging policy, in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 74933), we stated 
the following: ``We do not believe that the FDA approval process should 
exempt products from this packaging proposal or factor into the level 
of Medicare payment.'' Similarly, regarding our proposal to change the 
pass-through payment evaluation process and payment methodology for 
skin substitutes from the drug and biological process to the device 
process, we also believe that any particular FDA approval process 
should not exempt such products that appropriately fall under the 
category of skin substitutes under the OPPS from the application of 
this pass-through payment proposal or direct which pass-through payment 
evaluation process must be used.
    Notably, none of the current 61 skin substitute products described 
by distinct HCPCS codes and listed in Table 35 above have been approved 
by FDA under section 351 of the PHSA. This fact is somewhat 
counterintuitive, as biologics or biologicals or biological products 
are most commonly understood to be products approved by the FDA under 
section 351 of the PHSA. Current skin substitute products' FDA 
classifications include a variety of Class III medical devices, Class 
II medical devices, and HCT/Ps under section 361 of the PHSA, which are 
tissue bank materials not subject to FDA approval requirements. We also 
note that whether a future wound healing product is described by the 
OPPS packaged category of products described in 42 CFR 419.2(b)(16) as 
``skin substitutes and similar products that aid wound healing'' will 
depend upon the particular characteristics of the future product. We do 
not intend for the category of products described as ``skin substitutes 
and similar products that aid wound healing'' to necessarily include 
all products with a wound healing indication. However, if a new wound 
healing product, regardless of FDA approval or clearance type, fits 
with the ``skin substitutes and similar products that aid wound 
healing'' category of products, all of the applicable OPPS policies 
that apply to ``skin substitutes and similar products that aid wound 
healing'' would also apply to the new wound healing product.
    Finally, we do not believe that this policy will stifle innovation 
of new skin substitutes, as new skin substitutes that can demonstrate a 
substantial clinical improvement over current wound treatments could 
receive pass-through

[[Page 66888]]

status as a device. In addition, there are currently 61 distinct HCPCS 
codes for various skin substitutes. Of these 61 products, only 18 (30 
percent) have had, currently have, or will have pass-through payment 
status granted through the drug and biological pass-through payment 
process. Therefore, pass-through payment does not appear to be 
necessary for the commercialization of these products, which have (in 
terms of distinct HCPCS codes describing them) expanded significantly 
from 2 skin substitutes in CY 2001 to 61 skin substitutes in CY 2015. 
Furthermore, we have not restricted access to the high cost skin 
substitute group, and we have only required manufacturers of new skin 
substitutes to submit pricing information for assignment to the high 
cost group of skin substitutes. For these reasons, we do not believe 
that any CMS OPPS payment policies will stifle innovation or impede the 
development of new skin substitutes.
    Comment: One commenter was concerned that the substantial clinical 
improvement criterion for medical device pass-through places an unduly 
high burden on new skin substitute products. The commenter believed 
that this requirement is ``incompatible with skin substitute products, 
which are not required to submit efficacy data to the Food and Drug 
Administration.'' This commenter also disagreed with CMS' proposal to 
not accept any skin substitute applications though the drug and 
biological pass-through payment process after September 1, 2014, and to 
move the final pass-through payment deadline for drug and biologicals 
and devices from December 1, 2014, to January 15, 2015. The commenter 
requested that additional guidance on substantial clinical improvement 
be provided specifically for application to skin substitute products, 
beyond that described in the November 2, 2001, interim final rule with 
comment period entitled ``Medicare Program--Prospective Payment System 
for Hospital Outpatient Services: Criteria for Establishing Additional 
Pass-Through Categories for Medical Devices'' (66 FR 55850).
    Response: The comment that FDA does not require submission of 
efficacy data for skin substitute products is overly simplified. The 
different skin substitute products that have been identified in Table 
35 above are subject to different FDA regulatory requirements (that is, 
based on review by CBER versus CDRH, regulatory classification and 
claims).
    FDA/CDRH draws a distinction between wound dressing devices 
intended only to serve as a wound covering versus products intended to 
promote wound healing. Those devices that are intended to promote wound 
healing are subject to Premarket Approval (PMA) and require clinical 
data to support safety and effectiveness of the device. Those devices 
that are intended to serve as a wound covering are subject to Premarket 
Notification (510(k)) and require demonstration of substantial 
equivalence (that is, the device demonstrates that it is as safe and 
effective as a legally marketed predicate device). Generally, 
substantial equivalence in safety and effectiveness is demonstrated 
through comparative bench and animal studies and leveraged with 
historical clinical effectiveness data for similar devices. The 
weakness of the evidence for many skin substitute products has been 
documented in two recent technology assessments by the Agency for 
Healthcare Research and Quality. However, different pre-market data 
requirements for skin substitute products regulated by FDA should not 
excuse these products from the substantial clinical improvement pass-
through criterion for device pass-through payment. Pass-through payment 
status is not intended to be granted to every new product, but only to 
those that satisfy the pass-through payment requirements. As stated in 
the CY 2001 OPPS interim final rule: ``We believe 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, the need for additional payments for 
devices that offer little or no clinical improvement over a previously 
existing device is less apparent'' (66 FR 55852).
    Regarding the requirements for satisfying the substantial clinical 
improvement criterion, we believe that the list on page 55852 of the CY 
2001 OPPS interim final rule suffices. For example, among the items 
listed is: ``More rapid beneficial resolution of the disease process 
treated because of the use of the device.'' If a new skin substitute 
demonstrated improved wound healing compared to existing wound 
treatments, it could potentially qualify for pass-through as a medical 
device, assuming that the skin substitute is not described by an 
expired pass-through payment device category.
    Finally, we believe that sufficient notice was provided of this 
policy change in the CY 2015 OPPS/ASC proposed rule, and that accepting 
drug and biological applications through the first business date of 
September 2014 deadline for a January 1, 2015 pass-through payment 
effective date is a fair application of a policy that takes effect on 
January 1, 2015. The regular December 1, 2014 application deadline, 
which is being extended to January 15, 2015 for this cycle, was for 
pass-through payment applications with an earliest effective date of 
April 1, 2015, which is well past the effective date of this new 
policy.
    After consideration of the public comments we received, we are 
finalizing our proposal for applications seeking pass-through payment 
for skin substitute and similar wound healing products effective 
beginning April 1, 2015, to apply using the medical device pass-through 
evaluation process.
e. Packaging Determination for HCPCS Codes That Describe the Same Drug 
or Biological but Different Dosages
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66776), we began recognizing, for OPPS payment purposes, multiple HCPCS 
codes reporting different dosages for the same covered Part B drugs or 
biologicals in order to reduce hospitals' administrative burden by 
permitting them to report all HCPCS codes for drugs and biologicals. In 
general, prior to CY 2008, the OPPS recognized for payment only the 
HCPCS code that described the lowest dosage of a drug or biological. 
During CYs 2008 and 2009, we applied a policy that assigned the status 
indicator of the previously recognized HCPCS code to the associated 
newly recognized code(s), reflecting the packaged or separately payable 
status of the new code(s).
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believed that adopting the standard HCPCS 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, in the CY 2015 
OPPS/ASC proposed rule (79 FR 41001), 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

[[Page 66889]]

same drug or biological but different dosages in CY 2015.
    For CY 2015, in order to propose a packaging determination that is 
consistent across all HCPCS codes that describe different dosages of 
the same drug or biological, we aggregated both our CY 2013 claims data 
and our pricing information at ASP+6 percent across all of the HCPCS 
codes that describe each distinct drug or biological in order to 
determine the mean units per day of the drug or biological in terms of 
the HCPCS code with the lowest dosage descriptor. The following drugs 
did not have pricing information available for the ASP methodology for 
this CY 2015 OPPS/ASC final rule with comment period and, as is our 
current policy for determining the packaging status of other drugs, we 
used the mean unit cost available from the fourth quarter CY 2013 
claims data to make the packaging determinations for these drugs: HCPCS 
code J3471 (Injection, hyaluronidase, ovine, preservative free, per 1 
usp unit (up to 999 usp units)) and HCPCS code J3472 (Injection, 
hyaluronidase, ovine, preservative free, per 1000 usp units).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the weighted average 
ASP+6 percent per unit payment amount across all dosage levels of a 
specific drug or biological by the estimated units per day for all 
HCPCS codes that describe each drug or biological from our claims data 
to determine the estimated per day cost of each drug or biological at 
less than or equal to $95 (so that all HCPCS codes for the same drug or 
biological would be packaged) or greater than $95 (so that all HCPCS 
codes for the same drug or biological would be separately payable).
    The proposed packaging status of each drug and biological HCPCS 
code to which this methodology would apply was displayed in Table 41 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 41001 through 41002).
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing our CY 2015 proposal, without modification, to 
continue 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. Table 36 
below displays the packaging status of each drug and biological HCPCS 
code to which the methodology applies for CY 2015.

      Table 36--HCPCS Codes To Which the CY 2015 Drug-Specific Packaging Determination Methodology Applies
----------------------------------------------------------------------------------------------------------------
         CY 2015 HCPCS code                            CY 2015 long descriptor                      CY 2015 SI
----------------------------------------------------------------------------------------------------------------
C9257...............................  Injection, bevacizumab, 0.25 mg..........................               K
J9035...............................  Injection, bevacizumab, 10 mg............................               K
J1020...............................  Injection, methylprednisolone acetate, 20 mg.............               N
J1030...............................  Injection, methylprednisolone acetate, 40 mg.............               N
J1040...............................  Injection, methylprednisolone acetate, 80 mg.............               N
J1070...............................  Injection, testosterone cypionate, up to 100 mg..........               N
J1080...............................  Injection, testosterone cypionate, 1 cc, 200 mg..........               N
J1440...............................  Injection, filgrastim (g-csf), 300 mcg...................               N
J1441...............................  Injection, filgrastim (g-csf), 480 mcg...................               N
J1460...............................  Injection, gamma globulin, intramuscular, 1 cc...........               N
J1560...............................  Injection, gamma globulin, intramuscular over 10 cc......               N
J1642...............................  Injection, heparin sodium, (heparin lock flush), per 10                 N
                                       units.
J1644...............................  Injection, heparin sodium, per 1000 units................               N
J1850...............................  Injection, kanamycin sulfate, up to 75 mg................               N
J1840...............................  Injection, kanamycin sulfate, up to 500 mg...............               N
J2270...............................  Injection, morphine sulfate, up to 10 mg.................               N
J2271...............................  Injection, morphine sulfate, 100mg.......................               N
J2788...............................  Injection, rho d immune globulin, human, minidose, 50                   N
                                       micrograms (250 i.u.).
J2790...............................  Injection, rho d immune globulin, human, full dose, 300                 N
                                       micrograms (1500 i.u.).
J2920...............................  Injection, methylprednisolone sodium succinate, up to 40                N
                                       mg.
J2930...............................  Injection, methylprednisolone sodium succinate, up to 125               N
                                       mg.
J3120...............................  Injection, testosterone enanthate, up to 100 mg..........               N
J3130...............................  Injection, testosterone enanthate, up to 200 mg..........               N
J3471...............................  Injection, hyaluronidase, ovine, preservative free, per 1               N
                                       usp unit (up to 999 usp units).
J3472...............................  Injection, hyaluronidase, ovine, preservative free, per                 N
                                       1000 usp units.
J7050...............................  Infusion, normal saline solution , 250 cc................               N
J7040...............................  Infusion, normal saline solution, sterile (500 ml = 1                   N
                                       unit).
J7030...............................  Infusion, normal saline solution, 1000 cc................               N
J7515...............................  Cyclosporine, oral, 25 mg................................               N
J7502...............................  Cyclosporine, oral, 100 mg...............................               N
J8520...............................  Capecitabine, oral, 150 mg...............................               K
J8521...............................  Capecitabine, oral, 500 mg...............................               K
J9250...............................  Methotrexate sodium, 5 mg................................               N
J9260...............................  Methotrexate sodium, 50 mg...............................               N
----------------------------------------------------------------------------------------------------------------

[[Page 66890]]

3. 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 and Packaged Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or is a drug or biological for which payment 
was made on a pass-through basis on or before December 31, 2002.
    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and 
biologicals are designated as exceptions and are not included in the 
definition of SCODs. These exceptions are--
     A drug or biological for which payment is first made on or 
after January 1, 2003, under the transitional pass-through payment 
provision in section 1833(t)(6) of the Act.
     A drug or biological for which a temporary HCPCS code has 
not been assigned.
     During CYs 2004 and 2005, an orphan drug (as designated by 
the Secretary).
    Section 1833(t)(14)(A)(iii) of the Act requires that payment for 
SCODs in CY 2006 and subsequent years be equal to the average 
acquisition cost for the drug for that year as determined by the 
Secretary, subject to any adjustment for overhead costs and taking into 
account the hospital acquisition cost survey data collected by the 
Government Accountability Office (GAO) in CYs 2004 and 2005, and later 
periodic surveys conducted by the Secretary as set forth in the 
statute. If hospital acquisition cost data are not available, the law 
requires that payment be equal to payment rates established under the 
methodology described in section 1842(o), section 1847A, or section 
1847B of the Act, as calculated and adjusted by the Secretary as 
necessary. Most physician Part B drugs are paid at ASP+6 percent 
pursuant to section 1842(o) and section 1847A of the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to take into account overhead and related 
expenses, such as pharmacy services and handling costs. Section 
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead 
and related expenses and to make recommendations to the Secretary 
regarding whether, and if so how, a payment adjustment should be made 
to compensate hospitals for overhead and related expenses. Section 
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the 
weights for ambulatory procedure classifications for SCODs to take into 
account the findings of the MedPAC study.
    It has been our longstanding policy to apply the same treatment to 
all separately payable drugs and biologicals, which include SCODs, and 
drugs and biologicals that are not SCODs. Therefore, we apply the 
payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, 
as required by statute, but we also apply it to separately payable 
drugs and biologicals that are not SCODs, which is a policy 
determination rather than a statutory requirement. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41002), we proposed to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    Since CY 2006, we have attempted to establish a drug payment 
methodology that reflects hospitals' acquisition costs for drugs and 
biologicals while taking into account relevant pharmacy overhead and 
related handling expenses. We have attempted to collect more data on 
hospital overhead charges for drugs and biologicals by making several 
proposals that would require hospitals to change the way they report 
the cost and charges for drugs. None of these proposals were adopted 
due to significant stakeholder concern, including that hospitals stated 
that it would be administratively burdensome to report hospital 
overhead charges. We established a payment policy for separately 
payable drugs and biologicals, authorized by section 
1833(t)(14)(A)(iii)(I) of the Act, based on an ASP+X amount that is 
calculated by comparing the estimated aggregate cost of separately 
payable drugs and biologicals in our claims data to the estimated 
aggregate ASP dollars for separately payable drugs and biologicals, 
using the ASP as a proxy for average acquisition cost (70 FR 68642 
through 68643). We referred to this methodology as our standard drug 
payment methodology. Taking into consideration comments made by the 
pharmacy stakeholders and acknowledging the limitations of the reported 
data due to charge compression and hospitals' reporting practices, we 
added an ``overhead adjustment'' in CY 2010 (an internal adjustment of 
the data) by redistributing cost from coded and uncoded packaged drugs 
and biologicals to separately payable drugs in order to provide more 
appropriate payments for drugs and biologicals in the HOPD. We 
continued this methodology, and we further refined it in CY 2012 by 
finalizing a policy to update the redistribution amount for inflation 
and to keep the redistribution ratio constant between the proposed rule 
and the final rule. For a detailed discussion of our OPPS drug payment 
policies from CY 2006 to CY 2012, we refer readers to the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68383 through 68385).
    Because of continuing uncertainty about the full cost of pharmacy 
overhead and acquisition cost, based in large part on the limitations 
of the submitted hospital charge and claims data for drugs, in the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68386), we 
indicated our concern that the continued use of the standard drug 
payment methodology (including the overhead adjustment) still may not 
appropriately account for average acquisition and pharmacy overhead 
cost and, therefore, may result in payment rates that are not as 
predictable, accurate, or appropriate as they could be. Section 
1833(t)(14)(A)(iii)(II) of the Act requires an alternative methodology 
for determining payment rates for SCODS wherein, if hospital 
acquisition cost data are not available, payment shall be equal 
(subject to any adjustment for overhead costs) to payment rates 
established under the methodology described in section 1842(o), 1847A, 
or 1847B of the Act. We refer to this alternative methodology as the 
``statutory default.'' In the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68386), we noted that section 1833(t)(14)(A)(iii)(II) of 
the Act authorizes the Secretary to calculate and adjust, as necessary, 
the average price for a drug in the year established under section 
1842(o), 1847A, or 1847B of the Act, as the case may be, in determining 
payment for SCODs. Pursuant to sections 1842(o) and 1847A of the Act, 
Part B drugs are paid at ASP+6 percent when furnished in physicians' 
offices. We indicated that we believe that establishing the payment 
rates based on

[[Page 66891]]

the statutory default of ASP+6 percent is appropriate as it yields 
increased predictability in payment for separately payable drugs and 
biologicals under the OPPS and, therefore, we finalized our proposal 
for CY 2013 to pay for separately payable drugs and biologicals at 
ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act (the 
statutory default). We also finalized our proposal that the ASP+6 
percent payment amount for separately payable drugs and biologicals 
requires no further adjustment and represents the combined acquisition 
and pharmacy overhead payment for drugs and biologicals, that payments 
for separately payable drugs and biologicals are included in the budget 
neutrality adjustments under the requirements in section 1833(t)(9)(B) 
of the Act, and that the budget neutral weight scaler is not applied in 
determining payments for these separately paid drugs and biologicals 
for CY 2013 (77 FR 68389).
b. CY 2015 Payment Policy
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), we proposed to 
continue our CY 2014 policy and pay for separately payable drugs and 
biologicals at ASP+6 percent pursuant to section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We proposed 
that the ASP+6 percent payment amount for separately payable drugs and 
biologicals requires no further adjustment and represents the combined 
acquisition and pharmacy overhead payment for drugs and biologicals. We 
also proposed that payments for separately payable drugs and 
biologicals are included in the budget neutrality adjustments, under 
the requirements in section 1833(t)(9)(B) of the Act, and that the 
budget neutral weight scaler is not applied in determining payments for 
these separately paid drugs and biologicals.
    Comment: Commenters supported CMS' proposal to pay for separately 
payable drugs and biologicals based on the statutory default rate of 
ASP+6 percent. A few commenters supported CMS' proposal, but 
recommended that CMS examine ways to compensate hospitals for the 
unique, higher overhead and handling costs associated with therapeutic 
radiopharmaceuticals.
    Response: We appreciate the commenters' support of our proposal. We 
continue to believe that ASP+6 percent based on the statutory default 
is appropriate for hospitals for CY 2015 and that this percentage 
amount includes payment for acquisition and overhead cost. We see no 
evidence that an additional overhead adjustment is required for 
separately payable drugs, biologicals, and therapeutic 
radiopharmaceuticals for CY 2015.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). The ASP+6 
percent payment amount for separately payable drugs and biologicals 
requires no further adjustment and represents the combined acquisition 
and pharmacy overhead payment for drugs and biologicals for CY 2015. In 
addition, we are finalizing our proposal which states that payment for 
separately payable drugs and biologicals be included in the budget 
neutrality adjustments, under the requirements of section 1833(t)(9)(B) 
of the Act, and that the budget neutral weight scaler is not applied in 
determining payment of these separately paid drugs and biologicals. We 
note that separately payable drug and biological payment rates listed 
in Addenda A and B to this final rule with comment period (available 
via the Internet on the CMS Web site), which illustrate the final CY 
2015 payment of ASP+6 percent for separately payable nonpass-through 
drugs and biologicals and ASP+6 percent for pass-through drugs and 
biologicals, reflect either ASP information that is the basis for 
calculating payment rates for drugs and biologicals in the physician's 
office setting effective October 1, 2014, or WAC, AWP, or mean unit 
cost from CY 2013 claims data and updated cost report information 
available for this final rule with comment period. In general, these 
published payment rates are not reflective of actual January 2015 
payment rates. This is because payment rates for drugs and biologicals 
with ASP information for January 2015 will be determined through the 
standard quarterly process where ASP data submitted by manufacturers 
for the third quarter of 2014 (July 1, 2014 through September 30, 2014) 
are used to set the payment rates that are released for the quarter 
beginning in January 2015 near the end of December 2014. In addition, 
payment rates for drugs and biologicals in Addenda A and B to this 
final rule with comment period for which there was no ASP information 
available for October 2014 are based on mean unit cost in the available 
CY 2013 claims data. If ASP information becomes available for payment 
for the quarter beginning in January 2015, we will price payment for 
these drugs and biologicals based on their newly available ASP 
information. Finally, there may be drugs and biologicals that have ASP 
information available for this final rule with comment period 
(reflecting October 2014 ASP data) that do not have ASP information 
available for the quarter beginning in January 2015. These drugs and 
biologicals will then be paid based on mean unit cost data derived from 
CY 2013 hospital claims. Therefore, the payment rates listed in Addenda 
A and B to this final rule with comment period are not for January 2015 
payment purposes and are only illustrative of the CY 2015 OPPS payment 
methodology using the most recently available information at the time 
of issuance of this final rule with comment period.
4. Payment Policy for Therapeutic Radiopharmaceuticals
    Beginning in CY 2010 and continuing for CY 2014, we established a 
policy to pay for separately paid therapeutic radiopharmaceuticals 
under the ASP methodology adopted for separately payable drugs and 
biologicals. If ASP information is unavailable for a therapeutic 
radiopharmaceutical, we base therapeutic radiopharmaceutical payment on 
mean unit cost data derived from hospital claims. We believe that the 
rationale outlined in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60524 through 60525) for applying the principles of 
separately payable drug pricing to therapeutic radiopharmaceuticals 
continues to be appropriate for nonpass-through separately payable 
therapeutic radiopharmaceuticals in CY 2015. Therefore, in the CY 2015 
OPPS/ASC proposed rule (79 FR 41003), we proposed for CY 2015 to pay 
all nonpass-through, separately payable therapeutic 
radiopharmaceuticals at ASP+6 percent, based on the statutory default 
described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full 
discussion of ASP-based payment for therapeutic radiopharmaceuticals, 
we refer readers to the CY 2010 OPPS/ASC final rule with comment period 
(74 FR 60520 through 60521). We also proposed to rely on CY 2013 mean 
unit cost data derived from hospital claims data for payment rates for 
therapeutic radiopharmaceuticals for which ASP data are unavailable and 
to update the payment rates for separately payable therapeutic 
radiopharmaceuticals according to our usual process for updating the 
payment rates for separately payable drugs and biologicals, on a 
quarterly basis if updated ASP information is available. For a complete 
history of the OPPS payment policy for therapeutic 
radiopharmaceuticals, we refer readers

[[Page 66892]]

to the CY 2005 OPPS final rule with comment period (69 FR 65811), the 
CY 2006 OPPS final rule with comment period (70 FR 68655), and the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60524).
    The proposed CY 2015 payment rates for nonpass-through separately 
payable therapeutic radiopharmaceuticals were included in Addenda A and 
B to the proposed rule (which are available via the Internet on the CMS 
Web site).
    Comment: Several commenters supported CMS' proposal to pay for 
separately payable therapeutic radiopharmaceuticals under the statutory 
default payment rate of ASP+6 percent, if ASP data are submitted to 
CMS.
    Response: We appreciate the commenters' support. We continue to 
believe that providing payment for therapeutic radiopharmaceuticals 
based on ASP or mean unit cost if ASP information is not available 
would provide appropriate payment for these products. When ASP data are 
not available, we believe that paying for therapeutic 
radiopharmaceuticals using mean unit cost will appropriately pay for 
the average hospital acquisition and associated handling costs of 
nonpass-through separately payable therapeutic radiopharmaceuticals. As 
we stated in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60523), although using mean unit cost for payment for therapeutic 
radiopharmaceuticals when ASP data are not available is not the usual 
OPPS process (the usual process relies on alternative data sources such 
as WAC or AWP when ASP information is temporarily unavailable, prior to 
defaulting to the mean unit cost from hospital claims data), we 
continue to 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. Payment based on WAC or AWP under the 
established OPPS methodology for payment of 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. Because ASP reporting for OPPS payment of separately 
payable therapeutic radiopharmaceuticals is not required, a 
manufacturer's choice to not submit ASP could result in payment for a 
separately payable therapeutic radiopharmaceutical based on WAC or AWP 
for a full year, a result that we believe would be inappropriate.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to continue to pay all 
nonpass-through, separately payable therapeutic radiopharmaceuticals at 
ASP+6 percent. We also are finalizing our proposal to continue to rely 
on CY 2013 mean unit cost data derived from hospital claims data for 
payment rates for therapeutic radiopharmaceuticals for which ASP data 
are unavailable. The CY 2015 final rule payment rates for nonpass-
through separately payable therapeutic radiopharmaceuticals are 
included in Addenda A and B to this final rule with comment period 
(which are available via the Internet on the CMS Web site).
5. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly 
Enriched Uranium Sources
    Radioisotopes are widely used in modern medical imaging, 
particularly for cardiac imaging and predominantly for the Medicare 
population. Technetium-99 (Tc-99m), the radioisotope used in the 
majority of such diagnostic imaging services, is currently produced in 
legacy reactors outside of the United States using highly enriched 
uranium (HEU).
    The United States would like to eliminate domestic reliance on 
these reactors, and is promoting the conversion of all medical 
radioisotope production to non-HEU sources. Alternative methods for 
producing Tc-99m without HEU are technologically and economically 
viable, and conversion to such production has begun and is expected to 
be completed within a 3-year time period. We expect this change in the 
supply source for the radioisotope used for modern medical imaging will 
introduce new costs into the payment system that are not accounted for 
in the historical claims data.
    Therefore, for 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. The time period for this 
additional payment was not to exceed 5 years from January 1, 2013 (77 
FR 68321).
    Comment: A few commenters requested that CMS extend payment for 
HCPCS code Q9969 an additional 3 to 5 years to ensure adequate data are 
collected and provide a longer ramp up period for more widespread use 
of non-HEU materials since they are not yet widely available. One 
commenter believed that the $10 payment is not sufficient and requested 
that CMS increase the payment rate. This commenter also requested that 
CMS eliminate the copayment.
    Response: We stated in our CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68316) that our expectation was that the transition to 
non-HEU sourced Mo-99 would be completed within 4 to 5 years and that 
there might be a need to make differential payments for a period of 4 
to 5 years. We further 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. 
We have reassessed this payment for CY 2015 and have not identified any 
new information that would cause us to modify payment at this time. We 
do not agree with the commenter's suggestion to eliminate the 
beneficiary's copayment because section 1833(t)(8) of the Act and 
Sec. Sec.  419.41 through 419.45 of the regulations require a 
beneficiary copayment. We are continuing the policy of providing an 
additional $10 payment for radioisotopes produced by non-HEU sources 
for CY 2015. Although we will reassess this policy annually, consistent 
with the original policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68321), we do not anticipate that this additional 
payment would extend beyond CY 2017.
6. Payment for Blood Clotting Factors
    For CY 2014, we provided payment for blood clotting factors under 
the same methodology as other nonpass-through separately payable drugs 
and biologicals under the OPPS and continued paying an updated 
furnishing fee. That is, for CY 2014, we provided payment for blood 
clotting factors under the OPPS at ASP+6 percent, plus an additional 
payment for the furnishing fee. We note that when blood clotting 
factors are provided in physicians' offices under Medicare Part B and 
in other Medicare settings, a furnishing fee is also applied to the 
payment. The CY 2014 updated furnishing fee was $0.192 per unit.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), for CY 2015, 
we proposed to pay for blood clotting factors at ASP+6 percent, 
consistent

[[Page 66893]]

with our proposed payment policy for other nonpass-through separately 
payable drugs and biologicals, and to continue our policy for payment 
of the furnishing fee using an updated amount. Our policy to pay for a 
furnishing fee for blood clotting factors under the OPPS is consistent 
with the methodology applied in the physician office and inpatient 
hospital setting, and first articulated in the CY 2006 OPPS final rule 
with comment period (70 FR 68661) and later discussed in the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66765). The proposed 
furnishing fee update was based on the percentage increase in the 
Consumer Price Index (CPI) for medical care for the 12-month period 
ending in June of the previous year. Because the Bureau of Labor 
Statistics releases the applicable CPI data after the MPFS and OPPS/ASC 
proposed rules are published, we were not able to include the actual 
updated furnishing fee in the proposed rules. Therefore, in accordance 
with our policy, as finalized in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66765), we proposed to announce the actual figure 
for the percent change in the applicable CPI and the updated furnishing 
fee calculated based on that figure through applicable program 
instructions and posting on the CMS Web site at:  http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    Comment: Commenters supported CMS' proposal to continue to apply 
the furnishing fee for blood clotting factors provided in the OPD. The 
commenters also supported CMS' proposal to pay for separately payable 
drugs at ASP+6 percent based on the statutory default for CY 2015.
    Response: We appreciate the commenters' support.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to provide payment for 
blood clotting factors under the same methodology as other separately 
payable drugs and biologicals under the OPPS and to continue payment of 
an updated furnishing fee. 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 Web site.
7. Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims 
Data
    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (Pub. L. 108-173) did not address the OPPS payment in CY 2005 
and subsequent years for drugs, biologicals, and radiopharmaceuticals 
that have assigned HCPCS codes, but that do not have a reference AWP or 
approval for payment as pass-through drugs or biologicals. Because 
there was no statutory provision that dictated payment for such drugs, 
biologicals, and radiopharmaceuticals in CY 2005, and because we had no 
hospital claims data to use in establishing a payment rate for them, we 
investigated several payment options for CY 2005 and discussed them in 
detail in the CY 2005 OPPS final rule with comment period (69 FR 65797 
through 65799).
    For CYs 2005 to 2007, we implemented a policy to provide separate 
payment for new drugs, biologicals, and radiopharmaceuticals with HCPCS 
codes (specifically those new drug, biological, and radiopharmaceutical 
HCPCS codes in each of those calendar years that did not crosswalk to 
predecessor HCPCS codes) but which did not have pass-through status, at 
a rate that was equivalent to the payment they received in the 
physician's office setting, established in accordance with the ASP 
methodology for drugs and biologicals, and based on charges adjusted to 
cost for radiopharmaceuticals. Beginning in CY 2008 and continuing 
through CY 2014, we implemented a policy to provide payment for new 
drugs and biologicals with HCPCS codes (except those that are policy-
packaged), but which did not have pass-through status and were without 
OPPS hospital claims data, at an amount consistent with the final OPPS 
payment methodology for other separately payable nonpass-through drugs 
and biologicals for the given year.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41004), for CY 2015, 
we proposed to continue this policy and provide payment for new drugs, 
biologicals, and therapeutic radiopharmaceuticals that do not have 
pass-through status at ASP+6 percent, consistent with the proposed CY 
2015 payment methodology for other separately payable nonpass-through 
drugs, biologicals, and therapeutic radiopharmaceuticals, which was 
proposed to be ASP+6 percent. We believe this proposed policy would 
ensure that new nonpass-through drugs, biologicals, and therapeutic 
radiopharmaceuticals would be treated like other drugs, biologicals, 
and therapeutic radiopharmaceuticals under the OPPS.
    For CY 2015, we are also continuing to package payment for all new 
nonpass-through policy-packaged products (diagnostic 
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure, and drugs and biologicals that 
function as supplies when used in a surgical procedure) with HCPCS 
codes but without claims data (those new CY 2015 HCPCS codes that do 
not crosswalk to predecessor HCPCS codes). This is consistent with the 
CY 2014 finalized policy packaging proposal of all existing nonpass-
through diagnostic radiopharmaceuticals, contrast agents, anesthesia 
drugs, drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure, and drugs and 
biologicals that function as supplies when used in a surgical 
procedure, as discussed in more detail in section II.A.3. of this final 
rule with comment period.
    In accordance with the OPPS ASP methodology, in the absence of ASP 
data, for CY 2015, we proposed to continue our policy of using the WAC 
for the product to establish the initial payment rate for new nonpass-
through drugs and biologicals with HCPCS codes, but which are without 
OPPS claims data. However, we note that if the WAC is also unavailable, 
we would make payment at 95 percent of the product's most recent AWP. 
We also proposed to assign status indicator ``K'' (Separately paid 
nonpass-through drugs and biologicals, including therapeutic 
radiopharmaceuticals) to HCPCS codes for new drugs and biologicals 
without OPPS claims data and for which we have not granted pass-through 
status. With respect to new nonpass-through drugs and biologicals for 
which we do not have ASP data, we proposed that once their ASP data 
become available in later quarterly submissions, their payment rates 
under the OPPS would be adjusted so that the rates would be based on 
the ASP methodology and set to the proposed ASP-based amount (proposed 
for CY 2015 at ASP+6 percent) for items that have not been granted 
pass-through status. This proposed policy, which utilizes the ASP 
methodology for new nonpass-through drugs and biologicals with an ASP, 
is consistent with prior years' policies for these items and would 
ensure that new nonpass-through drugs and biologicals would be treated 
like other drugs and

[[Page 66894]]

biologicals under the OPPS, unless they are granted pass-through 
status.
    Similarly, we proposed to continue to base the initial payment for 
new therapeutic radiopharmaceuticals with HCPCS codes, but which do not 
have pass-through status and are without claims data, on the WACs for 
these products if ASP data for these therapeutic radiopharmaceuticals 
are not available. If the WACs also are unavailable, we proposed to 
make payment for new therapeutic radiopharmaceuticals at 95 percent of 
the products' most recent AWP because we would not have mean costs from 
hospital claims data upon which to base payment. As we proposed with 
new drugs and biologicals, we proposed to continue our policy of 
assigning status indicator ``K'' to HCPCS codes for new therapeutic 
radiopharmaceuticals without OPPS claims data for which we have not 
granted pass-through status.
    Consistent with other ASP-based payment, for CY 2015, we proposed 
to announce any changes to the payment amounts for new drugs and 
biologicals in this CY 2015 OPPS/ASC final rule with comment period and 
also on a quarterly basis on the CMS Web site during CY 2015 if later 
quarter ASP submissions (or more recent WACs or AWPs) indicate that 
changes to the payment rates for these drugs and biologicals are 
necessary. The payment rates for new therapeutic radiopharmaceuticals 
also would be changed accordingly based on later quarter ASP 
submissions. We note that the new CY 2015 HCPCS codes for drugs, 
biologicals, and therapeutic radiopharmaceuticals were not available at 
the time of development of the proposed rule. However, these agents are 
included in Addendum B to this CY 2015 OPPS/ASC final rule with comment 
period (which is available via the Internet on the CMS Web site), where 
they are assigned comment indicator ``NI.'' This comment indicator 
reflects that their interim final OPPS treatment is open to public 
comment in this CY 2015 OPPS/ASC final rule with comment period.
    There are several nonpass-through drugs and biologicals that were 
payable in CY 2013 and/or CY 2014 for which we did not have CY 2013 
hospital claims data available for the proposed rule and for which 
there are no other HCPCS codes that describe different doses of the 
same drug, but which have pricing information available for the ASP 
methodology. In order to determine the packaging status of these 
products for CY 2015, we proposed to continue our policy to calculate 
an estimate of the per day cost of each of these items by multiplying 
the payment rate of each product based on ASP+6 percent, similar to 
other nonpass-through drugs and biologicals paid separately under the 
OPPS, by an estimated average number of units of each product that 
would typically be furnished to a patient during one day in the 
hospital outpatient setting. This rationale was first adopted in the CY 
2006 OPPS/ASC final rule with comment period (70 FR 68666 through 
68667).
    We proposed to package items for which we estimated the per day 
administration cost to be less than or equal to $90 (although, as 
mentioned in section V.B.2. of this final rule with comment period, we 
are finalizing a packaging threshold of $95 for CY 2015) and to pay 
separately for items for which we estimated the per day administration 
cost to be greater than $90 (with the exception of diagnostic 
radiopharmaceuticals, contrast agents, anesthesia drugs, drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure, and drugs and biologicals that 
function as supplies when used in a surgical procedure, which we 
proposed to continue to package regardless of cost) in CY 2015. We also 
proposed that the CY 2015 payment for separately payable items without 
CY 2013 claims data would be ASP+6 percent, similar to payment for 
other separately payable nonpass-through drugs and biologicals under 
the OPPS. In accordance with the ASP methodology paid in the 
physician's office setting, in the absence of ASP data, we proposed to 
use the WAC for the product to establish the initial payment rate and, 
if the WAC is also unavailable, we would make payment at 95 percent of 
the most recent AWP available. The proposed estimated units per day and 
status indicators for these items were displayed in Table 42 of the 
proposed rule (79 FR 41005).
    Finally, there were 35 drugs and biologicals, shown in Table 43 of 
the proposed rule (79 FR 41005 through 41006), that were payable in CY 
2013 but for which we lacked CY 2013 claims data and any other pricing 
information for the ASP methodology for the CY 2015 OPPS/ASC proposed 
rule. For CY 2010, we finalized a policy to assign status indicator 
``E'' (Not paid by Medicare when submitted on outpatient claims [any 
outpatient bill type]) whenever we lacked claims data and pricing 
information and were unable to determine the per day cost of a drug or 
biological. In addition, we noted that we would provide separate 
payment for these drugs and biologicals if pricing information 
reflecting recent sales became available mid-year for the ASP 
methodology.
    For CY 2015, as we finalized in CY 2014 (78 FR 75031), we proposed 
to continue to assign status indicator ``E'' to drugs and biologicals 
that lack CY 2013 claims data and pricing information for the ASP 
methodology. All drugs and biologicals without CY 2013 hospital claims 
data or data based on the ASP methodology that were assigned status 
indicator ``E'' on this basis at the time of the proposed rule for CY 
2015 were displayed in Table 43 of the proposed rule (79 FR 41005 
through 41006). We also proposed to continue our policy to assign the 
products status indicator ``K'' and pay for them separately for the 
remainder of CY 2015 if pricing information becomes available.
    We did not receive any specific public comments regarding our 
proposed payment for nonpass-through drugs, biologicals, and 
radiopharmaceuticals with HCPCS codes, but without OPPS hospital claims 
data. Many commenters supported our proposal to pay for separately 
payable drugs at ASP+6 percent under the statutory default. However, 
these comments were not specific to new drugs and biologicals with 
HCPCS codes but without OPPS claims data.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal without modification, including our 
proposal to assign drug or biological products status indicator ``K'' 
and pay for them separately for the remainder of CY 2015 if pricing 
information becomes available. The final estimated units per day and 
status indicators for drugs and biologicals without CY 2013 claims data 
are displayed in Table 37 below.
    We did not receive any public comments on our proposal to continue 
to assign status indicator ``E'' to drugs and biologicals that lack CY 
2013 claims data and pricing information for the ASP methodology and, 
therefore, we are finalizing this proposal without modification. All 
drugs and biologicals without CY 2013 hospital claims data and without 
pricing information for the ASP methodology that are assigned status 
indicator ``E'' on this basis at the time of this final rule with 
comment period for CY 2015 are displayed in Table 38 below.

[[Page 66895]]

                           Table 37--Drugs And Biologicals Without CY 2013 Claims Data
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated
                                                                average number
     CY 2015 HCPCS code            CY 2015 long descriptor       of units per      CY 2015 SI      CY 2015 APC
                                                                      day
----------------------------------------------------------------------------------------------------------------
90581.......................  Anthrax vaccine, for                           1               K             1422
                               subcutaneous or intramuscular
                               use.
J0215.......................  Injection, alefacept, 0.5 mg....              29               K             1633
J0365.......................  Injection, aprotonin, 10,000 kiu               1               N             1439
J0630.......................  Injection, calcitonin salmon, up               2               K             1433
                               to 400 units.
J2670.......................  Injection, tolazoline hcl, up to               1               N             1457
                               25 mg.
J3355.......................  Injection, urofollitropin, 75 iu               2               K             1741
J7196.......................  Injection, antithrombin                      268               K             1332
                               recombinant, 50 IU.
J7505.......................  Muromonab-cd3, parenteral, 5 mg.               1               N             7038
J7513.......................  Daclizumab, parenteral, 25 mg...               1               N             1612
J8650.......................  Nabilone, oral, 1 mg............               4               K             1424
J9151.......................  Injection, daunorubicin citrate,              10               K             0821
                               liposomal formulation, 10 mg.
J9215.......................  Injection, interferon, alfa-n3,                1               N             1473
                               (human leukocyte derived),
                               250,000 iu.
J9300.......................  Injection, gemtuzumab                          1               K             9004
                               ozogamicin, 5 mg.
----------------------------------------------------------------------------------------------------------------

     Table 38--Drugs and Biologicals Without CY 2013 Claims Data and Without Pricing Information for the ASP
                                                   Methodology
----------------------------------------------------------------------------------------------------------------
         CY 2015 HCPCS code                            CY 2015 long descriptor                      CY 2015 SI
----------------------------------------------------------------------------------------------------------------
90296...............................  Diphtheria antitoxin, equine, any route..................               E
90393...............................  Vaccina immune globulin, human, for intramuscular use....               E
90477...............................  Adenovirus vaccine, type 7, live, for oral use...........               E
90644...............................  Meningococcal conjugate vaccine, serogroups c & y and                   E
                                       hemophilus influenza b vaccine (hib-mency), 4 dose
                                       schedule, when administered to children 2-15 months of
                                       age, for intramuscular use.
90681...............................  Rotavirus vaccine, human, attenuated, 2 dose schedule,                  E
                                       live, for oral use.
90727...............................  Plague vaccine, for intramuscular use....................               E
J0190...............................  Injection, biperiden lactate, per 5 mg...................               E
J0205...............................  Injection, alglucerase, per 10 units.....................               E
J0350...............................  Injection, anistreplase, per 30 units....................               E
J0364...............................  Injection, apomorphine hydrochloride, 1 mg...............               E
J0395...............................  Injection, arbutamine hcl, 1 mg..........................               E
J0710...............................  Injection, cephapirin sodium, up to 1 gm.................               E
J1180...............................  Injection, dyphylline, up to 500 mg......................               E
J1435...............................  Injection estrone per 1 mg...............................               E
J1562...............................  Injection, immune globulin (vivaglobin), 100 mg..........               E
J1620...............................  Injection, gonadorelin hydrochloride, per 100 mcg........               E
J1655...............................  Injection, tinzaparin sodium, 1000 iu....................               E
J1730...............................  Injection, diazoxide, up to 300 mg.......................               E
J1835...............................  Injection, itraconazole, 50 mg...........................               E
J2460...............................  Injection, oxytetracycline hcl, up to 50 mg..............               E
J2513...............................  Injection, pentastarch, 10% solution, 100 ml.............               E
J2725...............................  Injection, protirelin, per 250 mcg.......................               E
J2670...............................  Injection, tolazoline hcl, up to 25 mg...................               E
J2725...............................  Injection, protirelin, per 250 mcg.......................               E
J2940...............................  Injection, somatrem, 1 mg................................               E
J3305...............................  Injection, trimetrexate glucuronate, per 25 mg...........               E
J3365...............................  Injection, iv, urokinase, 250,000 i.u. vial..............               E
J3400...............................  Injection, triflupromazine hcl, up to 20 mg..............               E
J8562...............................  Fludarabine phosphate, oral, 10 mg.......................               E
J9165...............................  Injection, diethylstilbestrol diphosphate, 250 mg........               E
J9212...............................  Injection, interferon alfacon-1, recombinant, 1 microgram               E
J9219...............................  Leuprolide acetate implant, 65 mg........................               E
Q0174...............................  Thiethylperazine maleate, 10 mg, oral, fda approved                     E
                                       prescription anti-emetic, for use as a complete
                                       therapeutic substitute for an iv anti-emetic at the time
                                       of chemotherapy treatment, not to exceed a 48 hour
                                       dosage regimen.
Q0515...............................  Injection, sermorelin acetate, 1 microgram...............               E
----------------------------------------------------------------------------------------------------------------

[[Page 66896]]

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

A. Background

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payments for drugs, biologicals, 
radiopharmaceuticals, and categories of devices for a given year to an 
``applicable percentage,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget neutral, as required by 
section 1833(t)(6)(E) of the Act.
    For devices, developing an estimate of pass-through spending in CY 
2015 entails estimating spending for two groups of items. The first 
group of items consists of device categories that are currently 
eligible for pass-through payment and that will continue to be eligible 
for pass-through payment in CY 2015. The CY 2008 OPPS/ASC final rule 
with comment period (72 FR 66778) describes the methodology we have 
used in previous years to develop the pass-through spending estimate 
for known device categories continuing into the applicable update year. 
The second group of items consists of items that we know are newly 
eligible, or project may be newly eligible, for device pass-through 
payment beginning in CY 2015. The sum of the CY 2015 pass-through 
estimates for these two groups of device categories equals the total CY 
2015 pass-through spending estimate for device categories with pass-
through status. We base the device pass-through estimated payments for 
each device category on the amount of payment as established in section 
1833(t)(6)(D)(ii) of the Act, and as outlined in previous rules, 
including the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75034 through 75036). We note that, beginning in CY 2010, the pass-
through evaluation process and pass-through payment for implantable 
biologicals newly approved for pass-through payment beginning on or 
after January 1, 2010 that are surgically inserted or implanted 
(through a surgical incision or a natural orifice) is the device pass-
through process and payment methodology (74 FR 60476). As has been our 
past practice (76 FR 74335), in the CY 2015 OPPS/ASC proposed rule (79 
FR 41007), for CY 2015, we proposed to include an estimate of any 
implantable biologicals eligible for pass-through payment in our 
estimate of pass-through spending for devices. We also proposed that, 
beginning in CY 2015, applications for pass-through payment for skin 
substitutes and similar products be evaluated using the medical device 
pass-through process and payment methodology. We proposed that the last 
skin substitute pass-through applications evaluated using the drugs and 
biologicals pass-through evaluation process would be those with an 
application deadline of September 1, 2014, and an earliest effective 
date of January 1, 2015. Therefore, in light of this proposal, we 
proposed to change the December 1, 2014 pass-through application 
deadline (for an earliest effective date of April 1, 2015) for both 
drugs and biologicals and devices to January 15, 2015, in order to 
provide sufficient time for applicants to adjust to the new policies 
and procedures that will be in effect as of January 1, 2015. We discuss 
our proposal to change the pass-through evaluation process for skin 
substitutes and address comments to this proposal and the proposal to 
change the April 1, 2015 pass-through effective date application 
deadline in section V.B.2.d. of this final rule with comment period, 
where we explain that we are finalizing this proposal. Therefore, 
beginning in CY 2015, we will include an estimate of any skin 
substitutes eligible for pass-through payment in our estimate of pass-
through spending for devices.
    We did not receive any public comments on our proposed methodology 
or proposed estimate for pass-through spending for devices. Therefore, 
we are finalizing our proposal to base the pass-through estimate for 
devices on our established methodology, as described above. Moreover, 
we are finalizing our proposal, beginning in CY 2015 and in future 
years, to include an estimate of any skin substitutes eligible for 
pass-through payment 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. We note that the Part B drug CAP program has been postponed 
since CY 2009, and such a program has not been reinstated for CY 2015. 
Because, as we proposed, we will pay for most nonpass-through 
separately payable drugs and biologicals under the CY 2015 OPPS at 
ASP+6 percent, as we discuss in section V.B.3. of the proposed rule and 
this final rule with comment period, which represents the otherwise 
applicable fee schedule amount associated with most pass-through drugs 
and biologicals, and because, as we proposed, we will pay for CY 2015 
pass-through drugs and biologicals at ASP+6 percent, as we discuss in 
section V.A. of the proposed rule and this final rule with comment 
period, our estimate of drug and biological pass-through payment for CY 
2015 for this group of items is $0, as discussed below.
    Furthermore, payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents, without pass-through status 
will always be packaged into payment for the associated procedures and 
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure and drugs and biologicals that function as 
supplies when used in a surgical procedure, as discussed in section 
II.A.3. of this final rule with comment period. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41007), we proposed that all of these policy-
packaged drugs and biologicals with pass-through status would be paid 
at ASP+6 percent, like other pass-through drugs and biologicals, for CY 
2015. Therefore, our estimate of pass-through payment for policy-
packaged drugs and biologicals with pass-through status approved prior 
to CY 2015 is not $0. In section V.A.4. of this final rule with comment 
period, we discuss our

[[Page 66897]]

proposed and finalized 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 drugs or biologicals, the APC offset amount is 
the portion of the APC payment for the specific procedure performed 
with the pass-through drug or biological, which we refer to as the 
policy-packaged drug APC offset amount. If we determine that an offset 
is appropriate for a specific policy-packaged drug or biological 
receiving pass-through payment, we reduce our estimate of pass-through 
payments for these drugs or biologicals by this amount.
    Similar to pass-through estimates for devices, the first group of 
drugs and biologicals requiring a pass-through payment estimate 
consists of those products that were recently made eligible for pass-
through payment and that will continue to be eligible for pass-through 
payment in CY 2015. The second group contains drugs and biologicals 
that we know are newly eligible, or project will be newly eligible, 
beginning in CY 2015. The sum of the CY 2015 pass-through estimates for 
these two groups of drugs and biologicals equals the total CY 2015 
pass-through spending estimate for drugs and biologicals with pass-
through status.

B. Estimate of Pass-Through Spending

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41007), we proposed to 
set the applicable pass-through payment percentage limit at 2.0 percent 
of the total projected OPPS payments for CY 2015, consistent with 
section 1833(t)(6)(E)(ii)(II) of the Act, and our OPPS policy from CY 
2004 through CY 2014 (78 FR 75034 through 75036).
    For the first group of devices for pass-through payment estimation 
purposes, there is one device category, HCPCS code C1841 (Retinal 
prosthesis, includes all internal and external components), eligible 
for pass-through payment as of October 1, 2013, continuing to be 
eligible for CY 2014, and that will continue to be eligible for pass-
through payment for CY 2015. Based on the one device category, HCPCS 
code C1841, we are finalizing our proposed rule estimate for the first 
group of devices of $0.5 million.
    In estimating our CY 2015 pass-through spending for device 
categories in the second group, we include: Device categories that we 
knew at the time of the development of the final rule will be newly 
eligible for pass-through payment in CY 2015; additional device 
categories that we estimate could be approved for pass-through status 
subsequent to the development of the final rule and before January 1, 
2015; and contingent projections for new device categories established 
in the second through fourth quarters of CY 2015. 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 proposed rule, the estimate of CY 2015 pass-through spending 
for this second group of device categories was $10.0 million. We did 
not receive any public comments regarding our proposed pass-through 
estimate for devices. We are establishing one new device category 
subsequent to the publication of the proposed rule, HCPCS code C2624 
(Implantable wireless pulmonary artery pressure sensor with delivery 
catheter, including all system components), that will be effective 
January 1, 2015. We estimate that HCPCS code C2624 will cost $50.5 
million in pass-through expenditures in CY 2015. Therefore, for this CY 
2015 OPPS/ASC final rule with comment period, the estimate of CY 2015 
pass-through spending for this second group of device categories is 
$60.5 million.
    To estimate CY 2015 pass-through spending for drugs and biologicals 
in the first group, specifically those drugs and biologicals recently 
made eligible for pass-through payment and continuing on pass-through 
payment status for CY 2015, we proposed to utilize the most recent 
Medicare physician claims data regarding their utilization, information 
provided in the respective pass-through applications, historical 
hospital claims data, pharmaceutical industry information, and clinical 
information regarding those drugs or biologicals to project the CY 2015 
OPPS utilization of the products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2015, we estimate the pass-through 
payment amount as the difference between ASP+6 percent and the payment 
rate for nonpass-through drugs and biologicals that will be separately 
paid at ASP+6 percent, which is zero for this group of drugs. Because 
payment for policy-packaged drugs and biologicals is packaged if the 
product was not paid separately due to its pass-through status, we 
proposed to include in the CY 2015 pass-through estimate the difference 
between payment for the policy-packaged drug or biological at ASP+6 
percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC 
information is not available) and the policy-packaged drug APC offset 
amount, if we determine that the policy-packaged drug or biological 
approved for pass-through payment resembles a predecessor drug or 
biological already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment. For the 
proposed rule, using the methodology described above, we calculated a 
CY 2015 proposed spending estimate for this first group of drugs and 
biologicals of approximately $2.8 million.
    We did not receive any public comments on our proposed methodology 
for calculating for calculating the spending estimate for the first 
group of drugs and biologicals.
    For this final rule with comment period, using the methodology 
described above, we calculated a final CY 2015 spending estimate for 
this first group of drugs and biologicals of approximately $11.7 
million.
    To estimate proposed CY 2015 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
know are newly eligible, or project will be newly eligible, beginning 
in CY 2015), in the CY 2015 OPPS/ASC proposed rule (79 FR 41008), 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 
2015 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 2015 
pass-through payments for this second group of drugs, we calculated a 
proposed spending estimate for this second group of drugs and 
biologicals of approximately $2.2 million.
    We did not receive any public comments on our proposed methodology 
for calculating for

[[Page 66898]]

calculating the spending estimate for the second group of drugs and 
nonimplantable biologicals.
    For this final rule with comment period, using our finalized 
methodology for estimating CY 2015 pass-through payments for this 
second group of drugs, we calculated a spending estimate for this 
second group of drugs and biologicals of approximately $10.1 million. 
Our CY 2015 estimate for total pass-through spending for drugs and 
biologicals (spending for the first group of drugs and biologicals 
($11.7 million) plus spending for the second group of drugs and 
biologicals ($10.1 million)) equals $21.8 million.
    In summary, in accordance with the methodology described above in 
this section, for this final rule with comment period, we estimate that 
total pass-through spending for the device categories and the drugs and 
biologicals that are continuing to receive pass-through payment in CY 
2015 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2015 will be 
approximately $82.8 million (approximately $61.0 million for device 
categories and approximately $21.8 million for drugs and biologicals), 
which represents 0.15 percent of total projected OPPS payments for CY 
2015. Therefore, we estimate that pass-through spending in CY 2015 will 
not amount to 2.0 percent of total projected OPPS CY 2015 program 
spending.

VII. OPPS Payment for Hospital Outpatient Visits

A. Payment for Hospital Outpatient Clinic and Emergency Department 
Visits

    Since April 7, 2000, we have instructed hospitals to report 
facility resources for clinic and ED hospital outpatient visits using 
the CPT E/M codes and to develop internal hospital guidelines for 
reporting the appropriate visit level (65 FR 18451). Because a national 
set of hospital-specific codes and guidelines do not currently exist, 
we have advised hospitals that each hospital's internal guidelines that 
determine the levels of clinic and ED visits to be reported should 
follow the intent of the CPT code descriptors, in that the guidelines 
should be designed to reasonably relate the intensity of hospital 
resources to the different levels of effort represented by the codes.
    While many hospitals have advocated for hospital-specific national 
guidelines for visit billing since the OPPS started in 2000, and we 
have signaled in past rulemaking our intent to develop guidelines, this 
complex undertaking has proven challenging. Our work with interested 
stakeholders, such as hospital associations, along with a contractor, 
has confirmed that no single approach could consistently and accurately 
capture hospitals' relative costs. Public comments received on this 
issue, as well as our own knowledge of how clinics operate, have led us 
to conclude that it is not feasible to adopt a set of national 
guidelines for reporting hospital clinic visits that can accommodate 
the enormous variety of patient populations and service-mix provided by 
hospitals of all types and sizes throughout the country. Moreover, no 
single approach has been broadly endorsed by the stakeholder community.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 
through 75045), we finalized a new policy which created an alphanumeric 
HCPCS code, G0463 (Hospital outpatient clinic visit for assessment and 
management of a patient), for hospital use only representing any and 
all clinic visits under the OPPS and assigned HCPCS code G0463 to new 
APC 0634. We also finalized a policy to use CY 2012 claims data to 
develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on 
the total geometric mean cost of the levels one through five CPT E/M 
codes for clinic visits previously recognized under the OPPS (CPT codes 
99201 through 99205 and 99211 through 99215). In addition, we finalized 
a policy to no longer recognize a distinction between new and 
established patient clinic visits.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 
through 75043), we also stated our policy that we would continue to use 
our existing methodology to recognize the existing CPT codes for Type A 
ED visits as well as the five HCPCS codes that apply to Type B ED 
visits, and to establish the OPPS payment under our established 
standard process. We refer readers to the CY 2014 OPPS/ASC final rule 
with comment period for a detailed discussion of the public comments 
and our rationale for the CY 2014 policies.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41008 through 41009), 
for CY 2015, we proposed to continue the current policy, adopted in CY 
2014, for clinic and ED visits. HCPCS code G0463 (for hospital use 
only) will represent any and all clinic visits under the OPPS. We 
proposed to continue to assign HCPCS code G0463 to APC 0634. We 
proposed to use CY 2013 claims data to develop the CY 2015 OPPS payment 
rates for HCPCS code G0463 based on the total geometric mean cost of 
the levels one through five CPT E/M codes for clinic visits currently 
recognized under the OPPS (CPT codes 99201 through 99205 and 99211 
through 99215). Finally, as we established in the CY 2014 OPPS/ASC 
final rule with comment period, there is no longer a policy to 
recognize a distinction between new and established patient clinic 
visits.
    Comment: Commenters requested that CMS discontinue the single HCPCS 
G-code for reporting clinic visits and return to a reporting structure 
that recognizes differences in clinical acuity and resource 
utilization. The commenters expressed concern that CMS' clinic visit 
coding proposal creates a payment bias that unfairly penalizes certain 
providers, such as trauma centers, cancer hospitals, and major teaching 
hospitals, which provide care for more severely ill Medicare 
beneficiaries. One commenter urged CMS to carefully review its 
ratesetting process for HCPCS code G0463 to ensure that claims 
containing packaged services that are intended to be part of the 
hospital clinic rates are not being excluded from the payment 
computations, thereby creating artificially low rates. Another 
commenter recommended that CMS work with the American Medical 
Association (AMA) to develop facility-specific CPT codes for E/M clinic 
visits (with no distinction between new and established patients) and 
seek input from industry stakeholders to develop descriptions for these 
new codes that allow for their consistent application by hospital 
outpatient clinics/facilities.
    Response: We believe that the spectrum of hospital resources 
provided during an outpatient hospital clinic visit is appropriately 
captured and reflected in the single level payment for clinic visits. 
We also believe that the single visit code is consistent with a 
prospective payment system, where payment is based on an average 
estimated relative cost for the service, although the cost of 
individual cases may be more or less costly than the average. We 
believe the proposed payment rate for APC 0634 represents an 
appropriate payment for clinic visits, as it is based on the geometric 
mean costs of all visits. Although the cost for any given clinic visit 
may be higher or lower than the geometric mean cost of APC 0634, the 
payment remains appropriate to the hospital delivering a variety of 
clinic visits. The high volume of claims from every level of clinic CPT 
code that we used for ratesetting for HCPCS code G0463 allows us to 
have accurate data upon which to develop appropriate payment rates.
    With regard to specific concerns for hospitals that treat patients 
with a more

[[Page 66899]]

complex case-mix, we note that the relatively low estimated cost of 
clinic visits overall would result in much less underpayment or 
overpayment for hospitals that may serve a population with a more 
complex case-mix. As we stated in the CY 2015 OPPS/ASC proposed rule 
(79 FR 41008), we proposed to use CY 2013 claims data to develop the CY 
2015 OPPS payment rates for HCPCS code G0463 based on the total 
geometric mean cost of the levels one through five CPT E/M codes for 
clinic visits currently recognized under the OPPS (CPT codes 99201 
through 99205 and 99211 through 99215). We note that claims containing 
packaged services that are intended to be part of the hospital clinic 
rates are not excluded from payment computations for HCPCS code G0463, 
consistent with our application of our line-item trim as described in 
section II.A.2.a. of this final rule with comment period. The line-item 
trim described in section II.A.2.a. of this final rule with comment 
period requires the lines to be eligible for payment in both the claims 
year and the prospective years. Therefore, the lines that would be 
packaged when modeling clinic visits would not be subject to this trim. 
For a more detailed discussion of the OPPS data process, we refer 
readers to section II.A. of this final rule with comment period.
    With regard to the potential for facility-specific CPT codes, as we 
have stated in the past (76 FR 74346), if the AMA were to create 
facility-specific CPT codes for reporting visits provided in HOPDs 
(based on internally developed guidelines), we would consider such 
codes for OPPS use.
    After consideration of the public comments we received, we are 
finalizing our CY 2015 proposal, without modification, to continue to 
use HCPCS code G0463 (for hospital use only) to represent any and all 
clinic visits under the OPPS for CY 2015. In addition, for CY 2015 we 
are finalizing our proposals, without modification, to continue to 
assign HCPCS code G0463 to APC 0634 and to use CY 2013 claims data to 
develop the CY 2015 OPPS payment rates for HCPCS code G0463 based on 
the total geometric mean cost of the levels one through five CPT E/M 
codes for clinic visits currently recognized under the OPPS (CPT codes 
99201 through 99205 and 99211 through 99215).
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75040), we stated that additional study was needed to fully assess the 
most suitable payment structure for ED visits, including the particular 
number of visit levels that would not underrepresent resources required 
to treat the most complex patients, such as trauma patients and that we 
believed it was best to delay any change in ED visit coding while we 
reevaluate the most appropriate payment structure for Type A and Type B 
ED visits. At this time, we continue to believe that additional study 
is needed to assess the most suitable payment structure for ED visits. 
In the CY 2015 OPPS/ASC proposed rule, we did not propose any change in 
ED visit coding. Rather, for CY 2015, we proposed to continue to use 
our existing methodology to recognize the existing CPT codes for Type A 
ED visits as well as the five HCPCS codes that apply to Type B ED 
visits, and to establish the CY 2015 proposed OPPS payment rates using 
our established standard process. We stated that we intend to further 
explore the issues described above related to ED visits, including 
concerns about excessively costly patients, such as trauma patients. We 
also stated that we may propose changes to the coding and APC 
assignments for ED visits in future rulemaking.
    Comment: Commenters supported CMS' proposal to continue its current 
methodology to recognize the existing five CPT codes for Type A ED 
visits, as well as the five HCPCS codes for Type B ED visits, and to 
establish the associated CY 2015 OPPS payment rates using its standard 
process. Commenters commended CMS for proceeding with caution and 
agreed that additional study is needed on the appropriate payment 
structure for ED visits. Commenters also expressed their desire to work 
with CMS on a future policy proposal to create an appropriate payment 
structure for ED visits. Some commenters stated that one level of 
hospital ED payment is not appropriate for the various levels of 
resources required in ED visits, especially at major teaching 
hospitals, and expressed concern that a single level of ED visit 
payment would create a payment bias that would unfairly penalize 
certain providers, such as trauma centers and major teaching hospitals, 
which provide care for more severely ill Medicare beneficiaries. One 
commenter requested that CMS continue with its current ED visit payment 
policy for the foreseeable future and no longer attempt to make future 
changes to the policy in the coming years. Another commenter 
recommended that CMS work with the AMA to develop facility-specific CPT 
codes for Type A ED visits and Type B ED visits and seek input from 
industry stakeholders to develop descriptions for these new codes that 
allow for their consistent application by hospital outpatient clinics/
facilities.
    Response: We appreciate the commenters' support of our proposal to 
continue the current coding structure for ED visits while we continue 
to study the most appropriate payment structure for Type A and Type B 
ED visits. As discussed above, we received multiple comments that a 
single payment for an ED visit might underrepresent resources required 
to treat the most complex patients, such as trauma patients. As we have 
stated before (78 FR 75040), considering this issue requires additional 
study. As we continue to give additional study to this issue, we 
continue to welcome stakeholder input on the particular number of visit 
levels that would not underrepresent resources required to treat the 
most complex patients, such as trauma patients.
    With regard to the potential for facility-specific CPT codes, as we 
have also stated in the past (76 FR 74346), if the AMA were to create 
facility-specific CPT codes for reporting visits provided in HOPDs 
(based on internally developed guidelines), we would consider such 
codes for OPPS use.
    Comment: One commenter recommended, on a short-term basis, that CMS 
develop a set of three trauma[hyphen]specific HCPCS codes for all 
trauma patients, for whom a trauma team is activated.
    Response: We appreciate the alternative presented by the commenter. 
We will take this recommendation into consideration as we continue to 
study and fully consider the most appropriate payment structure for 
Type A and Type B ED visits.
    After consideration of the public comments we received, we are 
finalizing our proposals, without modification, to continue to use our 
existing methodology to recognize the existing CPT codes for Type A ED 
visits as well as the five HCPCS codes that apply to Type B ED visits, 
and to establish the CY 2015 OPPS payment rates using our established 
standard process. We intend to further explore the issues described 
above related to ED visits, including concerns about excessively costly 
patients, such as trauma patients. We note that we may propose changes 
to the coding and APC assignments for ED visits in the future 
rulemaking.

B. Payment for Critical Care Services

    For the history of the payment policy for critical care services, 
we refer readers to the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75043). In the CY 2014 OPPS/ASC final rule with comment period, 
we

[[Page 66900]]

continued to use the methodology established in the CY 2011 OPPS/ASC 
final rule with comment period for calculating a payment rate for 
critical care services that includes packaged payment of ancillary 
services, for example electrocardiograms, chest X-rays, and pulse 
oximetry. Critical care services are described by CPT codes 99291 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; first 30-74 minutes) and 99292 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; each additional 30 minutes (List separately in 
addition to code for primary service)).
    As we discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 
41009), compared to the CY 2012 hospital claims data used for the CY 
2014 OPPS ratesetting, the CY 2013 hospital claims data used for the CY 
2015 OPPS ratesetting again show increases in the geometric mean line 
item costs as well as the geometric mean line item charges for CPT code 
99291, which continue to suggest that hospitals' billing practices for 
CPT code 99291 have remained the same. Because the CY 2013 claims data 
do not support any significant change in hospital billing practices for 
critical care services, we stated in the proposed rule that we continue 
to believe that it would be inappropriate to pay separately for the 
ancillary services that hospitals typically report in addition to CPT 
codes for critical care services. Therefore, for CY 2015, we proposed 
to continue our policy (that has been in place since CY 2011) to 
recognize the existing CPT codes for critical care services and 
establish a payment rate based on historical claims data. We also 
proposed to continue to implement claims processing edits that 
conditionally package payment for the ancillary services that are 
reported on the same date of service as critical care services in order 
to avoid overpayment. We stated that we will continue to monitor the 
hospital claims data for CPT code 99291 in order to determine whether 
revisions to this policy are warranted based on changes in hospitals' 
billing practices.
    We did not receive any public comments on this issue. Accordingly, 
we are finalizing our proposals, without modification, to continue our 
policy to recognize the existing CPT codes for critical care services 
and establish a payment rate based on historical claims data, and to 
continue to implement claims processing edits that conditionally 
package payment for the ancillary services that are reported on the 
same date of service as critical care services in order to avoid 
overpayment.

VIII. Payment for Partial Hospitalization Services

A. Background

    Partial hospitalization is an intensive outpatient program of 
psychiatric services provided to patients as an alternative to 
inpatient psychiatric care for individuals who have an acute mental 
illness. Section 1861(ff)(1) of the Act defines partial hospitalization 
services as ``the items and services described in paragraph (2) 
prescribed by a physician and provided under a program described in 
paragraph (3) under the supervision of a physician pursuant to an 
individualized, written plan of treatment established and periodically 
reviewed by a physician (in consultation with appropriate staff 
participating in such program), which sets forth the physician's 
diagnosis, the type, amount, frequency, and duration of the items and 
services provided under the plan, and the goals for treatment under the 
plan.'' Section 1861(ff)(2) of the Act describes the items and services 
included in partial hospitalization services. Section 1861(ff)(3)(A) of 
the Act specifies that a partial hospitalization program (PHP) is a 
program furnished by a hospital to its outpatients or by a community 
mental health center (CMHC) (as defined in subparagraph (B)), and 
``which is a distinct and organized intensive ambulatory treatment 
service offering less than 24-hour-daily care other than in an 
individual's home or in an inpatient or residential setting.'' Section 
1861(ff)(3)(B) of the Act defines a community mental health center for 
purposes of this benefit.
    Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the 
authority to designate the OPD services to be covered under the OPPS. 
The Medicare regulations that implement this provision specify, under 
42 CFR 419.21, that payments under the OPPS will be made for partial 
hospitalization services furnished by CMHCs as well as Medicare Part B 
services furnished to hospital outpatients designated by the Secretary, 
which include partial hospitalization services (65 FR 18444 through 
18445).
    Section 1833(t)(2)(C) of the Act, in pertinent part, requires the 
Secretary to ``establish relative payment weights for covered OPD 
services (and any groups of such services described in subparagraph 
(B)) based on median (or, at the election of the Secretary, mean) 
hospital costs'' using data on claims from 1996 and data from the most 
recent available cost reports. In pertinent part, subparagraph (B) 
provides that the Secretary may establish groups of covered OPD 
services, within a classification system developed by the Secretary for 
covered OPD services, so that services classified within each group are 
comparable clinically and with respect to the use of resources. In 
accordance with these provisions, we have developed the PHP APCs. 
Section 1833(t)(9)(A) of the Act requires the Secretary to ``review not 
less often than annually and revise the groups, the relative payment 
weights, and the wage and other adjustments described in paragraph (2) 
to take into account changes in medical practice, changes in 
technology, the addition of new services, new cost data, and other 
relevant information and factors.''
    Because a day of care is the unit that defines the structure and 
scheduling of partial hospitalization services, we established a per 
diem payment methodology for the PHP APCs, effective for services 
furnished on or after July 1, 2000 (65 FR 18452 through 18455). Under 
this methodology, the median per diem costs have been used to calculate 
the relative payment weights for PHP APCs.
    From CY 2003 through CY 2006, the median per diem costs for CMHCs 
fluctuated significantly from year to year, while the median per diem 
costs for hospital-based PHPs remained relatively constant. We were 
concerned that CMHCs may have increased and decreased their charges in 
response to Medicare payment policies. Therefore, we began efforts to 
strengthen the PHP benefit through extensive data analysis and policy 
and payment changes finalized in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66670 through 66676). We made two refinements to 
the methodology for computing the PHP median: The first remapped 10 
revenue codes that are common among hospital-based PHP claims to the 
most appropriate cost centers; and the second refined our methodology 
for computing the PHP median per diem cost by computing a separate per 
diem cost for each day rather than for each bill. We refer readers to a 
complete discussion of these refinements in the CY 2008 OPPS/ASC final 
rule with comment period (72 FR 66670 through 66676).
    In CY 2009, we implemented several regulatory, policy, and payment 
changes, including a two-tiered payment approach for PHP services under 
which we paid one amount for days with 3 services (APC 0172 Level I 
Partial Hospitalization) and a higher amount for days with 4 or more 
services

[[Page 66901]]

(APC 0173 Level II Partial Hospitalization). We refer readers to 
section X.B. of the CY 2009 OPPS/ASC final rule with comment period (73 
FR 68688 through 68693) for a full discussion of the two-tiered payment 
system. In addition, for CY 2009, we finalized our policy to deny 
payment for any PHP claims submitted for days when fewer than 3 units 
of therapeutic services are provided (73 FR 68694).
    Furthermore, for CY 2009, we revised the regulations at 42 CFR 
410.43 to codify existing basic PHP patient eligibility criteria and to 
add a reference to current physician certification requirements under 
42 CFR 424.24 to conform our regulations to our longstanding policy (73 
FR 68694 through 68695). These changes have helped to strengthen the 
PHP benefit. We also revised the partial hospitalization benefit to 
include several coding updates. We refer readers to section X.C.3. of 
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68695 
through 68697) for a full discussion of these requirements.
    For CY 2010, we retained the two-tiered payment approach for PHP 
services and used only hospital-based PHP data in computing the APC per 
diem payment rates. We used only hospital-based PHP data because we 
were concerned about further reducing both PHP APC per diem payment 
rates without knowing the impact of the policy and payment changes we 
made in CY 2009. Because of the 2-year lag between data collection and 
rulemaking, the changes we made in CY 2009 were reflected for the first 
time in the claims data that we used to determine payment rates for the 
CY 2011 rulemaking (74 FR 60556 through 60559).
    In CY 2011, in accordance with section 1301(b) of the Health Care 
and Education Reconciliation Act of 2010 (HCERA 2010), we amended the 
description of a PHP in our regulations to specify that a PHP must be a 
distinct and organized intensive ambulatory treatment program offering 
less than 24-hour daily care ``other than in an individual's home or in 
an inpatient or residential setting.'' In addition, in accordance with 
section 1301(a) of HCERA 2010, we revised the definition of a CMHC in 
the regulations to conform to the revised definition now set forth 
under section 1861(ff)(3)(B) of the Act. We discussed our finalized 
policies for these two provisions of HCERA 2010 in section X.C. of the 
CY 2011 OPPS/ASC final rule with comment period (75 FR 71990).
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71994), we also established four separate PHP APC per diem payment 
rates, two for CMHCs (for Level I and Level II services) and two for 
hospital-based PHPs (for Level I and Level II services), based on each 
provider's own unique data. As stated in the CY 2011 OPPS/ASC proposed 
rule (75 FR 46300) and the final rule with comment period (75 FR 
71991), for CY 2011, using CY 2009 claims data, CMHC costs had 
significantly decreased again. We attributed the decrease to the lower 
cost structure of CMHCs compared to hospital-based PHP providers, and 
not the impact of the CY 2009 policies. CMHCs have a lower cost 
structure than hospital-based PHP providers, in part, because the data 
showed that CMHCs generally provide fewer PHP services in a day and use 
less costly staff than hospital-based PHPs. Therefore, it was 
inappropriate to continue to treat CMHCs and hospital-based providers 
in the same manner regarding payment, particularly in light of such 
disparate differences in costs. We also were concerned that paying 
hospital-based PHPs at a lower rate than their cost structure reflects 
could lead to hospital-based PHP closures and possible access problems 
for Medicare beneficiaries because hospital-based PHPs are located 
throughout the country and, therefore, offer the widest access to PHP 
services. Creating the four payment rates (two for CMHCs and two for 
hospital-based PHPs) based on each provider's data supported continued 
access to the PHP benefit, while also providing appropriate payment 
based on the unique cost structures of CMHCs and hospital-based PHPs. 
In addition, separation of data by provider type was supported by 
several hospital-based PHP commenters who responded to the CY 2011 
OPPS/ASC proposed rule (75 FR 71992).
    For CY 2011, we instituted a 2-year transition period for CMHCs to 
the CMHC APC per diem payment rates based solely on CMHC data. For CY 
2011, under the transition methodology, CMHC PHP APCs Level I and Level 
II per diem costs were calculated by taking 50 percent of the 
difference between the CY 2010 final hospital-based PHP median costs 
and the CY 2011 final CMHC median costs and then adding that number to 
the CY 2011 final CMHC median costs. A 2-year transition under this 
methodology moved us in the direction of our goal, which is to pay 
appropriately for PHP services based on each provider type's data, 
while at the same time allowing providers time to adjust their business 
operations and protect access to care for beneficiaries. We also stated 
that we would review and analyze the data during the CY 2012 rulemaking 
cycle and, based on these analyses, we might further refine the payment 
mechanism. We refer readers to section X.B. of the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 71991 through 71994) for a full 
discussion.
    After publication of the CY 2011 OPPS/ASC final rule with comment 
period, a CMHC and one of its patients filed an application for a 
preliminary injunction, challenging the OPPS payment rates for PHP 
services provided by CMHCs in CY 2011 as adopted in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 71995). We refer readers to 
the court case, Paladin Cmty. Mental Health Ctr. v. Sebelius, 2011 WL 
3102049 (W.D.Tex. 2011), aff'd, 684 F.3d 527 (5th Cir. 2012) (Paladin). 
The plaintiffs in the Paladin case challenged the agency's use of cost 
data derived from both hospitals and CMHCs in determining the relative 
payment weights for the OPPS payment rates for PHP services furnished 
by CMHCs, alleging that section 1833(t)(2)(C) of the Act requires that 
such relative payment weights be based on cost data derived solely from 
hospitals. As discussed above, section 1833(t)(2)(C) of the Act 
requires CMS to ``establish relative payment weights for covered OPD 
services (and any groups of such services . . .) . . . based on . . . 
hospital costs.'' Numerous courts have held that ``based on'' does not 
mean ``based exclusively on.'' On July 25, 2011, the District Court 
dismissed the plaintiffs' complaint and application for a preliminary 
injunction for lack of subject-matter jurisdiction, which the 
plaintiffs appealed to the United States Court of Appeals for the Fifth 
Circuit. On June 15, 2012, the Court of Appeals affirmed the District 
Court's dismissal for lack of subject-matter jurisdiction and found 
that the Secretary's payment rate determinations for PHP services are 
not a facial violation of a clear statutory mandate (Paladin, 684 F.3d 
at 533).
    For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74348 through 74352), we determined the relative 
payment weights for PHP services provided by CMHCs based on data 
derived solely from CMHCs and the relative payment weights for 
hospital-based PHP services based exclusively on hospital data. The 
statute is reasonably interpreted to allow the relative payment weights 
for the OPPS payment rates for PHP services provided by CMHCs to be 
based solely on CMHC data and relative payment weights for hospital-
based PHP services to be based exclusively on hospital data. Section 
1833(t)(2)(C) of the Act requires the

[[Page 66902]]

Secretary to ``establish relative payment weights for covered OPD 
services (and any groups of such services described in subparagraph 
(B)) based on . . . hospital costs.'' In pertinent part, subparagraph 
(B) provides that ``the Secretary may establish groups of covered OPD 
services . . . so that services classified within each group are 
comparable clinically and with respect to the use of resources.'' In 
accordance with subparagraph (B), we developed the PHP APCs, as set 
forth in Sec.  419.31 of the regulations (65 FR 18446 and 18447; 63 FR 
47559 through 47562 and 47567 through 47569). As discussed above, PHP 
services are grouped into APCs.
    Based on section 1833(t)(2)(C) of the Act, we believe that the word 
``establish'' can be interpreted as applying to APCs at the inception 
of the OPPS in 2000 or whenever a new APC is added to the OPPS. In 
creating the original APC for PHP services (APC 0033), we did 
``establish'' the initial relative payment weight for PHP services, 
provided in both hospital-based and CMHC-based settings, only on the 
basis of hospital data. Subsequently, from CY 2003 through CY 2008, the 
relative payment weights for PHP services were based on a combination 
of hospital and CMHC data. For CY 2009, we established new APCs for PHP 
services based exclusively on hospital data. Specifically, we adopted a 
two-tiered APC methodology (in lieu of the original APC 0033) under 
which CMS paid one rate for days with 3 services (APC 0172) and a 
different payment rate for days with 4 or more services (APC 0173). 
These two new APCs were established using only hospital data. For CY 
2011, we added two new APCs (APCs 0175 and 0176) for PHP services 
provided by hospitals and based the relative payment weights for these 
APCs solely on hospital data. APCs 0172 and 0173 were designated for 
PHP services provided by CMHCs and were based on a mixture of hospital 
and CMHC data. As the Secretary argued in the Paladin case, the courts 
have consistently held that the phrase ``based on'' does not mean 
``based exclusively on.'' Thus, the relative payment weights for the 
two APCs for PHP services provided by CMHCs in CY 2011 were ``based 
on'' hospital data, no less than the relative payment weights for the 
two APCs for hospital-based PHP services.
    Although we used hospital data to establish the relative payment 
weights for APCs 0033, 0172, 0173, 0175, and 0176 for PHP services, we 
believe that we have the authority to discontinue the use of hospital 
data in determining the OPPS relative payment weights for PHP services 
provided by CMHCs. Other parts of section 1833(t)(2)(C) of the Act make 
plain that the data source for the relative payment weights is subject 
to change from one period to another. Section 1833(t)(2)(C) of the Act 
provides that, in establishing the relative payment weights, ``the 
Secretary shall . . . us[e] data on claims from 1996 and us[e] data 
from the most recent available cost reports.'' We used 1996 data (in 
addition to 1997 data) in determining only the original relative 
payment weights for 2000. In the ensuing calendar year updates, we 
continually used more recent cost report data.
    Moreover, section 1833(t)(9)(A) of the Act requires the Secretary 
to ``review not less often than annually and revise the groups, the 
relative payment weights, and the wage and other adjustments described 
in paragraph (2) to take into account changes in medical practice, 
changes in technology, the addition of new services, new cost data, and 
other relevant information and factors.'' For purposes of the CY 2012 
update, we exercised our authority under section 1833(t)(9)(A) of the 
Act to change the data source for the relative payment weights for PHP 
services provided by CMHCs based on ``new cost data, and other relevant 
information and factors.''
    In the CY 2014 OPPS/ASC final rule with comment period, we 
finalized our proposal to base the relative payment weights that 
underpin the OPPS APCs, including the four PHP APCs, on geometric mean 
costs rather than on the median costs. For CY 2014, we established the 
four PHP APC per diem payment rates based on geometric mean cost levels 
calculated using the most recent claims and cost data for each provider 
type. We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period for a more detailed discussion (78 FR 75047 through 75050).

B. PHP APC Update for CY 2015

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41009 through 41012), 
for CY 2015, we proposed to continue 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 and cost data for each 
provider type. We computed proposed CMHC PHP APC geometric mean per 
diem costs for Level I (3 services per day) and Level II (4 or more 
services per day) PHP services using only CY 2013 CMHC claims data and 
the most recent cost data, and proposed hospital-based PHP APC 
geometric mean per diem costs for Level I and Level II PHP services 
using only CY 2013 hospital-based PHP claims data and the most recent 
cost report data. These proposed geometric mean per diem costs were 
shown in Table 44 of the CY 2015 OPPS/ASC proposed rule (79 FR 41011). 
To prevent confusion, we will refer to the per diem information listed 
in Table 44 of the proposed rule and Tables 39 and 40 of this final 
rule with comment period as the PHP APC per diem costs or the PHP APC 
geometric mean per diem costs, and the per diem information listed in 
Addendum A as the PHP APC per diem payment rates or the PHP APC 
geometric mean per diem rates. The PHP APC per diem costs are the 
provider-specific costs derived from the most recent claims and cost 
data. The PHP APC per diem payment rates are the national unadjusted 
payment rates calculated after applying the OPPS budget neutrality 
adjustments described in sections II.A.4. and II.B of this final rule 
with comment period.
    For CY 2015, the proposed geometric mean per diem costs for days 
with 3 services (Level I) were approximately $97 for CMHCs and 
approximately $177 for hospital-based PHPs. The proposed geometric mean 
per diem costs for days with 4 or more services (Level II) were 
approximately $115 for CMHCs and approximately $190 for hospital-based 
PHPs.
    The CY 2015 proposed geometric mean per diem costs for CMHCs 
calculated under the proposed CY 2015 methodology using CY 2013 claims 
data and the most recent cost data remained relatively constant when 
compared to the CY 2014 final geometric mean per diem costs for CMHCs 
established in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 75050), with geometric mean per diem costs for Level I CMHC PHP 
services decreasing from approximately $99 to approximately $97 for CY 
2015, and geometric mean per diem costs for Level II CMHC PHP services 
increasing from approximately $112 to approximately $115 for CY 2015.
    The CY 2015 proposed geometric mean per diem costs for hospital-
based PHPs calculated under the proposed CY 2015 methodology using CY 
2013 claims data and the most recent cost report data showed more 
variation when compared to the CY 2014 final geometric mean per diem 
costs for hospital-based PHPs, with geometric mean per diem costs for 
Level I hospital-based PHP services decreasing from approximately $191 
to approximately $177 for CY 2015, and geometric mean per diem costs 
for Level II hospital-based PHP services

[[Page 66903]]

decreasing from approximately $214 to approximately $190 for CY 2015.
    We understand that having little variation in the PHP per diem 
payment rates from one year to the next allows providers to more easily 
plan their fiscal needs. However, we believe that it is important to 
base the PHP payment rates on the claims and cost reports submitted by 
each provider type so these rates accurately reflect the cost 
information for these providers. We recognize that several factors may 
cause a fluctuation in the per diem payment rates, including direct 
changes to the PHP APC per diem costs (for example, establishing 
separate APCs and associated per diem payment rates for CMHCs and 
hospital-based providers based on the provider type's costs), changes 
to the OPPS (for example, basing the relative payment weights on 
geometric mean costs), and provider-driven changes (for example, a 
provider's decision to change its mix of services or to change its 
charges and clinical practice for some services). We refer readers to a 
more complete discussion of this issue in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75049). We invited public comments on 
what causes PHP costs to fluctuate from year to year and on these 
proposals.
    The proposed CY 2015 geometric mean per diem costs for the CMHC and 
hospital-based PHP APCs were shown in Table 44 of the proposed rule. We 
invited public comments on these proposals.
    Comment: Several commenters opposed the proposed CY 2015 PHP APC 
per diem payment rates and raised concerns about a continued decline in 
payments for these services. Commenters stated that the proposed per 
diem payment rates were inadequate to pay providers for furnishing 
these services, and were below most program costs for providing PHP 
services. Other commenters suggested that CMS continue to use the CY 
2014 payment rates for CY 2015. A few commenters expressed concerns 
that the 15-percent reduction in payment rates for Level II services in 
hospitals dropped the payment rates too far below providers' costs. 
Another commenter asked that CMS provide documentation to support the 
proposed payment rates for PHP services.
    Response: We acknowledge the concerns raised by the commenters who 
believe that reduced payment rates for CY 2015 will not adequately pay 
their costs to provide PHP services. However, the per diem payment 
rates reflect the cost of what each provider type expends to maintain 
such programs. Therefore, we do not believe that the final payment 
rates would be inadequate to cover the costs of providing these 
services.
    Based on the final geometric mean per diem costs derived from CY 
2013 claims data and the most recent cost data, CMHCs' geometric mean 
per diem costs increased from CY 2014 to CY 2015 for APC 0172 Level I 
(3 services per day) from approximately $99 to approximately $100, and 
for APC 0173 Level II (4 or more services per day) from approximately 
$112 to approximately $119. These per diem cost increases for CMHC APCs 
0172 and 0173 are 0.76 percent and 5.7 percent, respectively. Final 
hospital-based PHP per diem costs decreased by significantly smaller 
amounts than the per diem costs that were proposed, but still declined 
when compared to CY 2014 geometric mean per diem costs. The PHP APC 
geometric mean per diem costs decreased for hospital-based PHPs from CY 
2014 to CY 2015 for APC 0175 Level I (3 services per day) from 
approximately $191 to approximately $186, and for APC 0176 Level II (4 
or more service per day) from approximately $214 to approximately $203. 
These final hospital-based PHP APC geometric mean per diem cost 
decreases are 2.6 percent for APC 0175 (instead of the proposed 
decrease of 7.1 percent) and 5.3 percent for APC 0176 (instead of the 
proposed decrease of 11.3 percent). We believe that the PHP APC per 
diem payment rates for both providers accurately reflect the claims and 
cost data of each provider type. Again, the resulting PHP APC per diem 
payment rates and the APC payment structures reflect the cost of what 
providers expend to maintain such programs. At this time, we cannot 
establish payment rates that do not accurately reflect the current 
claims and cost data. For these reasons, we are not suspending 
implementation of the CY 2015 PHP APC per diem payment rates for CMHCs 
and hospital-based PHPs.
    The PHP APC per diem payment rates are directly related to the 
accuracy of the claims and cost data submitted by providers. Therefore, 
it is imperative that providers submit accurate claims and cost data in 
order for the payment rates to accurately reflect the providers' costs.
    Regarding the documentation supporting the proposed PHP per diem 
payment rates, for each calendar year update, we explain how the PHP 
APC per diem payment rates are calculated in a proposed rule and a 
final rule. The industry is welcome to comment during the rulemaking 
process. We also make available to the public the OPPS PHP limited data 
set (LDS) and the OPPS LDS, which we discussed in the CY 2015 OPPS/ASC 
proposed rule (79 FR 40931). The OPPS PHP LDS can be used to recreate 
the PHP cost estimates and, when used in conjunction with the OPPS LDS, 
can be used to recreate the PHP APC payment rates. Both of these files 
are available twice a year, once for the proposed rule and again for 
the final rule. The LDSs are available for purchase under a CMS data 
use agreement through the CMS Web sites at: http://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPSPHPLDS.html and http://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPS.html.
    Comment: A number of commenters noted the difficulty in planning 
and budgeting when payment rates for these services fluctuate and asked 
that CMS establish consistent and stable payments. Several commenters 
stated that they are committed to working with CMS to better understand 
and stabilize the payment rates for the PHP benefit, and to determine 
the factors driving the fluctuation in rates. One commenter asserted 
that the wide variability in PHP APC payment rates from year-to-year 
does not allow quality providers to plan for and to maintain services 
in a predictable way. Another commenter believed that the erratic 
payment rate structure could diminish access to care because providers 
may be unable to forecast statistical and financial parameters based on 
the proposed PHP APC payment rates.
    In response to our solicitation for public comments in the proposed 
rule on what the industry believed was causing the fluctuation in 
payment rates, a few commenters stated that other types of hospitals 
(rehabilitation, long-term acute care, and inpatient psychiatric 
facilities) are now providing PHP-like services, and questioned whether 
the cost structure of these facilities could be distorting PHP APC 
payment rates. Another commenter stated that as providers move away 
from PHPs and toward other mental health care options, the sample size 
used in calculating payment rates is smaller. The commenter further 
stated that volumes of services in a few areas could take on greater 
influence in the calculations and affect costs, creating instability in 
the PHP APC payment rates and difficulty in planning.
    A few commenters mentioned that their PHPs had not experienced 
significant operational or clinical protocol changes, and no changes in 
the personnel delivering the mix of services that would support a 
reduction in the

[[Page 66904]]

geometric mean per diem costs. Several commenters stated that almost 
one-third of the proposed PHP APC payment rate reduction could be 
explained by the budget neutrality adjustment, which disproportionately 
affects PHPs, and which, for CY 2015, may have led to payment rates 
that are less than the geometric mean per diem costs.
    A few commenters cited a study that they had a contractor conduct 
to investigate the fluctuations. The commenters stated that the study 
results did not suggest that the tiered payments, the use of a 
geometric mean versus a median methodology, the different payments by 
site of service, or provider-driver factors, such as service-mix or 
patient-mix, were the source of the problem. The commenters noted that 
the study found a dramatic decrease in the total volume of PHP services 
provided, but an increase in hospital-based PHP days, particularly for 
Level II services. The commenters believed that this shift to providing 
more hospital-based PHP services has partially offset the decline in 
CMHC PHP days and may have caused PHP costs to fluctuate. The 
commenters suggested several areas for potential future study, 
including the shift of services from CMHCs to hospital-based PHPs, a 
different of mix of providers within the hospital category, other types 
of hospitals newly offering PHP services, volume, and the size of 
hospitals and of PHPs.
    Response: We acknowledge the difficulties in planning and budgeting 
that can occur when payments fluctuate, or when payment rates decline. 
However, we are continuing to pay for PHP services based on provider 
data. We also believe that changes in payment rates from one year to 
the next are appropriate in a payment system that is annually updated 
to more accurately estimate the cost of a service upon which the 
relative payment weights are based. We continue to believe that payment 
rates for PHP services have fluctuated from year to year based on a 
variety of factors, including direct changes to the PHP APC per diem 
payment rate, and changes to the OPPS. Over the past several years, we 
have made changes to the OPPS methodology for calculating PHP APC per 
diem payment rates to more accurately align the payments with costs. 
The changes have included establishing two PHP APC payment tiers, 
establishing separate APCs and associated per diem payment rates for 
CMHCs and hospital-based providers based on each provider's costs, and 
basing payments on the geometric mean costs rather than on median 
costs.
    In addition, the OPPS is a budget neutral payment system and, as a 
result, changes in the relative payment weights associated with certain 
services may affect those of other services in the payment system. 
Furthermore, provider-driven changes, such as a provider's decision to 
change its mix of services or to change its charges and clinical 
practice for some services, may cause fluctuations in the per diem 
payment rates. We provided a detailed discussion of possible reasons 
for the fluctuation in the rates in the CY 2015 OPPS/ASC proposed rule 
(79 FR 41012) and in section VIII.B. of this final rule with comment 
period.
    We appreciate the commenters' providing possible reasons for 
fluctuations or declines in the payment rates. While several providers 
noted that their operations have not changed to support a decline in 
payments, we reiterate that our payment rates are based upon claims and 
cost data submitted to us by providers and, therefore, reflect the cost 
of what providers expend to maintain such programs. We also acknowledge 
the variables raised by the commenters that could cause the payment 
rate fluctuations and the study that several commenters had 
commissioned to look into PHP payments. We are unable to comment 
directly on the study results because we are not certain of the 
detailed methods used for this study. However, we appreciate the areas 
of potential future study suggested by commenters, and will take them 
into consideration in future analyses.
    Comment: Many commenters stated that the methodology for 
calculating payment rates was ``flawed and illogical'' and asked CMS to 
reexamine the methodology to determine why payment rates are declining. 
The commenters suggested that CMS consider other methods for paying for 
PHP services, such as removing PHP services from APC group assignments 
and creating PHPs under an independent payment status, such as is done 
under the home health benefit. The commenters suggested that CMS 
establish a base payment rate for PHP services at a higher level than 
the current mean cost, and annually adjust the base rate by an 
inflation factor.
    A few commenters supported the two-tiered payment methodology. 
However, the commenters suggested using only hospital-based data, which 
was implemented in CY 2009. Some commenters disagreed with CMS paying 
PHPs differently by site of service. One commenter disputed CMS' 
assertion that CMHCs generally provide fewer PHP services in a day. The 
commenter stated that claims information indicates that CMHCs submit a 
greater percentage of their claims for 4 or more services per day. The 
commenter added that CMS does not collect wage data on CMHCs in its 
costs reports. Several commenters did not support continued use of the 
CY 2014 policy, which uses the geometric mean per diem costs to 
calculate PHP payment rates.
    Many commenters suggested other alternatives to the current payment 
system, such as developing oversight strategies for poorly performing 
CMHCs if their performance suggests a high risk of fraud, and allowing 
top performing CMHCs to admit patients into intensive outpatient 
programs similarly structured as PHPs. One commenter noted that some 
hospital-based providers are moving away from PHPs and providing 
programs that are structured similarly to a PHP, but are not Medicare-
certified PHPs (that is, providing several individual mental health 
services in a day that would be similar to a PHP, but providers are not 
enrolled as a PHP). The commenter stated that the programs similar to 
PHPs would require fewer services and be subject to fewer regulatory 
requirements (for example, no certification or recertification, no 
physical examination requirement, and no minimum attendance mandate), 
and yet have similar payment rates as those established for PHPs. The 
commenter suggested that CMS require that these programs bill for 
furnishing these services under the mental health services composite 
APC under the OPPS, with payment aligned with how commercial insurers 
pay for these services. The commenter also suggested that CMS consider 
policy levers to ease regulatory requirements for administering PHPs.
    Response: The OPPS successfully pays for outpatient services 
provided, such as and including partial hospitalization services, and 
we disagree that the system is flawed and illogical. This system bases 
payment on the geometric mean costs of providing the service or 
services using provider data from claims and cost reports. As discussed 
above, we believe this system provides appropriate payment for partial 
hospitalization services based on provider costs.
    Sections 1833(t)(2) and 1833(t)(9) of the Act set forth the 
requirements for establishing and adjusting the OPPS payment rates, 
including the PHP payment rates. As such, we are directed to pay for 
these services under the OPPS (which uses APCs) and may not remove 
these PHP services from the OPPS and pay for them separately (such as 
by establishing a base rate and annually

[[Page 66905]]

adjusting it for inflation). The estimated costs of the PHP APCs are 
based on the most updated cost and claims data. The OPPS conversion 
factor used to calculate payments for those PHP APCs is updated by a 
market basket each year. While we continuously examine ways in which 
the data process could be improved, we also welcome and appreciate 
public comment with regard to potential improvements. Similarly, we 
appreciate the meaningful comments that stakeholders provided regarding 
ways that the cost modeling process could be more accurate or methods 
to extract more appropriate data from the claims available for OPPS 
cost modeling. For a more detailed discussion of the OPPS ratesetting 
process, including PHP payments, we refer readers to the CY 2015 OPPS 
Final Rule Claims Accounting document, available on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the link for ``Hospital 
Outpatient Regulations and Notices'', then on the link to the CY 2015 
OPPS final rule, and then on the CY2015 OPPS Claims Accounting 
document.
    With respect to the commenters' request to return to the two-tiered 
payment methodology calculated using only hospital-based data that was 
implemented in the CY 2009 OPPS/ASC final rule with comment period (73 
FR 68688 through 68693), we refer commenters to the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 71991 through 71994). Because the 
cost of providing PHP services differs significantly by site of 
service, in CY 2011, we implemented differing PHP payment rates for 
hospital-based PHPs and CMHCs. We added two new APCs (APCs 0175 and 
0176) for PHP services provided by hospitals, and based the relative 
payment weights for these APCs solely on hospital data. APCs 0172 and 
0173 were designated for PHP services provided by CMHCs and were based 
on a blend of CMHC and hospital data. We calculate the PHP APC per diem 
payment rates based on the data provided for each type of provider in 
order to pay for services. The resulting PHP APC per diem payment rates 
reflect the cost of what providers expend to maintain such programs 
based on data provided by these types of providers, which we believe is 
an improvement over the two-tiered payment methodology calculated using 
only hospital-based data.
    In regard to the commenters' concerns regarding the use of 
geometric mean rather than the median, in the CY 2013 OPPS/ASC final 
rule with comment period, we established the geometric mean rather than 
the median as the measure upon which to base the relative payment 
weights that underpin the OPPS APCs, including the four PHP APCs (77 FR 
68406 to 68412). The CY 2015 PHP APC per diem payment rates are based 
on geometric mean costs. While a few commenters disagreed with our use 
of geometric mean costs, we believe that the use of geometric mean 
costs rather than median costs represents an improvement to our cost 
estimation process. As we stated in the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68409), we believe that including outlier 
observations in developing the relative payment weights and capturing 
the full range of service costs lead to more accurate relative payment 
weights. In addition to better incorporating those cost values that 
surround the median and, therefore, describing a broader range of cost 
patterns, basing the relative payment weight on geometric mean costs 
also may promote better stability in the payment system by making OPPS 
payments more reflective of the range of costs associated with 
providing services. Further, applying the geometric mean to the PHP 
APCs helps ensure that the relativity of the OPPS payment weights is 
properly aligned. We do not believe that paying for some services based 
on median costs, while using geometric mean costs for other services is 
appropriate or equitable.
    We believe that paying providers using the four PHP APC per diem 
payment rates based on the methodologies described above supports 
continued access to the PHP benefit, while also providing appropriate 
payment based on the unique cost structures of CMHCs and hospital-based 
PHPs. We also believe that each of these policies enables us to 
continue our responsible stewardship of the Medicare Trust Fund by more 
accurately matching payments with costs. For a full discussion of each 
of these policies implemented in prior rulemaking, including details on 
the rationales, we refer readers to the above-mentioned final rules 
with comment period, which are available on the CMS OPPS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.
    In response to the commenters' concerns regarding CMS' statement 
that CMHCs provide fewer services in a day, as stated in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75047 through 75050), we 
are calculating the payment rates for PHP services based on the claims 
and cost data submitted by providers. The updated data used for 
calculating payments for this CY 2015 OPPS/ASC final rule with comment 
period indicate that CMHCs do indeed have a greater percentage of PHP 
days with 4 or more services, compared to hospital-based PHPs (94.6 
percent of days compared to 88.3 percent of days, respectively). 
However, in spite of their providing a greater percentage of days with 
4 or more services, our updated cost data continue to show that CMHC 
costs per day are lower than those of hospital-based PHPs.
    In response to the question about wage data, CMHCs are required to 
include wage data for their staff on their cost reports, with certain 
exceptions. We direct readers to Medicare's cost reporting instructions 
for CMHCs that are available online in the Provider Reimbursement 
Manual, Part 2, Chapter 18 on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html?DLPage=1&DLSort=0&DLSortDir=ascending.
    With respect to the suggestion that CMS develop oversight 
strategies for poor performing CMHCs with conduct that suggests 
potential fraud, we already have oversight strategies in place for 
providers that operate in a questionable manner. For example, MACs 
perform medical reviews of certain PHP claims, and PHP providers with 
claims that present ongoing concerns may have their claims placed on 
prepayment review. In some cases, CMHC and hospital-based PHP payments 
may be suspended or a CMHC's or hospital's billing privileges may be 
revoked. Our Office of Financial Management (OFM) has Recovery Audit 
Contractors (RACs), which regularly identify and collect overpayments 
from Medicare providers. Additionally, the Center for Program Integrity 
(CPI) and Zone Program Integrity Contractors (ZPICs) investigate 
potential fraud, waste, and abuse across the Medicare program, 
including potential concerns within CMHCs. Finally, the Office of 
Inspector General (OIG) and other law enforcement agencies continue in 
their efforts to address fraud and abuse throughout the Medicare 
program, including questionable billing for partial hospitalization 
services.
    With respect to the commenters' request to allow top performing 
CMHCs to admit beneficiaries who require partial hospitalization 
services into outpatient programs that are structured similarly to 
PHPs, Medicare covers and

[[Page 66906]]

pays for reasonable and necessary PHP services provided by hospitals 
and CMHCs under the OPPS. While some private insurers and some State 
Medicaid programs recognize other types of intensive outpatient mental 
health programs as a distinct benefit like PHP services, the Medicare 
program does not. However, hospitals may provide and bill for 
individual services that make up various other mental health programs.
    Because all Medicare outpatient mental health services are capped 
at the hospital-based Level II PHP per diem payment rate, from a 
payment standpoint, it does not matter how many of these individual 
services are billed to Medicare because payment will never exceed the 
hospital-based Level II PHP per diem payment rate. However, CMHCs may 
only be paid for partial hospitalization services under the OPPS.
    We are constantly monitoring the OPPS in search of potential 
refinements that would improve the accuracy and stability of the 
payment system. We are unclear about the policy changes that the 
commenters suggested that we make regarding easing the regulatory 
requirements for administering PHPs. Some of the PHP requirements are 
set forth in the statute. For example, physician certification and 
recertification requirements for PHP services are set forth in section 
1835(a)(2)(F) of the Act and would require Congressional legislation to 
change. However, if providers have suggestions for specific policy 
changes to improve PHP operations while safeguarding access to PHP 
services and paying accurately for these services, we welcome those 
suggestions during rulemaking or through other dialogue with the 
industry.
    Comment: Many commenters described the key role that PHPs play in 
the continuum of care for patients with mental health issues. A number 
of commenters stated that if CMS moved forward with the proposed 
payment rates, much-needed PHP programs would struggle to remain 
financially viable. Multiple commenters believed that additional 
reductions in payments for CY 2015 would limit the ability of hospitals 
and CMHCs to provide these vital psychiatric services, reducing 
capacity or leading to closures, especially in rural areas, and thereby 
reducing access to care for Medicare patients. Several commenters noted 
that, as access to PHP services decreases, the decreases could lead to 
patients not receiving any services or to patients receiving services 
that are not appropriate for their needs; to use of more expensive 
inpatient psychiatric services; or to use of already stressed emergency 
departments. One commenter believed that CMS was concerned about the 
potential for hospital-based PHP closures, but not about CMHC closures.
    Response: In response to commenters' concern about reduced PHP 
payment rates leading to decreased capacity and PHP closures, thereby 
reducing access to care and further eroding the viability of the safety 
net system, we emphasize again that the resulting PHP APC per diem 
payment rates for CY 2015 reflect the costs of what providers expend to 
maintain PHP programs. Therefore, it continues to be unclear to us why 
reduced PHP payment rates would lead to reduced capacity or program or 
business closures. As noted previously, the final CY 2015 per diem 
costs increased for CMHCs compared to CY 2014, and decreased less than 
proposed for hospital-based PHPs. As we stated in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74350), the closure of PHPs may 
be due to any number of reasons, such as poor business management or 
marketing decisions, competition, oversaturation of certain geographic 
areas, and Federal and State fraud and abuse efforts, among others. It 
does not directly follow that closure could be due to reduced per diem 
payment rates alone, especially when these per diem payment rates 
reflect the costs of PHP providers as stated in claims and cost data.
    In response to the commenters' concerns that further reduction in 
the CMHC and hospital-based PHP APC per diem payment amounts could 
further erode the viability of the safety net system and make it more 
difficult for patients to receive needed mental health services, we 
take such concerns seriously for both CMHCs and hospital-based PHPs. We 
will continue to monitor facility closings and openings for both rural 
and urban areas to make sure that access issues do not exist. We also 
remain steadfast in our concern regarding access to care for all 
beneficiaries, while also providing appropriate payments for such care.
    A PHP is not the only program in which a Medicare beneficiary is 
able to receive needed mental health care. Access to other forms of 
mental health services is also available. Although not equivalent to a 
PHP, Medicare provides payment for outpatient mental health services in 
addition to PHP services. Many beneficiaries in need of mental health 
treatment receive other outpatient services generally from hospital 
programs that are available nationwide.
    Comment: Many commenters suggested that future payment rates be 
tied to quality criteria. One commenter recommended a payment system 
that rewards individual providers for outstanding quality and outcomes 
while keeping costs under control, and suggested that CMS use value-
based purchasing rather than ``antiquated cost reimbursement-based 
purchasing.'' One commenter suggested that CMS conduct an analysis to 
determine what quality PHP care entails in terms of costs and staffing, 
rather than basing payment rates on reported costs.
    Response: We responded to a similar public comment in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68410 through 68411) and 
refer readers to a summary of that comment and our response. Sections 
1833(t)(2) and 1833(t)(9) of the Act set forth the requirements for 
establishing and adjusting OPPS rates, which include PHP rates. Section 
1833(t)(17) of the Act authorizes the Hospital OQR Program, which 
applies a payment reduction to subsection (d) hospitals that fail to 
meet program requirements. In the CY 2015 OPPS/ASC proposed rule (79 FR 
41040), we considered future inclusion of, and requested comments on, 
the following quality measures addressing PHP issues that would apply 
in the hospital outpatient setting: (1) 30-Day Readmissions; (2) Group 
Therapy; and (3) No Individual Therapy. We refer readers to section 
XIII. of this final rule with comment period for a more detailed 
discussion of PHP measures considered for inclusion in the Hospital OQR 
Program in future years. The Hospital OQR Program does not apply to 
CMHCs. Further, currently, there is no statutory language explicitly 
authorizing a value-based purchasing program for PHPs. With respect to 
the suggestion of conducting an analysis to determine what quality PHP 
care entails in terms of costs and staffing, we will take the 
suggestion into consideration in future analyses.
    We do not consider the OPPS, the system under which PHPs are paid, 
to be ``antiquated.'' Rather, we find the OPPS to be a robust system, 
which aligns payments with provider costs. As noted previously, we 
regularly monitor the OPPS and, in recent years, have made changes to 
further improve the system's ability to pay accurately for services 
provided.
    Comment: Many commenters noted that they provide services to 
Medicare beneficiaries which they cannot bill for on their claims. The 
services cited by the commenters included, for example: Assisting 
patients in finding appropriate housing; accessing other health care

[[Page 66907]]

services; obtaining medications; working through issues with family 
members; accessing transportation to medical and other appointments; 
assisting with information and appointments with Social Security; 
answering Medicare questions; accessing food banks and food stamps; 
obtaining eye and dental services; and integrating highly volatile and 
anxious patients into the milieu without upsetting the environment. 
Commenters stated that, currently, there is no way to show through the 
billing process that these events take place because there are no 
billing codes that capture these activities.
    Response: Section 1861(ff) of the Act and 42 CFR 410.43 describe 
the items and services included in partial hospitalization services. As 
set forth in these sections, partial hospitalization services generally 
consist of a variety of group, individual, and family psychotherapy 
sessions, supplemented with occupational therapy, the services of 
social workers, trained psychiatric nurses, and other staff trained to 
work with psychiatric patients, drugs and biologicals furnished for 
therapeutic purposes that cannot be self-administered, diagnostic 
services, education and training, and certain activity therapies 
designed to stabilize an acute episode of mental illness. Section 
1861(ff)(2)(I) of the Act explicitly excludes meals and transportation 
from the items and services included in partial hospitalization 
services. The PHP APC per diem payment rate is the bundled payment for 
partial hospitalization services. Only the items and services 
specifically identified in the statute and regulations are considered 
partial hospitalization services. All other items and services are not 
paid as part of partial hospitalization services.
    Comment: A number of commenters asked that CMS have a dialogue with 
the PHP industry, and that the public comments on the proposed rule be 
directly addressed by CMS in an open forum where ideas could be 
cooperatively shared.
    Response: We maintain positive working relationships with various 
industry leaders representing both CMHCs and hospital-based PHP 
providers with whom we have consistently met over the years to discuss 
industry concerns and ideas. These relationships have provided 
significant and valuable input regarding PHP ratesetting. We also hold 
Hospital Outpatient Open Door Forum calls monthly, in which all 
individuals are welcome to participate and/or submit questions 
regarding specific issues, including questions related to PHPs. 
Furthermore, we initiate rulemaking annually, through which we receive 
public comments on proposals set forth in a proposed rule, and we 
respond to those comments in a final rule. All individuals are provided 
an opportunity to comment, and we give consideration to each comment 
that we receive. Given the relationships that we have established with 
various industry leaders and the various means for us to receive 
comments and recommendations, we believe that we receive adequate input 
regarding PHP ratesetting and take that input into consideration when 
establishing the PHP per diem payment amounts. We continue to welcome 
any input and information that the industry is willing to provide.
    Comment: Several commenters requested a better understanding of the 
Program for Evaluating Payment Patterns Electronic Report (PEPPER), the 
areas of risk it has identified, how the PEPPER fits into fraud and 
abuse efforts, and how the PEPPER fits into the benefit in general, and 
indicated that this information might be helpful to providers. The 
commenters expressed concern regarding various areas of risk cited by 
the PEPPER, including ``No individual therapy.'' The commenter stated 
that although most providers furnish individual therapy, it is often 
not documented or billed as it is not included in the local coverage 
determinations (LCDs).
    Response: The PEPPER is a data report that contains statistics for 
each PHP area identified nationally to be at risk for improper payment 
(referred to in the report as ``target areas''). Each PEPPER contains a 
single PHP provider's claims data statistics, obtained from claims 
submitted to the MAC for these target areas. PEPPER does not identify 
the presence of improper payments, but it can be used by the provider 
as a guide for auditing and monitoring efforts. A provider can use the 
PEPPER to compare its claims data over time to identify areas of 
potential concern and to identify changes in billing practices. When a 
provider is sent a PEPPER, the report includes a user's guide, which 
describes the PEPPER and the target areas, among other things, and 
provides contact information for additional questions or information. 
Additional information on the PEPPER, including training and resources, 
is available at the PEPPER Web site at: http://pepperresources.org/.
    Regarding ``individual therapy,'' which is one area of risk that 
the PEPPER is assessing, individual therapy is a partial 
hospitalization service. For a review of the partial hospitalization 
services, we refer readers to section 1861(ff)(2)(A) of the Act and our 
regulations at 42 CFR 410.43(a)(4)(i). We expect that providers would 
furnish individual therapy services as one of the services provided 
within a PHP.
    Comment: One commenter noted that new Medicare conditions of 
participation (CoPs) are about to become effective for CMHCs, and 
stated that most CMHCs are unaware of them. One commenter noted that 
complying with the new CoPs would increase its costs. The commenter 
also stated that, under a provision of the Affordable Care Act that 
became effective October 1, 2014, providers need to be aware that a 
CMHC must provide at least 40 percent of its items and services to 
individuals who are not eligible for benefits under Medicare.
    Response: The Conditions of Participation for Community Mental 
Health Centers final rule (78 FR 64604, October 29, 2013) established, 
for the first time, CoPs that CMHCs must meet in order to participate 
in the Medicare program. The CMHC CoPs are codified in 42 CFR Part 485, 
Subpart J, and became effective on October 29, 2014. Prior to the 
issuance of this final rule, on June 17, 2011, CMS issued a proposed 
rule (76 FR 35684) outlining the CoPs for Medicare-certified CMHCs. The 
proposed rule was open to public comment until August 16, 2011. Also, 
CMS issued press releases and fact sheets on the CoPs. CMS also has 
been working with trade organizations and the States to inform 
providers about the CoPs and the implementation date. Therefore, we 
believe that all CMHCs should be aware of these new requirements. More 
information on the CoPs for CMHCs can be found at 42 CFR Part 485, and 
through the link to the final rule at: http://www.gpo.gov/fdsys/pkg/FR-2013-10-29/pdf/2013-24056.pdf. The proposed rule can be accessed 
through the following link on the Web site found at: http://www.gpo.gov/fdsys/pkg/FR-2011-06-17/pdf/2011-14673.pdf. The final rule 
fact sheets can be accessed through the following link to the Web site 
found at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2013-Fact-sheets-items/2013-10-28.html. The proposed rule press 
release can be accessed through the following link to the Web site 
found at: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2011-Press-releases-items/2011-06-16.html. We believe that the 
cost associated with the CoPs is a reasonable and necessary business 
expense to

[[Page 66908]]

ensure the health and safety of all CMHC clients. In addition, 
effective October 29, 2014, under 42 CFR 485.918(b)(1)(v), pursuant to 
section 1861(ff)(3)(B) of the Act, a CMHC must provide at least 40 
percent of its items and services to individuals who are not eligible 
for benefits under title XVIII of the Social Security Act, as measured 
by the total number of CMHC clients treated by the CMHC for whom 
services are not paid by Medicare, divided by the total number of 
clients treated by the CMHC in the applicable timeframe. Under this 
requirement, a newly enrolling or revalidating CMHC must submit to CMS 
a certification statement provided by an independent entity (such as an 
accounting technician). The document must indicate that (1) the entity 
has reviewed the CMHC's client care data, and (2) the CMHC meets the 
applicable 40 percent requirement. (We refer readers to 78 FR 64620). 
CMS has issued a change request that instructs MACs on the processing 
of such CMHC certifications. This requirement implements the provision 
of the Affordable Care Act noted by the commenter. For more detailed 
information, we refer readers to the Conditions of Participation for 
Community Mental Health Centers final rule (78 FR 64604).
    Comment: A number of commenters noted the complexities of abiding 
by the LCDs on PHPs and believed that such LCDs are making it difficult 
for hospital-based PHP providers to continue to provide PHP services. 
Some commenters questioned whether the LCDs should be clarified or 
updated.
    Response: LCDs issued by MACs specify under what clinical 
circumstances an item or service is considered to be reasonable and 
necessary. They are administrative and educational tools to assist 
providers in submitting correct claims for payment. The MACs publish 
LCDs to provide guidance to the public and medical community within 
their jurisdictions. The MACs develop LCDs by considering medical 
literature, the advice of local medical societies and medical 
consultants, public comments, and comments from the provider community. 
LCDs must be consistent with the statutory requirements for the 
Medicare program and with Medicare regulations and guidance. More 
information about LCDs can be found in the CMS Program Integrity Manual 
(Internet only manual) 100-08, Chapter 13, available at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pim83c13.pdf.
    Providers with questions about LCDs should contact their MAC for 
clarification or assistance. Inquiries of a clinical nature, such as 
the rationale behind coverage or noncoverage of certain items or 
services, are handled within the Medical Review (MR) department under 
the MAC responsible for the development of the LCD.
    Comment: One commenter recommended that the annual payment update 
for PHP APCs reflect the market basket update that is applied to all 
other OPPS APCs.
    Response: The PHP APC payment rates are based on the OPPS 
conversion factor, to which the market basket update is applied. 
Therefore, the market basket update is applied to the PHP APC payment 
rates. The OPPS conversion factor is discussed in further detail in 
section II.B. of this final rule with comment period.
    Comment: One commenter stated that physicians are billing inpatient 
codes rather than PHP codes. The commenter believed that the change in 
physician reporting may have altered what facilities reported, which 
would have reduced the number of facility fees reported, and skewed the 
APC data downward. The commenter recommended that CMS conduct an 
analysis of the frequency and type of CPT codes that have been 
submitted for PHP over the last 3 years.
    Response: As stated in section 1861(ff) of the Act and 42 CFR 
410.43, payment for partial hospitalization services generally 
represents the provider's overhead costs, support staff, some drugs and 
the services of some nurses, clinical social workers, and occupational 
therapists, whose professional services are considered to be partial 
hospitalization services for which payment is made to the provider. 
Physician services that meet the requirements of 42 CFR 415.102(a) are 
separately covered and not paid as part of partial hospitalization 
services. Therefore, we do not use physician claims in developing the 
PHP APC geometric mean per diem costs and it is unclear to us how 
physician billing would impact PHP APC payment rates.
    Regarding the recommendation that CMS conduct an analysis of the 
frequency and type of CPT codes that have been submitted for PHP 
services over the last 3 years, we will take the suggestion under 
consideration for future rulemaking, as we strengthen the PHP payment 
structure.
    In summary, after consideration of the public comments we received, 
we are finalizing our CY 2015 proposal, without modification, to update 
the four PHP APC per diem costs based on geometric mean cost levels 
calculated using the most recent claims and cost data for each provider 
type. The updated PHP APCs geometric mean per diem costs for PHP 
services that we are finalizing for CY 2015 are shown in Table 39 and 
40 below. As noted earlier in this section, we refer readers to 
Addendum A to this final rule with comment for the final PHP APC 
payment rates.

  Table 39--CY 2015 Geometric Mean Per Diem Costs for CMHC PHP Services
------------------------------------------------------------------------
                                                          Geometric mean
            APC                      Group title          per diem costs
------------------------------------------------------------------------
0172.......................  Level I Partial                     $100.15
                              Hospitalization (3
                              services) for CMHCs.
0173.......................  Level II Partial                     118.54
                              Hospitalization (4 or more
                              services) for CMHCs.
------------------------------------------------------------------------

 Table 40--CY 2015 Geometric Mean Per Diem Costs for Hospital-Based PHP
                                Services
------------------------------------------------------------------------
                                                          Geometric mean
            APC                      Group title          per diem costs
------------------------------------------------------------------------
0175.......................  Level I Partial                     $185.87
                              Hospitalization (3
                              services) for hospital-
                              based PHPs.
0176.......................  Level II Partial                     203.01
                              Hospitalization (4 or more
                              services) for hospital-
                              based PHPs.
------------------------------------------------------------------------

[[Page 66909]]

C. Separate Threshold for Outlier Payments to CMHCs

    As discussed in the CY 2004 OPPS final rule with comment period (68 
FR 63469 through 63470), after examining the costs, charges, and 
outlier payments for CMHCs, we believed that establishing a separate 
OPPS outlier policy for CMHCs would be appropriate. A CMHC-specific 
outlier policy would direct OPPS outlier payments towards genuine cost 
of outlier cases, and address situations where charges were being 
artificially increased to enhance outlier payments. We created a 
separate outlier policy that would be specific to the estimated costs 
and OPPS payments provided to CMHCs. We note that, in the CY 2009 OPPS/
ASC final rule with comment period, we established an outlier 
reconciliation policy to comprehensively address charging aberrations 
related to OPPS outlier payments (73 FR 68594 through 68599). 
Therefore, beginning in CY 2004, we designated a portion of the 
estimated OPPS outlier target amount specifically for CMHCs, consistent 
with the percentage of projected payments to CMHCs under the OPPS each 
year, excluding outlier payments, and established a separate outlier 
threshold for CMHCs.
    The separate outlier threshold for CMHCs resulted in $1.8 million 
in outlier payments to CMHCs in CY 2004, and $0.5 million in outlier 
payments to CMHCs in CY 2005. In contrast, in CY 2003, more than $30 
million was paid to CMHCs in outlier payments. We believe that this 
difference in outlier payments indicates that the separate outlier 
threshold for CMHCs has been successful in keeping outlier payments to 
CMHCs in line with the percentage of OPPS payments made to CMHCs.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41012), we proposed to 
continue designating a portion of the estimated 1.0 percent outlier 
target amount specifically for CMHCs, consistent with the percentage of 
projected payments to CMHCs under the OPPS in CY 2015, excluding 
outlier payments. CMHCs are projected to receive 0.03 percent of total 
OPPS payments in CY 2015, excluding outlier payments. Therefore, we 
proposed to designate 0.47 percent of the estimated 1.0 percent outlier 
target amount for CMHCs, and establish a threshold to achieve that 
level of outlier payments. Based on our simulations of CMHC payments 
for CY 2015, in the CY 2015 OPPS/ASC proposed rule, we proposed to 
continue to set the threshold for CY 2015 at 3.40 times the highest 
CMHC PHP APC payment rate (that is, APC 0173 (Level II Partial 
Hospitalization)) (79 FR 41012). We stated that we continue to believe 
that this approach would neutralize the impact of inflated CMHC charges 
on outlier payments and better target outlier payments to those truly 
exceptionally high-cost cases that might otherwise limit beneficiary 
access. In addition, we proposed to continue to apply the same outlier 
payment percentage that applies to hospitals. Therefore, for CY 2015, 
we proposed to continue to pay 50 percent of CMHC per diem costs over 
the threshold. In section II.G. of the CY 2015 OPPS/ASC proposed rule 
(79 FR 41012), for the hospital outpatient outlier payment policy, we 
proposed to set a dollar threshold in addition to an APC multiplier 
threshold. Because the PHP APCs are the only APCs for which CMHCs may 
receive payment under the OPPS, we would not expect to redirect outlier 
payments by imposing a dollar threshold. Therefore, we did not propose 
to set a dollar threshold for CMHC outlier payments.
    In summary, in the CY 2015 OPPS/ASC proposed rule, we proposed to 
establish that if a CMHC's cost for partial hospitalization services, 
paid under either APC 0172 or APC 0173, exceeds 3.40 times the payment 
rate for APC 0173, the outlier payment would be calculated as 50 
percent of the amount by which the cost exceeds 3.40 times the APC 0173 
payment rate. We invited public comments on these proposals.
    We did not receive any public comments regarding our proposed 
outlier policy. Therefore, we are finalizing our CY 2015 proposal to 
set a separate outlier threshold for CMHCs. As discussed in section 
II.G. of this final rule with comment period, using more recent data 
for this final rule with comment period, we set the target for hospital 
outpatient outlier payments at 1.00 percent of total estimated OPPS 
payments. We allocated a portion of the 1.00 percent, an amount equal 
to 0.65 percent of outlier payments, or 0.0065 percent of total 
estimated OPPS payments, to CMHCs for PHP outlier payments. For CY 
2015, as proposed, we are setting the CMHC outlier threshold at 3.40 
multiplied by the APC 0173 payment rate and the CY 2015 outlier 
percentage applicable to costs in excess of the threshold at 50 
percent. In other words, if a CMHC's cost for partial hospitalization 
services paid under either APC 0172 or APC 0173 exceeds 3.40 times the 
payment rate for APC 0173, the outlier payment will be calculated as 50 
percent of the amount by which the cost exceeds 3.40 times the APC 0173 
payment rate.

IX. Procedures That Will Be Paid Only as Inpatient Procedures

A. Background

    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74352 through 74353) for a full historical discussion of 
our longstanding policies on how we identify procedures that are 
typically provided only in an inpatient setting (referred to as the 
inpatient list) and, therefore, will not be paid by Medicare under the 
OPPS; and on the criteria that we use to review the inpatient list each 
year to determine whether or not any procedures should be removed from 
the list.

B. Changes to the Inpatient List

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41012 through 41013), 
for the CY 2015 OPPS, we proposed to use the same methodology 
(described in the November 15, 2004 final rule with comment period (69 
FR 65835)) of reviewing the current list of procedures on the inpatient 
list to identify any procedures that may be removed from the list. The 
established criteria upon which we make such a determination are as 
follows:
    1. Most outpatient departments are equipped to provide the services 
to the Medicare population.
    2. The simplest procedure described by the code may be performed in 
most outpatient departments.
    3. The procedure is related to codes that we have already removed 
from the inpatient-only list.
    4. A determination is made that the procedure is being performed in 
numerous hospitals on an outpatient basis.
    5. A determination is made that the procedure can be appropriately 
and safely performed in an ASC, and is on the list of approved ASC 
procedures or has been proposed by us for addition to the ASC list.
    Using this methodology, we did not identify any procedures that 
potentially could be removed from the inpatient list for CY 2015. 
Therefore, we proposed to not remove any procedures from the inpatient 
list for CY 2015.
    After our annual review of APCs and code assignments as required by 
section 1833(t)(9) of the Act and further clinical review performed by 
CMS medical officers, we proposed to add CPT code 22222 (Osteotomy of 
spine, including discectomy, anterior approach, single vertebral 
segment; thoracic) to the CY 2015 inpatient list.
    The complete list of codes that we proposed to be paid by Medicare 
in CY 2015 only as inpatient procedures was

[[Page 66910]]

included as Addendum E to the proposed rule (which is available via the 
Internet on the CMS Web site).
    Comment: Several commenters supported CMS' proposal to add CPT code 
22222 to the inpatient list.
    Response: We appreciate the commenters' support.
    Comment: Several commenters requested that CMS remove CPT codes 
0312T (Vagus nerve blocking therapy (morbid obesity); laparoscopic 
implantation of neurostimulator electrode array, anterior and posterior 
vagal trunks adjacent to esophagogastric junction (EGJ), with 
implantation of pulse generator, includes programming); 43771 
(Laparoscopy, surgical, gastric restrictive procedure; revision of 
adjustable gastric restrictive device component only); 43772 
(Laparoscopy, surgical, gastric restrictive procedure; removal of 
adjustable gastric restrictive device component only); 43773 
(Laparoscopy, surgical, gastric restrictive procedure; removal and 
revision of adjustable gastric restrictive device component only); 
43774 (Laparoscopy, surgical, gastric restrictive procedure; removal of 
adjustable gastric restrictive device and subcutaneous port 
components); 54411 (Removal and replacement of a multi-component 
inflatable penile prosthesis through an infected field at the same 
operative session); and 54417 (Removal and replacement of a non-
inflatable (semi-rigid) or inflatable (self-contained) penile 
prosthesis through an infected field at the same operative session) 
from the CY 2015 inpatient list based on their own experience, 
specialty society recommendation, or designation of a procedure as safe 
in the outpatient setting under one of the many clinical guidelines 
available.
    Response: We reevaluated data on CPT codes 0312T, 43771, 43772, 
43773, 43774, 54411, and 54417 using recent utilization data and 
further clinical review performed by CMS' medical advisors. As a result 
of the reevaluation, we have determined that these procedures can be 
safely performed only in the inpatient setting. We are not removing 
them from the inpatient list for CY 2015.
    Comment: Some commenters requested that CPT code 63044 (Laminotomy 
(hemilaminectomy), with decompression of nerve root(s), including 
partial facetectomy, foraminotomy and/or excision of herniated 
intervertebral disc, reexploration, single interspace; each additional 
lumbar interspace) be removed from the inpatient list.
    Response: We reevaluated data on CPT code 63044 using recent 
utilization data and further clinical review performed by CMS medical 
advisors. As a result of the reevaluation, we agree with the commenters 
that this procedure can be safely performed in the outpatient setting. 
In addition, as a result of our reevaluation, we believe that CPT code 
63043 (Laminotomy (hemilaminectomy), with decompression of nerve 
root(s), including partial facetectomy, foraminotomy and/or excision of 
herniated intervertebral disc, reexploration, single interspace; each 
additional cervical interspace) can be safely performed in the 
outpatient setting. Therefore, we are removing CPT codes 63043 and 
63044 from the inpatient list. Because CPT codes 63043 and 63044 are 
add-on codes, they are being assigned status indicator ``N'' for CY 
2015.
    Comment: Other commenters urged CMS to continue reviewing its 
inpatient only policy in light of ongoing changes in delivery systems 
and procedural safety and technological advances.
    Response: We agree with the commenters and will continue to review 
the inpatient only policy.
    After consideration of the public comments we received, we are 
finalizing our proposals for the inpatient only list, with 
modifications. We are removing CPT codes 63043 and 63044 from the 
inpatient list and adding CPT code 22222 (Osteotomy of spine, including 
discectomy, anterior approach, single vertebral segment; thoracic) to 
the CY 2015 inpatient list.
    The complete list of codes that will be paid by Medicare in CY 2015 
only as inpatient procedures is included as Addendum E to this final 
rule with comment period (which is available via the Internet on the 
CMS Web site.

X. Nonrecurring Policy Changes: Collecting Data on Services Furnished 
in Off-Campus Provider-Based Departments of Hospitals

    As we discussed in the CY 2014 OPPS/ASC proposed rule and final 
rule with comment period (78 FR 43626 and 78 FR 75061) and in the CY 
2014 Medicare Physician Fee Schedule (MPFS) proposed rule and final 
rule with comment period (78 FR 43301 and 78 FR 74427), in recent 
years, the research literature and popular press have documented the 
increased trend toward hospital acquisition of physician practices, 
integration of those practices as a department of the hospital, and the 
resultant increase in the delivery of physicians' services in a 
hospital setting. When a Medicare beneficiary receives outpatient 
services in a hospital, the total payment amount for outpatient 
services made by Medicare is generally higher than the total payment 
amount made by Medicare when a physician furnishes those same services 
in a freestanding clinic or in a physicians' office.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we stated that 
we continue to seek a better understanding of how the growing trend 
toward hospital acquisition of physicians' offices and subsequent 
treatment of those locations as off-campus provider-based departments 
(PBDs) of hospitals affects payments under the MPFS and the OPPS, as 
well as beneficiary cost-sharing obligations. We also noted that MedPAC 
continues to question the appropriateness of increased Medicare payment 
and beneficiary cost-sharing when physicians' offices become hospital 
outpatient departments and to recommend that Medicare pay selected 
hospital outpatient services at MPFS rates (MedPAC March 2012 and June 
2013 Report to Congress). In order to understand how this trend is 
affecting Medicare, we need information on the extent to which this 
shift is occurring. To that end, during the CY 2014 OPPS/ASC rulemaking 
cycle, we sought public comment regarding the best method for 
collecting information and data that would allow us to analyze the 
frequency, type, and payment for physicians' and outpatient hospital 
services furnished in off-campus PBDs of hospitals (78 FR 75061 through 
75062 and 78 FR 74427 through 74428). In response to our solicitation, 
we received many detailed public comments. However, the commenters did 
not present a consensus opinion regarding whether this data collection 
was advisable or which data collection method would be preferable. 
Based on our analysis of the public comments we received, we proposed 
for the CY 2015 OPPS/ASC proposed rule that the most efficient and 
equitable means of gathering this important information across two 
different payment systems would be to create a HCPCS modifier to be 
reported with every code for physicians' services and outpatient 
hospital services furnished in an off-campus PBD of a hospital on both 
the CMS-1500 claim form for physicians' services and the UB-04 form 
(CMS Form 1450) for hospital outpatient services. We noted that a main 
provider may treat an off-campus facility as provider-based if certain 
requirements in 42 CFR 413.65 are satisfied, and we define a ``campus'' 
at 42 CFR 413.65(a)(2) to be the physical area immediately adjacent to 
the provider's main buildings, other areas and

[[Page 66911]]

structures that are not strictly contiguous to the main buildings but 
are located within 250 yards of the main buildings, and any other areas 
determined on an individual case basis, by the CMS regional office, to 
be part of the provider's campus.
    Section 220(a)(1) of the Protecting Access to Medicare Act of 2014 
(Pub. L. 113-93) added a new subparagraph (M) under section 1848(c)(2) 
of the Act that granted CMS the authority to engage in data collection 
to support valuation of services paid under the MPFS. In the CY 2015 
OPPS/ASC proposed rule, we indicated that we are seeking more 
information on the frequency and type of services furnished in PBDs 
under this authority to improve the accuracy of MPFS practice expense 
payments for services furnished in off-campus PBDs. We discussed this 
issue in more detail in the CY 2015 MPFS proposed rule (79 FR 40333). 
In that discussion, we noted our concerns that our current MPFS 
practice expense methodology primarily distinguishes between the 
resources involved in furnishing services in two sites of service: the 
nonfacility setting and the facility setting. As more physician 
practices become hospital-based and are treated as off-campus PBDs, we 
believe it is important to develop an understanding of which practice 
expense costs typically are incurred by the physicians and 
practitioners in the setting, which are incurred by the hospital, and 
whether the facility and nonfacility site-of-service differentials 
adequately account for the typical resource costs, given these new 
ownership arrangements.
    To understand how this trend is affecting Medicare, including the 
accuracy of payments made through the MPFS, we stated in the proposed 
rule that we need to develop data to assess the extent to which this 
shift toward hospital-based physician practices is occurring. 
Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we 
proposed to collect information on the type and frequency of 
physicians' services and outpatient hospital services furnished in off-
campus PBDs beginning January 1, 2015, in accordance with our authority 
under section 1848(c)(2)(M) of the Act (as added by section 220(a) of 
Pub. L. 113-93). As noted above, we proposed to create a HCPCS modifier 
that is to be reported with every code for physicians' services and 
outpatient hospital services furnished in an off-campus PBD of a 
hospital. Under the proposal, the modifier would be reported on both 
the CMS-1500 claim form for physicians' services and the UB-04 form 
(CMS Form 1450) for hospital outpatient services. In the proposed rule 
(79 FR 41013), we sought additional public comments on whether or not 
the use of a modifier code is the best mechanism for collecting this 
service-level data in the hospital outpatient department.
    Comment: Many commenters agreed on the need to collect information 
on the frequency, type, and payment of services furnished in off-campus 
PBDs of hospitals. However, several commenters expressed concern that 
the HCPCS modifier would create additional administrative burden for 
providers. Many of these commenters stated that the new modifier would 
require significant changes to hospitals' billing systems, including a 
separate chargemaster for outpatient off-campus PBDs and training for 
staff on how to use the new modifier. Many of these commenters 
suggested that CMS should re-propose a detailed data collection 
methodology, test it with providers, make adjustments, and allow 
additional time for implementation. One commenter suggested that CMS 
withdraw the current proposal and ask the Advisory Panel on Hospital 
Outpatient Payment (HOP Panel) to develop a proposal for data 
collection.
    Response: While we understand the commenters' concerns about the 
additional administrative burden of reporting a new HCPCS modifier, we 
have weighed the burden of reporting the modifier for each service 
against the benefit of having data that will allow us to obtain and 
assess accurate information on the type and frequency of physicians' 
services and outpatient hospital services furnished in off-campus PBDs. 
We do not believe that the modifier is excessively burdensome for 
providers to report. This is especially the case because, under current 
rules, when billing for services, providers must know where services 
are performed in order to accurately complete value code 78 of an 
outpatient claim or the service location portion of a professional 
claim. However, as discussed later in this section, we agree that a 
place of service (POS) code on the professional claim allows for the 
same type of data collection as a modifier on the hospital claim and 
would be less burdensome than the modifier for practitioner billing. We 
discuss the timeframe for implementation later in this section. With 
respect to bringing this proposal to the HOP Panel, we note that such a 
proposal is outside the scope of the HOP Panel, which is generally 
charged with advising Medicare on the clinical integrity of APCs and 
their associate relative payment weights. The proposed modifier is for 
collecting data and, as structured, does not affect APCs and their 
associated relative payment weights. Therefore, it would not be 
appropriate to solicit HOP Panel discussion or recommendations on this 
proposal on data collection.
    Comment: Some commenters who were concerned about the 
administrative burden of the new HCPCS modifier suggested several 
alternative methods for CMS to collect data on services furnished in 
off-campus PBDs. Several of these commenters recommended that CMS 
consider the establishment of a new POS code for professional claims, 
or for both professional claims and hospital claims, because they 
believed this approach would be less administratively burdensome than 
attaching a modifier to each service reported on the claim that was 
furnished in an off-campus PBD. Some commenters preferred identifying 
services furnished in off-campus PBDs on the Medicare cost report (CMS-
2552-10). Some commenters suggested using provider numbers and 
addresses to identify off-campus PBDs, or changing the provider 
enrollment process to be able to track these data. Other commenters 
suggested creating a new bill type to track outpatient hospital 
services furnished in off-campus PBDs.
    Commenters generally recommended that CMS choose the least 
administratively burdensome approach that would ensure accurate data 
collection, but did not necessarily agree on what approach would 
optimally achieve that result. Some commenters believed that a HCPCS 
modifier would more clearly identify specific services furnished at 
off-campus PBDs, and would provide better information about the type 
and level of care furnished. Some commenters believed that a HCPCS 
modifier would be the least administratively burdensome approach 
because hospitals and physicians already report a number of claims-
based modifiers. Other commenters argued that additional modifiers 
would increase administrative burden because this approach would 
increase the modifiers that would need to be considered when billing.
    Response: With respect to creating a new POS code to obtain data on 
services furnished in off-campus PBDs of a hospital, we note that POS 
codes are only reported on professional claims and are not included on 
hospital claims. Therefore, a POS code could not be easily implemented 
for hospital claims. However, POS codes are already required to be 
reported on every professional claim and POS 22 is currently used to 
report when physicians' services are furnished in an

[[Page 66912]]

outpatient hospital department. (More information on existing POS codes 
is available on the CMS Web site at: http://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.html.)
    Although we considered proposing a new POS code for professional 
claims to collect data on services furnished in the off-campus PBD 
setting, we ultimately did not do so, in part because we were aware 
that previous Government Accountability Office and Office of the 
Inspector General reports (October 2004, A-05-04-0025; January 2005, A-
06-04-00046; July 2010, A-01-09-00503; September 2011, A-01-10-00516) 
have noted frequent inaccuracies in the reporting of POS codes. In 
addition, at the time the proposed rule was developed, we had concerns 
that using a POS code to report this information might not give us the 
reliable data we are looking to collect, especially if such data were 
to be crosswalked with hospital claims for the same service, because 
the hospital claim would have a modifier, not a POS code. However, we 
have been persuaded by public comments suggesting that use of a POS 
code would be less administratively burdensome on professional claims 
than use of a modifier. Specifically, because a POS code is already 
required on every professional claim, we believe that creating a new 
POS code to distinguish outpatient hospital services that are furnished 
on-campus versus off-campus would require less staff training and 
education than would use of a modifier on the professional claim. In 
addition, professional claims only have space for four modifiers. While 
a very small percentage of professional claims have four modifiers, 
required use of an additional modifier for every professional claim 
could lead to more occurrences where there would not be space for all 
applicable modifiers. Unlike hospital claims, we note that a new 
professional claim is required whenever the place of service changes. 
That is, even if the same practitioner treats the same patient on the 
same day in the office and hospital, the services furnished in the 
office setting must be submitted on one claim with the POS 11 (Office) 
code, while those furnished in the outpatient hospital department would 
be submitted on a separate claim with the POS 22 (Outpatient Hospital) 
code (we note that the POS 22 code will be changing under the final 
policy). Likewise, if a new POS code were to be created for an off-
campus PBD setting, a separate claim for services furnished in that 
setting would be required relative to a claim for services furnished on 
the main campus by the same practitioner to the same patient on the 
same day. Based on public comments and after further consultation with 
Medicare billing experts, we believe that the use of the POS code on 
professional claims would be no less accurate than the use of a 
modifier on professional claims in identifying services furnished in 
off-campus PBDs. In addition, we believe that the POS code would be 
less administratively burdensome for practitioners billing using the 
professional claim because a POS code is already required for every 
professional claim.
    With respect to adding new fields to existing claim forms or 
creating a new bill type, we do not believe that this data collection 
warrants these measures. We believe that those changes would create 
greater administrative burden than a HCPCS modifier or POS code, 
especially because providers are already accustomed to using modifiers 
and POS codes. Revisions to the claim form to add new fields or an 
additional bill type would create significant administrative burden to 
revise claims processing systems and educate providers, which we 
believe is not necessary, given the availability of a modifier and POS 
codes. Although providers may not be familiar with this new modifier or 
any new POS code; because these types of codes already exist generally 
for hospital and professional claims, providers and suppliers should 
already have an understanding of these types of codes and how to apply 
them. Finally, we do not believe that expansions to the claim form or 
use of a new bill type would provide us with detailed information on 
exactly which services were furnished in an off-campus PBD versus those 
furnished on the main campus when those services are furnished on the 
same day.
    We also do not believe that we could accurately determine which 
services are furnished at off-campus PBDs using currently available 
national provider identifier (NPI) and facility address data. Hospitals 
are required to report the 9-digit zip code indicating where a service 
was furnished for purposes of paying properly for physician and 
anesthesia services paid under the MPFS when that zip code differs from 
the master address for the hospital on file in CMS claims systems (Pub. 
100-04, Transmittal 1681, February 13, 2009). However, the billing zip 
code for the hospital main campus could be broad enough to incorporate 
on and off-campus PBDs. Further, a zip code reported in value code 78 
does not allow CMS to distinguish between services furnished in 
different locations on the same date. Therefore, we do not believe that 
a comparison of the zip code captured in value code 78 and the main 
campus zip code is sufficiently precise.
    Finally, while we considered the suggestion that CMS use currently 
reported Medicare hospital cost report (CMS-2552-10) data to identify 
services furnished at off-campus PBDs, we note that although aggregate 
data on services furnished in different settings must be reported 
through the appropriate cost center, we would not be able to obtain the 
service-specific level of detail that we would be able to obtain from 
claims data.
    We will take under consideration the suggestion that CMS create a 
way for hospitals to report their acquisition of off-campus PBDs 
through the enrollment process, although this information, as currently 
reported, like many of the suggestions above, would not allow us to 
know exactly which services are furnished in off-campus PBDs and which 
services are furnished on the hospital's main campus when a hospital 
provides both on the same day.
    Comment: Commenters noted that the proposed modifier would not 
allow CMS to know the precise location of the off-campus PBDs for 
billed services or when services are furnished at different off-campus 
PBD locations in the same day.
    Response: We agree that neither the proposed modifier nor a POS 
code provides precise information on the specific location of each off-
campus PBD for each furnished service. However, we believe having 
information on the type and frequency of services furnished at all off-
campus locations will assist CMS in better understanding the 
distribution of services between on-campus locations and off-campus 
locations.
    Comment: MedPAC believed there may be some value in collecting data 
on services furnished in off-campus PBDs to validate the accuracy of 
site-of-service reporting when the physician's office is off-campus but 
bills as an outpatient department. MedPAC indicated that any data 
collection effort should not prevent the development of policies to 
align payment rates across settings. MedPAC encouraged CMS to seek 
legislative authority to set equal payment rates across settings for 
evaluation and management office visits and other select services.
    Response: We thank MedPAC for its support of our data collection 
efforts to better inform the frequency and types of services that are 
being furnished in off-campus PBDs.

[[Page 66913]]

    Comment: Many commenters suggested that providers would not be able 
to accurately apply the new modifier by the January 1, 2015 
implementation timeline and recommended a 1-year delay before providers 
would be required to apply the modifier to services furnished at off-
campus PBDs. Some commenters requested only a 6-month delay in 
implementation. Commenters indicated that significant revisions to 
internal billing processes would require additional time to implement.
    Response: Although we believe that the customary January 1st 
effective date that applies to most policies adopted in the final rules 
with comment period for both the MPFS and the OPPS would provide 
sufficient lead time, we understand the commenters' concerns with the 
proposed timeline for implementation, given that the new reporting 
requirements may require changes to billing systems as well as 
education and training for staff. Accordingly, although we are 
finalizing our proposal to create a HCPCS modifier for hospital 
services furnished in an off-campus PBD setting, we are adopting a 
voluntary reporting period of the new HCPCS modifier for 1 year. That 
is, reporting the new HCPCS modifier for services furnished at an off-
campus PBD will not be mandatory until January 1, 2016, in order to 
allow providers time to make systems changes, test these changes, and 
train staff on use of the new modifier before reporting is required. We 
welcome early reporting of the modifier and believe a full year of 
preparation should provide hospitals with sufficient time to modify 
their systems for accurate reporting. With respect to the POS code for 
professional claims, we will request two new POS codes to replace POS 
code 22 (Hospital Outpatient) through the POS Workgroup and expect that 
it will take some time for these new codes to be established. Once the 
new POS codes are ready and integrated into CMS claims systems, 
practitioners would be required to use them, as applicable. More 
information on the availability of the new POS codes will be 
forthcoming in subregulatory guidance. However, we do not expect the 
new POS codes to be available prior to July 1, 2015. There will be no 
voluntary reporting period of the POS codes for applicable professional 
claims because each professional claim requires a POS code in order to 
be accepted by Medicare. However, we do not view this to be problematic 
because we intend to give prior notice on the POS coding changes and, 
as many of the commenters noted, because practitioners are already 
accustomed to using a POS code on every claim they submit.
    Comment: Many commenters expressed concern that this data 
collection would eventually lead to equalizing payment for similar 
services furnished in the nonfacility setting and the off-campus PBD 
setting. Several commenters noted that the trend of hospitals acquiring 
physician practices is due to efforts to better integrate care delivery 
and suggested that CMS weigh the benefits of care integration when 
deciding payment changes. Some commenters suggested that CMS use these 
data to equalize payment for similar services between these two 
settings. These commenters suggested that there is little difference in 
costs and care between the two settings that would warrant the 
difference in payment. Several of these commenters highlighted 
beneficiary cost-sharing as one reason for site-neutral payment, noting 
that the total payment amount for outpatient services is generally 
higher than the total payment amount for those same services when 
furnished in a physician's office.
    Response: We appreciate these comments. At this time, we are only 
finalizing a data collection in this final rule with comment period. We 
did not propose and, therefore, are not finalizing any adjustment to 
payments furnished in the off-campus PBD setting.
    Comment: One commenter noted that the CMS proposal would not 
provide additional information on how a physician practice billed prior 
to becoming an off-campus PBD, which would be important for analyzing 
the impact of this trend.
    Response: We agree that understanding physician billing patterns 
prior to becoming an off-campus PBD is important in analyzing the 
impact of this trend, and we will continue to evaluate ways to analyze 
claims data to gather this information. We believe that collecting data 
using the additional modifier and POS code finalized in this final rule 
with comment period will be an important tool in furthering this 
analysis.
    Comment: Some commenters suggested that the term ``off-campus'' be 
better defined. Commenters asked how billing would occur for hospitals 
with multiple campuses because the CMS definition of campus references 
main buildings and does not include remote locations. The commenters 
maintained that remote locations are not the same as off-campus 
departments and that remote campuses furnish both inpatient and 
outpatient hospital services, in contrast to individual hospital 
departments. The commenters argued that these types of locations are 
not ones that were formerly a physician office practice, and furnish 
completely different types of services than a physician office. One 
commenter also asked whether the modifier is intended to cover services 
furnished in freestanding emergency departments.
    Response: For purposes of the modifier and the POS codes we are 
finalizing in this final rule with comment period, we define ``campus'' 
using the definition at 42 CFR 413.65(a)(2) to be the physical area 
immediately adjacent to the provider's main buildings, other areas and 
structures that are not strictly contiguous to the main buildings but 
are located within 250 yards of the main buildings, and any other areas 
determined on an individual case basis, by the CMS regional office, to 
be part of the provider's campus. Our intent is to capture outpatient 
services furnished off of the hospital's main campus and off of any 
other hospital campuses. The term ``remote location of a hospital'' is 
defined at 42 CFR 413.65(a)(2). Under these regulations, a ``remote 
location'' includes a hospital campus other than the main hospital 
campus. Specifically, a remote location is ``a facility or an 
organization that is either created by, or acquired by, a hospital that 
is a main provider for the purpose of furnishing inpatient hospital 
services under the name, ownership, and financial and administrative 
control of the main provider. . . .'' Therefore, we agree with the 
commenter that remote locations of the hospital should not be required 
to report the modifier nor should practitioners be required to report 
the off-campus POS code in these settings. This term ``remote 
location'' does not include ``satellite'' locations of a hospital, but 
because a satellite facility is one that provides inpatient services in 
a building also used by another hospital, or in one or more entire 
buildings located on the same campus as buildings used by another 
hospital, we also are not requiring satellite facilities to report the 
modifier or the POS codes. Satellite facilities are described in the 
regulations at 42 CFR 412.22(h). Accordingly, reporting of the modifier 
and POS codes would be required for outpatient services furnished in 
PBDs beyond 250 yards from the main campus of the hospital, excluding 
services furnished in a remote location or satellite facility of the 
hospital.
    We also appreciate the comment on emergency departments. We do not 
intend for hospitals to report the new modifier for services furnished 
in an emergency department that is provider-

[[Page 66914]]

based to a hospital. We note that there is already a POS code for the 
emergency department, POS 23 (emergency room-hospital), and this code 
would continue to be used for emergency department services. That is, 
the new off-campus PBD code that will be created for purposes of this 
data collection would not apply to hospital emergency department 
services. Hospitals that have questions about which departments are 
considered to be ``off-campus PBDs'' should review additional guidance 
that CMS releases on this policy and work with the appropriate CMS 
regional office if individual, specific questions remain.
    Comment: Several commenters asked for clarification on when to 
report the modifier for services furnished both on-campus and off-
campus on the same day. The commenters provided several scenarios of 
visits and diagnostic services furnished on the same day.
    Response: The location where the service is actually furnished 
would dictate the use of the modifier, regardless of where the order 
for services initiated. We expect the modifier and the POS code for 
off-campus PBDs to be reported in locations in which the hospital 
expends resources to furnish the service in an off-campus PBD setting. 
For example, hospitals would not report the modifier for a diagnostic 
test that is ordered by a practitioner who is located in an off-campus 
PBD when the service is actually furnished on the main campus of the 
hospital. This issue does not impact use of the POS codes because 
practitioners submit a different claim for each POS where they furnish 
services for a specific beneficiary.
    Comment: A few commenters asked for clarification on whether their 
entity constitutes a PBD.
    Response: PBDs are departments of the hospital that meet the 
criteria specified in regulations at 42 CFR 413.65. Questions about 
PBDs may be directed to the appropriate CMS regional office.
    Comment: One commenter recommended that CMS publish the data it 
acquires through adoption of this modifier.
    Response: Data collected through the new HCPCS modifier would be 
part of the Medicare Limited Data Set and would be available to the 
public for purchase along with the remainder of the Limited Data Set. 
Similarly, professional claims data with revised POS coding would be 
available as a standard analytic file for purchase.
    In summary, after consideration of the public comments received, we 
are finalizing our proposal with modifications. For hospital claims, we 
are creating a HCPCS modifier that is to be reported with every code 
for outpatient hospital services furnished in an off-campus PBD of a 
hospital. This code will not be required to be reported for remote 
locations of a hospital defined at 42 CFR 412.65, satellite facilities 
of a hospital defined at 42 CFR 412.22(h), or for services furnished in 
an emergency department. This 2-digit modifier will be added to the 
HCPCS annual file as of January 1, 2015, with the label ``PO,'' the 
short descriptor ``Serv/proc off-campus pbd,'' and the long descriptor 
``Services, procedures and/or surgeries furnished at off-campus 
provider-based outpatient departments.'' Reporting of this new modifier 
will be voluntary for 1 year (CY 2015), with reporting required 
beginning on January 1, 2016. Additional instruction and provider 
education will be forthcoming in subregulatory guidance.
    For professional claims, instead of finalizing a HCPCS modifier, in 
response to public comments, we will be deleting current POS code 22 
(outpatient hospital department) and establishing two new POS codes--
one to identify outpatient services furnished in on-campus, remote, or 
satellite locations of a hospital, and one to identify services 
furnished in an off-campus PBD hospital setting. We will maintain the 
separate POS code 23 (Emergency room-hospital) to identify services 
furnished in an emergency department of the hospital. These new POS 
codes will be required to be reported as soon as they become available. 
However, advanced notice of the availability of these codes will be 
shared publicly as soon as practicable.

XI. CY 2015 OPPS Payment Status and Comment Indicators

A. CY 2015 OPPS Payment Status Indicator Definitions

    Payment status indicators (SIs) that we assign to HCPCS codes and 
APCs serve an important role in determining payment for services under 
the OPPS. They indicate whether a service represented by a HCPCS code 
is payable under the OPPS or another payment system and also whether 
particular OPPS policies apply to the code. The complete list of the CY 
2015 payment status indicators and their definitions is displayed in 
Addendum D1 to this final rule with comment period, which is available 
on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The CY 2015 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 Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The changes to CY 2015 payment status 
indicators and their definitions are discussed in detail below.
    We note that, in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 74869 through 74888), for CY 2014, we created a new 
status indicator ``J1'' to identify HCPCS codes that are paid under a 
comprehensive APC. However, because we delayed implementation of the 
new comprehensive APC policy until CY 2015, we also delayed the 
effective date of payment status indicator ``J1'' to CY 2015. A claim 
with payment status indicator ``J1'' will trigger a comprehensive APC 
payment for the claim. We refer readers to section II.A.2.e. of this 
final rule with comment period for a discussion of implementation of 
the new comprehensive APC policy.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41014), for CY 2015, 
we proposed to delete payment status indicator ``X'' and to assign 
ancillary services that are currently assigned payment status indicator 
``X'' to either payment status indicator ``Q1'' or ``S.'' We also 
proposed to revise the definition of payment status indicator ``Q1'' by 
removing payment status indicator ``X'' from the packaging criteria, so 
that codes assigned payment status indicator ``Q1'' would be designated 
as STV-packaged, rather than STVX-packaged, because payment status 
indicator ``X'' was proposed for deletion. These proposed changes, the 
public comments we received and our responses, and our finalized 
policies are discussed in section II.A.3.c.(1) of this final rule with 
comment period. Section II.A.3.c.(1) of this final rule with comment 
period discusses the ancillary services packaging policy. The ancillary 
services packaging policy is the policy that makes maintaining status 
indicator ``X'' no longer necessary. After consideration of the public 
comments that we received and that are discussed in section 
II.A.3.c.(1) of this final rule with comment period, we are finalizing, 
without modification, our CY 2015 proposal to delete payment status 
indicator ``X'' and to assign ancillary services that are currently 
assigned payment status indicator ``X'' to either payment status 
indicator ``Q1'' or ``S.''
    In addition, for CY 2015, we proposed to clarify the definition of 
payment status indicator ``E'' to state that

[[Page 66915]]

payment status indicator ``E'' applies to items, codes, and services in 
any of the following cases:
     For which pricing is not available;
     Not covered by any Medicare outpatient benefit category;
     Statutorily excluded by Medicare; or
     Not reasonable and necessary.
    Regarding items ``for which pricing is not available,'' this 
applies to drugs and biologicals assigned a HCPCS code but with no 
available pricing information (for example, WAC).
    In reviewing the OPPS status indicators and Addendum D1 for CY 
2015, we noticed that there are a few drugs or biologicals that are 
currently assigned payment status indicator ``A,'' indicating payment 
under a non-OPPS fee schedule. These drugs or biologicals are 
administered infrequently in conjunction with emergency dialysis for 
patients with ESRD, but when administered in the HOPD, they are paid 
under the standard OPPS drug payment methodology for drugs and 
biologicals, that is, at ASP+6 percent unless they are packaged. (We 
refer readers to section V. of this final rule with comment period for 
additional discussion of these drugs and their status indicators.) We 
proposed to change the status indicators for these drugs or biologicals 
for CY 2015 by removing the phrase ``EPO for ESRD Patients'' from the 
list of examples for status indicator ``A.'' In addition, we proposed 
to clarify the definition of payment status indicator ``A'' by adding 
the phrase ``separately payable'' to nonimplantable prosthetic and 
orthotic devices.
    We did not receive any public comments regarding our proposed 
change and clarifications of the definitions of payment status 
indicators ``E'' and ``A.'' Therefore, we are finalizing our 
clarification and proposed policies, without modifications, for CY 
2015.

B. CY 2015 Comment Indicator Definitions

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41014), for the CY 
2015 OPPS, we proposed to use the same two comment indicators that are 
in effect for the CY 2014 OPPS.
     ``CH''--Active HCPCS code in current and next calendar 
year; status indicator and/or APC assignment have changed or active 
HCPCS code that will be discontinued at the end of the current calendar 
year.
     ``NI''--New code for the next calendar year or existing 
code with substantial revision to its code descriptor in the next 
calendar year as compared to current calendar year, interim APC 
assignment; comments will be accepted on the interim APC assignment for 
the new code.
    We proposed to use the ``CH'' comment indicator in the CY 2015 
OPPS/ASC proposed rule (79 FR 41014) to indicate HCPCS codes for which 
the status indicator or APC assignment, or both, are proposed for 
change in CY 2015 compared to their assignment as of June 30, 2014. We 
believed that using the ``CH'' indicator in the proposed rule would 
facilitate the public's review of the changes that we proposed for CY 
2015. We proposed to use the ``CH'' comment indicator in the CY 2015 
OPPS/ASC final rule with comment period to indicate HCPCS codes for 
which the status indicator or APC assignment, or both, would change in 
CY 2015 compared to their assignment as of December 31, 2014. Use of 
the comment indicator ``CH'' in association with a composite APC 
indicates that the configuration of the composite APC would be changed 
in the CY 2015 OPPS/ASC final rule with comment period.
    In addition, we proposed that any existing HCPCS codes with 
substantial revisions to the code descriptors for CY 2015 compared to 
the CY 2014 descriptors would be labeled with comment indicator ``NI'' 
in Addendum B to the CY 2015 OPPS/ASC final rule with comment period. 
However, in order to receive the comment indicator ``NI,'' the CY 2015 
revision to the code descriptor (compared to the CY 2014 descriptor) 
must be significant such that the new code descriptor describes a new 
service or procedure for which the OPPS treatment may change. We use 
comment indicator ``NI'' to indicate that these HCPCS codes will be 
open for comment as part of the CY 2015 OPPS/ASC final rule with 
comment period. In the CY 2015 OPPS/ASC proposed rule, we stated that, 
like all codes labeled with comment indicator ``NI,'' we would respond 
to public comments and finalize their OPPS treatment in the CY 2016 
OPPS/ASC final rule with comment period.
    In accordance with our usual practice, we proposed that CPT and 
Level II HCPCS codes that are new for CY 2015 also would be labeled 
with comment indicator ``NI'' in Addendum B to the CY 2015 OPPS/ASC 
final rule with comment period.
    We did not receive any public comments on the proposed use of 
comment indicators for CY 2015.
    We believe that the CY 2014 definitions of the OPPS comment 
indicators continue to be appropriate for CY 2015. Therefore, we are 
continuing to use those definitions without modification for CY 2015. 
Only HCPCS codes with comment indicator ``NI'' in this CY 2015 OPPS/ASC 
final rule with comment period are subject to comment. HCPCS codes that 
do not appear with comment indicator ``NI'' in this CY 2015 OPPS/ASC 
final rule with comment period will not be open to public comment, 
unless we specifically request additional comments elsewhere in this 
final rule with comment period.
    The definitions of the OPPS comment indicators for CY 2015 are 
listed in Addendum D2 to this final rule with comment period, which is 
available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

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

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for 
the ASC Payment System
    For a detailed discussion of the legislative history and statutory 
authority related to payments to ASCs under Medicare, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 
32292). For a discussion of prior rulemaking on the ASC payment system, 
we refer readers to the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74378 through 74379), the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68434 through 68467), and the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 75064 through 75090).
2. Policies Governing Changes to the Lists of Codes and Payment Rates 
for ASC Covered Surgical Procedures and Covered Ancillary Services
    Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject 
to certain exclusions, covered surgical procedures in an ASC are 
surgical procedures that are separately paid under the OPPS, that would 
not be expected to pose a significant risk to beneficiary safety when 
performed in an ASC, and for which standard medical practice dictates 
that the beneficiary would not typically be expected to require active 
medical monitoring and care at midnight following the procedure 
(``overnight stay''). We adopted this standard for defining which 
surgical procedures are covered under the ASC payment system as an 
indicator of the complexity of the procedure and its appropriateness 
for

[[Page 66916]]

Medicare payment in ASCs. We use this standard only for purposes of 
evaluating procedures to determine whether or not they are appropriate 
to be furnished to Medicare beneficiaries in ASCs. We define surgical 
procedures as those described by Category I CPT codes in the surgical 
range from 10000 through 69999, as well as those Category III CPT codes 
and Level II HCPCS codes that directly crosswalk or are clinically 
similar to ASC covered surgical procedures (72 FR 42478).
    In the August 2, 2007 final rule, we also established our policy to 
make separate ASC payments for the following ancillary items and 
services when they are provided integral to ASC covered surgical 
procedures: (1) Brachytherapy sources; (2) certain implantable items 
that have pass-through payment status under the OPPS; (3) certain items 
and services that we designate as contractor-priced, including, but not 
limited to, procurement of corneal tissue; (4) certain drugs and 
biologicals for which separate payment is allowed under the OPPS; and 
(5) certain radiology services for which separate payment is allowed 
under the OPPS. These covered ancillary services are specified in Sec.  
416.164(b) and, as stated previously, are eligible for separate ASC 
payment (72 FR 42495). Payment for ancillary items and services that 
are not paid separately under the ASC payment system is packaged into 
the ASC payment for the covered surgical procedure.
    We update the lists of, and payment rates for, covered surgical 
procedures and covered ancillary services in ASCs in conjunction with 
the annual proposed and final rulemaking process to update the OPPS and 
the ASC payment system (Sec.  416.173; 72 FR 42535). In addition, as 
discussed in detail in section XII.B. of this final rule with comment 
period, because we base ASC payment policies for covered surgical 
procedures, drugs, biologicals, and certain other covered ancillary 
services on the OPPS payment policies, and we use quarterly change 
requests to update services covered under the OPPS, we also provide 
quarterly update change requests (CRs) for ASC covered surgical 
procedures and covered ancillary services throughout the year (January, 
April, July, and October). CMS releases new Level II codes to the 
public or recognizes the release of new CPT codes by the AMA and makes 
these codes effective (that is, the codes are recognized on Medicare 
claims) via these ASC quarterly update CRs. Thus, these quarterly 
updates are to implement newly created Level II HCPCS and Category III 
CPT codes for ASC payment and to update the payment rates for 
separately paid drugs and biologicals based on the most recently 
submitted ASP data. New Category I CPT codes, except vaccine codes, are 
released only once a year and, therefore, are implemented only through 
the January quarterly update. New Category I CPT vaccine codes are 
released twice a year and are implemented through the January and July 
quarterly updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC 
proposed rule for the process used to update the HCPCS and CPT codes 
(76 FR 42291).
    In our annual updates to the ASC list of, and payment rates for, 
covered surgical procedures and covered ancillary services, we 
undertake a review of excluded surgical procedures (including all 
procedures newly proposed for removal from the OPPS inpatient list), 
new procedures, and procedures for which there is revised coding, to 
identify any that we believe meet the criteria for designation as ASC 
covered surgical procedures or covered ancillary services. Updating the 
lists of ASC covered surgical procedures and covered ancillary 
services, as well as their payment rates, in association with the 
annual OPPS rulemaking cycle is particularly important because the OPPS 
relative payment weights and, in some cases, payment rates, are used as 
the basis for the payment of covered surgical procedures and covered 
ancillary services under the revised ASC payment system. This joint 
update process ensures that the ASC updates occur in a regular, 
predictable, and timely manner.

B. Treatment of New Codes

1. Process for Recognizing New Category I and Category III CPT Codes 
and Level II HCPCS Codes
    Category I CPT, Category III CPT, and Level II HCPCS codes are used 
to report procedures, services, items, and supplies under the ASC 
payment system. Specifically, we recognize the following codes on ASC 
claims: (1) Category I CPT codes, which describe surgical procedures 
and vaccine codes; (2) Category III CPT codes, which describe new and 
emerging technologies, services, and procedures; and (3) Level II HCPCS 
codes, which are used primarily to identify products, supplies, 
temporary procedures, and services not described by CPT codes.
    We finalized a policy in the August 2, 2007 final rule to evaluate 
each year all new Category I and Category III CPT codes and Level II 
HCPCS codes that describe surgical procedures, and to make preliminary 
determinations during the annual OPPS/ASC rulemaking process regarding 
whether or not they meet the criteria for payment in the ASC setting as 
covered surgical procedures and, if so, whether or not they are office-
based procedures (72 FR 42533 through 42535). In addition, we identify 
new codes as ASC covered ancillary services based upon the final 
payment policies of the revised ASC payment system.
    We have separated our discussion below into two sections based on 
whether we proposed to solicit public comments in the CY 2015 OPPS/ASC 
proposed rule (and respond to those comments in this CY 2015 OPPS/ASC 
final rule with comment period) or whether we are soliciting public 
comments in this CY 2015 OPPS/ASC final rule with comment period (and 
responding to those comments in the CY 2016 OPPS/ASC final rule with 
comment period).
    We note that we sought public comment in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75067) on the new Category I and 
Category III CPT and Level II HCPCS codes that were effective January 
1, 2014. We also sought public comment in the CY 2014 OPPS/ASC final 
rule with comment period on the new Level II HCPCS codes effective 
October 1, 2013. These new codes, with an effective date of October 1, 
2013, or January 1, 2014, were flagged with comment indicator ``NI'' in 
Addenda AA and BB to the CY 2014 OPPS/ASC final rule with comment 
period to indicate that we were assigning them an interim payment 
status and payment rate, if applicable, which were subject to public 
comment following publication of the CY 2014 OPPS/ASC final rule with 
comment period. In the proposed rule, we stated that we will respond to 
public comments and finalize the treatment of these codes under the ASC 
payment system in this CY 2015 OPPS/ASC final rule with comment period.
2. Treatment of New Level II HCPCS Codes and Category III CPT Codes 
Implemented in April 2014 and July 2014 for Which We Solicited Public 
Comments in the CY 2015 OPPS/ASC Proposed Rule
    In the April 2014 and July 2014 CRs, we made effective for April 1, 
2014 and July 1, 2014, respectively, a total of seven new Level II 
HCPCS codes and four new Category III CPT codes that describe ASC 
covered surgical procedures and covered ancillary services that were 
not addressed in the

[[Page 66917]]

CY 2014 OPPS/ASC final rule with comment period.
    In the April 2014 ASC quarterly update (Transmittal 2927, CR 8675, 
dated April 10, 2014), we added two new surgical Level II HCPCS codes 
and one new drug and biological Level II HCPCS code to the list of 
covered surgical procedures and covered ancillary services, 
respectively. Table 45 of the CY 2015 OPPS/ASC proposed rule (79 FR 
41016) listed the new Level II HCPCS codes that were implemented April 
1, 2014, along with their proposed payment indicators for CY 2015.
    In the July 2014 quarterly update (Transmittal 2970, CR 8786, dated 
May 23, 2014), we added one new brachytherapy Level II HCPCS code and 
three new drug and biological Level II HCPCS codes to the list of 
covered ancillary services. Table 46 of the CY 2015 OPPS/ASC proposed 
rule (79 FR 41016 through 41017) listed the new Level II HCPCS codes 
that were implemented July 1, 2014 along with their proposed payment 
indicators and proposed ASC payment rates for CY 2015.
    Through the July 2014 quarterly update CR, we also implemented ASC 
payment for four new Category III CPT codes as one ASC covered surgical 
procedure and three covered ancillary services, effective July 1, 2014. 
These codes were listed in Table 47 of the CY 2015 OPPS/ASC proposed 
rule (79 FR 41017), along with their proposed payment indicators and 
proposed payment rates for CY 2015.
    The HCPCS codes listed in Table 45 of the CY 2015 OPPS/ASC proposed 
rule (79 FR 41016) were included in Addenda AA or BB to the proposed 
rule (which are available via the Internet on the CMS Web site). 
Because the payment rates associated with the new Level II HCPCS codes 
and Category III CPT codes that became effective July 1, 2014 (listed 
in Table 46 and Table 47 of the proposed rule (79 FR 41016 through 
41017)) were not available to us in time for incorporation into the 
Addenda to the OPPS/ASC proposed rule, our policy is to include these 
HCPCS codes and their proposed payment indicators and payment rates in 
the preamble to the proposed rule but not in the Addenda to the 
proposed rule. These codes and their final payment indicators and rates 
are included in the appropriate Addendum to this CY 2015 OPPS/ASC final 
rule with comment period. Therefore, the codes implemented by the July 
2014 ASC quarterly update CR and their proposed CY 2015 payment 
indicators and rates that were displayed in Table 46 and Table 47 of 
the proposed rule were not included in Addenda AA or BB to the proposed 
rule (which are available via the Internet on the CMS Web site). The 
final list of ASC covered surgical procedures and covered ancillary 
services and the associated payment weights and payment indicators are 
included in Addenda AA or BB to this CY 2015 OPPS/ASC final rule with 
comment period, consistent with our annual update policy.
    We invited public comment on these proposed payment indicators and 
the proposed payment rates for the new Category III CPT code and Level 
II HCPCS codes that were newly recognized as ASC covered surgical 
procedures or covered ancillary services in April 2014 and July 2014 
through the quarterly update CRs, as listed in Tables 45, 46, and 47 of 
the CY 2015 OPPS/ASC proposed rule (79 FR 41016 through 41017). We 
proposed to finalize their payment indicators and their payment rates 
in this CY 2015 OPPS/ASC final rule with comment period.
    We did not receive any public comments regarding these proposed ASC 
payment indicators. Therefore, we are adopting as final for CY 2015 the 
ASC payment indicators for the ASC covered surgical procedures and 
covered ancillary services described by the new Level II HCPCS codes 
implemented in April 2014 and July 2014 through the quarterly update 
CRs as shown below, in Tables 41 and 42, respectively.
    For the new Category III CPT codes implemented in July 2014 through 
the quarterly update CR, as shown below in Table 43, we are not 
finalizing the ``Z2'' payment indicator that we proposed for CPT codes 
0348T, 0349T, and 0350T. For CY 2015, these codes will be conditionally 
packaged under the OPPS when provided with a significant procedure 
(status indicator ``Q1''). With the exception of device removal 
procedures (as discussed in section XII.D.1.b. of this final rule with 
comment period), HCPCS codes that are conditionally packaged under the 
OPPS are always packaged (payment indicator ``N1'') under the ASC 
payment system. Therefore, we are changing the final CY 2015 ASC 
payment indicator for CPT codes 0348T, 0349T, and 350T from ``Z2'' to 
``N1.'' We are adopting as final the payment indicator proposed for CPT 
code 0356T.
    These new HCPCS and CPT codes also are displayed in Addenda AA and 
BB to this final rule with comment period (which are available via the 
Internet on the CMS Web site). We note that after publication of the CY 
2015 OPPS/ASC proposed rule, the CMS HCPCS Workgroup created permanent 
HCPCS J-codes for CY 2015 to replace certain temporary HCPCS C-codes 
and Q-codes made effective for CY 2014. These permanent CY 2015 HCPCS 
J-codes are listed alongside the temporary CY 2014 HCPCS C-codes and Q-
codes in Tables 41 and 42 below. We also note that the CMS HCPCS 
Workgroup created a long descriptor for J1781 that is slightly 
different from the long descriptor listed for HCPCS code C9134 in the 
CY 2015 OPPS/ASC proposed rule.

 Table 41--New Level II HCPCS Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented in
                                                   April 2014
----------------------------------------------------------------------------------------------------------------
                                                                                                  Final CY 2015
       CY 2014 HCPCS code              CY 2015 HCPCS code            CY 2015 long descriptor         payment
                                                                                                    indicator
----------------------------------------------------------------------------------------------------------------
C9739..........................  C9739.........................  Cystourethroscopy, with                     G2
                                                                  insertion of transprostatic
                                                                  implant; 1 to 3 implants.
C9740..........................  C9740.........................  Cystourethroscopy, with                     G2
                                                                  insertion of transprostatic
                                                                  implant; 4 or more implants.
C9021..........................  J9301.........................  Injection, obinutuzumab, 10 mg              K2
----------------------------------------------------------------------------------------------------------------
G2 = Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment
  weight.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment
  based on OPPS rate.

[[Page 66918]]

           Table 42--New Level II HCPCS Codes for Covered Ancillary Services Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                                                                  Final CY 2015
       CY 2014 HCPCS code              CY 2015 HCPCS code            CY 2015 long descriptor         payment
                                                                                                    indicator
----------------------------------------------------------------------------------------------------------------
C2644..........................  C2644.........................  Brachytherapy source, cesium-               H2
                                                                  131 chloride solution, per
                                                                  millicurie.
C9022..........................  J1322.........................  Injection, elosulfase alfa,                 K2
                                                                  1mg.
C9134..........................  J7181.........................  Injection, Factor XIII A-                   K2
                                                                  subunit, (recombinant), per
                                                                  iu.
Q9970 *........................  J1439.........................  Injection, ferric                           K2
                                                                  carboxymaltose, 1 mg.
----------------------------------------------------------------------------------------------------------------
* HCPCS code Q9970 replaced HCPCS code C9441 effective July 1, 2014.
H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; payment
  based on OPPS rate.
K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment
  based on OPPS rate.

 Table 43--New Category III CPT Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented
                                                  in July 2014
----------------------------------------------------------------------------------------------------------------
                                                                                                  Final CY 2015
        CY 2014 CPT code                CY 2015 CPT code             CY 2015 long descriptor         payment
                                                                                                    indicator
----------------------------------------------------------------------------------------------------------------
0348T..........................  ..............................  Radiologic examination,                     N1
                                                                  radiostereometric analysis
                                                                  (RSA); spine, (includes,
                                                                  cervical, thoracic and
                                                                  lumbosacral, when performed).
0349T..........................  ..............................  Radiologic examination,                     N1
                                                                  radiostereometric analysis
                                                                  (RSA); upper extremity(ies),
                                                                  (includes shoulder, elbow and
                                                                  wrist, when performed).
0350T..........................  ..............................  Radiologic examination,                     N1
                                                                  radiostereometric analysis
                                                                  (RSA); lower extremity(ies),
                                                                  (includes hip, proximal
                                                                  femur, knee and ankle, when
                                                                  performed).
0356T..........................  ..............................  Insertion of drug-eluting                   R2
                                                                  implant (including punctal
                                                                  dilation and implant removal
                                                                  when performed) into lacrimal
                                                                  canaliculus, each.
----------------------------------------------------------------------------------------------------------------
N1 = Packaged service/item; no separate payment made.
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.

3. Process for New Level II HCPCS Codes and Category I and Category III 
CPT Codes for Which We Are Soliciting Public Comments in This CY 2015 
OPPS/ASC Final Rule With Comment Period
    As has been our practice in the past, we incorporate those new 
Category I and Category III CPT codes and new Level II HCPCS codes that 
are effective January 1 in the final rule with comment period updating 
the ASC payment system for the following calendar year. These codes are 
released to the public via the CMS HCPCS (for Level II HCPCS codes) and 
AMA Web sites (for CPT codes), and also through the January ASC 
quarterly update CRs. In the past, we also have released new Level II 
HCPCS codes that are effective October 1 through the October ASC 
quarterly update CRs and incorporated these new codes in the final rule 
with comment period updating the ASC payment system for the following 
calendar year. All of these codes are flagged with comment indicator 
``NI'' in Addenda AA and BB to the OPPS/ASC final rule with comment 
period to indicate that we are assigning them an interim payment status 
which is subject to public comment. The payment indicator and payment 
rate, if applicable, for all such codes flagged with comment indicator 
``NI'' are open to public comment in the OPPS/ASC final rule with 
comment period, and we respond to these comments in the final rule with 
comment period for the next calendar year's OPPS/ASC update.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41017), we proposed to 
continue this process for CY 2015. Specifically, for CY 2015, we 
proposed to include in Addenda AA and BB to the CY 2015 OPPS/ASC final 
rule with comment period any new Category I and III CPT codes effective 
January 1, 2015, that would be incorporated in the January 2015 ASC 
quarterly update CR and any new Level II HCPCS codes, effective October 
1, 2014 or January 1, 2015, that would be released by CMS in its 
October 2014 and January 2015 ASC quarterly update CRs. We stated that 
these codes would be flagged with comment indicator ``NI'' in Addenda 
AA and BB to this CY 2015 OPPS/ASC final rule with comment period to 
indicate that we have assigned them an interim payment status. We also 
stated that their payment indicators and payment rates, if applicable, 
would be open to public comment in this CY 2015 OPPS/ASC final rule 
with comment period and would be finalized in the CY 2016 OPPS/ASC 
final rule with comment period.
    We did not receive any public comments regarding this proposed 
process. Therefore, for CY 2015, we are finalizing our proposal, 
without modification, to continue our established process for 
recognizing and soliciting public comments on new Level II HCPCS codes 
and Category I and III CPT codes that become effective on October 1, 
2014, or January 1, 2015, as described above.

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

1. Covered Surgical Procedures
a. Additions to the List of ASC Covered Surgical Procedures
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41017 through 41018), 
we proposed to update the list of ASC covered surgical procedures by 
adding 10 procedures to the list for CY 2015. These 10 procedures were 
among those excluded from the ASC list for CY 2014 because we believed 
they did not meet the definition of a covered surgical procedure based 
on our expectation that they would be expected to pose a significant 
risk to beneficiary safety when performed in an ASC, or would be 
expected to require active medical monitoring and care of the 
beneficiary at midnight following the procedure. We conducted a review 
of all HCPCS codes that currently are paid under the OPPS, but not 
included on the ASC list of covered surgical procedures, to determine 
if changes in technology and/or medical practice affected the clinical 
appropriateness of these procedures for

[[Page 66919]]

the ASC setting. We determined that these 10 procedures 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 and, therefore, we proposed to include them on the list 
of ASC covered surgical procedures for CY 2015.
    The 10 procedures that we proposed to add to the ASC list of 
covered surgical procedures, including their HCPCS code long 
descriptors and proposed CY 2015 payment indicators, were displayed in 
Table 48 of the CY 2015 OPPS/ASC proposed rule (79 FR 41018).
    Comment: Several commenters supported adding the 10 procedures to 
the CY 2015 covered surgical procedures list for ASCs.
    Response: We thank the commenters for their support. As indicated 
later in this section, we are finalizing our proposal to add these 
procedure codes to the ASC list, in addition to two other procedure 
codes recommended by commenters.
    Comment: Some commenters stated that the APC relative weight for 
APC 0208 is too low for the cervical and lumbar fusion procedures (as 
described by HCPCS codes 22551, 22554, and 22612) proposed to be added 
to the list of ASC covered surgical procedures, and they urged CMS to 
reassign these three procedures codes to another APC with a higher 
relative weight.
    Response: As discussed in detail in section II.A.2.e. of this final 
rule with comment period, we agree with the commenters, and we are 
reassigning CPT codes 22551, 22554, and 22612 to APC 0425 for CY 2015 
because the geometric mean costs of these codes are more similar to the 
geometric mean cost of APC 0425, which has a higher geometric mean cost 
than APC 0208.
    Comment: Some commenters stated that, in order to perform the 
procedures proposed to be added to the ASC list of covered surgical 
procedures, additional procedure codes needed to be added to the list 
because some of the proposed additions to the list could not be 
furnished without procedures described by additional codes. Other codes 
were requested to be added because they represent procedures that are 
commonly furnished in conjunction with procedures described by the 
codes that were proposed to be added. Commenters stated that without 
adding the additional codes for procedures that must be performed in 
conjunction with or are often performed along with the proposed added 
procedures, these types of cases will continue to not be furnished in 
the ASC setting. Commenters stated that some of the procedures 
described by these codes were covered by other carriers and could be 
safely performed in the ASC setting for Medicare patients. Some 
commenters believed that, because Medicare makes facility payments for 
unlisted CPT codes under the OPPS, CMS should provide ASCs with the 
same flexibility to use unlisted CPT codes to report procedures. The 
list of codes that commenters requested to be added in addition to 
those that were proposed to be added is shown in Table 44 below.

 Table 44--Procedures Requested for Addition to the CY 2015 List of ASC
                       Covered Surgical Procedures
------------------------------------------------------------------------
      CY 2015 CPT/HCPCS codes             CY 2015 short descriptor
------------------------------------------------------------------------
19307.............................  Mast mod rad.
20930***..........................  Sp bone algrft morsel add-on.
20931***..........................  Sp bone algrft struct add-on.
20936*............................  Sp bone agrft local add-on.
20937*............................  Sp bone agrft morsel add-on.
20938*............................  Sp bone agrft struct add-on.
22526.............................  Idet single level.
22527.............................  Idet 1 or more levels.
22532*............................  Lat thorax spine fusion.
22533*............................  Lat lumbar spine fusion.
22534*............................  Lat thor/lumb addl seg.
22552*............................  Addl neck spine fusion.
22558*............................  Lumbar spine fusion.
22585*............................  Additional spinal fusion.
22610*............................  Thorax spine fusion.
22633*............................  Lumbar spine fusion combined.
22830*............................  Exploration of spinal fusion.
22840*............................  Insert spine fixation device.
22842*............................  Insert spine fixation device.
22845*............................  Insert spine fixation device.
22846*............................  Insert spine fixation device.
22849*............................  Reinsert spinal fixation.
22850*............................  Remove spine fixation device.
22851.............................  Apply spine prosth device.
22855*............................  Remove spine fixation device.
22856.............................  Cerv artific diskectomy.
23470.............................  Reconstruct shoulder joint.
28805.............................  Amputation thru metatarsal.
31600.............................  Incision of windpipe.
32551.............................  Insertion of chest tube.
33244.............................  Remove eltrd transven.
35471.............................  Repair arterial blockage.
35903.............................  Excision graft extremity.
37191.............................  Ins endovas vena cava filtr.
37193.............................  Rem endovas vena cava filter.
39400.............................  Mediastinoscopy incl biopsy.
43280.............................  Laparoscopy fundoplasty.
43281.............................  Lap paraesophag hern repair.
43770.............................  Lap place gastr adj device.
44180.............................  Lap enterolysis.
44970.............................  Laparoscopy appendectomy.
54332.............................  Revise penis/urethra.
54336.............................  Revise penis/urethra.
54535.............................  Extensive testis surgery.
54650.............................  Orchiopexy (fowler-stephens).
57120.............................  Closure of vagina.
57282.............................  Colpopexy extraperitoneal.
57283.............................  Colpopexy intraperitoneal.
57310.............................  Repair urethrovaginal lesion.
57425.............................  Laparoscopy surg colpopexy.
58260.............................  Vaginal hysterectomy.
58262.............................  Vag hyst including t/o.
58543.............................  Lsh uterus above 250 g.
58544.............................  Lsh w/t/o uterus above 250 g.
58553.............................  Laparo-vag hyst complex.
58554.............................  Laparo-vag hyst w/t/o compl.
58573.............................  Tlh w/t/o uterus over 250 g.
60252.............................  Removal of thyroid.
60260.............................  Repeat thyroid surgery.
60271.............................  Removal of thyroid.
63011.............................  Remove spine lamina 1/2 scrl.
63012.............................  Remove lamina/facets lumbar.
63015.............................  Remove spine lamina >2 crvcl.
63016.............................  Remove spine lamina >2 thrc.
63017.............................  Remove spine lamina >2 lmbr.
63035.............................  Spinal disk surgery add-on.
63040.............................  Laminotomy single cervical.
63046.............................  Remove spine lamina 1 thrc.
63048.............................  Remove spinal lamina add-on.
63057.............................  Decompress spine cord add-on.
63064.............................  Decompress spinal cord thrc.
63075.............................  Neck spine disk surgery.
63076.............................  Neck spine disk surgery.
77002****.........................  Needle localization by xray.
L-codes**.........................  (L codes for implants--plates and
                                     screws, peek or bone, putty--HCPCS
                                     not specified).
------------------------------------------------------------------------
* CPT codes on the OPPS inpatient list for CY 2015.
** HCPCS codes for prosthetics or prosthetic supplies.
*** CPT codes already on the ASC list of covered surgical procedures.
**** CPT code already on the ASC list of covered ancillary services.

    Response: We examined all of the codes that commenters requested 
for addition to the ASC list of covered surgical procedures. Of the 75 
codes requested for addition to the ASC list, we did not review the 19 
procedures that are reported by CPT codes that are on the OPPS 
inpatient list (identified with one asterisk in Table 44), or the 
unspecified non-surgical HCPCS L-codes (identified with two asterisks 
in Table 44) because these codes are not eligible for addition to the 
ASC list of covered surgical procedures, consistent with our final 
policy which is discussed in detail in the August 2, 2007 final rule 
(72 FR 42476 through 42486; 42 CFR 416.166). In addition, we did not 
review the 2 procedures reported by CPT codes that are already on the 
ASC list of covered surgical procedures (identified with three 
asterisks in Table 44), or the 1 procedure reported by a CPT code that 
is on the ASC list of covered ancillary

[[Page 66920]]

services (identified with four asterisks in Table 44).
    With respect to the remaining procedures described by the 52 codes 
in Table 44 that commenters requested be added to the list of ASC 
covered surgical procedures, we do not agree that any of the procedures 
described by these codes should be added to the list because they do 
not meet our criteria for inclusion on this list. Under 42 CFR 416.2 
and 416.166, subject to certain exclusions, covered surgical procedures 
in an ASC are surgical procedures that are separately paid under the 
OPPS, that would not be expected to pose a significant risk to 
beneficiary safety when performed in an ASC, and would not be expected 
to require active medical monitoring and care of the beneficiary at 
midnight following the procedure. The criteria used under the revised 
ASC payment system to identify procedures that would be expected to 
pose a significant safety risk when performed in an ASC include, but 
are not limited to, those procedures that: Generally result in 
extensive blood loss; require major or prolonged invasion of body 
cavities; directly involve major blood vessels; are generally emergent 
or life threatening in nature; commonly require systemic thrombolytic 
therapy; are designated as requiring inpatient care under Sec.  
419.22(n); can only be reported using a CPT unlisted surgical procedure 
code; or are otherwise excluded under Sec.  411.15 (we refer readers to 
Sec.  416.166). Procedures that do not meet the criteria set forth in 
42 CFR 416.166 would not be added to the list of ASC covered surgical 
procedures.
    Although the commenters asserted that some of the procedures they 
were requesting for addition to the list are as safe as procedures 
already on the list, based on our review of the procedures listed in 
Table 44, we found that all of the remaining procedures described by 
the 52 codes either would be expected to pose a threat to beneficiary 
safety or would require active medical monitoring and care of the 
beneficiary at midnight following the procedure. Specifically, we found 
that prevailing medical practice called for inpatient hospital stays 
for beneficiaries undergoing many of the procedures and that some of 
the procedures directly involve major blood vessels and/or may result 
in extensive blood loss. Therefore, we are not including any of the 
procedures suggested by commenters on the list of ASC covered surgical 
procedures for CY 2015.
    Regarding the comment about unlisted codes being noncovered in the 
ASC, we have a longstanding ASC policy that all unlisted codes are 
noncovered in the ASC because we are unable to determine (due to the 
nondescript nature of unlisted codes) if a procedure that would be 
reported with an unlisted code 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. We continue to 
believe it would not be appropriate to provide ASC payment for unlisted 
CPT codes in the surgical range, even if payment may be provided under 
the OPPS. ASCs do not possess the breadth and intensity of services 
that hospitals must maintain to care for patients of higher acuity, and 
we would have no way of knowing what specific procedures reported by 
unlisted CPT codes were provided to patients in order to ensure that 
they are safe for ASC performance.
    After consideration of the public comments we received, we are 
finalizing the addition of the 10 HCPCS codes that we proposed to the 
list of ASC covered surgical procedures for CY 2015. As addressed in 
section XII.C.1.e. of this final rule with comment period, we also are 
adding CPT code 63044 (Laminotomy (hemilaminectomy), with decompression 
of nerve root(s), including partial facetectomy, foraminotomy and/or 
excision of herniated intervertebral disc, reexploration, single 
interspace; each additional lumbar interspace) to the ASC list of 
covered surgical procedures for CY 2015. This code was removed from the 
OPPS inpatient-only list in response to comments and, after review of 
the procedure described by this code, we believe that the procedure 
could be safely performed in an ASC and would not require active 
medical monitoring and care of the beneficiary at midnight following 
the procedure. The procedure codes, descriptors, and payment indicators 
for these 11 new covered surgical procedures for CY 2015 are displayed 
in Table 45 below.

 Table 45--Additions to the List of ASC Covered Surgical Procedures for
                                 CY 2015
------------------------------------------------------------------------
                                                          Final CY 2015
     CY 2015 HCPCS code        CY 2015 long descriptor     ASC payment
                                                            indicator
------------------------------------------------------------------------
22551......................  Arthrodesis, anterior                   J8
                              interbody, including disc
                              space preparation,
                              discectomy,
                              osteophytectomy and
                              decompression of spinal
                              cord and/or nerve roots;
                              cervical below c2.
22554......................  Arthrodesis, anterior                   J8
                              interbody technique,
                              including minimal
                              discectomy to prepare
                              interspace (other than
                              for decompression);
                              cervical below c2.
22612......................  Arthrodesis, posterior or               J8
                              posterolateral technique,
                              single level; lumbar
                              (with lateral transverse
                              technique, when
                              performed).
22614......................  Arthrodesis, posterior or               N1
                              posterolateral technique,
                              single level; each
                              additional vertebral
                              segment (list separately
                              in addition to code for
                              primary procedure).
63020......................  Laminotomy                              G2
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc; 1
                              interspace, cervical.
63030......................  Laminotomy                              G2
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc; 1
                              interspace, lumbar.
63042......................  Laminotomy                              G2
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc,
                              reexploration, single
                              interspace; lumbar.
63044......................  Laminotomy                              N1
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc,
                              reexploration, single
                              interspace; each
                              additional lumbar
                              interspace (list
                              separately in addition to
                              code for primary
                              procedure).
63045......................  Laminectomy, facetectomy                G2
                              and foraminotomy
                              (unilateral or bilateral
                              with decompression of
                              spinal cord, cauda equina
                              and/or nerve root[s],
                              [eg, spinal or lateral
                              recess stenosis]), single
                              vertebral segment;
                              cervical.
63047......................  Laminectomy, facetectomy                G2
                              and foraminotomy
                              (unilateral or bilateral
                              with decompression of
                              spinal cord, cauda equina
                              and/or nerve root[s],
                              [eg, spinal or lateral
                              recess stenosis]), single
                              vertebral segment; lumbar.

[[Page 66921]]

 
63056......................  Transpedicular approach                 G2
                              with decompression of
                              spinal cord, equina and/
                              or nerve root(s) (eg,
                              herniated intervertebral
                              disc), single segment;
                              lumbar (including
                              transfacet, or lateral
                              extraforaminal approach)
                              (eg, far lateral
                              herniated intervertebral
                              disc).
------------------------------------------------------------------------

b. Covered Surgical Procedures Designated as Office-Based
(1) Background
    In the August 2, 2007 ASC final rule, we finalized our policy to 
designate as ``office-based'' those procedures that are added to the 
ASC list of covered surgical procedures in CY 2008 or later years that 
we determine are performed predominantly (more than 50 percent of the 
time) in physicians' offices based on consideration of the most recent 
available volume and utilization data for each individual procedure 
code and/or, if appropriate, the clinical characteristics, utilization, 
and volume of related codes. In that rule, we also finalized our policy 
to exempt all procedures on the CY 2007 ASC list from application of 
the office-based classification (72 FR 42512). The procedures that were 
added to the ASC list of covered surgical procedures beginning in CY 
2008 that we determined were office-based were identified in Addendum 
AA to that rule by payment indicator ``P2'' (Office-based surgical 
procedure added to ASC list in CY 2008 or later with MPFS nonfacility 
PE RVUs; payment based on OPPS relative payment weight); ``P3'' 
(Office-based surgical procedures added to ASC list in CY 2008 or later 
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE 
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in 
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on 
OPPS relative payment weight), depending on whether we estimated the 
procedure would be paid according to the standard ASC payment 
methodology based on its OPPS relative payment weight or at the MPFS 
nonfacility PE RVU-based amount.
    Consistent with our final policy to annually review and update the 
list of surgical procedures eligible for payment in ASCs, each year we 
identify surgical procedures as either temporarily office-based (these 
are new procedure codes with little or no utilization data that our 
medical advisors have determined are clinically similar to other 
procedures that are permanently office-based), permanently office-
based, or nonoffice-based, after taking into account updated volume and 
utilization data.
(2) Changes for CY 2015 to Covered Surgical Procedures Designated as 
Office-Based
    In developing the CY 2015 OPPS/ASC proposed rule, we followed our 
policy to annually review and update the surgical procedures for which 
ASC payment is made and to identify new procedures that may be 
appropriate for ASC payment, including their potential designation as 
office-based. We reviewed CY 2013 volume and utilization data and the 
clinical characteristics for all surgical procedures that are assigned 
payment indicator ``G2'' (Non-office-based surgical procedure added in 
CY 2008 or later; payment based on OPPS relative payment weight) in CY 
2014, as well as for those procedures assigned one of the temporary 
office-based payment indicators, specifically ``P2,'' ``P3,'' or ``R2'' 
in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75071 
through 75075).
    Our review of the CY 2013 volume and utilization data resulted in 
our identification of two covered surgical procedures, CPT codes 10022 
and 19296 that we believe meet the criteria for designation as office-
based. The data indicate these procedures are performed more than 50 
percent of the time in physicians' offices and our medical advisors 
believe the services are of a level of complexity consistent with other 
procedures performed routinely in physicians' offices. The two CPT 
codes we proposed to permanently designate as office-based were listed 
in Table 49 of the CY 2015 OPPS/ASC proposed rule (79 FR 41019).
    We invited public comment on this proposal.
    Comment: One commenter stated that CPT code 10022 was performed 
only 51 percent of the time in the office setting and recommended that 
it temporarily be designated as office-based rather than permanently.
    Response: As stated in the proposed rule and above, we designate 
new procedure codes as temporarily office-based in situations where we 
have little to no utilization data on these procedures and our Medical 
Officers have determined these procedures are clinically similar to 
other procedures that are permanently office-based. For CPT code 10022, 
we have enough volume and utilization data from CY 2013 to indicate 
that CPT code 10022 is performed more than 50 percent of the time in 
physicians' offices and our medical advisors believe this service is of 
a level of complexity consistent with other procedures performed 
routinely in physicians' offices. Therefore, we believe that this code 
should be designated as permanently office-based.
    After consideration of the public comments we received, we are 
finalizing our proposal, without modification, to designate the 
procedures described by CPT codes 10022 and 19296 as permanently 
office-based for CY 2015, as set forth in Table 46 below.

       Table 46--ASC Covered Surgical Procedures Newly Designated as Permanently Office-Based for CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                  Proposed CY
                                                                 CY 2014 ASC        2015 ASC      Final CY 2015
      CY 2015 CPT code            CY 2015 long descriptor          payment          payment        ASC payment
                                                                  indicator        indicator*       indicator*
----------------------------------------------------------------------------------------------------------------
10022.......................  Fine needle aspiration; with                 G2               P3               P3
                               imaging guidance.

[[Page 66922]]

 
19296.......................  Placement of radiotherapy                    G2               P2               P2
                               afterloading expandable
                               catheter (single or
                               multichannel) into the breast
                               for interstitial radioelement
                               application following partial
                               mastectomy, includes imaging
                               guidance; on date separate
                               from partial mastectomy.
----------------------------------------------------------------------------------------------------------------
* Final payment indicators are based on a comparison of the final rates according to the ASC standard
  ratesetting methodology and the MPFS final rates effective January 1, 2015. We note that these payment
  indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015
  under current law. Updates to the ASC rates and payment indicators effective April l, 2015 will be included in
  the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer
  readers to the CY 2015 MPFS final rule with comment period.

    We also reviewed CY 2013 volume and utilization data and other 
information for the 8 procedures finalized for temporary office-based 
status in Tables 52 and 53 in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75074 through 75075). Among these eight 
procedures, there were very few claims data or no claims data for six 
procedures: CPT code 0099T (Implantation of intrastromal corneal ring 
segments); CPT code 0299T (Extracorporeal shock wave for integumentary 
wound healing, high energy, including topical application and dressing 
care; initial wound); CPT code C9800 (Dermal injection procedure(s) for 
facial lipodystrophy syndrome (LDS) and provision of Radiesse or 
Sculptra dermal filler, including all items and supplies); CPT code 
10030 (Image-guided fluid collection drainage by catheter (eg, abscess, 
hematoma, seroma, lymphocele, cyst), soft tissue (eg, extremity, 
abdominal wall, neck), percutaneous); CPT code 64617 (Chemodenervation 
of muscle(s); larynx, unilateral, percutaneous (eg, for spasmodic 
dysphonia), includes guidance by needle electromyography, when 
performed); and CPT code 67229 (Treatment of extensive or progressive 
retinopathy, one or more sessions; preterm infant (less than 37 weeks 
gestation at birth), performed from birth up to 1 year of age (eg, 
retinopathy of prematurity), photocoagulation or cryotherapy). 
Consequently, we proposed to maintain their temporary office-based 
designations for CY 2015.
    We proposed that one procedure that has a temporary office-based 
designation for CY 2014, CPT code 0226T (Anoscopy, high resolution 
(HRA) (with magnification and chemical agent enhancement); diagnostic, 
including collection of specimen(s) by brushing or washing when 
performed), be packaged under the OPPS for CY 2015. Our policy is to 
package covered surgical procedures under the ASC payment system if 
these procedures are packaged under the OPPS. Consequently, we proposed 
to package, and assign payment indicator ``N1'' to, this covered 
surgical procedure code in CY 2015.
    HCPCS code 0124T (Conjunctival incision with posterior extrascleral 
placement of pharmacological agent (does not include supply of 
medication)) was finalized for temporary office-based status in the CY 
2014 OPPS/ASC final rule with comment period. However, this code was 
deleted effective December 31, 2013.
    The proposed CY 2015 payment indicator designations for the 7 
remaining procedures that were temporarily designated as office-based 
in CY 2014 were displayed in Table 50 of the CY 2015 OPPS/ASC proposed 
rule (79 FR 41019). The procedures for which the proposed office-based 
designations for CY 2015 are temporary also were indicated by asterisks 
in Addendum AA to the proposed rule (which is available via the 
Internet on the CMS Web site).
    We invited public comment on these proposals.
    Comment: One commenter stated that because CPT code 10030 is new 
for CY 2014, it should not be designated as temporarily office-based at 
this time.
    Response: As stated in the 2014 OPPS/ASC final rule with comment 
period (78 FR 75074 through 75075), after reviewing the clinical 
characteristics, utilization, and volume of related codes, we 
determined that the procedures described by CPT code 10030 would be 
predominantly performed in physicians' offices. However, because we had 
no utilization data for CPT code 10030, we made the office-based 
designation temporary rather than permanent for CY 2014. As discussed 
above, we continue to have no claims data for this procedure so we are 
continuing to designate the procedures described by CPT code 10030 as 
temporarily office-based. We will reevaluate CPT code 10030 in next 
year's rulemaking.
    After consideration of the public comment we received, for CY 2015 
we are finalizing our proposal without modification to designate six 
procedures listed in Table 47 below as temporarily office-based. HCPCS 
code 0226T (Anoscopy, high resolution (HRA) (with magnification and 
chemical agent enhancement); diagnostic, including collection of 
specimen(s) by brushing or washing when performed) was included in our 
proposal for CY 2015. However, this code will be deleted effective 
December 31, 2014.

 Table 47--CY 2015 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporarily Office-Based
                             in the CY 2014 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
                                                                                  CY 2014 ASC      CY 2015 ASC
           CY 2015 CPT code                     CY 2015 long descriptor             payment          payment
                                                                                   indicator       indicator **
----------------------------------------------------------------------------------------------------------------
0099T.................................  Implantation of intrastromal corneal               R2*              R2*
                                         ring segments.
0226T.................................  Anoscopy, high resolution (HRA) (with              R2*               D5
                                         magnification and chemical agent
                                         enhancement); diagnostic, including
                                         collection of specimen(s) by brushing
                                         or washing when performed.

[[Page 66923]]

 
0299T.................................  Extracorporeal shock wave for                      R2*              R2*
                                         integumentary wound healing, high
                                         energy, including topical application
                                         and dressing care; initial wound.
C9800.................................  Dermal injection procedure(s) for                  R2*              R2*
                                         facial lipodystrophy syndrome (LDS)
                                         and provision of Radiesse or Sculptra
                                         dermal filler, including all items
                                         and supplies.
10030.................................  Image-guided fluid collection drainage             P2*              P2*
                                         by catheter (eg, abscess, hematoma,
                                         seroma, lymphocele, cyst), soft
                                         tissue (eg, extremity abdominal wall,
                                         neck), percutaneous.
64617.................................  Chemodenervation of muscle(s); larynx,             P3*              P3*
                                         unilateral, percutaneous (eg, for
                                         spasmodic dysphonia), includes
                                         guidance by needle electromyography,
                                         when performed.
67229.................................  Treatment of extensive or progressive              R2*              R2*
                                         retinopathy, one or more sessions;
                                         preterm infant (less than 37 weeks
                                         gestation at birth), performed from
                                         birth up to 1 year of age (eg,
                                         retinopathy of prematurity),
                                         photocoagulation or cryotherapy.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Final payment indicators are based on a comparison of the final rates according to the ASC standard
  ratesetting methodology and the MPFS final rates effective January 1, 2015. We note that these payment
  indicators do not include the effect of the negative update to the MPFS payment rates effective April 1, 2015
  under current law. Updates to the ASC rates and payment indicators effective April 1, 2015 will be included in
  the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS rates, we refer
  readers to the CY 2015 MPFS final rule with comment period.

c. ASC Covered Surgical Procedures To Be Designated as Device-Intensive
(1) Background
    As discussed in the August 2, 2007 final rule (72 FR 42503 through 
42508), we adopted a modified payment methodology for calculating the 
ASC payment rates for covered surgical procedures that are assigned to 
the subset of OPPS device-dependent APCs with a device offset 
percentage greater than 50 percent of the APC cost under the OPPS, in 
order to ensure that payment for the procedure is adequate to provide 
packaged payment for the high-cost implantable devices used in those 
procedures.
(2) Changes to List of ASC Covered Surgical Procedures Designated as 
Device-Intensive for CY 2015
    As we discuss in section II.A.2.e of the CY 2015 OPPS/ASC proposed 
rule (79 FR 40940 through 40953), for CY 2015, we proposed to implement 
28 comprehensive APCs created to replace the current device-dependent 
APCs and a few nondevice-dependent APCs under the OPPS, which would 
eliminate all device-dependent APCs for CY 2015. We proposed to define 
a comprehensive APC as a classification for the provision of a primary 
service and all adjunctive services provided to support the delivery of 
the primary service. Because a comprehensive APC would treat all 
individually reported codes as representing components of the 
comprehensive service, our OPPS proposal is to make a single 
prospective payment based on the cost of all individually reported 
codes that represent the provision of a primary service and all 
adjunctive services provided to support the delivery of the primary 
service.
    Unlike the OPPS claims processing system that can be configured to 
make a single payment for the encounter-based comprehensive service 
whenever a HCPCS code that is assigned to a comprehensive APC appears 
on the claim, the ASC claims processing system does not allow for this 
type of conditional packaging. Therefore, we proposed that all 
separately paid covered ancillary services that are provided integral 
to covered surgical procedures that would map to comprehensive APCs 
would continue to be separately paid under the ASC payment system 
instead of being packaged into the payment for the comprehensive APC as 
under the OPPS. The OPPS relative payment weights for the comprehensive 
APCs would include costs for ancillary services; therefore, we could 
duplicate payment if we based the ASC payment rate on the OPPS relative 
payment weights for the comprehensive APCs. Therefore, to avoid this 
issue, we proposed that the ASC payment rates for these comprehensive 
APCs would be based on the CY 2015 OPPS relative payments weights that 
have been calculated using the standard APC ratesetting methodology for 
the primary service instead of the relative payment weights that are 
based on the comprehensive bundled service. For the same reason, under 
the ASC payment system, we also proposed to use the standard OPPS APC 
ratesetting methodology instead of the comprehensive methodology to 
calculate the device offset percentage for comprehensive APCs for 
purposes of identifying device-intensive procedures and to calculate 
payment rates for device-intensive procedures assigned to comprehensive 
APCs.
    Payment rates for ASC device-intensive procedures are based on a 
modified payment methodology to ensure that payment for the procedure 
is adequate to provide packaged payment for the high-cost implantable 
devices used in those procedures. Device-intensive procedures are 
currently defined as those procedures that are assigned to device-
dependent APCs with a device offset percentage greater than 50 percent 
of the APC cost under the OPPS. Because we proposed to implement the 
comprehensive APC policy and, therefore, eliminate device-dependent 
APCs under the OPPS in CY 2015, we need to define ASC device-intensive 
procedures for CY 2015. We proposed to define ASC device-intensive 
procedures as those procedures that are assigned to any APC (not only 
an APC formerly designated device-dependent) with a device offset 
percentage greater than 40 percent based on the standard OPPS APC 
ratesetting methodology. We believe that our proposal to lower the 
offset threshold from greater than 50 percent to greater than 40 
percent better aligns with the OPPS device credit policy finalized for 
CY 2014 (78 FR 75006 and 75007) that applies to procedures with a 
significant device offset amount, which is defined as exceeding 40 
percent of the APC cost. Because the ASC device-intensive methodology 
is applied to procedures with significant device costs, we believe that 
the definition of ``significant'' with regard to device-intensive 
procedures should match that used under the OPPS to determine 
``significant'' device costs for the device credit policy. We

[[Page 66924]]

proposed changes to Sec.  416.171(b)(2) to reflect this proposal.
    We also proposed to update the ASC list of covered surgical 
procedures that are eligible for payment according to our device-
intensive procedure payment methodology, consistent with our proposed 
modified definition of device-intensive procedures, reflecting the 
proposed APC assignments of procedures and APC device offset 
percentages based on the CY 2013 OPPS claims and cost report data 
available for the final rule with comment period.
    The ASC covered surgical procedures that we proposed to designate 
as device-intensive and that would be subject to the device-intensive 
procedure payment methodology for CY 2015 were listed in Table 51 of 
the proposed rule (79 FR 41021 through 41023). The CPT code, the CPT 
code short descriptor, the proposed CY 2015 ASC payment indicator (PI), 
the proposed CY 2015 OPPS APC assignment, the proposed CY 2015 OPPS APC 
device offset percentage, and an indication if the full credit/partial 
credit (FB/FC) device adjustment policy would apply also were listed in 
Table 51. All of these procedures were included in Addendum AA to the 
proposed rule (which is available via the Internet on the CMS Web 
site).
    We invited public comment on these proposals.
    Comment: Some commenters supported the proposal to change the 
device offset threshold from 50 percent to 40 percent, citing that the 
proposal allowed for greater flexibility in allowing clinical 
considerations to determine site-of-care decisions and would likely 
lead to a migration of services from HOPDs to ASCs. However, some 
commenters urged CMS to monitor volume and to explore the implications 
of the expansion of this policy. Other commenters requested that CMS 
adopt additional changes to the device-intensive policy to encourage 
migration of services to ASCs from other settings. Some commenters 
recommended that the device offset percentage be lowered to 30 percent. 
Some commenters expressed the same views as CMS received in prior 
rulemaking--that the ASC device offset percentages should be based on a 
percentage of the total unadjusted ASC cost for a service rather than a 
percentage of the HOPD, or that the device offset be applied to all 
procedures for which CMS can establish a device cost regardless of the 
percentage of the total cost that the device represents. These 
commenters suggested that these alternatives would result in savings to 
the Medicare program. Some commenters also expressed the same views as 
CMS received in prior rulemakings--that CMS should not adjust the 
device portion of the ASC payment for device-intensive procedures by 
the wage index.
    Response: In the August 2, 2007 final rule (72 FR 42503 through 
42508), we established a modified payment methodology for calculating 
ASC payment rates for device-intensive procedures under the ASC payment 
system. We defined device-intensive procedures as those procedures that 
are assigned to device-dependent APCs under the OPPS with device costs 
of greater than 50 percent of the APC cost under the OPPS (that is, the 
device offset percentage is greater than 50 percent). In the CY 2015 
OPPS/ASC proposed rule (79 FR 41020), we proposed to define ASC device-
intensive procedures as those procedures that are assigned to any APC 
with a device offset percentage greater than 40 percent based on the 
standard OPPS APC ratesetting methodology. In that proposed rule, we 
stated that we believe that lowering the offset threshold from greater 
than 50 percent to greater than 40 percent better aligns with the OPPS 
device credit policy finalized for CY 2014 (78 FR 75006 through 75007) 
that applies to procedures with a significant device offset amount, 
which is defined as exceeding 40 percent of the APC cost. Because the 
ASC device-intensive methodology is applied to procedures with 
significant device costs, we believe that the definition of 
``significant'' with regard to device-intensive procedures should match 
that used under the OPPS to determine ``significant'' device costs for 
the device credit policy. We do not believe that it should be lowered 
to 30 percent, because the intent of the policy change is to align 
significant device cost percentage in the OPPS with the device-
intensive procedures in the ASC payment system.
    We do not agree with the commenters that the device-intensive 
methodology should be applied to all procedures where a device offset 
could be established. Nor do we agree with the commenters who suggested 
using a threshold to determine device-intensive procedures that is 
based on the ASC payment rate instead of the OPPS payment rate. Under 
42 CFR 416.167 and 416.171, most ASC payment rates are based on the 
OPPS relative payment weights, and our ASC policy is to be consistent 
with the OPPS. ``Device intensive'' identifies those procedures 
assigned to APCs with significant device costs and applies to services 
that are performed both in the HOPD and ASC. Procedures are not device 
intensive in one setting and not in another--they either have 
significant associated device costs or they do not, based on the 
purpose of the surgical procedure. Accordingly, we believe that the 
device-intensive methodology for ASCs should align with the device-
intensive policies for OPPS.
    We also continue to believe it would not be appropriate to vary the 
portion of the national payment that is wage-adjusted for different 
services, such as applying the wage index only to the service portion 
of the ASC payment for device-intensive procedures, as the commenters 
requested. As indicated above, our ASC policy is to be consistent with 
the OPPS because ASC payment rates are based on the OPPS relative 
payment weights. Therefore, we apply the ASC geographic wage adjustment 
to the entire ASC payment rate for device-intensive procedures. We also 
refer readers to our responses to similar comments in the CY 2009, CY 
2010, CY 2011, CY 2012, CY 2013, and CY 2014 OPPS/ASC final rules with 
comment period (73 FR 68735; 74 FR 60608 through 60609; 75 FR 72039; 76 
FR 74409; 77 FR 68449; and 78 FR 75076, respectively). We respond to 
the commenters' request to monitor volume and to explore the 
implications of this policy in the next response.
    Comment: Some commenters supported the lowering of the device 
offset percentage to 40 percent, but stated that this policy, if 
finalized, would make device-intensive procedures more attractive to 
ASCs. Commenters suggested that CMS monitor its data to determine 
whether the policy results in significant increases in volume of these 
services and that CMS explore the implications of further expanding the 
list of device-intensive procedures.
    Response: We will continue to monitor our data to ensure that our 
payment policies do not have the unintended consequence of 
inappropriately encouraging shifts in site of service.
    Comment: One commenter expressed appreciation that CMS designated 
HCPCS code 0334T (Sacroiliac joint stabilization for arthrodesis, 
percutaneous or minimally invasive (indirect visualization), includes 
obtaining and applying autograft or allograft (structural or 
morselized), when performed, includes image guidance when performed 
(eg, CT or fluoroscopic)) as device-intensive, but expressed concern 
that the device offset percentage was too low, thereby resulting in an 
undervalued ASC payment. The commenter stated that

[[Page 66925]]

Medicare patients otherwise eligible for this treatment in the ASC 
would be denied access due to the low ASC payment. The commenter 
suggested that CMS consider HCPCS-specific device offsets rather than 
at the APC level. Alternatively, the commenter suggested that CMS add 
``device offset similarity'' (that is, identifying and grouping 
procedure codes based on the similarity of their respective device 
offsets) as an additional criterion (in addition to clinical and cost 
similarity) in APC assignment. Another commenter stated that ASC 
payment for transprostatic implant procedures (as described by HCPCS 
codes C9739 and C9740) was too low because these procedures were not 
designated as device-intensive in the ASC setting, and it is unlikely 
that any transprostatic implant procedures would be conducted in the 
ASC setting for a Medicare patient.
    Response: In the August 2, 2007 ASC final rule (72 FR 42504), we 
finalized our policy to apply the OPPS device offset percentage to the 
OPPS national unadjusted payment to acquire the device cost included in 
the OPPS payment rate for a device-intensive ASC covered surgical 
procedure, which we then set as equal to the device portion of the 
national unadjusted ASC payment rate for the procedure. The device 
offset percentage represents a weighted average for all of the 
procedures assigned to the APC. It is not uncommon that, within an APC, 
there will be a range of device costs associated with the various 
procedures assigned to the APC. The device offset for the APC 
represents a weighted average for all of the procedures assigned to the 
APC, and the device offset percentage is our best estimate of the 
amount of device cost included in an APC payment under the OPPS.
    We did not propose calculating offsets at the HCPCS level or 
introducing a new criterion for APC code assignments. These would be 
significant changes to our longstanding policy of calculating offsets 
at the APC level, discussed above, and we believe our current policy 
allows for appropriate payment. Moreover, under 42 CFR 416.167 and 
416.171, ASC covered surgical procedures are classified using OPPS APC 
groups described in 42 CFR 419.31. Under our policy, we cannot assign a 
CPT code to a different APC for the ASC setting.
    We believe that APC 0425 is an appropriate APC assignment for CPT 
code 0334T based on clinical and resource similarity to other 
procedures assigned to APC 0425 and have calculated the device offset 
for this procedure according to our longstanding policy discussed 
above. We believe that payment for this code is appropriate.
    With respect to the comment about ASC payment for transprostatic 
implant procedures being too low because the procedures do not 
currently qualify for a device-intensive offset adjustment, as 
addressed in section III.C.3.e. of this final rule with comment period, 
for CY 2015, we are maintaining our APC assignments for HCPCS codes 
C9739 and C9740 to APCs 0162 and 1564, respectively. As discussed in 
section III.C.3.e. of this final rule with comment period, the APC 
assignments for HCPCS codes C9739 and C9740 are initial APC assignments 
until we obtain claims data for these two codes for the CY 2016 OPPS 
update. We will reevaluate whether these codes qualify for a device-
intensive adjustment based on their APC assignments for CY 2016 in next 
year's rulemaking cycle.
    As indicated in section II.A.2.e. of this final rule with comment 
period, after consideration of the public comments we received 
regarding the proposed OPPS comprehensive APC policy, we are finalizing 
our proposal to implement the comprehensive APC policy for CY 2015, 
with some minor modifications. With respect to modifications to the 
comprehensive APC policy that affect the ASC payment policy, we note 
that the finalized comprehensive APC policy includes all device-
dependent APCs, except for APCs 0427, 0622, and 0652, which will become 
standard APCs because we are discontinuing the device-dependent APC 
policy. This modification does not affect any of our proposals with 
respect to the finalized comprehensive APCs or the definition of 
device-intensive.
    Given the final OPPS comprehensive APC policy and after 
consideration of the public comments we received, we are finalizing our 
proposal that all separately paid covered ancillary services that are 
provided integral to covered surgical procedures that would map to 
comprehensive APCs will continue to be separately paid under the ASC 
payment system instead of being packaged into the payment for the 
comprehensive APC as under the OPPS. Further, the ASC payment rates for 
these comprehensive APCs will be based on the CY 2015 OPPS relative 
payments weights that have been calculated using the standard APC 
ratesetting methodology for the primary service (instead of the 
relative payment weights that are based on the comprehensive bundled 
service) and use the standard OPPS APC ratesetting methodology instead 
of the comprehensive methodology to calculate the device offset 
percentage for comprehensive APCs for purposes of identifying device-
intensive procedures and to calculate payment rates for device-
intensive procedures assigned to comprehensive APCs. We also will 
define ASC device-intensive procedures as those procedures that are 
assigned to any APC with a device offset percentage greater than 40 
percent based on the standard OPPS APC ratesetting methodology and 
codify this policy in the regulations at 42 CFR 416.171(b)(2). Finally, 
we will update the ASC list of covered surgical procedures that are 
eligible for payment according to our device-intensive procedure 
payment methodology, consistent with our final modified definition of 
device-intensive procedures, reflecting the final APC assignments of 
procedures and APC device offset percentages based on the CY 2013 OPPS 
claims and cost report data available for this final rule with comment 
period.
    We are designating the ASC covered surgical procedures displayed in 
Table 48 below as device-intensive and subject to the device-intensive 
procedure payment methodology for CY 2015. The CPT code, the CPT code 
short descriptor, the final CY 2015 ASC payment indicator (PI), the 
final CY 2014 OPPS APC assignment, the final CY 2015 OPPS APC device 
offset percentage, and an indication if the full credit/partial credit 
(FB/FC) device adjustment policy will apply, also are listed in Table 
48 below. All of these procedures are included in Addendum AA to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).
d. Adjustment to ASC Payments for No Cost/Full Credit and Partial 
Credit Devices
    Our ASC policy with regard to payment for costly devices implanted 
in ASCs at no cost/full credit or partial credit as set forth in Sec.  
416.179 is consistent with the OPPS policy that was in effect until CY 
2014. The established ASC policy reduces payment to ASCs when a 
specified device is furnished without cost or with full credit or 
partial credit for the cost of the device for those ASC covered 
surgical procedures that are assigned to APCs under the OPPS to which 
this policy applies. We refer readers to the CY 2009 OPPS/ASC final 
rule with comment period for a full discussion of the ASC payment 
adjustment policy for no cost/full credit and partial credit devices 
(73 FR 68742 through 68744).
    As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75005 through 75006), we finalized our 
proposal to

[[Page 66926]]

modify our former policy of reducing OPPS payment for specified APCs 
when a hospital furnishes a specified device without cost or with a 
full or partial credit. Formerly, under the OPPS, our policy was to 
reduce OPPS payment by 100 percent of the device offset amount when a 
hospital furnishes a specified device without cost or with a full 
credit and by 50 percent of the device offset amount when the hospital 
receives partial credit in the amount of 50 percent or more (but less 
than 100 percent) of the cost for the specified device. For CY 2014, we 
finalized our proposal to reduce OPPS payment for applicable APCs by 
the full or partial credit a provider receives for a replaced device, 
capped at the device offset amount.
    Although we finalized our proposal to modify the policy of reducing 
payments when a hospital furnishes a specified device without cost or 
with full or partial credit under the OPPS, in that final rule with 
comment period (78 FR 75076 through 75080), we finalized our proposal 
for CY 2014 to maintain our ASC policy for reducing payments to ASCs 
for specified device-intensive procedures when the ASC furnishes a 
device without cost or with full or partial credit. Unlike the OPPS, 
there is currently no mechanism within the ASC claims processing system 
for ASCs to submit to CMS the actual amount received when furnishing a 
specified device at full or partial credit. Therefore, under the ASC 
payment system, we finalized our proposal 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.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41021 through 41023), 
we proposed to update the list of ASC covered device-intensive 
procedures, based on the revised device-intensive definition proposed 
above, that would be subject to the no cost/full credit and partial 
credit device adjustment policy for CY 2015. Table 51 of the proposed 
rule (79 FR 41021 through 41023) displays the ASC covered device-
intensive procedures that we proposed would be subject to the no cost/
full credit or partial credit device adjustment policy for CY 2015. 
Specifically, when a procedure that is listed in Table 51 is subject to 
the no cost/full credit or partial credit device adjustment policy and 
is performed to implant a device that is furnished at no cost or with 
full credit from the manufacturer, the ASC would append the HCPCS 
``FB'' modifier on the line with the procedure to implant the device. 
The contractor would reduce payment to the ASC by the device offset 
amount that we estimate represents the cost of the device when the 
necessary device is furnished without cost to the ASC or with full 
credit. We continue to believe that the reduction of ASC payment in 
these circumstances is necessary to pay appropriately for the covered 
surgical procedure being furnished by the ASC.
    For partial credit, we proposed to reduce the payment for 
implantation procedures listed in Table 51 of the CY 2015 OPPS/ASC 
proposed rule (79 FR 41021 through 41023) that are subject to the no 
cost/full credit or partial credit device adjustment policy by one-half 
of the device offset amount that would be applied if a device was 
provided at no cost or with full credit, if the credit to the ASC is 50 
percent or more (but less than 100 percent) of the cost of the new 
device. The ASC would append the HCPCS ``FC'' modifier to the HCPCS 
code for a surgical procedure listed in Table 51 that is subject to the 
no cost/full credit or partial credit device adjustment policy, when 
the facility receives a partial credit of 50 percent or more (but less 
than 100 percent) of the cost of a device. In order to report that they 
received a partial credit of 50 percent or more (but less than 100 
percent) of the cost of a new device, ASCs would have the option of 
either: (1) Submitting the claim for the device replacement procedure 
to their Medicare contractor after the procedure's performance but 
prior to manufacturer acknowledgment of credit for the device, and 
subsequently contacting the contractor regarding a claim adjustment 
once the credit determination is made; or (2) holding the claim for the 
device implantation procedure until a determination is made by the 
manufacturer on the partial credit and submitting the claim with the 
``FC'' modifier appended to the implantation procedure HCPCS code if 
the partial credit is 50 percent or more (but less than 100 percent) of 
the cost of the replacement device. Beneficiary coinsurance would 
continue to be based on the reduced payment amount.
    We currently apply the ``FB/FC'' modifier policy to device-
intensive procedures that involve devices that would be amenable to 
removal and replacement in a device recall or warranty situation. We 
proposed to apply the ``FB/FC'' modifier policy to all device-intensive 
procedures beginning in CY 2015 because, in addition to receiving 
devices at no cost/full credit or partial credit due to a device recall 
or warranty situation, ASCs also may receive devices at no cost/full 
credit or partial credit due to being part of an investigational device 
trial. In order to ensure that our policy covers any situation 
involving a device-intensive procedure where an ASC may receive a 
device at no cost/full credit or partial credit, we proposed to apply 
our FB/FC policy to all device-intensive procedures.
    We invited public comment on these proposals.
    We did not receive any comments on this proposal. Therefore, we are 
finalizing our proposals without modification. Specifically, we will 
apply our FB/FC policy to all device-intensive procedures beginning in 
CY 2015. The device-intensive procedures for CY 2015 are listed in 
Table 48 below. For CY 2015, we will reduce the payment for the 
procedures listed in Table 48 below by the full device offset amount if 
a device is furnished without cost or with full credit. ASCs must 
append the HCPCS modifier ``FB'' to the HCPCS code for a surgical 
procedure listed in Table 48 below when the device is furnished without 
cost or with full credit. In addition, for CY 2015, we will reduce the 
payment for the procedures listed in Table 48 below by one-half of the 
device offset amount if a device is provided with partial credit, if 
the credit to the ASC is 50 percent or more (but less than 100 percent) 
of the device cost. The ASC must append the HCPCS ``FC'' modifier to 
the HCPCS code for a surgical procedure listed in Table 48 below when 
the facility receives a partial credit of 50 percent or more (but less 
than 100 percent) of the cost of a device.

[[Page 66927]]

   Table 48--ASC Covered Surgical Procedures Designated as Device-Intensive for CY 2015, Including ASC Covered
   Surgical Procedures for Which the No Cost/Full Credit or Partial Credit Device Adjustment Policy Will Apply
----------------------------------------------------------------------------------------------------------------
                                                                               Final CY 2015
       HCPCS code         Short descriptor    Final CY 2015    Final CY 2015   device offset  Final FB/FC policy
                                                  ASC PI         OPPS APC       percentage        will apply
----------------------------------------------------------------------------------------------------------------
19298..................  Place breast rad                J8             0648          0.4408  Yes.
                          tube/caths.
19325..................  Enlarge breast                  J8             0648          0.4408  Yes.
                          with implant.
19342..................  Delayed breast                  J8             0648          0.4408  Yes.
                          prosthesis.
19357..................  Breast                          J8             0648          0.4408  Yes.
                          reconstruction.
22551..................  Neck spine                      J8             0425          0.5565  Yes.
                          fuse&remov bel c2.
22554..................  Neck spine fusion.              J8             0425          0.5565  Yes.
22612..................  Lumbar spine                    J8             0425          0.5565  Yes.
                          fusion.
23515..................  Treat clavicle                  J8             0064          0.4319  Yes.
                          fracture.
23585..................  Treat scapula                   J8             0064          0.4319  Yes.
                          fracture.
23615..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
23616..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
23630..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
23670..................  Treat dislocation/              J8             0064          0.4319  Yes.
                          fracture.
24361..................  Reconstruct elbow               J8             0425          0.5565  Yes.
                          joint.
24363..................  Replace elbow                   J8             0425          0.5565  Yes.
                          joint.
24365..................  Reconstruct head                J8             0425          0.5565  Yes.
                          of radius.
24366..................  Reconstruct head                J8             0425          0.5565  Yes.
                          of radius.
24370..................  Revise reconst                  J8             0425          0.5565  Yes.
                          elbow joint.
24371..................  Revise reconst                  J8             0425          0.5565  Yes.
                          elbow joint.
24435..................  Repair humerus                  J8             0425          0.5565  Yes.
                          with graft.
24498..................  Reinforce humerus.              J8             0425          0.5565  Yes.
24515..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
24516..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
24545..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
24546..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
24575..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
24579..................  Treat humerus                   J8             0064          0.4319  Yes.
                          fracture.
24586..................  Treat elbow                     J8             0064          0.4319  Yes.
                          fracture.
24587..................  Treat elbow                     J8             0064          0.4319  Yes.
                          fracture.
24615..................  Treat elbow                     J8             0064          0.4319  Yes.
                          dislocation.
24635..................  Treat elbow                     J8             0064          0.4319  Yes.
                          fracture.
24666..................  Treat radius                    J8             0064          0.4319  Yes.
                          fracture.
25441..................  Reconstruct wrist               J8             0425          0.5565  Yes.
                          joint.
25442..................  Reconstruct wrist               J8             0425          0.5565  Yes.
                          joint.
25444..................  Reconstruct wrist               J8             0425          0.5565  Yes.
                          joint.
25446..................  Wrist replacement.              J8             0425          0.5565  Yes.
25574..................  Treat fracture                  J8             0064          0.4319  Yes.
                          radius & ulna.
25575..................  Treat fracture                  J8             0064          0.4319  Yes.
                          radius/ulna.
25607..................  Treat fx rad extra-             J8             0064          0.4319  Yes.
                          articul.
25608..................  Treat fx rad intra-             J8             0064          0.4319  Yes.
                          articul.
25609..................  Treat fx radial 3+              J8             0064          0.4319  Yes.
                          frag.
26686..................  Treat hand                      J8             0064          0.4319  Yes.
                          dislocation.
27279..................  Arthrodesis                     J8             0425          0.5565  Yes.
                          sacroiliac joint.
27415..................  Osteochondral knee              J8             0425          0.5565  Yes.
                          allograft.
27428..................  Reconstruction                  J8             0425          0.5565  Yes.
                          knee.
27438..................  Revise kneecap                  J8             0425          0.5565  Yes.
                          with implant.
27440..................  Revision of knee                J8             0425          0.5565  Yes.
                          joint.
27442..................  Revision of knee                J8             0425          0.5565  Yes.
                          joint.
27443..................  Revision of knee                J8             0425          0.5565  Yes.
                          joint.
27446..................  Revision of knee                J8             0425          0.5565  Yes.
                          joint.
27745..................  Reinforce tibia...              J8             0425          0.5565  Yes.
27759..................  Treatment of tibia              J8             0064          0.4319  Yes.
                          fracture.
27823..................  Treatment of ankle              J8             0064          0.4319  Yes.
                          fracture.
27827..................  Treat lower leg                 J8             0064          0.4319  Yes.
                          fracture.
27828..................  Treat lower leg                 J8             0064          0.4319  Yes.
                          fracture.
28415..................  Treat heel                      J8             0064          0.4319  Yes.
                          fracture.
28715..................  Fusion of foot                  J8             0425          0.5565  Yes.
                          bones.
33206..................  Insert heart pm                 J8             0089          0.6972  Yes.
                          atrial.
33207..................  Insert heart pm                 J8             0089          0.6972  Yes.
                          ventricular.
33208..................  Insrt heart pm                  J8             0089          0.6972  Yes.
                          atrial & vent.
33210..................  Insert electrd/pm               J8             0090          0.6858  Yes.
                          cath sngl.
33211..................  Insert card                     J8             0090          0.6858  Yes.
                          electrodes dual.
33212..................  Insert pulse gen                J8             0090          0.6858  Yes.
                          sngl lead.
33213..................  Insert pulse gen                J8             0089          0.6972  Yes.
                          dual leads.
33214..................  Upgrade of                      J8             0089          0.6972  Yes.
                          pacemaker system.
33216..................  Insert 1 electrode              J8             0090          0.6858  Yes.
                          pm-defib.
33217..................  Insert 2 electrode              J8             0090          0.6858  Yes.
                          pm-defib.
33221..................  Insert pulse gen                J8             0655          0.7495  Yes.
                          mult leads.

[[Page 66928]]

 
33224..................  Insert pacing lead              J8             0089          0.6972  Yes.
                          & connect.
33227..................  Remove&replace pm               J8             0090          0.6858  Yes.
                          gen singl.
33228..................  Remv&replc pm gen               J8             0089          0.6972  Yes.
                          dual lead.
33229..................  Remv&replc pm gen               J8             0655          0.7495  Yes.
                          mult leads.
33230..................  Insrt pulse gen w/              J8             0107          0.7851  Yes.
                          dual leads.
33231..................  Insrt pulse gen w/              J8             0108          0.8114  Yes.
                          mult leads.
33233..................  Removal of pm                   J8             0090          0.6858  Yes.
                          generator.
33240..................  Insrt pulse gen w/              J8             0107          0.7851  Yes.
                          singl lead.
33249..................  Nsert pace-defib w/             J8             0108          0.8114  Yes.
                          lead.
33262..................  Remv&replc cvd gen              J8             0107          0.7851  Yes.
                          sing lead.
33263..................  Remv&replc cvd gen              J8             0107          0.7851  Yes.
                          dual lead.
33264..................  Remv&replc cvd gen              J8             0108          0.8114  Yes.
                          mult lead.
33270..................  Ins/rep subq                    J8             0108          0.8114  Yes.
                          defibrillator.
33271..................  Insj subq impltbl               J8             0090          0.6858  Yes.
                          dfb elctrd.
33282..................  Implant pat-active              J8             0090          0.6858  Yes.
                          ht record.
37221..................  Iliac revasc w/                 J8             0229          0.5036  Yes.
                          stent.
37225..................  Fem/popl revas w/               J8             0229          0.5036  Yes.
                          ather.
37226..................  Fem/popl revasc w/              J8             0229          0.5036  Yes.
                          stent.
37227..................  Fem/popl revasc                 J8             0319          0.5911  Yes.
                          stnt & ather.
37228..................  Tib/per revasc w/               J8             0229          0.5036  Yes.
                          tla.
37229..................  Tib/per revasc w/               J8             0319          0.5911  Yes.
                          ather.
37230..................  Tib/per revasc w/               J8             0319          0.5911  Yes.
                          stent.
37231..................  Tib/per revasc                  J8             0319          0.5911  Yes.
                          stent & ather.
37236..................  Open/perq place                 J8             0229          0.5036  Yes.
                          stent 1st.
37238..................  Open/perq place                 J8             0229          0.5036  Yes.
                          stent same.
53440..................  Male sling                      J8             0385          0.5902  Yes.
                          procedure.
53444..................  Insert tandem cuff              J8             0385          0.5902  Yes.
53445..................  Insert uro/ves nck              J8             0386          0.6988  Yes.
                          sphincter.
53447..................  Remove/replace ur               J8             0386          0.6988  Yes.
                          sphincter.
54400..................  Insert semi-rigid               J8             0385          0.5902  Yes.
                          prosthesis.
54401..................  Insert self-contd               J8             0386          0.6988  Yes.
                          prosthesis.
54405..................  Insert multi-comp               J8             0386          0.6988  Yes.
                          penis pros.
54410..................  Remove/replace                  J8             0386          0.6988  Yes.
                          penis prosth.
54416..................  Remv/repl penis                 J8             0386          0.6988  Yes.
                          contain pros.
55873..................  Cryoablate                      J8             0385          0.5902  Yes.
                          prostate.
61885..................  Insrt/redo                      J8             0039          0.8616  Yes.
                          neurostim 1 array.
61886..................  Implant neurostim               J8             0318          0.8688  Yes.
                          arrays.
61888..................  Revise/remove                   J8             0061          0.5625  Yes.
                          neuroreceiver.
62361..................  Implant spine                   J8             0227          0.8062  Yes.
                          infusion pump.
62362..................  Implant spine                   J8             0227          0.8062  Yes.
                          infusion pump.
63650..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
63655..................  Implant                         J8             0039          0.8616  Yes.
                          neuroelectrodes.
63663..................  Revise spine eltrd              J8             0061          0.5625  Yes.
                          perq aray.
63664..................  Revise spine eltrd              J8             0061          0.5625  Yes.
                          plate.
63685..................  Insrt/redo spine n              J8             0318          0.8688  Yes.
                          generator.
64553..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
64555..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
64561..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
64565..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
64568..................  Inc for vagus n                 J8             0318          0.8688  Yes.
                          elect impl.
64569..................  Revise/repl vagus               J8             0061          0.5625  Yes.
                          n eltrd.
64575..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
64580..................  Implant                         J8             0039          0.8616  Yes.
                          neuroelectrodes.
64581..................  Implant                         J8             0061          0.5625  Yes.
                          neuroelectrodes.
64590..................  Insrt/redo pn/                  J8             0039          0.8616  Yes.
                          gastr stimul.
65770..................  Revise cornea with              J8             0293          0.6611  Yes.
                          implant.
69714..................  Implant temple                  J8             0425          0.5565  Yes.
                          bone w/stimul.
69715..................  Temple bne implnt               J8             0425          0.5565  Yes.
                          w/stimulat.
69718..................  Revise temple bone              J8             0425          0.5565  Yes.
                          implant.
69930..................  Implant cochlear                J8             0259          0.8283  Yes.
                          device.
0238T..................  Trluml perip athrc              J8             0319          0.5911  Yes.
                          iliac art.
0282T..................  Periph field                    J8             0061          0.5625  Yes.
                          stimul trial.
0283T..................  Periph field                    J8             0318          0.8688  Yes.
                          stimul perm.
0302T..................  Icar ischm mntrng               J8             0089          0.6972  Yes.
                          sys compl.
0303T..................  Icar ischm mntrng               J8             0090          0.6858  Yes.
                          sys eltrd.
0304T..................  Icar ischm mntrng               J8             0090          0.6858  Yes.
                          sys device.
0308T..................  Insj ocular                     J8             0351          0.9066  Yes.
                          telescope prosth.
0316T..................  Replc vagus nerve               J8             0039          0.8616  Yes.
                          pls gen.

[[Page 66929]]

 
0387T..................  Leadless c pm ins/              J8             0319          0.5911  Yes.
                          rpl ventr.
----------------------------------------------------------------------------------------------------------------

e. ASC Treatment of Surgical Procedures Removed From the OPPS Inpatient 
List for CY 2015
    As we discussed in the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68724), we adopted a policy to include in our annual 
evaluation of the ASC list of covered surgical procedures, a review of 
the procedures that are being proposed for removal from the OPPS 
inpatient list for possible inclusion on the ASC list of covered 
surgical procedures. In the CY 2015 OPPS/ASC proposed rule (79 FR 
41023), we stated there are no procedures proposed for removal from the 
OPPS inpatient list for CY 2015, so we did not propose any procedures 
for possible inclusion on the ASC list of covered surgical procedures.
    Comment: Some commenters recommended that, if a surgical procedure 
was removed from the inpatient list, it be made eligible for payment in 
the ASC setting.
    Response: As discussed in the CY 2009 OPPS/ASC final rule with 
comment period (73 FR 68724), we adopted a policy to include in our 
annual evaluation of the ASC list of covered surgical procedures a 
review of the procedures that are being proposed for removal from the 
OPPS inpatient-only list for possible inclusion on the ASC list of 
covered surgical procedures. We review these procedures and include 
them on the ASC list of covered surgical procedures only if the 
surgical procedure 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.
    Although there were no procedures proposed for removal from the 
OPPS inpatient list for CY 2015, we are removing CPT code 63043 
(Laminotomy (hemilaminectomy), with decompression of nerve root(s), 
including partial facetectomy, foraminotomy and/or excision of 
herniated intervertebral disc, reexploration, single interspace; each 
additional cervical interspace) and CPT code 63044 (Laminotomy 
(hemilaminectomy), with decompression of nerve root(s), including 
partial facetectomy, foraminotomy and/or excision of herniated 
intervertebral disc, reexploration, single interspace; each additional 
lumbar interspace) from the inpatient-only list in response to a public 
comment. We refer readers to section IX.B. of this final rule with 
comment period for our discussion of the CY 2015 inpatient-only list. 
As discussed previously, because these procedures were removed from the 
OPPS inpatient-only list, we review them to determine whether they 
should be included on the list of ASC covered surgical procedures. We 
believe that the procedure described by CPT code 63044 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. Therefore, we are including the procedure described by 
CPT code 63044 on the list of ASC covered surgical procedures and list 
the procedure code, descriptor, and payment indicator for this new 
covered surgical procedure in Table 45 of section XII.C.1.a. of this 
final rule with comment period. However, we do not believe that the 
procedure described by CPT code 63043 should be added to the ASC list 
because we believe that the beneficiary would generally require active 
medical monitoring and care at midnight following the procedure, so we 
are not adding it to the list of ASC covered surgical procedures.
2. Covered Ancillary Services
    Consistent with the established ASC payment system policy, we 
proposed to update the ASC list of covered ancillary services to 
reflect the proposed payment status for the services under the CY 2015 
OPPS. Maintaining consistency with the OPPS may result in proposed 
changes to ASC payment indicators for some covered ancillary services 
because of changes that are being proposed under the OPPS for CY 2015. 
For example, a covered ancillary service that was separately paid under 
the revised ASC payment system in CY 2014 may be proposed for packaged 
status under the CY 2015 OPPS and, therefore, also under the ASC 
payment system for CY 2015.
    To maintain consistency with the OPPS, we proposed that these 
services also would be packaged under the ASC payment system for CY 
2015. Comment indicator ``CH,'' discussed in section XII.F. of the CY 
2015 OPPS/ASC proposed rule (79 FR 41028), is used in Addendum BB to 
the proposed rule (which is available via the Internet on the CMS Web 
site) 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 2015.
    Except for the Level II HCPCS codes and Level III CPT codes listed 
in Table 46 and Table 47 of the proposed rule (79 FR 41016 through 
41017), all ASC covered ancillary services and their proposed payment 
indicators for CY 2015 were included in Addendum BB to the proposed 
rule (which is available via the Internet on the CMS Web site).
    We invited public comment on this proposal.
    Comment: Commenters were concerned that, because ASC payment rates 
are already substantially lower than HOPD rates, packaging these 
ancillary services codes would not provide adequate payment for all of 
the procedures being performed, and would result in cases shifting from 
the ASC to the more expensive HOPD setting. The commenters noted that 
this was particularly problematic because there are 244 ancillary and 
surgical codes that are separately payable as procedures in CY 2014 
under the OPPS but are proposed to be packaged and no longer separately 
payable in CY 2015 under the OPPS. The commenters noted that Medicare 
currently pay ASCs approximately 55 percent of the hospital rate for 
the same service and expressed concern that packaging the payment for 
the secondary services will lower the ASC payment even further and 
discourage the movement of volume to ASCs. Commenters recommended that 
CMS work to ensure that any packaging policies are not structured to

[[Page 66930]]

disproportionately impact the already lower cost provider.
    Response: We discuss the OPPS ancillary services packaging policy 
for CY 2015 in section II.A.3.c.(1) of this final rule with comment 
period. Of the 21 APCs proposed for conditional packaging under this 
policy, 17 of the 21 contain services that are not ASC services. 
Therefore, for the most part, this packaging policy does not apply to 
the ASC. The four remaining APCs contain primarily minor imaging 
services, such as a chest X-ray. Most of these diagnostic tests are not 
typically performed in the ASC; instead, they are performed pre-
operatively before the patient has surgery at the ASC. Therefore, we do 
not believe that ASCs will be adversely impacted by the OPPS ancillary 
services packaging policy in CY 2015. In addition, to the extent that 
any of the packaged covered ancillary services are performed with 
covered surgical procedures, the relative weights of the surgical 
procedures will reflect the additional cost of the packaged ancillary 
service. We typically consider the potential effect of OPPS payment 
policy changes, including new packaging policies, on ASC payments, and 
we will continue to do so in the future.
    After consideration of the public comments we received, we are 
finalizing, without modification, our proposal to update the ASC list 
of covered ancillary services to reflect the payment status for the 
services under the OPPS. All CY 2015 ASC covered ancillary services and 
their final payment indicators are included in Addendum BB to this 
final rule with comment period (which is available via the Internet on 
the CMS Web site).

D. ASC Payment for Covered Surgical Procedures and Covered Ancillary 
Services

1. ASC Payment for Covered Surgical Procedures
a. Background
    Our ASC payment policies for covered surgical procedures under the 
revised ASC payment system are fully described in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66828 through 66831). Under our 
established policy for the revised ASC payment system, the ASC standard 
ratesetting methodology of multiplying the ASC relative payment weight 
for the procedure by the ASC conversion factor for that same year is 
used to calculate the national unadjusted payment rates for procedures 
with payment indicators ``G2'' and ``A2.'' Payment indicator ``A2'' was 
developed to identify procedures that were included on the list of ASC 
covered surgical procedures in CY 2007 and, therefore, were subject to 
transitional payment prior to CY 2011. Although the 4-year transitional 
period has ended and payment indicator ``A2'' is no longer required to 
identify surgical procedures subject to transitional payment, we 
retained payment indicator ``A2'' because it is used to identify 
procedures that are exempted from application of the office-based 
designation.
    The rate calculation established for device-intensive procedures 
(payment indicator ``J8'') is structured so that the packaged device 
payment amount is the same as under the OPPS, and only the service 
portion of the rate is subject to the ASC standard ratesetting 
methodology. In the CY 2014 OPPS/ASC final rule with comment period (78 
FR 75064 through 75090), we updated the CY 2013 ASC payment rates for 
ASC covered surgical procedures with payment indicators of ``A2,'' 
``G2,'' and ``J8'' using CY 2012 data, consistent with the CY 2014 OPPS 
update. We also updated payment rates for device-intensive procedures 
to incorporate the CY 2014 OPPS device offset percentages.
    Payment rates for office-based procedures (payment indicators 
``P2,'' ``P3,'' and ``R2'') are the lower of the MPFS nonfacility PE 
RVU-based amount (we refer readers to the CY 2015 MPFS proposed rule) 
or the amount calculated using the ASC standard ratesetting methodology 
for the procedure. In the CY 2014 OPPS/ASC final rule with comment 
period, we updated the payment amounts for office-based procedures 
(payment indicators ``P2,'' ``P3,'' and ``R2'') using the most recent 
available MPFS and OPPS data. We compared the estimated CY 2014 rate 
for each of the office-based procedures, calculated according to the 
ASC standard ratesetting methodology, to the MPFS nonfacility PE RVU-
based amount to determine which was lower and, therefore, would be the 
CY 2014 payment rate for the procedure according to the final policy of 
the revised ASC payment system (Sec.  416.171(d)).
b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41024), we proposed to 
update ASC payment rates for CY 2015 using the established rate 
calculation methodologies under Sec.  416.171 and using our proposed 
modified definition of device-intensive procedures, as discussed above. 
Because the proposed OPPS relative payment weights were based on 
geometric mean costs for CY 2015, the ASC system used geometric means 
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 that payment rates for office-based procedures (payment 
indicators ``P2,'' ``P3,'' and ``R2'') and device-intensive procedures 
(payment indicator ``J8'') be calculated according to our established 
policies and, for device-intensive procedures, using our proposed 
modified definition of device-intensive procedures, as discussed above. 
Therefore, we proposed to update the payment amount for the service 
portion of the device-intensive procedures using the ASC standard 
ratesetting methodology and the payment amount for the device portion 
based on the proposed CY 2015 OPPS device offset percentages that have 
been calculated using the standard OPPS APC ratesetting methodology. 
Payment for office-based procedures is at the lesser of the proposed CY 
2015 MPFS nonfacility PE RVU-based amount or the proposed CY 2015 ASC 
payment amount calculated according to the ASC standard ratesetting 
methodology.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75081), we finalized our proposal to calculate the CY 2014 payment 
rates for ASC covered surgical procedures according to our established 
methodologies, with the exception of device removal procedures. For CY 
2014, we finalized a policy to conditionally package device removal 
codes under the OPPS. Under the OPPS, a conditionally packaged code 
(status indicators ``Q1'' and ``Q2'') describes a HCPCS code where the 
payment is packaged when it is provided with a significant procedure 
but is separately paid when the service appears on the claim without a 
significant procedure. Because ASC services always include a covered 
surgical procedure, HCPCS codes that are conditionally packaged under 
the OPPS are always packaged (payment indicator ``N1'') under the ASC 
payment system. Therefore, no Medicare payment would be made when a 
device removal procedure is performed in an ASC without another 
surgical procedure included on the claim; therefore, no Medicare 
payment would be made if a device was removed but not replaced. To 
address this concern, for the device removal procedures that are 
conditionally packaged in the OPPS (status indicator ``Q2''), we 
assigned the current ASC payment indicators associated with

[[Page 66931]]

these procedures and continued to provide separate payment in CY 2014. 
For CY 2015, we proposed to continue this policy for the device removal 
procedures for these same reasons.
    We invited public comment on these proposals. We did not receive 
any public comments on these proposals. Therefore, we are finalizing 
our proposed policies without modification to calculate the CY 2015 
payment rates for ASC covered surgical procedures according to our 
established methodologies using the modified definition of device-
intensive procedures. For those covered surgical procedures where the 
payment rate is the lower of the final rates under the ASC standard 
ratesetting methodology and the MPFS final rates, the final payment 
indicators and rates set forth in this rule are based on a comparison 
using the MPFS rates effective January 1, 2015. These payment rates and 
indicators do not include the effect of the negative update to the MPFS 
payment rates effective April 1, 2015 under current law. Updates to 
these rates and payment indicators effective April l, 2015 will be 
included in the April 2015 quarterly ASC addenda posted on the CMS Web 
site. For a discussion of the MPFS rates, we refer readers to the CY 
2015 MPFS final rule with comment period.
c. Waiver of Coinsurance and Deductible for Certain Preventive Services
    Section 1833(a)(1) and section 1833(b)(1) of the Act waive the 
coinsurance and the Part B deductible for those preventive services 
under section 1861(ddd)(3)(A) of the Act as described in section 
1861(ww)(2) of the Act (excluding electrocardiograms) that are 
recommended by the United States Preventive Services Task Force 
(USPSTF) with a grade of A or B for any indication or population and 
that are appropriate for the individual. Section 1833(b) of the Act 
also waives the Part B deductible for colorectal cancer screening tests 
that become diagnostic. In the CY 2011 OPPS/ASC final rule with comment 
period, we finalized our policies with respect to these provisions and 
identified categories of services and the ASC covered surgical 
procedures and covered ancillary services that are preventive services 
that are recommended by the USPSTF with a grade of A or B for which the 
coinsurance and the deductible are waived. For a complete discussion of 
our policies and categories of services, we refer readers to the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72047 through 
72049). We did not propose any changes to our policies or the 
categories of services for CY 2015. We identify the specific services 
with a double asterisk in Addenda AA and BB to this final rule with 
comment period (which are available via the Internet on the CMS Web 
site).
d. Payment for Cardiac Resynchronization Therapy Services
    Cardiac resynchronization therapy (CRT) uses electronic devices to 
sequentially pace both sides of the heart to improve its output. CRT 
utilizes a pacing electrode implanted in combination with either a 
pacemaker or an implantable cardioverter defibrillator (ICD). CRT 
performed by the implantation of an ICD along with a pacing electrode 
is referred to as ``CRT-D.'' In the CY 2012 OPPS/ASC final rule with 
comment period, we finalized our proposal to establish the CY 2012 ASC 
payment rate for CRT-D services based on the OPPS payment rate 
applicable to APC 0108 when procedures described by CPT codes 33225 
(Insertion of pacing electrode, cardiac venous system, for left 
ventricular pacing, at time of insertion of pacing cardioverter-
defibrillator or pacemaker pulse generator (eg., for upgrade to dual 
chamber system) (list separately in addition to code for primary 
procedure)) and 33249 (Insertion or replacement of permanent pacing 
cardioverter-defibrillator system with transvenous lead(s), single or 
dual chamber) are performed on the same date of service in an ASC. ASCs 
use the corresponding HCPCS Level II G-code (G0448) for proper 
reporting when the procedures described by CPT codes 33225 and 33249 
are performed on the same date of service. When not performed on the 
same day as the service described by CPT code 33225, ASC payment for 
the service described by CPT code 33249 is based on APC 0108 using the 
device-intensive methodology. When not performed on the same day as the 
service described by CPT code 33249, ASC payment for the service 
described by CPT code 33225 is based on APC 0655 using the device-
intensive methodology. For a complete discussion of our policy 
regarding payment for CRT-D services in ASCs, we refer readers to the 
CY 2012 OPPS/ASC final rule with comment period (76 FR 74427 through 
74428).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41025), for CY 2015, 
we proposed that CPT code 33249, the primary code for CRT-D services, 
continue to be assigned to APC 0108, and that payment for CPT code 
33225 be packaged under the OPPS. Consequently, we also proposed that 
CPT code 33249 would continue to be assigned to APC 0108 and payment 
for CPT code 33225 would be packaged into the payment for the primary 
covered surgical procedure (for example, CPT code 33249) under the ASC 
payment system for CY 2015. Because we proposed to package CPT code 
33225 packaged under the ASC payment system and, therefore, it would 
not receive separate payment, it would no longer be necessary that ASCs 
use the HCPCS Level II G-code (G0448) for proper reporting when the 
procedures described by CPT codes 33225 and 33249 are performed on the 
same date of service.
    We invited public comment on these proposals.
    We did not receive any public comments on these proposals. Further, 
we are finalizing our proposals under the OPPS that CPT code 33249, the 
primary code for CRT-D services, continue to be assigned to APC 0108, 
and that payment for CPT code 33225 be packaged under the OPPS. 
Therefore, we are finalizing our proposals under the ASC payment system 
without modification. Specifically, CPT code 33249, the primary code 
for CRT-D services, will continue to be assigned to APC 0108, and 
payment for CPT code 33225 will be packaged into the payment for the 
primary covered surgical procedure (for example, CPT code 33249).
e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy Composite
    LDR prostate brachytherapy is a treatment for prostate cancer in 
which hollow needles or catheters are inserted into the prostate, 
followed by permanent implantation of radioactive sources into the 
prostate through the needles/catheters. At least two CPT codes are used 
to report the treatment service because there are separate codes that 
describe placement of the needles/catheters and the application of the 
brachytherapy sources: CPT code 55875 (Transperineal placement of 
needles or catheters into prostate for interstitial radioelement 
application, with or without cystoscopy); and CPT code 77778 
(Interstitial radiation source application; complex). Generally, the 
component services represented by both codes are provided in the same 
operative session on the same date of service to the Medicare 
beneficiary being treated with LDR brachytherapy for prostate cancer.
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized our proposal to establish the CY 2013 ASC payment rate for 
LDR prostate brachytherapy services based on the

[[Page 66932]]

OPPS relative payment weight applicable to APC 8001 when CPT codes 
55875 and 77778 are performed on the same date of service in an ASC. 
ASCs use the corresponding HCPCS Level II G-code (G0458) for proper 
reporting when the procedures described by CPT codes 55875 and 77778 
are performed on the same date of service, and therefore receive the 
appropriate LDR prostate brachytherapy composite payment. When not 
performed on the same day as the service described by CPT code 55875, 
the service described by CPT code 77778 will be assigned to APC 0651. 
When not performed on the same day as the service described by CPT code 
77778, the service described by CPT code 55875 will be assigned to APC 
0162. For a complete discussion of our policy regarding payment for LDR 
prostate brachytherapy services in ASCs, we refer readers to the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68457). In the CY 
2015 OPPS/ASC proposed rule (79 FR 41025), we did not propose any 
changes to our current policy regarding ASC payment for LDR prostate 
brachytherapy services for CY 2015.
2. Payment for Covered Ancillary Services
a. Background
    Our final payment policies under the revised ASC payment system for 
covered ancillary services vary according to the particular type of 
service and its payment policy under the OPPS. Our overall policy 
provides separate ASC payment for certain ancillary items and services 
integrally related to the provision of ASC covered surgical procedures 
that are paid separately under the OPPS and provides packaged ASC 
payment for other ancillary items and services that are packaged or 
conditionally packaged (status indicators ``N,'' ``Q1,'' and ``Q2'') 
under the OPPS. In the CY 2013 OPPS/ASC rulemaking (77 FR 45169; 77 FR 
68457 through 68458), we further clarified our policy regarding the 
payment indicator assignment of codes that are conditionally packaged 
in the OPPS (status indicators ``Q1'' and ``Q2''). Under the OPPS, a 
conditionally packaged code describes a HCPCS code where the payment is 
packaged when it is provided with a significant procedure but is 
separately paid when the service appears on the claim without a 
significant procedure. Because ASC services always include a surgical 
procedure, HCPCS codes that are conditionally packaged under the OPPS 
are always packaged (payment indictor ``N1'') under the ASC payment 
system. Thus, our final policy generally aligns ASC payment bundles 
with those under the OPPS (72 FR 42495). In all cases, in order for 
those ancillary services also to be paid, ancillary items and services 
must be provided integral to the performance of ASC covered surgical 
procedures for which the ASC bills Medicare.
    Our ASC payment policies provide separate payment for drugs and 
biologicals that are separately paid under the OPPS at the OPPS rates. 
We generally pay for separately payable radiology services at the lower 
of the MPFS nonfacility PE RVU-based (or technical component) amount or 
the rate calculated according to the ASC standard ratesetting 
methodology (72 FR 42497). However, as finalized in the CY 2011 OPPS/
ASC final rule with comment period (75 FR 72050), payment indicators 
for all nuclear medicine procedures (defined as CPT codes in the range 
of 78000 through 78999) that are designated as radiology services that 
are paid separately when provided integral to a surgical procedure on 
the ASC list are set to ``Z2'' so that payment is made based on the ASC 
standard ratesetting methodology rather than the MPFS nonfacility PE 
RVU amount, regardless of which is lower. This modification to the ASC 
payment methodology for ancillary services was finalized in response to 
a comment on the CY 2011 OPPS/ASC proposed rule that suggested it is 
inappropriate to use the MPFS-based payment methodology for nuclear 
medicine procedures because the associated diagnostic 
radiopharmaceutical, although packaged under the ASC payment system, is 
separately paid under the MPFS (42 CFR 416.171(d)(1)). We set the 
payment indicator to ``Z2'' for these nuclear medicine procedures in 
the ASC setting so that payment for these procedures would be based on 
the OPPS relative payment weight rather than the MPFS nonfacility PE 
RVU-based amount to ensure that the ASC will be compensated for the 
cost associated with the diagnostic radiopharmaceuticals.
    In addition, because the same issue exists for radiology procedures 
that use contrast agents (the contrast agent is packaged under the ASC 
payment system but is separately paid under the MPFS), we finalized in 
the CY 2012 OPPS/ASC final rule with comment period (76 FR 74429 
through 74430) to set the payment indicator to ``Z2'' for radiology 
services that use contrast agents so that payment for these procedures 
will be based on the OPPS relative payment weight and, therefore, will 
include the cost for the contrast agent (42 CFR 416.171(d)(2)).
    ASC payment policy for brachytherapy sources mirrors the payment 
policy under the OPPS. ASCs are paid for brachytherapy sources provided 
integral to ASC covered surgical procedures at prospective rates 
adopted under the OPPS or, if OPPS rates are unavailable, at 
contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs 
have been paid for brachytherapy sources provided integral to ASC 
covered surgical procedures at prospective rates adopted under the 
OPPS.
    Our ASC policies also provide separate payment for: (1) Certain 
items and services that CMS designates as contractor-priced, including, 
but not limited to, the procurement of corneal tissue; and (2) certain 
implantable items that have pass-through payment status under the OPPS. 
These categories do not have prospectively established ASC payment 
rates according to the final policies for the revised ASC payment 
system (72 FR 42502 and 42508 through 42509; 42 CFR 416.164(b)). Under 
the revised ASC payment system, we have designated corneal tissue 
acquisition and hepatitis B vaccines as contractor-priced. Corneal 
tissue acquisition is contractor-priced based on the invoiced costs for 
acquiring the corneal tissue for transplantation. Hepatitis B vaccines 
are contractor-priced based on invoiced costs for the vaccine.
    Devices that are eligible for pass-through payment under the OPPS 
are separately paid under the ASC payment system and are contractor-
priced. Currently, the one device that is eligible for pass-through 
payment in the OPPS is described by HCPCS code C1841 (Retinal 
prosthesis, includes all internal and external components). The payment 
amount for HCPCS code C1841 under the ASC payment system is contractor-
priced. Under the revised ASC payment system (72 FR 42502), payment for 
the surgical procedure associated with the pass-through device is made 
according to our standard methodology for the ASC payment system, based 
on only the service (nondevice) portion of the procedure's OPPS 
relative payment weight if the APC weight for the procedure includes 
other packaged device costs. (We note that the cost for the new pass-
through device would not be included in the APC weight because 
historical claims are used to establish the OPPS relative weights). We 
also refer to this methodology as applying a ``device offset'' to the 
ASC payment for the associated surgical procedure. This ensures that 
duplicate payment is not

[[Page 66933]]

provided for any portion of an implanted device with OPPS pass-through 
payment status. There are no other device costs included in the APC for 
the surgical procedure associated with HCPCS code C1841. Therefore, 
payment for the associated surgical procedure is made according to the 
standard methodology and no device offset is applied. HCPCS code C1841 
was approved for pass-through payment effective October 1, 2013, and 
will continue to be eligible for pass-through payment in CY 2015.
b. Payment for Covered Ancillary Services for CY 2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41026 through 41027), 
for CY 2015, 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 2015 OPPS and 
ASC payment rates. We also proposed to continue to set the CY 2015 ASC 
payment rates for brachytherapy sources and separately payable drugs 
and biologicals equal to the proposed OPPS payment rates for CY 2015.
    Consistent with established ASC payment policy (72 FR 42497), we 
proposed that the proposed CY 2015 payment for separately payable 
covered radiology services be based on a comparison of the proposed CY 
2015 MPFS nonfacility PE RVU-based amounts (we refer readers to the CY 
2015 MPFS proposed rule) and the proposed CY 2015 ASC payment rates 
calculated according to the ASC standard ratesetting methodology and 
then set at the lower of the two amounts (except as discussed below for 
nuclear medicine procedures and radiology services that use contrast 
agents). We proposed that payment for a radiology service would be 
packaged into the payment for the ASC covered surgical procedure if the 
radiology service is packaged or conditionally packaged under the OPPS. 
The payment indicators in Addendum BB to the proposed rule indicate 
whether the proposed payment rates for radiology services are based on 
the MPFS nonfacility PE RVU-based amount or the ASC standard 
ratesetting methodology, or whether payment for a radiology service is 
packaged into the payment for the covered surgical procedure (payment 
indicator ``N1''). Radiology services that we proposed to pay based on 
the ASC standard ratesetting methodology are assigned payment indicator 
``Z2'' (proposed revised definition, as discussed below: Radiology or 
diagnostic service paid separately when provided integral to a surgical 
procedure on ASC list; payment based on OPPS relative payment weight), 
and those for which the proposed payment is based on the MPFS 
nonfacility PE RVU-based amount be assigned payment indicator ``Z3'' 
(proposed revised definition, as discussed below: Radiology or 
diagnostic service paid separately when provided integral to a surgical 
procedure on ASC list; payment based on MPFS nonfacility PE RVUs).
    As finalized in the CY 2011 OPPS/ASC final rule with comment period 
(75 FR 72050), payment indicators for all nuclear medicine procedures 
(defined as CPT codes in the range of 78000 through 78999) that are 
designated as radiology services that are paid separately when provided 
integral to a surgical procedure on the ASC list are set to ``Z2'' so 
that payment for these procedures will be based on the OPPS relative 
payment weight (rather than the MPFS nonfacility PE RVU-based amount, 
regardless of which is lower) and, therefore, will include the cost for 
the diagnostic radiopharmaceutical. We proposed to continue this 
modification to the payment methodology in CY 2015 and, therefore, set 
the payment indicator to ``Z2'' for nuclear medicine procedures.
    As finalized in the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74429 through 74430), payment indicators for radiology services 
that use contrast agents are set to ``Z2'' so that payment for these 
procedures will be based on the OPPS relative payment weight and, 
therefore, will include the cost for the contrast agent. We proposed to 
continue this modification to the payment methodology in CY 2015 and, 
therefore, proposed to assign the payment indicator ``Z2'' to radiology 
services that use contrast agents.
    Covered ancillary services are items and services that are integral 
to a covered surgical procedure performed in an ASC for which separate 
payment may be made under the ASC payment system (42 CFR 416.2). 
Covered ancillary services include, among other categories of items and 
services, certain radiology services, including diagnostic imaging 
services, for which separate payment is allowed under the OPPS when 
these services are necessary for the successful completion of a 
surgical procedure and are performed in the ASC immediately preceding, 
during, or immediately following the covered surgical procedure, as 
evidenced by the service being provided on the same day as a covered 
surgical procedure (42 CFR 416.164(b)(5)). Currently, there are certain 
nonimaging diagnostic tests for which payment is not made under 
Medicare Part B when provided in an ASC setting although these tests 
are paid under the OPPS. Therefore, we believe that certain nonimaging 
diagnostic tests for which separate payment is allowed under the OPPS 
should be considered covered ancillary services and separately paid 
when these tests are required for the successful performance of the 
surgery and are performed in the ASC on the same day as a covered 
surgical procedure.
    Therefore, we proposed that, beginning in CY 2015, certain 
diagnostic tests within the medicine range of CPT codes for which 
separate payment is allowed under the OPPS be covered ancillary 
services when they are integral to an ASC covered surgical procedure. 
We believe that adopting such a payment policy is reasonable and 
appropriate to ensure access to these tests in ASCs and is consistent 
with the OPPS. We proposed that diagnostic tests within the medicine 
range of CPT codes include all Category I CPT codes in the medicine 
range established by CPT, from 90000 to 99999, and Category III CPT 
codes and Level II HCPCS codes that describe diagnostic tests that 
crosswalk or are clinically similar to procedures in the medicine range 
established by CPT.
    We proposed to pay for these tests at the lower of the MPFS 
nonfacility PE RVU-based (or technical component) amount or the rate 
calculated according to the ASC standard ratesetting methodology 
because this would ensure appropriate and equitable payment for these 
diagnostic tests provided integral to covered surgical procedures and 
not provide a payment incentive for migration of the tests from 
physician offices to ASCs. Further, we believe these diagnostic tests 
are similar to the covered ancillary services that are radiology 
services, and this is the payment methodology we use for those 
services. We proposed that the diagnostic tests for which the proposed 
payment is based on the ASC standard ratesetting methodology be 
assigned to payment indicator ``Z2'' (proposed revised definition: 
Radiology or diagnostic service paid separately when provided integral 
to a surgical procedure on ASC list; payment based on OPPS relative 
payment weight), and those for which the proposed payment is based on 
the MPFS nonfacility PE RVU-based amount be assigned payment indicator 
``Z3'' (proposed revised definition: Radiology or diagnostic service 
paid separately when provided integral to a surgical

[[Page 66934]]

procedure on ASC list; payment based on MPFS nonfacility PE RVUs). We 
proposed changes to the definitions for payment indicators ``Z2'' and 
``Z3,'' as detailed in section XII.F.2. of this final rule with comment 
period, and proposed changes to Sec.  416.164(a)(11) and (b)(5) as well 
as Sec.  416.171(b)(1) to reflect these proposals.
    We have identified one diagnostic test that is within the medicine 
range of CPT codes and for which separate payment is allowed under the 
OPPS: CPT code 91035 (Esophagus, gastroesophageal reflux test; with 
mucosal attached telemetry pH electrode placement, recording, analysis 
and interpretation). We proposed to add this code to the list of ASC 
covered ancillary services and proposed separate ASC payment as a 
covered ancillary service for this code beginning in CY 2015 when the 
test is integral to an ASC covered surgical procedure. We would expect 
the procedure described by CPT code 91035 to be integral to the 
endoscopic attachment of the electrode to the esophageal mucosa.
    Most covered ancillary services and their proposed payment 
indicators were listed in Addendum BB to the proposed rule (which is 
available via the Internet on the CMS Web site).
    We invited public comment on these proposals.
    Comment: Several commenters supported CMS' proposals to expand the 
scope of ASC covered ancillary services to include certain diagnostic 
tests and to add CPT code 91035 to the list of ASC covered ancillary 
services and allow separate payment for this code when the test is 
integral to an ASC covered surgical procedure. However, these 
commenters expressed concern regarding the proposed ASC payment for CPT 
code 91035 and requested that CMS reassign the code to a higher-paying 
APC.
    Response: We thank the commenters for their support for our 
proposal. Payment for CPT 91035 is addressed in section III.C.2. of 
this final rule with comment period. Briefly, the ASC payment is 
dependent upon the APC assignment for this service. Based on our 
analysis of the latest hospital outpatient claims data used for this 
final rule with comment period, we believe that CPT code 91035 is 
appropriately assigned to APC 0361. Our claims data show a geometric 
mean cost of approximately $466 for CPT code 91035 based on 1,272 
single claims (out of 5,099 total claims), and a geometric mean cost of 
approximately $341 for APC 0361. Further, the geometric mean cost of 
APC 0142 is approximately $884, which is almost twice the geometric 
mean cost of CPT code 91035. Also, assignment of 91035 to APC 0142 
would create a 2 times violation in APC 0142, because the geometric 
mean cost of the highest cost significant procedure in APC 0142 (CPT 
code 44361, with a geometric mean cost of $1,019) is 2.2 times the 
geometric mean cost of 91035. Therefore, APC 0142 would not be 
appropriate for 91035 and we are finalizing our CY 2015 proposal to 
continue to assign CPT code 91035 to APC 0361.
    After consideration of the public comments we received, we are 
finalizing these proposals without modification: to expand the scope of 
ASC-covered ancillary services to include certain diagnostic tests for 
which separate payment is allowed under the OPPS when provided integral 
to covered ASC surgical procedures; to pay for these diagnostic tests 
at the lower of the MPFS nonfacility PE RVU based (or technical 
component) amount or the rate calculated according to the ASC standard 
ratesetting methodology; and to revise Sec. Sec.  416.164(a)(11) and 
(b)(5) as well as Sec.  416.171(b)(1) to reflect these finalized 
policies. We also are revising the regulation text at Sec.  416.171(d) 
to reflect that payment for these tests will be at the lower of the 
MPFS nonfacility PE RVU-based amount or the rate calculated according 
to the ASC standard ratesetting methodology, as discussed above and in 
the CY 2015 OPPS/ASC proposed rule (79 FR 41027). For those covered 
ancillary services where the payment rate is the lower of the final 
rates under the ASC standard ratesetting methodology and the MPFS final 
rates, the final payment indicators and rates set forth in this rule 
are based on a comparison using the MPFS rates effective January 1, 
2015. These payment rates and indicators do not include the effect of 
the negative update to the MPFS payment rates effective April 1, 2015 
under current law. Updates to these rates and payment indicators 
effective April l, 2015 will be included in the April 2015 quarterly 
ASC addenda posted on the CMS Web site. For a discussion of the MPFS 
rates, we refer readers to the CY 2015 MPFS final rule with comment 
period.

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle
    Our process for reviewing applications to establish new classes of 
new technology intraocular lenses (NTIOLs) is as follows:
     Applicants submit their NTIOL requests for review to CMS 
by the annual deadline. For a request to be considered complete, we 
require submission of the information that is found in the guidance 
document entitled ``Application Process and Information Requirements 
for Requests for a New Class of New Technology Intraocular Lenses 
(NTIOLs) or Inclusion of an IOL in an existing NTIOL Class'' posted on 
the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
     We announce annually in the proposed rule updating the ASC 
and OPPS payment rates for the following calendar year, a list of all 
requests to establish new NTIOL classes accepted for review during the 
calendar year in which the proposal is published. In accordance with 
section 141(b)(3) of 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 updating the ASC and OPPS payment rates 
for the following calendar year, we--
    [cir] Provide a list of determinations made as a result of our 
review of all new NTIOL class requests and public comments;
    [cir] When a new NTIOL class is created, we identify the 
predominant characteristic of NTIOLs in that class that sets them apart 
from other IOLs (including those previously approved as members of 
other expired or active NTIOL classes) and that is associated with an 
improved clinical outcome.
    [cir] The date of implementation of a payment adjustment in the 
case of approval of an IOL as a member of a new NTIOL class would be 
set prospectively as of 30 days after publication of the ASC payment 
update final rule, consistent with the statutory requirement.
    [cir] Announce the deadline for submitting requests for review of 
an application for a new NTIOL class for the following calendar year.
2. Requests To Establish New NTIOL Classes for CY 2015
    We did not receive any requests for review to establish a new NTIOL 
class for CY 2015 by March 3, 2014, the due date published in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 75085).
3. Payment Adjustment
    The current payment adjustment for a 5-year period from the 
implementation date of a new NTIOL class is $50 per lens. Since 
implementation of the process for adjustment of payment

[[Page 66935]]

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 2015.
4. Announcement of CY 2015 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 2016, requests for review of applications for a new 
class of new technology IOLs must be received at CMS by 5 p.m. EST, on 
March 2, 2015. Send requests 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 the information requested on 
the CMS Web site at: http://www.cms.gov/ASCPayment/downloads/NTIOLprocess.pdf.

F. ASC Payment and Comment Indicators

1. Background
    In addition to the payment indicators that we introduced in the 
August 2, 2007 final rule, we also created final comment indicators for 
the ASC payment system in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66855). We created Addendum DD1 to define ASC payment 
indicators that we use in Addenda AA and BB to provide payment 
information regarding covered surgical procedures and covered ancillary 
services, respectively, under the revised ASC payment system. The ASC 
payment indicators in Addendum DD1 are intended to capture policy 
relevant characteristics of HCPCS codes that may receive packaged or 
separate payment in ASCs, such as whether they were on the ASC list of 
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment 
methodology; and their classification as separately payable ancillary 
services including radiology services, brachytherapy sources, OPPS 
pass-through devices, corneal tissue acquisition services, drugs or 
biologicals, or NTIOLs.
    We also created Addendum DD2 that lists the ASC comment indicators. 
The ASC comment indicators used in Addenda AA and BB to the proposed 
rules and final rules with comment period serve to identify, for the 
revised ASC payment system, the status of a specific HCPCS code and its 
payment indicator with respect to the timeframe when comments will be 
accepted. The comment indicator ``NI'' is used in the OPPS/ASC final 
rule with comment period to indicate new codes for the next calendar 
year for which the interim payment indicator assigned is subject to 
comment. The comment indicator ``NI'' also is assigned to existing 
codes with substantial revisions to their descriptors such that we 
consider them to be describing new services, as discussed in the CY 
2010 OPPS/ASC final rule with comment period (74 FR 60622). We 
indicated that in the CY 2015 OPPS/ASC final rule with comment period, 
we will respond to public comments and finalize the ASC treatment of 
all codes that are labeled with comment indicator ``NI'' in Addenda AA 
and BB to the CY 2014 OPPS/ASC final rule with comment period.
    The ``CH'' comment indicator was used in Addenda AA and BB to the 
proposed rule (which are available via the Internet on the CMS Web 
site) to indicate that the payment indicator assignment has changed for 
an active HCPCS code in the current year and next calendar year; an 
active HCPCS code is newly recognized as payable in ASCs; or an active 
HCPCS code is discontinued at the end of the current calendar year. The 
``CH'' comment indicators that are published in the final rule with 
comment period are provided to alert readers that a change has been 
made from one calendar year to the next, but do not indicate that the 
change is subject to comment.
2. ASC Payment and Comment Indicators
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41028), we did not 
propose any changes to the definitions of the ASC comment indicators 
for CY 2015. In order to incorporate changes associated with our 
proposal for CY 2015, as detailed in section XII.D.2.b. of the proposed 
rule, that certain diagnostic tests qualify as covered ancillary 
services when provided integral to an ASC covered surgical procedure, 
we proposed to revise the definitions for payment indicators ``Z2'' and 
``Z3'' to add the words ``or diagnostic'' after ``Radiology'' so that 
the proposed definition for payment indicator ``Z2'' would be 
``Radiology or diagnostic service paid separately when provided 
integral to a surgical procedure on ASC list; payment based on OPPS 
relative payment weight,'' and the proposed definition for payment 
indicator ``Z3'' would be ``Radiology or diagnostic service paid 
separately when provided integral to a surgical procedure on ASC list; 
payment based on MPFS nonfacility PE RVUs.'' We refer readers to 
Addenda DD1 and DD2 to the proposed rule (which are available via the 
Internet on the CMS Web site) for the complete list of ASC payment and 
comment indicators for the CY 2015 update.
    We did not receive any public comments regarding our proposals to 
change the definitions of ``Z2'' and ``Z3''. Therefore, we are 
finalizing our proposal to revise the definitions for payment 
indicators ``Z2'' and ``Z3'' to add the words ``or diagnostic'' after 
``Radiology'' so that the revised definition for payment indicator 
``Z2'' will be ``Radiology or diagnostic service paid separately when 
provided integral to a surgical procedure on ASC list; payment based on 
OPPS relative payment weight,'' and the revised definition for payment 
indicator ``Z3'' will be ``Radiology or diagnostic service paid 
separately when provided integral to a surgical procedure on ASC list; 
payment based on MPFS nonfacility PE RVUs.''

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

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

[[Page 66936]]

FR 42532 through 42533; 42 CFR 416.171(e)).
    We note that we consider the term ``expenditures'' in the context 
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of 
the Act to mean expenditures from the Medicare Part B Trust Fund. We do 
not consider expenditures to include beneficiary coinsurance and 
copayments. This distinction was important for the CY 2008 ASC budget 
neutrality model that considered payments across the OPPS, ASC, and 
MPFS payment systems. However, because coinsurance is almost always 20 
percent for ASC services, this interpretation of expenditures has 
minimal impact for subsequent budget neutrality adjustments calculated 
within the revised ASC payment system.
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 
through 66858), we set out a step-by-step illustration of the final 
budget neutrality adjustment calculation based on the methodology 
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531) 
and as applied to updated data available for the CY 2008 OPPS/ASC final 
rule with comment period. The application of that methodology to the 
data available for the CY 2008 OPPS/ASC final rule with comment period 
resulted in a budget neutrality adjustment of 0.65.
    For CY 2008, we adopted the OPPS relative payment weights as the 
ASC relative payment weights for most services and, consistent with the 
final policy, we calculated the CY 2008 ASC payment rates by 
multiplying the ASC relative payment weights by the final CY 2008 ASC 
conversion factor of $41.401. For covered office-based surgical 
procedures and covered ancillary radiology services (excluding covered 
ancillary radiology services involving certain nuclear medicine 
procedures or involving the use of contrast agents, as discussed in 
section XII.D.2.b. of the proposed rule), the established policy is to 
set the payment rate at the lower of the MPFS unadjusted nonfacility PE 
RVU-based amount or the amount calculated using the ASC standard 
ratesetting methodology. Further, as discussed in the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66841 through 66843), we also 
adopted alternative ratesetting methodologies for specific types of 
services (for example, device-intensive procedures).
    As discussed in the August 2, 2007 final rule (72 FR 42517 through 
42518) and as codified at 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 cost when calculating individual 
ASC payments by applying the pre-floor and pre-reclassified hospital 
wage index values that CMS calculates for payment under the IPPS, using 
updated Core Based Statistical Areas (CBSAs) issued by OMB in June 
2003. In other words, the wage index for an ASC is the pre-floor and 
pre-reclassified hospital wage index under the IPPS of the CBSA that 
maps to the CBSA where the ASC is located.
    The reclassification provision in section 1886(d)(10) of the Act is 
specific to hospitals. We believe that using the most recently 
available pre-floor and pre-reclassified IPPS hospital wage indexes 
results in the most appropriate adjustment to the labor portion of ASC 
costs. We continue to believe that the unadjusted hospital wage 
indexes, which are updated yearly and are used by many other Medicare 
payment systems, appropriately account for geographic variation in 
labor costs for ASCs.
    On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which 
provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010 in the Federal Register (75 FR 37246 through 37252) and 2010 
Census Bureau data. (A copy of this bulletin may be obtained at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.) The pre-floor and pre-reclassified IPPS hospital wage indexes 
for FY 2014 do not reflect OMB's new area delineations and, because the 
ASC wage indexes are the pre-floor and pre-reclassified IPPS hospital 
wage indexes, the CY 2014 ASC wage indexes do not reflect the OMB 
changes. As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 
28054 through 28068), we proposed to use the new CBSAs delineations 
issued by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index 
beginning in FY 2015. Therefore, because the ASC wage indexes are the 
pre-floor and pre-reclassified IPPS hospital wage indexes, the proposed 
CY 2015 ASC wage indexes reflected the new OMB delineations. In the FY 
2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49957), we finalized 
our proposal to use these new OMB delineations for the IPPS hospital 
wage index. Therefore, the final ASC wage indexes, which are the pre-
floor and pre-reclassified IPPS hospital wage indexes, will reflect the 
new OMB delineations. As discussed in section XII.G.2.b. of the CY 2015 
OPPS/ASC proposed rule (79 FR 41030), we proposed a transition to these 
new OMB delineations for ASCs in certain situations for CY 2015.
    We note that, in certain instances, there might be urban or rural 
areas for which there is no IPPS hospital whose wage index data would 
be used to set the wage index for that area. For these areas, our 
policy has been to use the average of the wage indexes for CBSAs (or 
metropolitan divisions as applicable) that are contiguous to the area 
that has no wage index (where ``contiguous'' is defined as sharing a 
border). For example, for CY 2014, we applied a proxy wage index based 
on this methodology to ASCs located in CBSA 25980 (Hinesville-Fort 
Stewart, GA) and CBSA 08 (Rural Delaware).
    When all of the areas contiguous to the urban CBSA of interest are 
rural and there is no IPPS hospital that has wage index data that could 
be used to set the wage index for that area, we determine the ASC wage 
index by calculating the average of all wage indexes for urban areas in 
the State (75 FR 72058 through 72059). In other situations, where there 
are no IPPS hospitals located in a relevant labor market area, we will 
continue our current policy of calculating an urban or rural area's 
wage index by calculating the average of the wage indexes for CBSAs (or 
metropolitan divisions where applicable) that are contiguous to the 
area with no wage index.
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2015 and Future 
Years
    We update the ASC relative payment weights each year using the 
national OPPS relative payment weights (and MPFS nonfacility PE RVU-
based amounts, as applicable) for that same calendar year and uniformly 
scale the ASC relative payment weights for each update year to make 
them budget neutral (72 FR 42533). In the CY 2015 OPPS/ASC proposed 
rule (79 FR 41029 through 41030), consistent with our established 
policy, we proposed to scale the CY 2015 relative payment weights for 
ASCs according to the following method. Holding ASC utilization and the 
mix of services constant from CY 2013, we proposed to compare the total 
payment using the CY 2014 ASC

[[Page 66937]]

relative payment weights with the total payment using the CY 2015 
relative payment weights to take into account the changes in the OPPS 
relative payment weights between CY 2014 and CY 2015. We proposed to 
use the ratio of CY 2014 to CY 2015 total payment (the weight scaler) 
to scale the ASC relative payment weights for CY 2015. The proposed CY 
2015 ASC scaler was 0.9142 and scaling would apply to the ASC relative 
payment weights of the covered surgical procedures and covered 
ancillary radiology services for which the ASC payment rates are based 
on OPPS relative payment weights.
    Scaling would not apply in the case of ASC payment for separately 
payable covered ancillary services that have a predetermined national 
payment amount (that is, their national ASC payment amounts are not 
based on OPPS relative payment weights), such as drugs and biologicals 
that are separately paid or services that are contractor-priced or paid 
at reasonable cost in ASCs. Any service with a predetermined national 
payment amount would be included in the ASC budget neutrality 
comparison, but scaling of the ASC relative payment weights would not 
apply to those services. The ASC payment weights for those services 
without predetermined national payment amounts (that is, those services 
with national payment amounts that would be based on OPPS relative 
payment weights) would be scaled to eliminate any difference in the 
total payment between the current year and the update year.
    For any given year's ratesetting, we typically use the most recent 
full calendar year of claims data to model budget neutrality 
adjustments. For this final rule with comment period, we used CY 2013 
ASC claims data.
    To create an analytic file to support calculation of the weight 
scaler and budget neutrality adjustment for the wage index (discussed 
below), we summarized available CY 2013 ASC claims by ASC and by HCPCS 
code. We used the National Provider Identifier for the purpose of 
identifying unique ASCs within the CY 2013 claims data. We used the 
supplier zip code reported on the claim to associate State, county, and 
CBSA with each ASC. This file, available to the public as a supporting 
data file for the proposed rule, is posted on the CMS Web site at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Transition Period to New OMB Delineations for ASC Wage Index
    As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 
28054 through 28055), we proposed to use the new CBSA delineations 
issued by OMB in OMB Bulletin 13-01 dated February 28, 2013 for the 
IPPS hospital wage index. Therefore, because the ASC wage indexes are 
the pre-floor and pre-reclassified IPPS hospital wage indexes, the 
proposed CY 2015 ASC wage indexes reflected the new OMB delineations. 
While we believe that instituting the latest OMB labor market area 
delineations would create a more accurate and up-to-date wage index 
system, we also recognize that implementing the new OMB delineations 
may cause some short-term instability in ASC payments. Therefore, we 
proposed a transition to the new OMB delineations similar to what we 
proposed for the IPPS for FY 2015 (79 FR 28062) and the OPPS as 
described in section II.C of the proposed rule. Specifically, for ASCs, 
we proposed a 1-year blended wage index for all ASCs that would 
experience any decrease in their actual wage index exclusively due to 
the implementation of the new OMB delineations. For ASCs where the CY 
2015 ASC wage index with the CY 2015 CBSAs would be lower than with the 
CY 2014 CBSAs, we proposed that the CY 2015 ASC wage index would be 50 
percent of the ASC wage index based on the CY 2014 CBSA and 50 percent 
of the ASC wage index based on the new CY 2015 CBSA. We believe a 1-
year 50/50 blended wage index would mitigate the short-term instability 
and negative payment impacts due to the proposed implementation of the 
new OMB delineations, providing ASCs that would be negatively impacted 
by the new OMB delineations with a transition period during which they 
may adjust to their new geographic CBSA. We believe that a longer 
transition period would reduce the accuracy of the overall labor market 
area wage index system.
    Comment: Some commenters objected to CMS continuing to use the pre-
floor and pre-reclassified IPPS hospital wage indexes for the labor 
portion of ASC costs. These commenters stated that ASCs and hospitals 
compete in the same local markets and provide many of the same services 
and require similar staff. Commenters stated that the different wage 
index for hospitals than for ASCs increases the gap between the OPPS 
and ASC payment rates.
    Response: As discussed in the August 2, 2007 final rule (72 FR 
42517 through 42518) and as codified at Sec.  416.172(c) of the 
regulations, the revised ASC payment system accounts for geographic 
wage variation when calculating individual ASC payments by applying the 
pre-floor and pre-reclassified IPPS hospital wage indexes to the labor-
related share, which is 50 percent of the ASC payment amount. We have 
responded to similar comments in the past and believe our prior 
rationale for using unadjusted wage indexes is still a sound one. We 
continue to believe that the unadjusted hospital wage indexes, which 
are updated yearly and are used by many other Medicare payment systems, 
appropriately account for geographic variation in labor costs for ASCs. 
We did not propose to change our use of the pre-floor, pre-reclassified 
IPPS wage indexes for the ASC wage index. Therefore, in addition to the 
reasons stated above, we will continue to apply the pre-floor, pre-
reclassified IPPS hospital wage indexes for the labor portion of ASC 
costs. We refer readers to our responses to similar comments in the CY 
2010, CY 2011, CY 2012, CY 2013, and CY 2014 OPPS/ASC final rules with 
comment period (74 FR 60625; 75 FR 72059; 76 FR 74446; 77 FR 68463; and 
78 FR 75086, respectively).
    Comment: Commenters supported CMS' proposal to phase in reductions 
to the ASC wage indexes that occur as a result of the new OMB labor 
market delineations.
    Response: We appreciate the commenters' support and, as stated 
below, we are finalizing this policy as proposed.
    After consideration of the public comments we received, we are 
finalizing our proposal to apply a 1-year blended wage index for all 
ASCs that would experience any decrease in their actual wage index 
exclusively due to the implementation of the new OMB delineations. 
Specifically, for ASCs where the CY 2015 ASC wage index with the CY 
2015 CBSAs is lower than with the CY 2014 CBSAs, we will calculate the 
CY 2015 ASC wage index such that it will be 50 percent of the ASC wage 
index based on the CY 2014 CBSA and 50 percent of the ASC wage index 
based on the new CY 2015 CBSA.
c. Updating the ASC Conversion Factor
    Under the OPPS, we typically apply a budget neutrality adjustment 
for provider level changes, most notably a change in the wage index 
values for the upcoming year, to the conversion factor. In the CY 2015 
OPPS/ASC proposed rule (79 FR 41030 through 41031), consistent with our 
final ASC payment policy, for the CY 2015 ASC payment system, we 
proposed to calculate and apply a budget neutrality adjustment to the 
ASC conversion factor for supplier

[[Page 66938]]

level changes in wage index values for the upcoming year, just as the 
OPPS wage index budget neutrality adjustment is calculated and applied 
to the OPPS conversion factor. For CY 2015, we calculated this proposed 
adjustment for the ASC payment system by using the most recent CY 2013 
claims data available and estimating the difference in total payment 
that would be created by introducing the proposed CY 2015 ASC wage 
indexes. Specifically, holding CY 2013 ASC utilization and service-mix 
and the proposed CY 2015 national payment rates after application of 
the weight scaler constant, we calculated the total adjusted payment 
using the CY 2014 ASC wage indexes and the total adjusted payment using 
the proposed CY 2015 ASC wage indexes (which reflect the new OMB 
delineations and would include any applicable transition period). We 
used the 50-percent labor-related share for both total adjusted payment 
calculations. We then compared the total adjusted payment calculated 
with the CY 2014 ASC wage indexes to the total adjusted payment 
calculated with the proposed CY 2015 ASC wage indexes and applied the 
resulting ratio of 0.9983 (the proposed CY 2015 ASC wage index budget 
neutrality adjustment) to the CY 2014 ASC conversion factor to 
calculate the proposed CY 2015 ASC conversion factor.
    Section 1833(i)(2)(C)(i) of the Act requires that, ``if the 
Secretary has not updated amounts established'' under the revised ASC 
payment system in a calendar year, the payment amounts ``shall be 
increased by the percentage increase in the Consumer Price Index for 
all urban consumers (U.S. city average) as estimated by the Secretary 
for the 12-month period ending with the midpoint of the year 
involved.'' The statute, therefore, does not mandate the adoption of 
any particular update mechanism, but it requires the payment amounts to 
be increased by the CPI-U in the absence of any update. Because the 
Secretary updates the ASC payment amounts annually, we adopted a 
policy, which we codified at 42 CFR 416.171(a)(2)(ii), to update the 
ASC conversion factor using the CPI-U for CY 2010 and subsequent 
calendar years. Therefore, the annual update to the ASC payment system 
is the CPI-U (referred to as the CPI-U update factor).
    Section 3401(k) of the Affordable Care Act amended section 
1833(i)(2)(D) of the Act by adding a new clause (v) which requires that 
``any annual update under [the ASC payment] system for the year, after 
application of clause (iv), shall be reduced by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II)'' of the Act 
effective with the calendar year beginning January 1, 2011. The statute 
defines the productivity adjustment to be equal to the 10-year moving 
average of changes in annual economy-wide private nonfarm business 
multifactor productivity (MFP) (as projected by the Secretary for the 
10-year period ending with the applicable fiscal year, year, cost 
reporting period, or other annual period) (the ``MFP adjustment''). 
Clause (iv) of section 1833(i)(2)(D) of the Act authorizes the 
Secretary to provide for a reduction in any annual update for failure 
to report on quality measures. Clause (v) of section 1833(i)(2)(D) of 
the Act states that application of the MFP adjustment to the ASC 
payment system may result in the update to the ASC payment system being 
less than zero for a year and may result in payment rates under the ASC 
payment system for a year being less than such payment rates for the 
preceding year.
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74516), we finalized a policy that ASCs begin submitting data on 
quality measures for services beginning on October 1, 2012 for the CY 
2014 payment determination under the ASCQR Program. In the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68499 through 68500), we 
finalized a methodology to calculate reduced national unadjusted 
payment rates using the ASCQR Program reduced update conversion factor 
that would apply to ASCs that fail to meet their quality reporting 
requirements for the CY 2014 payment determination and subsequent 
years. The application of the 2.0 percentage point reduction to the 
annual update factor, which currently is the CPI-U, may result in the 
update to the ASC payment system being less than zero for a year for 
ASCs that fail to meet the ASCQR Program requirements. We amended 
Sec. Sec.  416.160(a)(1) and 416.171 to reflect these policies.
    In accordance with section 1833(i)(2)(C)(i) of the Act, before 
applying the MFP adjustment, the Secretary first determines the 
``percentage increase'' in the CPI-U, which we interpret cannot be a 
negative percentage. Thus, in the instance where the percentage change 
in the CPI-U for a year is negative, we would hold the CPI-U update 
factor for the ASC payment system to zero. For the CY 2014 payment 
determination and subsequent years, under section 1833(i)(2)(D)(iv) of 
the Act, we would reduce the annual update by 2.0 percentage points for 
an ASC that fails to submit quality information under the rules 
established by the Secretary in accordance with section 1833(i)(7) of 
the Act. Section 1833(i)(2)(D)(v) of the Act, as added by section 
3401(k) of the Affordable Care Act, requires that the Secretary reduce 
the annual update factor, after application of any quality reporting 
reduction, by the MFP adjustment, and states that application of the 
MFP adjustment to the annual update factor after application of any 
quality reporting reduction may result in the update being less than 
zero for a year. If the application of the MFP adjustment to the annual 
update factor after application of any quality reporting reduction 
would result in an MFP-adjusted update factor that is less than zero, 
the resulting update to the ASC payment rates would be negative and 
payments would decrease relative to the prior year. We refer readers to 
the CY 2011 OPPS/ASC final rule with comment period (75 FR 72062 
through 72064) for illustrative examples of how the MFP adjustment is 
applied to the ASC payment system.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41031), based on IHS 
Global Insight's (IGI's) 2014 first quarter forecast with historical 
data through 2013 fourth quarter, for the 12-month period ending with 
the midpoint of CY 2015, the CPI-U update was projected to be 1.7 
percent. Also, based on IGI's 2014 first quarter forecast, the MFP 
adjustment for the period ending with the midpoint of CY 2015 was 
projected to be 0.5 percent. IGI is a nationally recognized economic 
and financial forecasting firm that contracts with CMS to forecast the 
components of CMS' market baskets as well as the CPI-U and MFP. We 
finalized the methodology for calculating the MFP adjustment in the CY 
2011 MPFS final rule with comment period (75 FR 73394 through 73396) as 
revised in the CY 2012 MPFS final rule with comment period (76 FR 73300 
through 73301). The ASCQR Program affected payment rates beginning in 
CY 2014 and, under this program, there is a 2.0 percentage point 
reduction to the CPI-U for ASCs that fail to meet the ASCQR Program 
requirements.
    We proposed to reduce the CPI-U update of 1.7 percent by the MFP 
adjustment of 0.5 percentage point, resulting in an MFP-adjusted CPI-U 
update factor of 1.2 percent for ASCs meeting the quality reporting 
requirements. Therefore, we proposed to apply a 1.2 percent MFP-
adjusted CPI-U update factor to the CY 2014 ASC conversion factor for 
ASCs meeting the quality reporting requirements. We proposed to reduce 
the CPI-U update of 1.7 percent by 2.0 percentage points for ASCs that 
do not meet the quality

[[Page 66939]]

reporting requirements and then apply the 0.5 percentage point MFP 
reduction. Therefore, we proposed to apply a -0.8 percent quality 
reporting/MFP-adjusted CPI-U update factor to the CY 2014 ASC 
conversion factor for ASCs not meeting the quality reporting 
requirements. We also proposed that if more recent data are 
subsequently available (for example, a more recent estimate of the CY 
2015 CPI-U update and MFP adjustment), we would use such data, if 
appropriate, to determine the CY 2015 ASC update for the final rule 
with comment period.
    For CY 2015, we also proposed to adjust the CY 2014 ASC conversion 
factor ($43.471) by the proposed wage index budget neutrality factor of 
0.9983 in addition to the MFP-adjusted update factor of 1.2 percent 
discussed above, which results in a proposed CY 2015 ASC conversion 
factor of $43.918 for ASCs meeting the quality reporting requirements. 
For ASCs not meeting the quality reporting requirements, we proposed to 
adjust the CY 2014 ASC conversion factor ($43.471) by the proposed wage 
index budget neutrality factor of 0.9983 in addition to the quality 
reporting/MFP-adjusted update factor of -0.8 percent discussed above, 
which results in a proposed CY 2015 ASC conversion factor of $43.050.
    We invited public comment on these proposals.
    Comment: Some commenters stated that CMS should replace the CPI-U 
as the update mechanism for ASC payments with the hospital market 
basket. Commenters stated that the CPI-U measures inflation in a basket 
of consumer goods atypical of what ASCs purchase. In addition, the 
commenters stated that the Affordable Care Act requires CMS to reduce 
the update by a measure of productivity gains, which inappropriately 
subjects ASCs to two productivity adjustments: improvements reflected 
in the price of consumer purchased goods and the additional statutorily 
required reduction. While the commenters maintained that the hospital 
market basket would be the most appropriate update for ASCs, they 
suggested that there are various alternatives within the CPI-U that CMS 
could explore that more accurately reflect the economic climate in the 
ASC environment. For instance, CMS could use subsets of the CPI-U 
(medical care, medical care services, and outpatient services) that are 
consistent with the services being provided in the ASC setting.
    MedPAC commented that, in the CY 2013 rulemaking, CMS requested 
public comment on the feasibility of ASC cost information to determine 
whether CPI-U or another type of update factor would be more 
appropriate, but that CMS did not propose to begin collecting ASC cost 
data. MedPAC acknowledged that there may be a burden associated with 
requiring ASCs to submit cost reports, but recommended that CMS collect 
some sort of ASC cost data, such as through surveys.
    Response: As we have stated in response to similar comments in the 
past (for example, 77 FR 68465; 78 FR 75088 through 75089), we continue 
to believe that, while commenters argue that the items included in the 
CPI-U index may not adequately measure inflation for the goods and 
services provided by ASCs, the hospital market basket does not align 
with the cost structures of ASCs. Hospitals provide a much wider range 
of services, such as room and board and emergency services, and the 
costs associated with providing these services are not part of the ASC 
cost structure. Therefore, at this time, we do not believe that it is 
appropriate to use the hospital market basket for the ASC annual 
update.
    We recognize that the CPI-U is an output price index that accounts 
for productivity. However, section 1833(i)(2)(D)(v) of the Act requires 
the agency to reduce the annual update factor by the MFP adjustment. 
For the reasons stated above, we do not believe that the hospital 
market basket appropriately reflects the cost structures of ASCs, and 
because we do not have cost data on ASCs, we are continuing to use the 
CPI-U which we believe provides a reasonable approximation of the price 
increases facing ASCs. We will continue to explore the feasibility of 
collecting ASC cost data. However, based on our past experience, we do 
not believe that collecting such data through surveys would be 
productive. We appreciate the commenter's suggestion to adjust the CPI-
U, such as by using subsets of services within the CPI-U, for 
productivity and will take this suggestion into consideration if we 
propose changes to the ASC update factor in the future.
    After consideration of the public comments we received, we are 
applying our established methodology for determining the final CY 2015 
ASC conversion factor. Using more complete CY 2013 data for this final 
rule with comment period than were available for the proposed rule, we 
calculated a wage index budget neutrality adjustment of 0.9998. Based 
on IGI's 2014 third quarter forecast, the CPI-U for the 12-month period 
ending with the midpoint of CY 2015 is now projected to be 1.9 percent, 
while the MFP adjustment (as discussed and finalized in the CY 2012 
MPFS final rule with comment period (76 FR 73300 through 73301)) is 0.5 
percent, resulting in an MFP-adjusted CPI-U update factor of 1.4 
percent for ASCs that meet the quality reporting requirements. The 
final ASC conversion factor of $44.071, for ASCs that meet the quality 
reporting requirements, is the product of the CY 2014 conversion factor 
of $43.471 multiplied by the wage index budget neutrality adjustment of 
0.9998 and the MFP-adjusted CPI-U payment update of 1.4 percent. For 
ASCs that do not meet the quality reporting requirements, we are 
reducing the CPI-U update of 1.9 percent by 2.0 percentage points and 
then we are applying the 0.5 percentage point MFP reduction, resulting 
in a -0.6 percent quality reporting/MFP-adjusted CPI-U update factor. 
The final ASC conversion factor of $43.202 for ASCs that do not meet 
the quality reporting requirements is the product of the CY 2014 
conversion factor of $43.471 multiplied by the wage index budget 
neutrality adjustment of 0.9998 and the quality reporting/MFP-adjusted 
CPI-U payment update of -0.6 percent.
3. Display of CY 2015 ASC Payment Rates
    Addenda AA and BB to this CY 2015 OPPS/ASC final rule with comment 
period (which are available via the Internet on the CMS Web site) 
display the final updated ASC payment rates for CY 2015 for covered 
surgical procedures and covered ancillary services, respectively. For 
those covered surgical procedures and covered ancillary services where 
the payment rate is the lower of the final rates under the ASC standard 
ratesetting methodology and the MPFS final rates, the final payment 
indicators and rates set forth in this rule are based on a comparison 
using the MPFS rates effective January 1, 2015. These payment rates and 
indicators do not include the effect of the negative update to the MPFS 
payment rates effective April 1, 2015 under current law. Updates to 
these rates and payment indicators effective April l, 2015 will be 
included in the April 2015 quarterly ASC addenda posted on the CMS Web 
site. For a discussion of the MPFS rates, we refer readers to the CY 
2015 MPFS final rule with comment period. The payment rates included in 
these addenda reflect the full ASC payment update and not the reduced 
payment update used to calculate payment rates for ASCs not meeting the 
quality reporting requirements under the ASCQR Program. These addenda 
contain several types of information related to the CY 2015 payment 
rates. Specifically, in Addendum AA, a ``Y'' in the column titled 
``Subject to Multiple

[[Page 66940]]

Procedure Discounting'' indicates that the surgical procedure will be 
subject to the multiple procedure payment reduction policy. As 
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66829 through 66830), most covered surgical procedures are subject to a 
50-percent reduction in the ASC payment for the lower-paying procedure 
when more than one procedure is performed in a single operative 
session. Display of the comment indicator ``CH'' in the column titled 
``Comment Indicator'' indicates a change in payment policy for the item 
or service, including identifying discontinued HCPCS codes, designating 
items or services newly payable under the ASC payment system, and 
identifying items or services with changes in the ASC payment indicator 
for CY 2015. Display of the comment indicator ``NI'' in the column 
titled ``Comment Indicator'' indicates that the code is new (or 
substantially revised) and that the payment indicator assignment is an 
interim assignment that is open to comment in the final rule with 
comment period.
    The values displayed in the column titled ``CY 2015 Payment 
Weight'' are the relative payment weights for each of the listed 
services for CY 2015. The payment weights for all covered surgical 
procedures and covered ancillary services whose ASC payment rates are 
based on OPPS relative payment weights were scaled for budget 
neutrality. Therefore, scaling was not applied to the device portion of 
the device-intensive procedures, services that are paid at the MPFS 
nonfacility PE RVU-based amount, separately payable covered ancillary 
services that have a predetermined national payment amount, such as 
drugs and biologicals and brachytherapy sources that are separately 
paid under the OPPS, or services that are contractor-priced or paid at 
reasonable cost in ASCs.
    To derive the CY 2015 payment rate displayed in the ``CY 2015 
Payment Rate'' column, each ASC payment weight in the ``CY 2015 Payment 
Weight'' column was multiplied by the CY 2015 conversion factor of 
$44.071. The conversion factor includes a budget neutrality adjustment 
for changes in the wage index values and the annual update factor as 
reduced by the productivity adjustment (as discussed in section 
XII.H.2.b. of this final rule with comment period).
    In Addendum BB, there are no relative payment weights displayed in 
the ``CY 2015 Payment Weight'' column for items and services with 
predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``CY 2015 Payment'' column displays the CY 
2015 national unadjusted ASC payment rates for all items and services. 
The CY 2015 ASC payment rates listed in Addendum BB for separately 
payable drugs and biologicals are based on ASP data used for payment in 
physicians' offices in October 2014.
    Addendum E provides the HCPCS codes and short descriptors for 
surgical procedures that are to be excluded from payment in ASCs for FY 
2015.
    We did not receive any public comments regarding the continuation 
of our policy to provide CY 2015 ASC payment information as detailed in 
Addenda AA and BB. Therefore, Addenda AA and BB to this final rule with 
comment period (which are available via the Internet on the CMS Web 
site) display the updated ASC payment rates for CY 2015 for covered 
surgical procedures and covered ancillary services, respectively, and 
provide additional information related to the CY 2015 rates.

XIII. Hospital Outpatient Quality Reporting Program Updates

A. Background

1. Overview
    CMS seeks to promote higher quality and more efficient health care 
for Medicare beneficiaries. In pursuit of these goals, CMS has 
implemented quality reporting programs for multiple care settings 
including the quality reporting program for hospital outpatient care, 
known as the Hospital Outpatient Quality Reporting (OQR) Program, 
formerly known as the Hospital Outpatient Quality Data Reporting 
Program (HOP QDRP). The Hospital OQR Program has generally been modeled 
after the quality reporting program for hospital inpatient services 
known as the Hospital Inpatient Quality Reporting (IQR) Program 
(formerly known as the Reporting Hospital Quality Data for Annual 
Payment Update (RHQDAPU) Program).
    In addition to the Hospital IQR and Hospital OQR Programs, CMS has 
implemented quality reporting programs for other care settings that 
provide financial incentives for the reporting of quality data to CMS. 
These additional programs include reporting for care furnished by:
     Physicians and other eligible professionals, under the 
Physician Quality Reporting System (PQRS, formerly referred to as the 
Physician Quality Reporting Program Initiative (PQRI));
     Inpatient rehabilitation facilities, under the Inpatient 
Rehabilitation Facility Quality Reporting Program (IRF QRP);
     Long-term care hospitals, under the Long-Term Care 
Hospital Quality Reporting (LTCHQR) Program;
     PPS-exempt cancer hospitals, under the PPS-Exempt Cancer 
Hospital Quality Reporting (PCHQR) Program;
     Ambulatory surgical centers, under the Ambulatory Surgical 
Center Quality Reporting (ASCQR) Program;
     Inpatient psychiatric facilities, under the Inpatient 
Psychiatric Facility Quality Reporting (IPFQR) Program;
     Home health agencies, under the Home Health Quality 
Reporting Program (HH QRP); and
     Hospices, under the Hospice Quality Reporting Program.
    In addition, CMS has implemented two value-based purchasing 
programs, the Hospital Value-Based Purchasing (Hospital VBP) Program 
and the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP), 
that link payment to performance.
    In implementing the Hospital OQR Program and other quality 
reporting programs, we have focused on measures that have high impact 
and support national priorities for improved quality and efficiency of 
care for Medicare beneficiaries as reflected in the National Quality 
Strategy (NQS) and CMS Quality Strategy, as well as conditions for 
which wide cost and treatment variations have been reported, despite 
established clinical guidelines. To the extent possible under various 
authorizing statutes, our ultimate goal is to align the clinical 
quality measure requirements of our various quality reporting programs. 
As appropriate, we will consider the adoption of measures with 
electronic specifications to enable the collection of this information 
as part of care delivery.
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68467 through 68469) for a discussion on the principles 
underlying consideration for future measures that we intend to use in 
implementing this and other quality reporting programs.
2. Statutory History of the Hospital OQR Program
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72064 through 72065) for a detailed discussion of the 
statutory history of the Hospital OQR Program.

[[Page 66941]]

3. Measure Updates and Data Publication
a. Maintenance of Technical Specifications for Quality Measures
    CMS maintains technical specifications for previously adopted 
Hospital OQR Program measures. These specifications are updated as we 
continue to develop the Hospital OQR Program. The manuals that contain 
specifications for the previously adopted measures can be found on the 
QualityNet Web site at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244.
    Many of the quality measures used in Medicare and Medicaid 
reporting programs are endorsed by the National Quality Forum (NQF). We 
note that not all of the measures adopted by the Hospital OQR Program 
are NQF-endorsed, nor is NQF endorsement a program requirement (section 
1833(t)(17)(C)(i) of the Act). As part of its regular maintenance 
process for endorsed performance measures, the NQF requires measure 
stewards (owners/developers) to submit annual measure maintenance 
updates and undergo maintenance of endorsement review every 3 years. In 
the measure maintenance process, the measure steward is responsible for 
updating and maintaining the currency and relevance of the measure and 
will confirm existing or minor specification changes with the NQF on an 
annual basis. The NQF solicits information from measure stewards for 
annual reviews, and it reviews measures for continued endorsement in a 
specific 3-year cycle.
    We note that the NQF's annual or triennial maintenance processes 
for endorsed measures may result in the NQF requiring updates to 
measures in order to maintain endorsement status. Other non-NQF 
measures may undergo maintenance changes as well. We believe that it is 
important to have in place a subregulatory process to incorporate 
nonsubstantive updates into the measure specifications for measures 
that we have adopted for the Hospital OQR Program so that these measure 
specifications remain current. We also recognize that some changes to 
measures are substantive in nature and might not be appropriate for 
adoption using a subregulatory process.
    Therefore, in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68469 through 68470), we finalized our proposal to follow the 
same process for updating Hospital OQR Program measures that we adopted 
for the Hospital IQR Program measures, including the subregulatory 
process for making updates to the adopted measures (77 FR 53504 through 
53505). This process expanded upon the subregulatory process for 
updating measures that we finalized in the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68766 through 68767).
b. Public Display of Quality Measures
    We refer readers to the CY 2014 OPPS/ASC proposed rule (78 FR 
43645) for a discussion of our policy for the publication of Hospital 
OQR Program data on the Hospital Compare Web site and noninteractive 
CMS Web sites.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41033), we did not 
propose any changes to our policies on the public display of quality 
measures.
    Comment: One commenter urged CMS to continue to keep stakeholders 
such as physicians, hospitals, measure developers, and patient groups 
engaged in public reporting to ensure that accurate and beneficial 
reporting is performed. This commenter encouraged CMS to establish 
streamlined policies and procedures for partnering with nongovernmental 
entities that have an interest in posting data through ongoing 
communication with these stakeholders, including the rulemaking 
process.
    Response: We interpret the commenter's suggestion to ``. . . 
establish streamlined policies and procedures for partnering with 
nongovernmental entities that have an interest in posting data . . .'' 
to mean that we should establish streamlined policies and procedures to 
partner with physicians, hospitals, measure developers, and patient 
groups that wish to be involved in our quality data reporting efforts. 
To the extent feasible and practical, we work with as many stakeholders 
as possible to ensure data are accurately reported and displayed on 
Hospital Compare and other CMS Web sites. In the future, we will 
continue working with stakeholders to consolidate and streamline 
reporting.

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

    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68471), we finalized a policy that once a quality measure is adopted 
for the Hospital OQR Program, it is retained for use in subsequent 
years unless otherwise specified.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41033), we did not 
propose any changes to the process for retaining measures previously 
adopted.

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

1. Considerations in Removing Quality Measures From the Hospital OQR 
Program
    In the FY 2010 IPPS/LTCH PPS final rule, we finalized a process for 
immediate retirement, which we later termed ``removal'' (74 FR 43863), 
of Hospital IQR Program measures based on evidence that the continued 
use of the measure as specified raised patient safety concerns. We 
adopted the same immediate measure retirement policy for the Hospital 
OQR Program in the CY 2010 OPPS/ASC final rule with comment period (74 
FR 60634 through 60635). We refer readers to the CY 2013 OPPS/ASC final 
rule with comment period (77 FR 68472 through 68473) for a discussion 
of our reasons for changing the term ``retirement'' to ``removal'' in 
the Hospital OQR Program.
    In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185), we finalized 
a set of criteria for determining whether to remove measures from the 
Hospital IQR Program. These criteria are: (1) Measure performance among 
hospitals is so high and unvarying that meaningful distinctions and 
improvements in performance can no longer be made (``topped-out'' 
measures); (2) performance or improvement on a measure does not result 
in better patient outcomes; (3) a measure does not align with current 
clinical guidelines or practice; (4) the availability of a more broadly 
applicable (across settings, populations, or conditions) measure for 
the topic; (5) the availability of a measure that is more proximal in 
time to desired patient outcomes for the particular topic; (6) the 
availability of a measure that is more strongly associated with desired 
patient outcomes for the particular topic; and (7) collection or public 
reporting of a measure leads to negative unintended consequences such 
as patient harm. These criteria were suggested through public comment 
on proposals for the Hospital IQR Program, and we determined that these 
criteria are also applicable in evaluating the Hospital OQR Program 
quality measures for removal.
    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68472 
through 68473), we finalized our proposal to apply these measure 
removal criteria in the Hospital OQR Program as well. In addition to 
the Hospital IQR Program's criteria, we consider eliminating measure 
redundancy and incorporating the views of the Measure Applications 
Partnership (MAP) when evaluating measures for removal.

[[Page 66942]]

2. Criteria for Removal of ``Topped-Out'' Measures
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41033 through 41034), 
we proposed to refine the criteria for determining when a measure is 
``topped-out.'' We had previously finalized that a measure is ``topped-
out'' when measure performance among hospitals is so high and unvarying 
that meaningful distinctions and improvements in performance can no 
longer be made (``topped-out'' measures) (77 FR 68472). We do not 
believe that measuring hospital performance on ``topped-out'' measures 
provides meaningful information on the quality of care provided by 
hospitals. We further believe that quality measures, once ``topped-
out,'' represent care standards that have been widely adopted by 
hospitals. We believe such measures should be considered for removal 
from the Hospital OQR Program because their associated reporting burden 
may outweigh the value of the quality information they provide.
    In order to determine ``topped-out'' status, we proposed to apply 
the following two criteria, the first of which was previously adopted 
by the Hospital VBP Program for certain measures in the Hospital 
Inpatient VBP Program final rule (76 FR 26510). The second criterion is 
a modified version of what was previously adopted by the Hospital VBP 
Program in the above mentioned final rule (76 FR 26510), with the 
change from the ``less than'' operator ( Statistically indistinguishable performance at the 75th 
and 90th percentiles; and
     A truncated coefficient of variation less than or equal to 
0.10.
    To identify if a measure has statistically indistinguishable 
performance at the 75th and 90th percentiles, we would determine 
whether the difference between the 75th and 90th percentiles for a 
measure is within two times the standard error of the full dataset. The 
coefficient of variation (CV) is a descriptive statistic that expresses 
the standard deviation as a percentage of the sample mean; this 
provides a statistic that is independent of the units of observation. 
Applied to this analysis, a large CV would indicate a broad 
distribution of individual hospital scores, with large and presumably 
meaningful differences between hospitals in relative performance. A 
small CV would indicate that the distribution of individual hospital 
scores is clustered tightly around the mean value, suggesting that it 
is not useful to draw distinctions among individual hospitals' measure 
performance. The truncated CV excludes observations with rates below 
the 5th percentile and above the 95th percentile. We adopted the second 
of these ``topped-out'' criteria for the Hospital VBP Program (79 FR 
50055). Both criteria were adopted for the Hospital IQR Program (79 FR 
50204) and are being adopted for the ASCQR Program (section XIV.A.3. of 
this final rule with comment period).
    We invited public comment on this proposal.
    Comment: Many commenters supported CMS' proposed criteria for 
identifying ``topped-out'' measures. Some commenters recommended that 
CMS proceed cautiously, expressing concern that removal of measures 
could disrupt hospitals' quality improvement efforts. Some commenters 
believed there is value in collecting data on some topped-out measures, 
regardless of national performance scores. Other commenters urged CMS 
to assess the topped-out measures individually and in a broader context 
before removing them.
    Response: We agree that, in some cases, measures that are 
quantitatively ``topped-out'' may still be appropriate if, for example, 
the specified care topic is important to providers and/or beneficiaries 
or if some classes or some hospitals may still have room for 
improvement with the measure. We recognize that some measures may not 
be appropriate for the topped-out analysis, including measures of 
outcomes for which small numbers are desired (for example, hospital-
acquired infection and patient safety oriented measures). We note that 
``topped-out'' status is only one of many factors we consider in 
removing measures. We consider the removal of each topped-out measure 
on a case-by-case basis, as appropriate, and determine whether a 
clinical or other quality improvement need for the measure justifies 
the retention of a topped-out measure that otherwise meets our 
criteria. We refer readers to III.C.1. of this final rule with comment 
period, ``Considerations in Removing Quality Measures from the Hospital 
OQR Program,'' for a discussion of the different factors we consider in 
removing measures.
    Comment: Many commenters urged CMS to continue monitoring 
performance on ``topped-out'' measures to ensure that high performance 
continues and that quality gains are sustained.
    Response: We expect hospitals to always follow appropriate 
standards-of-care and clinical guidelines regardless of whether a 
quality measure exists. We believe that HOPDs are committed to 
providing quality care to patients and we do not have any indication 
that HOPDs will stop doing so when measures are removed. We currently 
monitor the performance of removed measures to ensure that performance 
does not decline significantly and will continue to do so. However, we 
must balance the costs of continued monitoring of a successful measure 
with high levels of performance with the adoption of other measures 
where there are opportunities for improvement in clinical quality.
    At this time, we believe the two finalized topped-out criteria will 
ensure the detection of potential topped-out measures that have high 
performance with little variability. However, we will consider the need 
for refinement and, if we determine changes may be necessary, we will 
propose such changes in future rulemaking.
    After consideration of the public comments we received, we are 
finalizing the ``topped-out'' criteria as proposed. Specifically, we 
are finalizing a policy that a measure under the Hospital OQR Program 
is ``topped-out'' when it meets both of the following criteria: (1) 
Statistically indistinguishable performance at the 75th and 90th 
percentiles; and (2) a truncated coefficient of variation less than or 
equal to 0.10. To identify if a measure has statistically 
indistinguishable performance at the 75th and 90th percentiles, we will 
determine whether the difference between the 75th and 90th percentiles 
for a measure is within two times the standard error of the full 
dataset. However, consistent with our discussion above at XIII.C.1. of 
this final rule with comment period, ``Considerations in Removing 
Quality Measures from the Hospital OQR Program,'' we evaluate different 
factors in considering the removal of measures. We will assess the 
benefits of retaining a measure on a case-by-case basis before 
proposing to remove a measure from the Hospital OQR Program.
3. Removal of Measures From the Hospital OQR Program for the CY 2017 
Payment Determination and Subsequent Years
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41034), we proposed to 
remove three measures for the CY 2017 payment determination and 
subsequent years: OP-4, OP-6, and OP-7. Based on our analysis of 
Hospital OQR Program

[[Page 66943]]

chart-abstracted measure data for January 1, 2013-June 30, 2013 (Q1-Q2) 
encounters, the following measures met both: (1) The previously 
finalized criteria for being ``topped-out''; that is, measure 
performance among hospitals is so high and unvarying that meaningful 
distinctions and improvements in performance can no longer be made (77 
FR 68472); and (2) the two criteria we finalized in section XIII.C.2. 
of this final rule with comment period for determining ``topped-out'' 
status. These measures are:
     OP-4: Aspirin at Arrival (NQF # 0286);
     OP-6: Timing of Antibiotic Prophylaxis; and
     OP-7: Prophylactic Antibiotic Selection for Surgical 
Patients (NQF # 0528).
    Therefore, we proposed to remove these three measures from the 
Hospital OQR Program beginning with the CY 2017 payment determination.
    We believed that removal was appropriate as there appeared little 
room for improvement for these measures, all of which address standards 
of clinical care. In addition, by removing these measures, we hoped to 
alleviate the maintenance costs and administrative burden to hospitals 
associated with retaining them. Should we determine that hospital 
adherence to these practices has unacceptably declined, we stated that 
we would re-propose these measures in future rulemaking. In addition, 
we would comply with any requirements imposed by the Paperwork 
Reduction Act before reinstituting these measures. We noted that we 
removed three measures under the Hospital IQR Program similar to these 
measures; the similar measures were AMI-1, SCIP-Inf-1, and SCIP-Inf-2, 
respectively. We note that we retained SCIP-Inf-1 and SCIP-Inf-2 as 
voluntarily reported electronic clinical quality measures in the 
Hospital IQR Program (79 FR 50208).
    We invited public comment on these proposals.
    Comment: Many commenters supported the proposal to remove OP-4, OP-
6, and OP-7, noting that the removal would reduce administrative burden 
on hospitals. Some commenters specifically supported the removal of 
these measures to align with the Hospital IQR Program. One commenter 
recommended the removal of the three proposed topped-out measures 
effective January 2015, to reduce administrative burden for hospitals.
    Response: We thank the commenters for their support. We continue to 
look for ways to minimize burden as we pursue the quality objectives of 
the Hospital OQR Program. We agree that quality of care measures should 
be aligned across our quality reporting and value-based purchasing 
programs to the extent possible. The patient encounter period for the 
CY 2017 payment determination is January 1, 2015 through December 31, 
2015. Thus, for patient encounters beginning January 1, 2015, hospitals 
would not be required to submit data on any measures that we are 
finalizing for removal as discussed below.
    Comment: Some commenters inquired about the criteria for resuming 
data collection for measures that are removed from the Hospital OQR 
Program. One commenter recommended that CMS establish a process, 
similar to the one used by NQF, to place a measure in ``reserve 
status'' for some time after the measure is determined to be ``topped-
out'' to ensure no ``backsliding'' has occurred. Another commenter 
suggested that CMS consider sampling hospitals on their performance on 
these removed measures to ensure continued high performance on these 
measures.
    Response: We thank the commenters for their suggestions to monitor 
topped-out measures for continued high performance and we understand 
their concerns of backsliding. Should we determine that hospital 
adherence to these practices has unacceptably declined; we would 
propose to reinstate the measure in future rulemaking to resume data 
collection. We expect hospitals to always follow appropriate standards-
of-care and clinical guidelines in exercising positive interventions, 
regardless of whether a measure is removed.
    Comment: Some commenters urged CMS to retain OP-4 for voluntary 
reporting. Some commenters opposed the removal of OP-4, noting that 
this measure provides incentives for better care and improves patient 
outcomes, and the data help Medicare beneficiaries make informed 
choices about their health care options. One commenter recommended that 
CMS not remove OP-4 until there are at least 2 years of continued high 
performance data.
    Response: We agree with the commenters that OP-4 should be 
retained. Upon further analysis, we have found that, although 
technically ``topped-out,'' the rate distributions for OP-4 indicate 
that hospitals with a small number of cases have lower rates. Because 
performance for OP-4 is still low in some hospitals, and there is 
substantial evidence indicating that aspirin at arrival is associated 
with better patient outcomes, we are not finalizing our proposal to 
remove OP-4.
    Comment: Some commenters opposed the removal of OP-6 and OP-7, 
noting that the removal of these measures may cause unnecessary harm to 
surgical patients. One commenter recommended that CMS not remove OP-6 
and OP-7 until there are at least 2 years of continued high performance 
data.
    Response: We thank the commenters for expressing their concerns. 
Our proposed criteria for topped-out measures did not include a 
timeframe for sustained statistical performance; however, we will take 
this suggestion into consideration for future rulemaking. Based on our 
topped-out analysis, both OP-6 and OP-7 are ``topped-out'' across 
hospitals, and we do not believe that removal of these two measures 
would cause unnecessary harm to surgical patients because our data show 
that hospital performance on OP-6 and OP-7 is high and unvarying, 
indicating that HOPDs have been in compliance with OP-6 in exercising 
the correct timing as well as with OP-7 in administering the 
appropriate antibiotic for surgical patients. In addition, unlike OP-4, 
we did not see indications in the measure distributions for OP-6 and 
OP-7 that imply outlier hospitals with a small number of cases have 
statistically significantly lower rates. Therefore, this leads us to 
believe that removal of these two measures would not cause unnecessary 
harm to surgical patients. Because our data indicate that hospital 
performance on OP-6 and OP-7 is high and unvarying, we believe the 
costs associated with the maintenance of our administrative systems and 
the costs to hospitals to continue reporting outweigh the benefits of 
retaining of these measures in the Hospital OQR Program. We expect 
hospitals to follow appropriate standards-of-care and clinical 
guidelines in exercising positive interventions, regardless of whether 
a measure is removed. Therefore, as noted below, we are finalizing our 
proposal to remove the OP-6 and OP-7 measures and will continue to 
monitor clinical trends and repropose these measures if we see the 
performance gap widening.
    Comment: One commenter noted that, beginning with CY 2015 
reporting, hospitals will be required to report a new element (Rectal 
Culture-Guided Antibiotic) for OP-7. The commenter requested 
clarification because CMS proposed to remove this measure.
    Response: We clarify that, as stated above, we are removing OP-7 
from the Hospital OQR Program beginning with the CY 2017 payment 
determination. The patient encounter period for the CY 2017 payment 
determination is January 1, 2015 through December 31, 2015. Therefore, 
beginning with CY 2015

[[Page 66944]]

patient encounters, hospitals are not required to submit Rectal 
Culture-Guided Antibiotic data or other data for OP-7.
    After consideration of the public comments we received and for the 
reasons we discussed above, we are finalizing our proposal to remove 
OP-6 and OP-7 from the Hospital OQR Program as proposed. However, we 
are not finalizing our proposal to remove OP-4 and are retaining that 
measure in the Hospital OQR Program for reasons discussed above. 
Hospitals are to report data on OP-4 as previously required. We refer 
readers to the CY 2008 OPPS/ASC final rule with comment period (FR 72 
66865), the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68482), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75111 through 75112) for more information about OP-4 and the data 
submission requirements. Set out in the table below are the measures we 
are removing for the CY 2017 payment determination and subsequent 
years.

      Hospital OQR Program Measures Removed for the CY 2017 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
         NQF #                               Measure
------------------------------------------------------------------------
N/A....................  OP-6: Timing of Prophylactic Antibiotics
0528...................  OP-7: Prophylactic Antibiotic Selection for
                          Surgical Patients
------------------------------------------------------------------------

D. Quality Measures Previously Adopted for the CY 2016 Payment 
Determination and Subsequent Years

    As previously discussed, in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68471), we finalized a policy that, beginning CY 
2013, when we adopt measures for the Hospital OQR Program, these 
measures are automatically adopted for all subsequent years' payment 
determinations, unless we propose to remove, suspend, or replace the 
measures. The table below lists 27 measures that we adopted for the CY 
2016 payment determination and subsequent years under the Hospital OQR 
Program.

   Hospital OQR Program Measure Set Previously Adopted for the CY 2016
               Payment Determination and Subsequent Years
------------------------------------------------------------------------
         NQF #                             Measure name
------------------------------------------------------------------------
N/A....................  OP-1: Median Time to Fibrinolysis
0288...................  OP-2: Fibrinolytic Therapy Received Within 30
                          Minutes of ED Arrival ****
0290...................  OP-3: Median Time to Transfer to Another
                          Facility for Acute Coronary Intervention
0286...................  OP-4: Aspirin at Arrival
0289...................  OP-5: Median Time to ECG
N/A....................  OP-6: Timing of Prophylactic Antibiotics **
528....................  OP-7: Prophylactic Antibiotic Selection for
                          Surgical Patients **
0514...................  OP-8: MRI Lumbar Spine for Low Back Pain
N/A....................  OP-9: Mammography Follow-up Rates
N/A....................  OP-10: Abdomen CT--Use of Contrast Material
0513...................  OP-11: Thorax CT--Use of Contrast Material
N/A....................  OP-12: The Ability for Providers with HIT to
                          Receive Laboratory Data Electronically
                          Directly into their ONC-Certified EHR System
                          as Discrete Searchable Data
0669...................  OP-13: Cardiac Imaging for Preoperative Risk
                          Assessment for Non Cardiac Low Risk Surgery
N/A....................  OP-14: Simultaneous Use of Brain Computed
                          Tomography (CT) and Sinus Computed Tomography
                          (CT)
N/A....................  OP-15: Use of Brain Computed Tomography (CT) in
                          the Emergency Department for Atraumatic
                          Headache
N/A....................  OP-17: Tracking Clinical Results between Visits
0496...................  OP-18: Median Time from ED Arrival to ED
                          Departure for Discharged ED Patients
N/A....................  OP-20: Door to Diagnostic Evaluation by a
                          Qualified Medical Professional
0662...................  OP-21: Median Time to Pain Management for Long
                          Bone Fracture
N/A....................  OP-22: ED--Left Without Being Seen ****
0661...................  OP-23: ED--Head CT or MRI Scan Results for
                          Acute Ischemic Stroke or Hemorrhagic Stroke
                          who Received Head CT or MRI Scan
                          Interpretation Within 45 minutes of Arrival
N/A....................  OP-25: Safe Surgery Checklist Use
N/A....................  OP-26: Hospital Outpatient Volume on Selected
                          Outpatient Surgical Procedures *
0431...................  OP-27: Influenza Vaccination Coverage among
                          Healthcare Personnel
0658...................  OP-29: Endoscopy/Polyp Surveillance:
                          Appropriate Follow-up Interval for Normal
                          Colonoscopy in Average Risk Patients
0659...................  OP-30: Endoscopy/Polyp Surveillance:
                          Colonoscopy Interval for Patients with a
                          History of Adenomatous Polyps--Avoidance of
                          Inappropriate Use
1536...................  OP-31: Cataracts--Improvement in Patient's
                          Visual Function within 90 Days Following
                          Cataract Surgery ***
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measures removed beginning with the CY 2017 payment determination, as
  set forth in section XIII.D.3.b. of this final rule with comment
  period.
*** Measure collected voluntarily, as set forth in section XIII.D.3.b.
  of this final rule with comment period.
**** Name has been updated to correspond with NQF-endorsed name.

    Comment: Some commenters expressed views on previously adopted 
Hospital OQR Program measures. Some commenters were supportive of 
previously adopted measures, and some commenters recommended changing 
measure specifications for some measures. Several commenters asked CMS 
to consider removing previously

[[Page 66945]]

adopted measures from the Hospital OQR Program, specifically, OP-9, OP-
10, OP-14, OP-15, OP-20, OP-22, and OP-25, because these measures are 
no longer NQF-endorsed, are not recommended by the MAP, or are deemed 
unsuitable for public reporting.
    Response: Because we did not propose to remove OP-9, OP-10, OP-14, 
OP-15, OP-20, OP-22, or OP-25 from the Hospital OQR Program, change 
their measure specifications, or discuss the related MAP 
recommendations in the CY 2015 OPPS/ASC proposed rule, these comments 
are beyond the scope of the proposed rule. Therefore, we are not 
changing the status of any of the measures referred to by commenters. 
However, we will take into consideration commenters' concerns regarding 
these measures for future rulemaking.
    Regarding removal of measures from the Hospital OQR Program based 
upon NQF endorsement, we focus on measures appropriate to the specific 
provider category that reflect the level of care and the most important 
areas of service and measures for that provider category. Section 
1833(t)(17)(C)(i) of the Act requires the Secretary to ``develop 
measures that the Secretary determines to be appropriate for the 
measurement of the quality of care (including medication errors) 
furnished by hospitals in outpatient settings and that reflect 
consensus among affected parties and, to the extent feasible and 
practicable, shall include measures set forth by one or more national 
consensus building entities.'' This provision does not require that the 
measures we adopt for the Hospital OQR Program be endorsed by any 
particular entity, and we believe that consensus among affected parties 
can be achieved by means other than endorsement by a national consensus 
building entity, including through the measure development process, 
through broad acceptance and use of the measure(s), and through public 
comment.
    At this time, we continue to believe there is value in collecting 
and reporting these measures, but we can consider removal in future 
rulemaking. We thank the commenters for the measure suggestions and 
will share them with measure stewards.
1. Data Submission Requirements for OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF # 0431) Reported via NHSN for 
the CY 2017 Payment Determination and Subsequent Years
    The Influenza Vaccination Coverage among Healthcare Personnel (HCP) 
(NQF # 0431) was finalized for the Hospital OQR Program in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75097 through 75099). We 
refer readers to the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75116 through 75117) for a discussion of the previously 
finalized data submission requirements for this measure. This measure 
was previously finalized for the Hospital IQR Program in the FY 2012 
IPPS/LTCH PPS final rule (76 FR 51631). In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41035), we made two clarifications: (1) correcting 
the previously stated submission deadline; and (2) clarifying that 
hospitals should report the Influenza Vaccination Coverage among HCP 
(NQF # 0431) measure by CMS Certification Number (CCN) rather than 
separately reporting for both the inpatient and outpatient setting.
a. Clarification of Submission Deadline and Data Submitted
    We noted that there was a typographical error in our discussion in 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75116 
through 75117), and we proposed to remedy that error in the proposed 
rule. Specifically, we stated that the deadline for hospitals to submit 
NHSN hospital-acquired infection (HAI) measure collection data would be 
``May 15, 2015, with respect to the October 1, 2015 through March 31, 
2015 encounter period'' (78 FR 75117). In the CY 2015 OPPS/ASC proposed 
rule, we clarified that the beginning of the encounter period should be 
``October 1, 2014'' instead of ``October 1, 2015.'' In addition, we 
clarified that the data to be submitted are more specifically referred 
to as ``Healthcare Personnel (HCP) Influenza Vaccination summary 
reporting data'' instead of ``HAI measure collection data.''
    Comment: Commenters supported the CMS clarification of the 
reporting deadline for OP-27 because this deadline will align the 
reporting for both inpatient and outpatient settings.
    Response: We thank commenters for their support. We agree that 
measures should be aligned across our quality reporting and value-based 
purchasing programs to the extent possible.
    As stated above, we are clarifying that the beginning of the 
encounter period is October 1, 2014, and that the data to be submitted 
are ``Healthcare Personnel Influenza Vaccination summary reporting 
data'' instead of ``HAI measure collection data.''
b. Clarification on Reporting by CMS Certification Number (CCN)
    We received public comment about the burden of separately 
collecting HCP influenza vaccination status for both the hospital 
inpatient and outpatient settings (78 FR 75098). We believe that 
reporting a single vaccination count for each health care facility 
enrolled in NHSN will be less burdensome to facilities. Therefore, in 
response to these concerns, we collaborated with CDC and clarified in 
an Operational Guidance document that, beginning with the 2014-2015 
influenza season (CY 2014 reporting period and CY 2016 payment 
determination), facilities will report data to NHSN by enrolled 
facility (also known as OrgID). CDC will then translate and submit the 
data to CMS on behalf of the facilities by CCN.\1\ The CDC also has 
produced an Operational Guidance document regarding reporting for this 
measure, which can be found at: http://www.cdc.gov/nhsn/PDFs/HCP/Operational-Guidance-ACH-HCP-Flu.pdf.
---------------------------------------------------------------------------

    \1\ We erroneously referred to ``CNN'' in the CY 2015 OPPS/ASC 
proposed rule (79 FR 41035). We have corrected that reference in 
this final rule with comment period to ``CCN.''
---------------------------------------------------------------------------

    Reporting data in this way will allow health care facilities with 
multiple care settings to simplify data collection and submit a single 
count applicable across the inpatient and outpatient settings. We will 
then publicly report the percentage of HCP who received an influenza 
vaccination per CCN. This single count per CCN will inform the public 
of the percentage of vaccinated HCP at a particular healthcare 
facility, which would still provide meaningful data and help to improve 
the quality of care. Specific details on data submission for this 
measure can be found at: http://www.cdc.gov/nhsn/acute-care-hospital/hcp-vaccination/ and at: http://www.cdc.gov/nhsn/acute-care-hospital/index.html. This clarification was also noted in the FY 2015 IPPS/LTCH 
PPS final rule for the Hospital IQR Program (79 FR 50217).
    Comment: Many commenters supported CMS' guidance allowing hospitals 
to report OP-27 for both the inpatient and outpatient settings using 
one single count because it provides a clearer picture of vaccination 
rates, reduces provider burden, and aligns the inpatient and outpatient 
settings. Some commenters, however, requested further clarification on 
this guidance because the Hospital IQR Program clarified in the FY 2015 
IPPS/LTCH PPS final rule that hospitals ``should report a single count 
per enrolled facility, and not CCN'' and that facilities should 
``collect

[[Page 66946]]

and submit a single vaccination count for each health care facility 
enrolled in NHSN by facility OrgID.''
    Response: We thank commenters for their support of the guidance 
issued. Consistent with the Hospital IQR Program in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 50217), for OP-27, hospitals should report a 
single count per enrolled facility (by OrgID), and not per CCN. We 
require facilities to collect and submit a single vaccination count for 
each health care facility enrolled in NHSN by facility OrgID.
    Comment: One commenter was concerned that viewers of Hospital 
Compare will not understand that the measure entails data in both 
hospital inpatient and outpatient settings. The commenter believed this 
would create confusion among consumers and misinform their decision-
making.
    Response: We thank the commenter for its concern. However, we do 
not agree that reporting a single vaccination count for each enrolled 
health care facility will cause confusion. We believe that it will be 
easier for consumers to understand the influenza vaccination rate of a 
hospital as a whole when we combine data for both the inpatient and 
outpatient settings, and we believe the measure is important enough for 
it to be implemented in both the inpatient and outpatient settings.
    As stated above, we clarify that, consistent with the Hospital IQR 
Program and CDC Operational Guidance, hospitals should report to NHSN a 
single count per enrolled facility by the facility OrgID.
2. Delayed Data Collection for OP-29 and OP-30
    In the CY 2014 OPPS/ASC final rule with comment period, we adopted 
OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients (NQF # 0558) (78 FR 75102) 
and OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for 
Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use (NQF # 0659) (78 FR 75102), both chart-abstracted 
measures, and proposed that aggregate data would be collected via an 
online Web-based tool (the QualityNet Web site) beginning with the CY 
2016 payment determination. We finalized that, for the CY 2016 payment 
determination, hospitals would be required to submit aggregate-level 
encounter data between July 1, 2015 and November 1, 2015 for data 
collected during January 1, 2014 through December 31, 2014 (78 FR 
75114).
    On December 31, 2013, we issued guidance stating that we would 
delay the implementation of OP-29 and OP-30 for 3 months for the CY 
2016 payment determination, changing the encounter period from January 
1, 2014 through December 31, 2014 to April 1, 2014 through December 31, 
2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772854917). The data submission window for data collected from April 1, 
2014 through December 31, 2014 is still July 1, 2015 through November 
1, 2015. The data submission windows and the encounter periods for 
subsequent years remain as previously finalized (78 FR 75114); 
hospitals are to submit Web-based data between July 1 and November 1 of 
the year prior to a payment determination with respect to the encounter 
period of January 1 to December 31 of 2 years prior to a payment 
determination year.
    Comment: Several commenters noted their support for efforts to 
limit the overuse of colonoscopies, but expressed concern that OP-29 
and OP-30 are burdensome because they are chart-abstracted measures, 
have not been specified or tested at the facility level, and are 
measures of physician quality rather than facility quality. Another 
commenter stated that these measures are not yet meaningful due to low 
sample sizes and the lack of specifications detailed with algorithms 
for the measures.
    Response: We have previously responded to the commenters' concerns 
that the measure is not specified or tested at the facility level and 
is a measure of physician quality rather than facility quality. We 
refer readers to our responses in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75099 through75103) where we finalized these 
measures. We continue to believe the measures are suitable for HOPDs 
based on the reasons we discussed in the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75100 through 75102). In addition, we 
understand the commenters' concerns regarding the administrative effort 
associated with chart-abstraction. We will continue to examine options 
for less burdensome reporting mechanisms for these and other program 
measures in the future.
    Comment: Many commenters supported CMS' delayed collection of OP-29 
and OP-30, but requested specific rationale for the delay.
    Response: Based on feedback from stakeholders, we believed it would 
be too burdensome to require hospitals to implement OP-29 and OP-30 by 
January 1, 2014 since these measures could require coordination with 
other physicians (78 FR 75113). Consequently, we delayed the data 
collection period until April 1, 2014. We believe that this 3-month 
period was sufficient to allow hospitals to put the necessary 
mechanisms in place to collect these data.
3. OP-31: Cataracts--Improvement in Patient's Visual Function within 90 
Days Following Cataract Surgery
    In the CY 2014 OPPS/ASC final rule with comment period, we adopted 
OP-31 Cataracts--Improvement in Patient's Visual Function within 90 
Days Following Cataract Surgery (NQF # 1536) for the CY 2016 payment 
determination and subsequent years (78 FR 75103). This measure assesses 
the rate of patients 18 years and older (with a diagnosis of 
uncomplicated cataract) in a sample who had improvement in visual 
function achieved within 90 days following cataract surgery based on 
completing both a pre-operative and post-operative visual function 
survey.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41036), we: (1) 
Corrected our response to public comments, (2) noted our decision to 
delay data collection for the CY 2016 payment determination, and (3) 
proposed voluntary data collection for the CY 2017 payment 
determination and subsequent years for OP-31: Cataracts: Improvement in 
Patient's Visual Function within 90 Days Following Cataract Surgery 
(NQF # 1536).
a. Correction of Response to Public Comments
    In the CY 2014 OPPS/ASC final rule with comment period, we stated, 
in response to commenters concerned that the proposed chart-abstracted 
measures had not been field-tested, that ``all three measures that we 
are finalizing . . . were field-tested in the HOPD facility setting by 
the measure stewards. These three measures are: (1) Endoscopy/Polyp 
Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in 
Average Risk Patients (NQF # 0658); (2) Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous 
Polyps--Avoidance of Inappropriate Use (NQF # 0659); and (3) [OP-31] 
Cataracts: Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery (NQF # 1536)'' (78 FR 75099 through 75100).
    We inadvertently misstated that the OP-31: Cataracts: Improvement 
in Patient's Visual Function within 90 Days Following Cataract Surgery 
(NQF # 1536) had been field-tested in the HOPD

[[Page 66947]]

setting, and we are clarifying here that this measure has not been 
field-tested in that setting. However, we note that, in considering and 
selecting this measure, we took into account other principles or 
factors, including: NQS goals, type of measure, HHS Strategic Plan and 
Initiatives, NQF endorsement, MAP support, stakeholder input, alignment 
with quality goals and settings, relevance, utility, and burden. More 
information about these principles can be found in the CY 2014 OPPS/ASC 
proposed rule and final rule with comment period (78 FR 43643 through 
43644) and in the CY 2013 OPPS/ASC final rule with comment period (77 
FR 68467 through 68468).
b. Delayed Data Collection for OP-31 and Exclusion From the CY 2016 
Payment Determination Measure Set
    Since our adoption of this measure, we have come to believe that it 
can be operationally difficult for hospitals to collect and report this 
measure. Specifically, we are concerned that the results of the survey 
used to assess the pre-operative and post-operative visual function of 
the patient may not be shared across clinicians, making it difficult 
for hospitals to have knowledge of the visual function of the patient 
before and after surgery.
    We also are concerned about the use of inconsistent surveys to 
assess visual function; the measure specifications allow for the use of 
any validated survey and results may be inconsistent should clinicians 
use different surveys. Therefore, on December 31, 2013, we issued 
guidance stating that we would delay the implementation of OP-31 by 3 
months from January 1, 2014 to April 1, 2014 for the CY 2016 payment 
determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772854917). Because of continuing concerns, on April 2, 2014, we issued 
additional guidance stating that we would further delay the 
implementation of the measure from April 1, 2014 to January 1, 2015 for 
the CY 2016 payment determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228721506778). In the CY 2015 OPPS/ASC proposed rule (79 FR 41036), we 
proposed to exclude OP-31 Cataracts: Improvement in Patient's Visual 
Function within 90 Days Following Cataract Surgery (NQF # 1536) from 
the CY 2016 payment determination measure set. We proposed not to 
subject hospitals to a payment reduction with respect to this measure 
for the CY 2016 payment determination.
    We invited comment on this proposal.
    Comment: Many commenters commended CMS' recognition of the 
associated operational issues and the proposal to exclude OP-31 from 
the CY 2016 payment measure determination set. Other commenters 
disagreed; they stated that complications following cataract surgery 
are not acceptable, and they strongly believed that OP-31 tracks 
patient-centered clinical outcomes and improves care coordination among 
providers.
    Response: We agree that complications following cataract surgery 
are not acceptable. While OP-31 does not address complications 
following cataract surgery, it does address improvement in visual 
function following cataract surgery and tracks an important patient-
centered clinical outcome. Based on stakeholder feedback, we believe 
this measure should be excluded from the CY 2016 payment determination 
because there are a low number of hospitals ready to operationalize 
this measure for the CY 2016 payment determination. As noted below, we 
believe that by the CY 2017 payment determination, many more hospitals 
will be operationally able to collect the data necessary for this 
measure and may choose to do so.
    After consideration of the public comments we received, we are 
finalizing our proposal to exclude OP-31 from the CY 2016 payment 
determination measure set as proposed. Therefore, we will not subject 
hospitals to a payment reduction with respect to OP-31 for the CY 2016 
payment determination.
c. Voluntary Collection of Data for OP-31 for the CY 2017 Payment 
Determination and Subsequent Years
    We continue to believe that OP-31 promotes accountability for 
Medicare beneficiaries, improve coordination of services, reduce 
fragmented care, encouraged redesigned care processes for high quality 
and efficient service delivery, and incentivize higher value care (78 
FR 75099). Furthermore, we believe that HOPDs should be partners in 
care with physicians and other clinicians, and this measure provides an 
opportunity to do so. Therefore, we are continuing to include this 
measure in the Hospital OQR Program measure set. However, in the CY 
2015 OPPS/ASC proposed rule (79 FR 41036), we proposed that hospitals 
have the option to voluntarily collect and submit OP-31 data for the CY 
2015 encounter period/CY 2017 payment determination and subsequent 
years. In addition, we proposed to not subject hospitals to a payment 
reduction with respect to this measure during the period of voluntary 
reporting. For hospitals that choose to submit data voluntarily, we 
would request that they submit such data using the means and timelines 
finalized in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75112 through 75113). Data submitted voluntarily will be publicly 
reported as discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 
43645) and final rule with comment period (78 FR 75092).
    We invited public comment on this proposal.
    Comment: Many commenters requested that CMS remove the measure from 
the program entirely, rather than delaying implementation and allowing 
voluntary reporting. The commenters repeated similar concerns expressed 
in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75099 
through 75103), where this measure was finalized, regarding associated 
burden, suitability for the Hospital OQR Program versus the PQRS, 
program alignment of this measure, non-standardization of collected 
information, NQF endorsement, MAP recommendations, and coordination 
challenges faced by facilities.
    Response: We do not agree that we should remove the measure 
entirely, because we believe OP-31 addresses an area of care that is 
not adequately addressed in our current measure set and is an important 
area of care coordination between performing physicians, practitioners 
that assess visual function, and HOPDs where procedures are performed. 
We previously addressed the above concerns in our responses the CY 2014 
OPPS/ASC final rule with comment period where we finalized this measure 
and refer readers to that final rule with comment period (78 FR 75099 
through 75103) for a discussion of these issues.
    Comment: Commenters opposed to voluntary reporting of OP-31 were 
concerned that incomplete display of data is confusing and not 
meaningful to consumers and is hard to validate. Furthermore, 
commenters feared that the display of data from some hospitals but not 
others would lead some patients to conclude that some hospitals are 
more committed to improving cataract surgery.
    Response: We appreciate the commenters' concerns, but we do not 
agree that voluntary data reporting will result in data that are 
confusing, are not meaningful, or cause patients to conclude that some 
hospitals are more committed to improving cataract surgery. There are 
many situations

[[Page 66948]]

where hospitals do not submit information to the Hospital OQR Program 
due to lack of cases or low case volume. Where quality information is 
submitted, we make this information publicly available as statutorily 
required, and we state when it is not available. Furthermore, reporting 
of measure data by some hospitals and not others under voluntary 
reporting would not affect the validity of data reported for this Web-
based measure any more so than a required measure where not all 
hospitals had cases. We note that at this time, we do not validate 
aggregate data submitted to CMS using an online tool, so difficulty to 
validate this information is not a program issue. We refer readers to 
section XIII.H.3 of this final rule with comment period where we 
discuss our validation procedures.
    We understand some facilities are capable of reporting data for 
this measure at this time, and we believe those facilities should 
report if they are operationally able to do so. We believe voluntary 
reporting is beneficial for HOPDs because all HOPDs, both participating 
and not participating in voluntary reporting, can use the reported data 
to gauge their own performance and identify improvement efforts. By 
retaining the measure but allowing voluntary reporting, we can continue 
to monitor the data submitted to assess further enhancement of the 
measure as necessary.
    Comment: Commenters expressed support for patient-reported outcome 
measures like OP-31 and recommended additional outcome measures for 
cataract procedures, such as Complications within 30 Days Following 
Cataract Surgery Requiring Additional Procedures (NQF #0564) and Better 
Visual Acuity Within 90 Days Following Cataract Surgery (NQF #0565).
    Response: We thank the commenters for the support and their input 
regarding patient-reported outcome measures. We may consider these 
suggestions for future measure selection.
    Comment: One commenter suggested that CMS allow voluntary reporting 
for all newly adopted measures, given the inconvenience and burden 
associated with preparing to report a measure that later may become 
suspended or for which we delay implementation.
    Response: We thank the commenter for the suggestion. We understand 
that hospitals may have been inconvenienced by this measure, but 
disagree that all newly adopted measures should be voluntarily 
reported. We have retained the vast majority of measures adopted for 
the Hospital OQR Program.
    After consideration of the public comments we received, we are 
finalizing our proposal that hospitals have the option to voluntarily 
collect and submit OP-31 data for the CY 2015 encounter period/CY 2017 
payment determination and subsequent years as proposed. For hospitals 
that choose to submit data, we request that they submit such data using 
the means and timelines finalized in the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75113 through 75115). We will not subject 
hospitals to a payment reduction with respect to this measure during 
the period of voluntary reporting. However, data submitted voluntarily 
will be publicly reported.

E. New Quality Measure for the CY 2018 Payment Determination and 
Subsequent Years

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41036 through 41039), 
we proposed to adopt one new claims-based measure into the Hospital OQR 
Program for the CY 2017 payment determination and subsequent years: OP-
32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy. Colonoscopy is one of the most frequently 
performed procedures in the outpatient setting in the United States.\2\ 
The most recent data available indicate that, in 2002 alone, physicians 
performed an estimated 14 million colonoscopies in the United 
States.\3\ Colonoscopies are associated with a range of well-described 
and potentially preventable adverse events that can lead to hospital 
visits, repeat procedures, or surgical intervention for treatment, 
including colonic perforation, gastrointestinal (GI) bleeding, and 
cardiopulmonary events such as hypoxia, aspiration pneumonia, and 
cardiac arrhythmias. While hospital visits are generally unexpected 
after outpatient colonoscopy, the literature suggests that the majority 
of these visits occur within the first 7 days.4 5 6 Reported 
hospital visit rates after outpatient colonoscopy range from 0.8 to 1.0 
percent at 7 to 14 days post procedure, and from 2.4 to 3.8 percent at 
30 days post procedure.7 8 9 Some adverse events such as 
bleeding occur after the 7th day, but based on input from clinical 
experts, public comment, and empirical analyses, we concluded that 
unplanned hospital visits within 7 days is the optimal outcome to 
ensure capture of procedure-related adverse events and to minimize 
capture of hospital visits unrelated to the procedure. This measure 
provides the opportunity for providers to improve quality of care and 
to lower the rates of adverse events leading to hospital visits after 
outpatient colonoscopy; this measure will encourage providers to 
achieve the outcome rates of the best performers.
---------------------------------------------------------------------------

    \2\ Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based 
Ambulatory Surgery, 2007: Statistical Brief #86. Healthcare Cost and 
Utilization Project (HCUP) Statistical Briefs. Rockville (MD) 2006.
    \3\ Seeff LC, Richards TB, Shapiro JA, et al. How many 
endoscopies are performed for colorectal cancer screening? Results 
from CDC's survey of endoscopic capacity. Gastroenterology. Dec 
2004; 127(6):1670-1677.
    \4\ Rathgaber SW., Wick TM. Colonoscopy completion and 
complication rates in a community gastroenterology practice. 
Gastrointest Endosc. 2006; 64:556-62.
    \5\ Rabeneck L, Saskin R, Paszat LF. Onset and clinical course 
of bleeding and perforation after outpatient colonoscopy: A 
population-based study. Gastrointest Endosc. 2011; 73:520-3.
    \6\ Ko CW, Riffle S, Michael L, et al. Serious complications 
within 30 days of screening and surveillance colonoscopy are 
uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73.
    \7\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor 
complications and time lost from normal activities after screening 
or surveillance colonoscopy. Gastrointest Endosc. Apr 2007; 
65(4):648-656.
    \8\ Leffler DA, Kheraj R, Garud S, et al. The incidence and cost 
of unexpected hospital use after scheduled outpatient endoscopy. 
Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
    \9\ Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A, 
Brooks R. Is there a relationship between physician and facility 
volumes of ambulatory procedures and patient outcomes? J Ambul Care 
Manage. Oct-Dec 2008; 31(4):354-369.
---------------------------------------------------------------------------

    We believe it is important to reduce adverse patient outcomes 
associated with preparation for colonoscopy, the procedure itself, and 
follow-up care. Therefore, we proposed to include OP-32: Facility 7-Day 
Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy, 
which is based on paid Medicare FFS claims, in the Hospital OQR Program 
for the CY 2017 payment determination and subsequent years. We expect 
that the measure would promote improvement in patient care over time 
because transparency in publicly reporting measure scores will make 
patient unplanned hospital visits (emergency department visits, 
observation stays, and inpatient admissions) following colonoscopies 
more visible to providers and patients and encourage providers to 
incorporate quality improvement activities in order to reduce these 
visits. Providers are often unaware of complications following 
colonoscopy for which patients visit the hospital.\10\ This risk-
standardized quality measure will address this information gap and

[[Page 66949]]

promote quality improvement by providing feedback to facilities and 
physicians, as well as transparency for patients on the rates and 
variation across facilities in unplanned hospital visits after 
colonoscopy.
---------------------------------------------------------------------------

    \10\ Leffler DA, Kheraj R, Garud S, et al. The incidence and 
cost of unexpected hospital use after scheduled outpatient 
endoscopy. Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
---------------------------------------------------------------------------

    The outcome measured in the OP-32 measure is all-cause, unplanned 
hospital visits (admissions, observation stays, and emergency 
department visits) within 7 days of an outpatient colonoscopy 
procedure. The measure score, also referred to as the facility-level 
risk-standardized hospital visit rate, is derived from the calculation 
of the ratio of the numerator to the denominator multiplied by the 
crude rate. The numerator is the number of predicted (meaning adjusted 
actual) hospital visits, which is the number of unplanned hospital 
visits within 7 days of colonoscopy that the facility is predicted to 
have based on its case-mix. The denominator is the number of expected 
hospital visits, which is the number of unplanned hospital visits the 
facility is expected to have based on the nation's performance with the 
facility's case-mix. The crude rate is the national unadjusted number 
of patients who had a hospital visit post-colonoscopy among all 
patients who had a colonoscopy.
    Based on discussions with clinical and technical panel experts, the 
measure excludes colonoscopies for patients undergoing concomitant 
high-risk upper GI endoscopy because these patients are at a higher 
risk for hospital visits than patients undergoing a typical 
colonoscopy, and patients with a history of inflammatory bowel disease 
(IBD) or diverticulitis in the year preceding the colonoscopy because 
we likely could not fully characterize and adjust for their pre-
procedure risk of needing a post-procedure hospital visit or identify 
whether these admissions are planned or unplanned. The measure also 
excludes procedures for patients who lack continuous enrollment in 
Medicare FFS Parts A and B in the 1 month after the procedure to ensure 
all patients have complete data available for outcome assessment. The 
statistical risk adjustment model includes 15 clinically relevant risk-
adjustment variables that are strongly associated with risk of hospital 
visits within 7 days following colonoscopy. Additional methodology 
details and information obtained from public comments for measure 
development are available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html under ``Hospital Outpatient Colonoscopy.''
    Section 1890A(a)(2) of the Act outlines the pre-rulemaking process 
established under section 1890A of the Act, which requires the 
Secretary to make available to the public by December 1 of each year a 
list of quality and efficiency measures that the Secretary is 
considering. This measure was included on a publicly available document 
titled ``MAP Pre-Rulemaking Report: 2014 Recommendations on Measures 
for More than 20 Federal Programs'' on the NQF Web site at: http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx (formerly referred to as the ``List of Measures Under 
Consideration'') in compliance with section 1890A(a)(2) of the Act. (We 
note that at the time the measure was listed on the ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20 
Federal Programs,'' it was named ``High-Acuity Care Visits after 
Outpatient Colonoscopy Procedure.'')
    The MAP, which represents stakeholder groups, conditionally 
supported the measure, ``noting the need to provide outcome information 
to inform consumer decisions and drive quality improvement.'' The MAP 
further stated that ``[t]his measure addresses an important quality and 
safety issue with incidence of these events ranging from 10 to 22 per 
1,000 after risk adjustment.'' However, the MAP also ``recognized the 
need for the measure to be further developed and gain NQF endorsement. 
The MAP expects the endorsement process to resolve questions of the 
reliability and validity of the measure as well as with the accuracy of 
the algorithm for attributing claims data in light of possible effects 
of the Medicare 3-day payment window policy.'' As required under 
section 1890A(a)(4) of the Act, we considered the input and 
recommendations provided by the MAP in selecting measures to propose 
for the Hospital OQR Program.
    We believe we have addressed the concerns raised by the MAP to the 
extent possible. The measure is well-defined and precisely specified 
for consistent implementation within and between organizations that 
will allow for comparability. Reliability testing demonstrated the 
measure data elements produced were repeatable; that is, the same 
results were produced a high proportion of the time when assessed in 
the same population in the same time period. Validity testing 
demonstrated that the measure data elements produce measure scores that 
correctly reflect the quality of care provided and that adequately 
identify differences in quality. In order to ensure the accuracy of the 
algorithm for attributing claims data and the comprehensive capture of 
HOPD colonoscopies potentially affected by the policy, we identified 
physician claims for colonoscopy in the HOPD setting from the Medicare 
Part B Standard Analytical Files (SAF) with an inpatient admission 
within 3 days and lacking a corresponding HOPD facility claim. We then 
attribute the colonoscopies identified as affected by this policy to 
the appropriate HOPD facility using the facility provider ID from the 
inpatient claim.
    Section 1833(t)(17)(C)(i) of the Act states that, ``The Secretary 
shall develop measures . . . that reflect consensus among affected 
parties and, to the extent feasible and practicable, shall include 
measures set forth by one or more national consensus building 
entities.'' We believe that this proposed measure reflects consensus 
among the affected parties, because the MAP, which represents 
stakeholder groups, reviewed, conditionally supported the measure, and 
stated that it ``would provide valuable outcome information to inform 
consumer decision and drive quality improvement.'' Further, the measure 
was subject to public comment during the MAP and measure development 
processes, with some public commenters agreeing with the MAP's 
conclusions on the measure (MAP Report, January 2014, p. 184 http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx). We also note that the measure was submitted to NQF 
for endorsement on February 21, 2014.
    Currently, there are no publicly available quality of care reports 
for providers or facilities that conduct outpatient colonoscopies. 
Thus, adoption of this measure provides an opportunity to enhance the 
information available to patients choosing among providers who offer 
this elective procedure. We believe this measure would reduce adverse 
patient outcomes associated with preparation for colonoscopy, the 
procedure itself, and follow-up care by capturing and making more 
visible to providers and patients all unplanned hospital visits 
following the procedure. Further, providing outcome rates to providers 
will make visible to clinicians meaningful quality differences and 
encourage improvement. Although this measure is not NQF-endorsed, it is 
currently undergoing the endorsement process, as noted above. 
Therefore, we believe the

[[Page 66950]]

statutory requirement for included measures to have, to the extent 
feasible and practicable, been set forth by a national consensus-
building entity has been met.
    We invited public comment on the proposal to include OP-32 in the 
Hospital OQR Program for the CY 2017 payment determination and 
subsequent years.
    Comment: Several commenters supported the adoption of OP-32, 
stating that it will provide patients with important information about 
the quality of colonoscopy care furnished in outpatient settings. Some 
commenters noted that CMS has appropriately considered the MAP's input 
in adopting this measure and that the measure's adoption is a good 
first step in the continued evolution of the Hospital OQR Program.
    Response: We thank commenters for their support and acknowledgement 
that the measure is appropriate for the Hospital OQR Program. We agree 
that measuring quality of care associated with colonoscopy procedures 
is an important clinical care area to assess for HOPDs.
    Comment: Many commenters urged CMS not to adopt OP-32 until it is 
NQF-endorsed. Several of these commenters also noted that the MAP 
supported this measure on condition of NQF-endorsement, and stated that 
the NQF process would resolve a number of questions about the 
reliability, validity and feasibility of this measure. The commenters 
requested that, in general, CMS only include measures in the Hospital 
OQR Program that have been NQF-endorsed in order to avoid subsequent 
suspension or removal of these measures.
    Response: We note that not all of the measures adopted by the 
Hospital OQR Program are NQF-endorsed, and as we stated in our earlier 
discussion in this final rule with comment period, NQF endorsement is 
not a program requirement, as consensus among affected parties can be 
reached through means other than NQF endorsement. Under section 
1833(t)(17)(C)(i) of the Act, the Secretary must develop measures that 
reflect consensus among affected parties and, to the extent feasible 
and practicable, must include measures set forth by one or more 
national consensus building entities.
    Whenever possible, we strive to adopt NQF-endorsed measures because 
these measures will meet these requirements. However, we believe the 
requirements that measures reflect consensus among affected parties can 
be achieved in other ways, including through the measure development 
process, through broad acceptance and use of the measure, and through 
public comments. Further, it may not be feasible or practicable to 
adopt an NQF-endorsed measure, such as when an NQF-endorsed measure 
does not exist. Section 1833(t)(17)(C)(i) of the Act does not require 
that each measure we adopt for the OQR Program be endorsed by a 
national consensus building entity, or by the NQF specifically. As 
discussed below, we believe the measure as developed exhibits 
sufficient levels of reliability, validity, and feasibility to be 
adopted for the Hospital OQR Program. We have also submitted this 
measure to the NQF for endorsement.
    Comment: A few commenters noted that the measure is currently being 
reviewed by the NQF All-Cause Admissions and Readmissions Standing 
Committee. Commenters were disappointed that the Committee's minutes 
indicated there were no discussions of consideration of key elements of 
the measure's construction and testing.
    Response: We thank the commenters for sharing their concerns. We 
believe the NQF process is rigorous and transparent. We understand the 
NQF All-Cause Admissions and Readmissions Standing Committee applies 
the four NQF criteria for measure endorsement \11\ and votes on each 
criterion. In addition, our understanding is that the measure was 
discussed in detail by NQF working groups prior to the measure 
discussion at the All-Cause Admissions and Readmissions Standing 
Committee (http://www.qualityforum.org/ProjectMaterials.aspx?projectID=73619).
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    \11\ Available at: http://www.qualityforum.org/docs/measure_evaluation_criteria.aspx.
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    NQF also seeks public comments on measures before endorsement. 
http://www.qualityforum.org/comments_By_Project.aspx?projectID=110&ActivityID=762#p=3. (This link 
requires users to log in to the NQF Web site.) For questions related to 
NQF internal procedures, we suggest contacting the NQF directly at 
http://www.qualityforum.org/About_NQF/Contact_NQF.aspx.
    Comment: Many commenters did not support CMS' proposal to finalize 
OP-32, stating that complications from colonoscopies are rare and 
hospitals already take steps to ensure colonoscopies are conducted in 
such a way so as to eliminate preventable complications. Some 
commenters specifically noted that the literature indicates the 
measured incidence rate is less than 2 percent, and does not rise to 
the level of importance needed for a national quality measurement 
program.
    Response: Given the widespread use of colonoscopy for colorectal 
cancer screening in the outpatient setting, we consider measuring the 
quality of this high volume procedure to be a priority. We agree that 
the incidence of colonoscopy complications is relatively low. However, 
serious adverse events, such as perforation of the bowel and bleeding, 
may occur following colonoscopies. We view OP-32 as a critical outcome 
measure for which the goal is to drive toward and sustain zero harm. In 
addition, some literature suggests that many facilities performing 
colonoscopies are unaware of patients accessing hospital-based care 
with adverse events because patients return to different facilities, 
including other hospitals and emergency departments, and would not 
return to the same outpatient facility. For example, one study showed 
that physicians were unaware of nearly 75 percent of hospital 
admissions for adverse events following colonoscopy.\12\ While most 
colonoscopies are performed without subsequent complication, we note 
that, among Medicare patients aged 65 and older, 1.6 percent of 
outpatient colonoscopies resulted in an unplanned hospital visit within 
7 days.\13\ This is based on a 20-percent sample of nationwide Medicare 
FFS patients. If we were to use full national data (that is, a 100 
percent sample), we estimate 1.7 million colonoscopies would have been 
performed among Medicare FFS patients and nearly 27,000 unplanned 
hospitals visits would have occurred within 7 days of colonoscopy. 
These findings suggest that adverse events are not as rare or 
inconsequential as many believed and that quality measurement for 
colonoscopy procedures in the hospital outpatient setting is important.
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    \12\ Leffler DA, Kheraj R, Garud S, et al. The incidence and 
cost of unexpected hospital use after scheduled outpatient 
endoscopy. Arch Intern Med. Oct 25 2010; 170(19): 1752-1757.
    \13\ 2010 Medicare 20 percent fee-for-service sample. Based on 
an analysis of 20 percent sample of Medicare FFS data from 2010 
during measure development. The 20 percent sample included 332,391 
outpatient colonoscopies meeting the measure inclusion and exclusion 
criteria, and 1.6 percent of these colonoscopies were followed by an 
unplanned hospital visit. This equates to 5,331 unplanned hospital 
visits in the 20 percent sample.
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    Comment: Many commenters expressed concern that OP-32 includes 
hospital visits unrelated to colonoscopy (counted in the numerator). 
Some commenters questioned why the measure uses an all-cause 
categorization versus only admissions attributable to colonoscopies. 
One commenter suggested that all high-risk colonoscopies (such as 
patients with multiple biopsies, patients with

[[Page 66951]]

inflammatory bowel disease, and diverticulitis) should be excluded from 
the measure. Commenters recommended that OP-32 should be limited to 
low-risk surveillance and screening colonoscopies as well as 
nontherapeutic colonoscopies for Medicare patients. One commenter 
appreciated that OP-32 includes a mechanism for excluding hospital 
visits for certain ``planned'' procedures, but encouraged CMS to expand 
that list to also include bone fractures and behavioral health 
disorders.
    Response: We clarify that this measure is purposely designed to use 
a broad outcome of hospital visits following surgery rather than a 
narrow set of easily identifiable complications. From a patient and 
health care system perspective, the goal of this measure is to 
encourage and inform provider efforts to minimize all potential acute 
complications, not just those narrowly related to procedural technique. 
This is important as the literature 14 15 16 17 18 suggests 
that hospital visits following colonoscopy occur due to a range of 
adverse events relating to the bowel preparation, anesthesia, the 
colonoscopy procedure itself, and follow-up care. These adverse events 
include a range of symptoms and signs such as abdominal pain, bloating, 
dizziness and collapse, electrolyte disturbances, and cardiorespiratory 
symptoms (from sedation use) in addition to other complications, such 
as bleeding and bowel perforation, that are directly related to 
procedural techniques. The broad outcome of unplanned hospital visits 
captures all of these potential acute complications of colonoscopy.
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    \14\ Day LW, Kwon A, Inadomi JM, et al. Adverse events in older 
patients undergoing colonoscopy: a systematic review and meta-
analysis. 2011; 74:885-96.
    \15\ Ko CW, Dominitz JA. Complications of colonoscopy: Magnitude 
and management. Gastrointest Endosc Clin N Am 2010;20:659-71.
    \16\ ASGE Standards of Practice Committee, Fisher DA, Maple JT, 
et al. Complications of colonoscopy. Gastrointest Endosc 
2011;74:745-52.
    \17\ Baudet JS, Diaz-Bethencourt D, Aviles J, et al. Minor 
adverse events of colonoscopy on ambulatory patients: The impact of 
moderate sedation. Eur J Gastroenterol Hepatol 2009; 21:656-61.
    \18\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor 
complications and time lost from normal activities after screening 
or surveillance colonoscopy. 2007; 65:648-56.
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    As to the suggestion of expanding the list to include bone 
fractures and behavioral health disorders, we note that inpatient 
admissions for bone fracture and behavioral health disorders (such as 
depression and anxiety) are typically acute and are not generally 
considered as ``planned'' admissions. We do not expect planned 
admissions for these conditions within the first 7-days following 
colonoscopy. Furthermore, we have adapted the planned readmission 
algorithms developed by CMS independent of OP-32. This algorithm has 
been validated against medical record (chart-extracted) data to ensure 
it only removes planned admissions.
    Our goal for including the measure is to encourage providers to be 
mindful of reducing post-colonoscopy admission caused by prior 
colonoscopy procedures performed at a HOPD. For example, patients may 
be at higher risk of falls post-colonoscopy secondary to dehydration 
following the bowel preparation for the procedure, and there may be 
opportunities for providers to minimize this risk. Furthermore, we 
removed planned admissions from the measure outcome by adapting CMS' 
Planned Readmission Algorithm version 3.0.\19\ \20\ This algorithm 
removes nonacute admissions for scheduled procedures (for example, 
total hip replacement) and other types of care always considered 
planned (for example, rehabilitation or maintenance chemotherapy) from 
the outcome because these admissions do not reflect differences in 
colonoscopy quality of care.
---------------------------------------------------------------------------

    \19\ Horwitz L, Grady J, Dorsey K, Zhang W, Keenan M, Keshawarz 
A, Cohen D, Ngo C, Okai M, Nwosu C, Lin Z, Bhat K, Krumholz H, 
Bernheim S. 2014 Measures Updates and Specifications Report: 
Hospital-Wide All-Cause Unplanned Readmission--Version 3.0. 2014: 
Centers for Medicare & Medicaid Services, 2014.
    \20\ Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
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    Comment: One commenter noted that CMS stated that the statistical 
risk adjustment model includes 15 clinically relevant risk- adjustment 
variables (such as number of polyps removed) that are strongly 
associated with risk of hospital visits within seven days following 
colonoscopy and certain patients receiving colonoscopies that would be 
more likely to have a subsequent visit were excluded. The commenter 
stated that CMS did not report the variation between hospitals in the 
application for NQF-endorsement. The commenter raised the possibility 
of no statistically significant difference between a hospital's risk-
adjusted visit rate and the national average. The commenter believed 
this scenario would make it impossible to identify poor performers and 
good performers for this measure. Without this type of differentiation, 
the commenter did not understand how this measure will be actionable 
for care improvement. The commenter suggested that CMS conduct a root 
cause analysis for specific related readmission after colonoscopy or 
test of the variation of the measure between hospital providers. The 
commenter also suggested that The Joint Commission's guidelines and 
relevant Conditions of Participation standards would enhance care 
improvement efforts.
    Response: We thank the commenter for their suggestions to enhance 
improvement efforts for colonoscopy. We clarify that, in the 
application for NQF endorsement, we noted that the measure, following 
risk-adjustment, is able to detect statistically significant variation 
(good and poor performers) between outpatient facilities by 
demonstrating measure score variation using the 2010 Healthcare Cost 
and Utilization Project (HCUP) data from four States (California, New 
York, Nebraska, and Florida). Using a very conservative bootstrapping 
(sampling with replacement) statistical technique, we constructed 95 
percent interval estimates (similar to confidence intervals) around the 
facility measure score and used the estimates to place facilities into 
three performance categories: worse than expected; no different than 
expected; and better than expected. Based on this analysis, we 
identified 5 outlier facilities among a total of 992 ASCs and HOPDs. 
This analysis included only about one-tenth of all outpatient 
facilities in the United States, and typically we see greater variation 
between facilities when 100 percent of nationwide facilities are 
included for actual measure implementation and reporting due to 
increased precision related to greater sample size.
    We disagree with the notion that there is a possibility of no 
statistically significant difference between a hospital's risk-adjusted 
visit rate and the national average. Our analysis shows statistically 
significant facility variation. Some facilities have a hospital visit 
rate that is higher than the expected national average rate and this is 
statistically significant. Also, we only tested provider variation 
using data from 4 States. We expect greater variation and more outliers 
using nationwide data.
    We are committed to filling the performance gaps in colonoscopy 
performed in the outpatient setting. Therefore, we believe this measure 
is appropriate for the outpatient setting. However, in response to 
comments, to allow sufficient time to conduct further analysis of this 
measure, we are finalizing this measure beginning with the CY 2018 
payment determination, rather than the CY 2017 payment determination as 
proposed. We plan to perform a dry run of the measure in

[[Page 66952]]

2015. From our perspective, a dry run is a preliminary analysis of data 
in which HOPDs may review their measure results, and ask questions 
about and become familiar with the measure methodology. Dry runs will 
include 3 to 4 years of paid Medicare FFS claims. We will use the most 
recent complete claims samples (usually 6 to 9 months prior to the 
start date) for dry runs. For example, if the dry run begins in March 
2015, the most recent data available may be July 2011 to June 2014 
(assuming we use 3 years of data). Because we use paid Medicare FFS 
claims, HOPDs will not need to submit any additional data for the dry 
run. General information about dry run as well as confidential reports 
will be made available for hospitals to review on their accounts at 
https://www.qualitynet.org. The dry run will generate confidential 
reports at the patient level, indicating whether the patient had a 
hospital visit, the type of visit (admission, emergency department 
visit, or observational stay), the admitting facility, and the 
principal discharge diagnosis. Further, the dry run will enable HOPDs 
to see the measure score reports and have the opportunity to receive 
individual patient data and information contained within individual 
patient records. In addition, we will continue to generate these 
reports for HOPDs after we implement the measure beginning with the CY 
2018 payment determination. HOPDs can use the information to identify 
performance gaps and develop quality improvement strategies.
    Dry run results are not linked to public reporting, payment 
determinations, or reliability testing. We expect the dry run to take 
approximately one month to conduct, during which facilities will be 
provided the confidential report and the opportunity to review their 
performance and provide feedback to us. The measure will have no 
payment impact until the CY 2018 payment determination and subsequent 
years. Public display of data will occur on or after December 1, 2017, 
but there will be no public display of the dry run data.
    We agree that adhering to The Joint Commission's guidelines and 
relevant Conditions of Participation standards could enhance care 
improvement efforts and hospitals' rates on this measure, and we 
encourage hospitals to follow these guidelines and standards. We also 
believe that issuing reports to hospitals, such as those that we will 
provide during the dry-run, would help hospitals to identify the root 
cause (practices and conditions) that could cause hospital visits after 
colonoscopy.
    Comment: Many commenters expressed concern that OP-32 is not 
sufficiently reliable to be included in the Hospital OQR Program; 
specifically, the measure developer has indicated that the measure is 
only ``fairly'' reliable, with an interclass correlation coefficient 
(ICC) of 0.335. These commenters contended that ``fair'' reliability is 
not sufficient for publicly reported quality metrics since such 
information could misinform the public, and urged CMS to conduct an 
analysis on the measure's reliability to understand the amount of data 
required to achieve ``good'' reliability. Several commenters argued 
that ``good'' reliability should result in an ICC of at least 0.60. 
Other commenters believed that reliability will improve with several 
years' worth of data. Another commenter requested that data from this 
measure be withheld from public reporting until concerns about its 
reliability and validity can be thoroughly assessed.
    Response: We disagree with commenters and believe that OP-32 is 
sufficiently reliable to be included in the Hospital OQR Program. The 
ICC value submitted in the initial NQF application (0.335) was 
calculated using a split sample of data from 2 years. We randomly split 
the patient cohort at each hospital into two equal halves, calculated 
the measure using each half, and then calculated the agreement between 
these two (the `test' and the `retest'). After submitting the measure 
to NQF for endorsement review, we conducted additional calculations of 
the reliability testing score, this time using the Spearman-Brown 
prophecy formula. The Spearman-Brown prophecy formula is an accepted 
statistical method which estimates the ICC if the sample were 
increased. Therefore, it allows us to estimate what the reliability 
score would be if all observations were used for public reporting 
rather than using a split sample. Our Spearman-Brown prophecy formula 
calculations resulted in a higher ICC of 0.43.
    The NQF considers the ICC values ranging from 0.21 to 0.40 as 
``fair'' reliability and values ranging from 0.41 to 0.60 as 
``moderate'' reliability. Therefore, the ICC values of 0.335 and 0.43 
are interpreted as ``fair'' and ``moderate'' reliability, respectively. 
These ICC values are also in line with other NQF-endorsed outcome 
measures used in other CMS programs. For example, in the Hospital 
Readmissions Reduction Program, the Inpatient Acute Myocardial 
Infarction (AMI) 30-day Risk Standardized Readmission measure (NQF 
#0505) (76 FR 51667) has an ICC of 0.369, and the Pneumonia (PN) 30-day 
Risk Standardized Readmission measure (NQF #0506), also in the Hospital 
Readmissions Reduction Program (76 FR 51667), has an ICC of 0.406. Both 
measures are NQF-endorsed.
    Regarding the concerns that the public may be misinformed and that 
we should withhold public reporting until the measure's reliability and 
validity is addressed, as stated above, we believe the reliability of 
the measure is sufficiently reliable for inclusion in the Hospital OQR 
Program and do not agree that the public may be misinformed or that we 
should withhold public reporting. In addition to our calculations 
above, reliability testing previously conducted by the measure steward 
demonstrated the measure data elements produced were repeatable; that 
is, the same results were produced a high proportion of the time when 
assessed in the same population in the same time period. Also, validity 
testing by the measure steward demonstrated that the measure data 
elements produce measure scores that correctly reflect the quality of 
care provided and that adequately identify differences in quality.
    As the commenters suggested, the measure reliability may be further 
improved by using several years' worth of data; however, we must 
balance the reliability of the measure with the timeliness of the 
measure. As discussed, at this time, we believe that 1 year of data 
appropriately balances these competing interests for payment 
determination purposes, but we will continue to assess this belief 
during the dry run. Also, we will consider conducting additional 
reliability assessments of the measure using an extended data period.
    Moreover, we believe it is important to include this measure in the 
program because colonoscopy is a high volume, common procedure 
performed at outpatient facilities and is frequently performed on 
relatively healthy patients to screen for colorectal cancer (CRC). 
Given the widespread use of colonoscopy, understanding and minimizing 
procedure-related adverse events is a high priority. These adverse 
events, such as abdominal pain, bleeding, and intestinal perforation, 
can result in unanticipated hospital visits post procedure. Physicians 
performing colonoscopies are often unaware that patients seek acute 
care at hospitals following the procedure and the associated adverse 
events are potentially preventable. We strongly believe that the 
measure would promote improvement in patient care over time because 
transparency in publicly

[[Page 66953]]

reporting measure scores would make patient unplanned hospital visits 
(emergency department visits, observation stays, and inpatient 
admissions) following colonoscopies more visible to HOPDs and patients 
and incentivize HOPDs to incorporate quality improvement activities in 
order to reduce these visits.
    Finally, we believe this measure should be included in the program 
because currently, this risk-standardized colonoscopy quality measure 
is the only measure available that would address this information gap 
and promote quality improvement by providing feedback to facilities and 
physicians, as well as transparency for patients on the rates and 
variation across facilities in unplanned hospital visits after 
colonoscopy. There are no publicly available quality of care reports 
for HOPDs that conduct outpatient colonoscopies. Therefore, adoption of 
this measure provides an opportunity to enhance the information 
available to patients choosing among HOPDs that offer this elective 
procedure. We believe this measure would reduce adverse patient 
outcomes associated with preparation for colonoscopy, the procedure 
itself, and follow-up care by capturing and making more visible to 
HOPDs and patients all unplanned hospital visits following the 
procedure. In addition, providing outcome rates to HOPDs would make 
visible to clinicians meaningful quality differences and incentivize 
improvement.
    In response to comments, however, to allow sufficient time to 
conduct further analysis of this measure, we are finalizing this 
measure beginning with the CY 2018 payment determination, rather than 
the CY 2017 payment determination as proposed. We plan to perform a dry 
run (a preliminary analysis) of the measure in 2015. We refer readers 
to our discussion of the dry run above, in response to a previous 
comment.
    With national implementation of a dry run of this measure, we will 
also review the appropriate cutoff volume for facilities, if necessary, 
in reporting the measure score. We require a minimum volume (cutoff 
volume) of colonoscopies per facility to be able to calculate a 
reliable measure score for the facility. We have yet to determine the 
minimum volume per facility (that is, the cutoff colonoscopy volume). 
Because we used a Medicare 20 percent sample to develop the measure, we 
could not estimate this cutoff during measure development. However, 
testing during the measure dry-run with 100 percent of the sample per 
facility will help us to determine the appropriate cutoff volume of 
colonoscopies per facility. HOPDs will be notified via the QualityNet 
Web site of the cutoff volume of colonscopies per facility.
    While some HOPDs perform too few colonoscopies for us to calculate 
a measure score, and we would not publicly report their data, these 
facilities would remain in the measure cohort. Typically, for public 
reporting of hospital measures on the Hospital Compare Web site, the 
measure score is reported as ``Number of cases too small'' for 
hospitals with fewer cases than the cutoff. We will use the same 
protocol when the measure is publicly reported for the Hospital OQR 
Program, and will report a measure score as ``Number of cases too 
small'' for HOPDs with fewer cases than the cutoff on the QualityNet 
Web site.
    Comment: Many commenters were concerned that HOPDs may not have 
actionable information generated from OP-32. Specifically, commenters 
were concerned that claims would not accurately capture the data of 
patients who had initial colonoscopy at a facility but had a subsequent 
hospital visit at a different facility. Several of these commenters 
questioned whether this measure will benefit facilities or patients if 
each facility only receives a report with an aggregate number of claims 
based on historical data. Commenters requested that CMS clarify its 
plan to report detailed patient-level data confidentially to facilities 
that indicate whether the patient had a hospital visit, the type of 
visit (admission, emergency department visit, and observational stay), 
the admitting facility, and the principal discharge diagnosis. These 
reports would enable facilities to understand their performance and 
take steps where remediation is needed. One commenter also recommended 
that CMS allow at least a two-quarter black-out period so that 
hospitals have ample time to review and request corrections to their 
data.
    Response: We do not believe that claims data will be difficult to 
capture at a facility different from where the colonoscopy was 
performed. Hospitals are responsible for accurately populating claims, 
regardless of where the patient had the procedure done.
    In addition, due to commenters' concerns, we intend to conduct a 
dry run (discussed in detail above) and provide detailed facility 
specific information containing confidential patient-level data to all 
HOPDs. The dry run will generate confidential reports at the patient 
level, indicating whether the patient had a hospital visit, the type of 
visit (admission, emergency department visit, or observational stay), 
the admitting facility, and the principal discharge diagnosis. Further, 
it will enable HOPDs to see the measure score reports and have the 
opportunity to receive individual patient data and information 
contained within individual patient records. In addition, we will 
continue to generate these reports for HOPDs after we implement the 
measure beginning with the CY 2018 payment determination. HOPDs can use 
the information to identify performance gaps and develop quality 
improvement strategies. As we previously stated, dry runs have no 
payment impact and are not linked to public reporting. The main purpose 
of the dry run is to provide opportunities for hospitals to review 
their measure results and ask questions about measure methodology.
    Comment: A few commenters stated that the measure methodology 
should include risk adjustment for socioeconomic factors so the results 
are accurate and reflect differences in socioeconomic burden and racial 
composition of patients across hospitals. Commenters were concerned 
that without proper risk adjustment, a hospital that serves a 
disproportionate share of low-income patients with confounding 
socioeconomic factors may have more unplanned visits following 
outpatient procedures. Commenters stated that the measure score can be 
skewed by factors such as race, homelessness, cultural and linguistic 
barriers, and low literacy. Commenters also stated that the 
readmissions of low-income patients with confounding socioeconomic 
factors are caused by factors beyond the control of the hospital and, 
therefore, do not reflect the quality of care being provided. Several 
commenters recommended that, after the NQF has reviewed OP-32, CMS 
consider submitting this measure as part of the socioeconomic status 
(SES) trial period created by the NQF Board of Directors.
    Response: We do not believe that the measure is biased for low-
income patients with confounding socioeconomic factors. When developing 
the measure, we tested how the measure score varied among outpatient 
facilities with varying proportion of low SES patients. Using patient 
dual eligibility status as an indicator of low SES, we noted that the 
median measure score, and the measure score distribution, was similar 
among facilities with many low SES patients compared to facilities with 
a few low SES patients. Based on our testing as well as input from the 
measure developer and the national technical expert panel, we concluded 
that facilities with a high proportion of low

[[Page 66954]]

SES patients were not biased by this measure and that the measure score 
was unaffected by SES status. These findings were presented to the NQF 
All-Cause Admissions and Readmissions Measures Standing Committee on 
May 6, 2014.\21\
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    \21\ Available at: http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx.
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    Also, we thank the commenters for the suggestions to submit the 
measure as part of the SES trial period, which is a trial for a defined 
period that would assess the impact and implications of risk adjusting 
relevant quality measures for sociodemographic factors and was a 
recommendation of the Consensus Standards Approval Committee following 
its review of the NQF Expert Panel's report Risk Adjustment for 
Socioeconomic Status and Other Sociodemographic Factors. (http://www.qualityforum.org/Press_Releases/2014/NQF_Board_Approves_Trial_Risk_Adjustment.aspx). We will take this 
suggestion into consideration in future years.
    Comment: One commenter requested clarification of how the measure 
numerator and denominator for OP-32 are calculated.
    Response: The measure score is the ratio of predicted hospital 
visits (numerator) over the expected hospital visits (denominator) 
multiplied by the crude national rate. The measure score numerator is 
the predicted rate, which is the number of unplanned hospital visits 
the facility is predicted to have within 7 days of colonoscopy, and it 
accounts for the observed unplanned hospital visit rate, the number of 
colonoscopies performed at the facility, and the facility's case mix. 
This is sometimes referred to as the ``adjusted actual rate.''
    The measure score denominator is the expected rate, which is the 
number of unplanned hospital visits the facility is expected to have 
based on the nation's performance with that facility's case and mix. It 
is the sum of all patients' expected probabilities of a hospital visit, 
given their risk factors and the risk of readmission at an average 
facility. The contribution of each risk factor (for example, age) to 
the patient's risk of a hospital admission is calculated based on all 
of the patients in the measure cohort. The crude national rate is the 
average rate of hospital visits following colonoscopy observed in the 
entire measure cohort. We also refer readers to the measure discussion 
above and measure specifications (http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=75057) for a more detailed 
discussion of how the numerator and denominator are calculated.
    Comment: Commenters believed that the Medicare 3-day window payment 
policy for hospitals does not allow HOPDs to generate a claim when 
there is an inpatient admission during the 3-day window payment policy, 
that is, during the 3 days subsequent to the colonoscopy. Commenters 
stated that HOPDs may be advantaged with systematic undercounting of 
hospital visits while ASCs get a full count of all hospital visits 
within 7 days subsequent to outpatient colonoscopy. Commenters did not 
believe the methodological solution proposed by the measure developer, 
using physician claims with an HOPD Place of Service (POS) code, is 
adequate due to the high error rates in POS coding on physician claims. 
Commenters were concerned that these challenges would make comparisons 
of HOPD and ASC data impossible, and significantly reduce the validity 
of the measure in the HOPD setting.
    Response: We agree that the ability to detect meaningful variation 
is an important indication of the value of a measure. We have shown 
facility variation in unplanned hospital visits following colonoscopy 
in both nationwide Medicare data from HOPDs and also in the 2010 
Healthcare Cost and Utilization Project (HCUP) data. We have also shown 
facility variation in unplanned hospital visits among ASCs alone using 
HCUP data from California. ASCs are unaffected by the 3-day payment 
window policy.\22\ We are confident that the variation shown is a 
reflection of facility variation in quality and not as a result of any 
issues to do with the 3-day window payment policy. We are aware of the 
impact of the 3-day window payment policy and will ensure HOPD 
colonoscopies affected by the 3-day window payment policy are included 
in the measure cohort and outcome to the fullest extent possible. Based 
on our internal testing with claims data, we believe our current 
algorithm is appropriate and accurate. However, since we always strive 
for improvement, we will evaluate the colonoscopy measure dry run data 
and work with HOPDs and ASCs to further review and refine the algorithm 
if necessary.
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    \22\ Center for Medicare and Medicaid Services, ``Facility 7-Day 
Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy,'' National Quality Form Measure Submission Form, 20.
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    We clarify that HOPD colonoscopy claims for calculation of the 
measure are identified using both the physician and the facility 
claims. We did not intend to imply that colonoscopies performed in 
HOPDs are solely identified from physician claims. For both ASCs and 
HOPDs, the measure first identifies colonoscopy claims using both the 
physician claim and the corresponding facility claim to ensure that 
each colonoscopy claim is attributed to the appropriate facility. As a 
second step, the measure matches (1) physician claims that contain HOPD 
as the POS that do not have a matching facility claim with (2) 
inpatient claims to identify potential HOPD colonoscopies that have a 
subsequent inpatient admission within the measure's timeframe of 
interest. This second step identifies HOPD colonoscopy claims affected 
by the 3-day window payment policy.
    An OIG review (http://oig.hhs.gov/oas/reports/region10/11000516.pdf), concluded that, based on a sample of 2009 claims, 
inaccuracies in physician POS coding often occur where a procedure 
occurs at a HOPD or ASC and a facility claim exists, yet the physician 
claimed a nonfacility POS. By matching both facility and physician 
colonoscopy claims for any given patient, we ensure that we accurately 
identify colonoscopy claims to the fullest extent possible and 
attribute the colonoscopy to the appropriate provider including HOPD 
colonoscopies affected by the 3-day window payment policy.
    We also have taken steps to educate providers about the appropriate 
POS coding and actively audit providers to improve the accuracy of POS 
coding. Beginning in 2012, we also introduced the ``PD'' modifier to 
indicate physician claims affected by the 3-day window payment policy.
    Regarding the comment concerning challenges in comparing HOPD and 
ASC data, the measure includes colonoscopies from all outpatient 
settings to ensure that the expected hospital visit rate for any 
facility is estimated using the full national experience of colonoscopy 
patients. We appreciate the concern that there are structural 
differences in claims across HOPD and ASC settings. However, the 
measure links claims across multiple settings to identify outpatient 
colonoscopy claims, comorbidities for risk-adjustment, and patient 
outcomes. Linking patient claims across multiple settings largely 
mitigates the impact of potential difference in coding practice among 
settings and allows comparisons of colonoscopy quality across settings.
    Comment: One commenter was concerned that the low occurrence rate 
may make the measure unreportable.
    Response: On Hospital Compare, we report measure rates, but may 
refrain from publishing numerator and/or

[[Page 66955]]

denominator data if either are less than 11. Consistent with the CMS 
Policy for Privacy Act Implementation & Breach Notification, 2007, CMS 
statistical, aggregate or summarized information created as a result of 
analysis conducted using identifiable CMS data obtained under CMS-
approved projects/studies may only be disclosed if the data are not 
individual-specific and the data are aggregated to a level where no 
data cells contain 10 or fewer individuals https://www.cms.gov/Research-Statistics-Data-and-Systems/CMS-Information-Technology/SystemLifecycleFramework/downloads/privacypolicy.pdf.
    Comment: Many commenters expressed concern that, if finalized, the 
OP-32 measure's data collection period would begin July 1, 2014, 
several months before adoption of the measure is finalized. These 
commenters requested that CMS delay the beginning of the data 
submission period until at least 30 days after the rule is finalized.
    Response: After consideration of the public comments we received, 
we are not finalizing our proposal to use paid Medicare FFS claims from 
a 12-month period from July 1 of the year 3 years before the payment 
determination year to June 30 of the following year. We will not use 
administrative claims data for services that occur prior to January 1, 
2015. Instead, after the dry run, we will use paid Medicare FFS claims 
from a 12-month period from January 1 to December 31 of the year 2 
years before a payment determination year. Specifically, since we are 
finalizing this measure beginning with the CY 2018 payment 
determination, and we will start with paid Medicare FFS claims from 
January 1, 2016 to December 31, 2016.
    Comment: Some commenters suggested that CMS consider developing 
additional outcomes measures specific to colonoscopies, such as a 
measure of whether colonoscopy patients remain cancer free.
    Response: We appreciate the commenters' suggestions and will take 
them into consideration for future measure selection.
    We continue to believe that quality of care measurement in the 
clinical area of outpatient colonoscopy is an important gap area with 
ample room for improvement and that this measure has sufficient 
reliability and validity for use in the Hospital OQR Program. 
Therefore, after consideration of the public comments we received, we 
are finalizing our proposal to adopt the OP-32: Facility Seven-Day 
Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy 
measure for the Hospital OQR Program. However, to allow HOPDs 
sufficient time to review their measure data from the dry run and 
utilize the confidential facility reports with patient-level associated 
hospital event information, we are finalizing to make this measure 
required beginning with the CY 2018 payment determination and 
subsequent years, instead of the CY 2017 payment determination and 
subsequent years as proposed.
    We plan to perform a dry run of the measure in 2015. Also, with 
national implementation of a dry run of this measure, we will also 
review the appropriate cutoff volume for facilities, if necessary, in 
reporting the measure score. We refer readers to our discussion of the 
dry run and the cutoff volume above, in responses to previous comments.
    The finalized measure set for the Hospital OQR Program CY 2017 
payment determination and subsequent years, which includes previously 
finalized measures, is listed below.

   Finalized Hospital OQR Program Measure Set for the CY 2017 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
           NQF No.                           Measure name
------------------------------------------------------------------------
N/A.........................  OP-1: Median Time to Fibrinolysis.
0288........................  OP-2: Fibrinolytic Therapy Received Within
                               30 Minutes of ED Arrival. ****
0290........................  OP-3: Median Time to Transfer to Another
                               Facility for Acute Coronary Intervention.
0286........................  OP-4: Aspirin at Arrival.
0289........................  OP-5: Median Time to ECG.
0514........................  OP-8: MRI Lumbar Spine for Low Back Pain.
N/A.........................  OP-9: Mammography Follow-up Rates.
N/A.........................  OP-10: Abdomen CT--Use of Contrast
                               Material.
0513........................  OP-11: Thorax CT--Use of Contrast
                               Material.
N/A.........................  OP-12: The Ability for Providers with HIT
                               to Receive Laboratory Data Electronically
                               Directly into their ONC-Certified EHR
                               System as Discrete Searchable Data.
0669........................  OP-13: Cardiac Imaging for Preoperative
                               Risk Assessment for Non Cardiac Low Risk
                               Surgery.
N/A.........................  OP-14: Simultaneous Use of Brain Computed
                               Tomography (CT) and Sinus Computed
                               Tomography (CT).
N/A.........................  OP-15: Use of Brain Computed Tomography
                               (CT) in the Emergency Department for
                               Atraumatic Headache.
N/A.........................  OP-17: Tracking Clinical Results between
                               Visits.
0496........................  OP-18: Median Time from ED Arrival to ED
                               Departure for Discharged ED Patients.
N/A.........................  OP-20: Door to Diagnostic Evaluation by a
                               Qualified Medical Professional.
0662........................  OP-21: Median Time to Pain Management for
                               Long Bone Fracture.
N/A.........................  OP-22: ED--Left Without Being Seen. ***
0661........................  OP-23: ED--Head CT or MRI Scan Results for
                               Acute Ischemic Stroke or Hemorrhagic
                               Stroke who Received Head CT or MRI Scan
                               Interpretation Within 45 minutes of
                               Arrival.
N/A.........................  OP-25: Safe Surgery Checklist Use.
N/A.........................  OP-26: Hospital Outpatient Volume on
                               Selected Outpatient Surgical Procedures.
                               *
0431........................  OP-27: Influenza Vaccination Coverage
                               among Healthcare Personnel.
0658........................  OP-29: Endoscopy/Polyp Surveillance:
                               Appropriate Follow-up Interval for Normal
                               Colonoscopy in Average Risk Patients.
0659........................  OP-30: Endoscopy/Polyp Surveillance:
                               Colonoscopy Interval for Patients with a
                               History of Adenomatous Polyps--Avoidance
                               of Inappropriate Use.
1536........................  OP-31: Cataracts--Improvement in Patient's
                               Visual Function within 90 Days Following
                               Cataract Surgery. **
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  this final rule with comment period.
*** Name has been updated to correspond with NQF-endorsed name.

[[Page 66956]]

    The finalized measure set for the Hospital OQR Program CY 2018 
payment determination and subsequent years, which includes previously 
finalized measures, and which includes the newly adopted measure, OP-
32, is listed below.

   Finalized Hospital OQR Program Measure Set for the CY 2018 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
           NQF No.                           Measure name
------------------------------------------------------------------------
N/A.........................  OP-1: Median Time to Fibrinolysis.
0288........................  OP-2: Fibrinolytic Therapy Received Within
                               30 Minutes of ED Arrival. ****
0290........................  OP-3: Median Time to Transfer to Another
                               Facility for Acute Coronary Intervention.
0286........................  OP-4: Aspirin at Arrival.
0289........................  OP-5: Median Time to ECG.
0514........................  OP-8: MRI Lumbar Spine for Low Back Pain.
N/A.........................  OP-9: Mammography Follow-up Rates.
N/A.........................  OP-10: Abdomen CT--Use of Contrast
                               Material.
0513........................  OP-11: Thorax CT--Use of Contrast
                               Material.
N/A.........................  OP-12: The Ability for Providers with HIT
                               to Receive Laboratory Data Electronically
                               Directly into their ONC-Certified EHR
                               System as Discrete Searchable Data.
0669........................  OP-13: Cardiac Imaging for Preoperative
                               Risk Assessment for Non Cardiac Low Risk
                               Surgery.
N/A.........................  OP-14: Simultaneous Use of Brain Computed
                               Tomography (CT) and Sinus Computed
                               Tomography (CT).
N/A.........................  OP-15: Use of Brain Computed Tomography
                               (CT) in the Emergency Department for
                               Atraumatic Headache.
N/A.........................  OP-17: Tracking Clinical Results between
                               Visits.
0496........................  OP-18: Median Time from ED Arrival to ED
                               Departure for Discharged ED Patients.
N/A.........................  OP-20: Door to Diagnostic Evaluation by a
                               Qualified Medical Professional.
0662........................  OP-21: Median Time to Pain Management for
                               Long Bone Fracture.
N/A.........................  OP-22: ED--Left Without Being Seen. ***
0661........................  OP-23: ED--Head CT or MRI Scan Results for
                               Acute Ischemic Stroke or Hemorrhagic
                               Stroke who Received Head CT or MRI Scan
                               Interpretation Within 45 minutes of
                               Arrival.
N/A.........................  OP-25: Safe Surgery Checklist Use.
N/A.........................  OP-26: Hospital Outpatient Volume on
                               Selected Outpatient Surgical Procedures.
                               *
0431........................  OP-27: Influenza Vaccination Coverage
                               among Healthcare Personnel.
0658........................  OP-29: Endoscopy/Polyp Surveillance:
                               Appropriate Follow-up Interval for Normal
                               Colonoscopy in Average Risk Patients.
0659........................  OP-30: Endoscopy/Polyp Surveillance:
                               Colonoscopy Interval for Patients with a
                               History of Adenomatous Polyps--Avoidance
                               of Inappropriate Use.
1536........................  OP-31: Cataracts--Improvement in Patient's
                               Visual Function within 90 Days Following
                               Cataract Surgery. **
N/A.........................  OP-32: Facility 7-Day Risk-Standardized
                               Hospital Visit Rate after Outpatient
                               Colonoscopy. ****
------------------------------------------------------------------------
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  this final rule with comment period.
*** Name has been updated to correspond with NQF-endorsed name.
**** New measure finalized for the CY 2018 payment determination and
  subsequent years.

F. Possible Hospital OQR Program Measures and Topics for Future 
Consideration

    The current measure set for the Hospital OQR Program includes 
measures that assess processes of care, imaging efficiency patterns, 
care transitions, ED throughput efficiency, the use of health 
information technology (health IT), care coordination, patient safety, 
and volume. For future payment determinations, we are considering 
expanding these measure areas and creating measures in new areas. 
Specifically, we are exploring (1) electronic clinical quality 
measures; (2) partial hospitalization measures; (3) behavioral health 
measures; and (4) other measures that align with the National Quality 
Strategy and the CMS Quality Strategy domains.
1. Electronic Clinical Quality Measures
    HHS believes all patients, their families, and their health care 
providers should have consistent and timely access to their health 
information in a standardized format that can be securely exchanged 
between the patient, providers, and others involved in the patient's 
care. (HHS August 2013 Statement, ``Principles and Strategy for 
Accelerating Health Information Exchange'' (http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf). The 
Department is committed to accelerating health information exchange 
(HIE) through the use of electronic health records (EHRs) and other 
types of health information technology (health IT) across the broader 
care continuum through a number of initiatives including: (1) Alignment 
of incentives and payment adjustments to encourage provider adoption 
and optimization of health IT and HIE services through Medicare and 
Medicaid payment policies; (2) adoption of common standards and 
certification requirements for interoperable health IT; (3) support for 
privacy and security of patient information across all HIE-focused 
initiatives; and (4) governance of health information networks.
    More information on the governance of health information networks 
and its role in facilitating interoperability of health information 
systems can be found at: http://www.healthit.gov/sites/default/files/ONC10yearInteroperabilityConceptPaper.pdf.
    These initiatives are designed to encourage HIE among health care 
providers, including professionals and hospitals eligible for the 
Medicare and Medicaid EHR Incentive Programs as well as those who are 
not eligible for those programs, and are designed to improve care 
delivery and coordination across the entire care continuum. For 
example, the Transition of Care Measure #2 in Stage 2 of the Medicare 
and Medicaid EHR Incentive Programs (77 FR 54017 through 54020) 
requires HIE to share summary records for more than 10 percent of care 
transitions.

[[Page 66957]]

    We anticipate that as EHR technology evolves and more 
infrastructure is operational, we will begin to accept electronic 
reporting of many measures from EHR technology certified under the ONC 
health IT Certification Program. We are working diligently toward this 
goal. We believe that submitting data for the Hospital OQR Program 
electronically would significantly reduce the administrative burden 
associated with reporting chart-abstracted measures. We recognize that 
considerable work needs to be done by measure owners and health IT 
developers and implementers to make this possible with respect to the 
clinical quality measures targeted for electronic specifications (e-
specifications). This work includes completing e-specifications for 
measures, pilot testing, reliability and validity testing, and 
implementing such specifications in certified EHR technology to capture 
and calculate the results.
    We received the following comments on these future measures.
    Comment: Many commenters supported CMS' efforts to establish 
electronic clinical quality measures after validation and testing, but 
expressed concerns and offered suggestions. One commenter specifically 
noted the importance of health information exchanges in disseminating 
infection prevention and control information across the care continuum. 
Some commenters encouraged CMS to obtain input from ONC and hospital 
staff, for the purpose of ensuring the maturity of e-specifications and 
the ability of certified EHRs to support valid, feasible, and reliable 
electronic clinical quality measures for implementation in different 
programs. Some commenters urged CMS to proceed in a phased approach to 
implementing electronic clinical quality measures.
    Response: We agree that health information exchanges are critical 
in quality care improvement, including infection prevention and 
control. To the greatest extent feasible, we strive to work with ONC 
and stakeholders, including hospital staff, to develop and specify 
electronic clinical quality measures before their adoption. If we 
decide to propose electronic clinical quality measures in the future, 
we will consider a phased approach.
    Comment: One commenter stated that it is premature to expand the 
measure set to include electronic clinical quality measures at this 
time because tremendous work in developing or defining e-
specifications, pilot testing, and validity and reliability testing is 
still needed.
    Response: We recognize that much work needs to be done before the 
adoption of electronic clinical quality measures. However, we also 
believe that implementation of electronic clinical quality measures 
will ultimately reduce provider burden and facilitate care coordination 
and patient engagement. We will weigh and balance these concerns when 
we propose to adopt electronic clinical quality measures in the future.
    Comment: One commenter stated that the additional time needed to 
develop electronic clinical quality measures will allow hospitals to 
optimize their EHRs and develop information sharing networks.
    Response: We thank the commenter for raising this concern. We 
believe, to the extent feasible, it is important to ensure that 
hospitals are ready to implement EHRs and will continue to work with 
them as we implement electronic clinical quality measures.
    We thank the commenters for their views and will consider them as 
we develop and implement future electronic clinical quality measures.
2. Partial Hospitalization Program Measures
    We seek to develop a comprehensive set of quality measures to be 
available for widespread use for informed decision-making and quality 
improvement in the hospital outpatient setting. Therefore, in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 75106), we stated 
that, through future rulemaking, we intended to propose new measures 
that help us further our goal of achieving better health care and 
improved health for Medicare beneficiaries who receive health care in 
hospital outpatient settings, such as partial hospitalization programs 
(PHPs) that are part of HOPDs.
    Partial hospitalization is an intensive outpatient program of 
psychiatric services provided to patients as an alternative to 
inpatient psychiatric care for individuals who have acute mental 
illness. The PHP was designed to assist individuals with acute 
psychiatric illness in managing debilitating symptoms and prevent the 
need for hospitalization or rehospitalization. Behavioral health 
treatments and services have improved and evolved through medication 
advances, recovery-based therapy, and evidenced-based interventions, 
including peer supports. PHP services have had the opportunity to 
evolve to provide individuals with a unique setting that can contribute 
to maintaining social and community connectivity while focusing on 
sustained recovery to prevent initial hospitalization during a given 
episode and subsequent rehospitalization. Currently, the Hospital OQR 
Program has not adopted measures applicable to PHPs.
    Although we believe that the PHP is an important program offering 
an alternative to inpatient stays, we note that PHP utilization has 
been declining.\23\ Therefore, as we consider implementing PHP measures 
in future years, we invited public comment regarding the utility of 
including measures for this care setting in the Hospital OQR Program.
---------------------------------------------------------------------------

    \23\ http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/Leung_PHP_PPS_2010.pdf.
---------------------------------------------------------------------------

    We specifically requested public comment on three PHP measures we 
submitted to the MAP for consideration as part of the ``MAP Pre-
Rulemaking Report: 2014 Recommendations on Measures for More than 20 
Federal Programs'' (http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx 
(formerly referred to as the ``List of Measures Under 
Consideration'')):
     30-Day Readmission;
     Group Therapy; and
     No Individual Therapy.
    These measures are included in the Program for Evaluating Payment 
Patterns Electronic Reports (PEPPERs) developed under the Comprehensive 
Error Rate Testing (CERT) Program. Further information on these claims-
based measures that provide indicators of quality of care can be found 
at http://www.pepperresources.org/LinkClick.aspx?fileticket=stK9uUmQWlM%3d&tabid=148.
    We also requested public input on other possible quality measures 
for partial hospitalization services for inclusion in the Hospital OQR 
Program in future years.
    Comment: Some commenters supported CMS' consideration of PHP 
measures, noting that these measures will encourage hospitals to 
monitor their performance over time and identify opportunities for 
quality improvement.
    Response: We thank the commenters for their support. We agree that 
PHPs are an important alternative to inpatient stays and there may be 
value in collecting and reporting this data.
    Comment: Many commenters did not support PHP quality metrics in the 
Hospital OQR Program, stating that there are significant differences 
between outpatient and PHP treatment services,

[[Page 66958]]

structure, and supervision, as well as other concerns. Commenters 
recommended that CMS adopt PHP measures that have been NQF-endorsed and 
are MAP-recommended, noting that the three PHP measures mentioned in 
the proposed rule were not recommended by the MAP because they were not 
well-defined or required additional evidence relating to their value. 
Commenters suggested that CMS address the MAP's concerns before 
proposing these measures for use in the Hospital OQR Program.
    Response: We disagree that PHP measures are not appropriate for the 
Hospital OQR Program based on differences between outpatient and PHP 
treatment services, structure, and supervision. Because PHP services 
are provided by HOPDs, are an important alternative to inpatient stays, 
and are utilized by Medicare beneficiaries, we believe that there may 
be value in collecting and reporting quality measure data for these 
services. However, at this time, we are not proposing any PHP measures 
for the Hospital OQR Program. The PHP measures on which we invited 
comment have not been recommended by the MAP. The MAP stated that it 
needed further information on the 30-Day Readmission measure and 
recommended that the No Individual Therapy and Group Therapy measures 
be submitted for NQF endorsement before they are adopted by the 
Hospital OQR Program (http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx)
.
    If we do consider proposing PHP measures in the future, to the 
extent feasible, we intend to propose to adopt measures which are NQF-
endorsed and have been MAP-recommended. Before adopting a measure, we 
try to address stakeholder concerns, including the differences in the 
outpatient and PHP settings. Finally, if we choose to propose the three 
measures discussed in the proposed rule, we will consider the comments 
of the MAP and address them to the extent feasible. We note, however, 
that not all of the measures adopted by the Hospital OQR Program are 
NQF-endorsed, nor is NQF endorsement a program requirement (section 
1833(t)(17)(C)(i) of the Act).
    Comment: Some commenters believed that using PHP measures in the 
Hospital OQR Program would constitute a duplication of efforts because 
the measures are already included in PEPPER. Other commenters also 
viewed PEPPER measures as auditing tools rather than quality measures.
    Response: We will consider the commenters' viewpoint if we propose 
to adopt the PEPPER measures in future rulemaking. We note that these 
measures, while addressing areas of payment concern, also address areas 
of quality of care concern and that the PEPPER measures are not 
publicly reported at the facility level.
    Comment: Commenters expressed concerns about the 30-day 
readmissions measure because this patient population tends to be 
readmitted for behavioral conditions due to social issues for which 
hospitals have little control. Commenters stated that PHP patients' 
clinical needs evolve over time, that readmissions are often needed to 
stabilize patients, and that measuring facilities on readmission rates 
could cause unintended consequences. Commenters further stated that the 
readmission measure is not sufficiently risk-adjusted.
    Response: We thank the commenters for raising these concerns. We 
will consider these concerns if we propose to adopt the 30-day 
readmission PEPPER measure for the Hospital OQR Program in future 
rulemaking.
    Comment: Some commenters stated that CMS should better understand 
the challenges facing PHP and readmissions before imposing PHP quality 
measures because quality measures could further destabilize the PHP 
rate and threaten access to this service.
    Response: We understand that utilization of PHP services has been 
decreasing and that many challenges may be unique to the PHP setting. 
We will consider these issues before proposing to adopt any PHP 
measures in future rulemaking.
    Comment: One commenter recommended that CMS include the 60+ Days of 
Service measure in the PHP measure suite as well as assessments of 
intensive outpatient programs that treat individuals with substance use 
disorders.
    Response: We thank the commenter for the recommendation and will 
consider this measure if we propose to adopt PHP measures in future 
rulemaking. We note that Medicare does not cover intensive outpatient 
program (IOP) services, and this could affect the usefulness of the 
recommended measure for the Hospital OQR Program.
    Comment: Some commenters encouraged CMS to develop specific PHP 
measures such as: (1) Requiring PHPs to identify a specific appointment 
within 14 days; (2) requiring continuing care information be provided 
directly to the follow-up provider; and (3) establishing Quality 
Service Criteria for use in judging performance, including criteria 
relating to access, treatment intensity, discharge planning, and 
continuity of care.
    Response: We appreciate the commenters' suggestions. We support 
coordination of care efforts and will consider developing these types 
of measures for the Hospital OQR Program.
    Comment: One commenter argued that the Group Therapy measure should 
only be adopted as a percentage rating of group therapy as a comparison 
to all interventions billed. The commenter also noted that both group 
therapy and individual psychotherapy are needed for optimal success.
    Response: We thank the commenter for sharing its views. We are 
unclear what the commenter means by ``a percentage rating of group 
therapy'' and so cannot respond at this time. However, we welcome 
clarification and will consider all of the commenter's concerns if we 
propose to adopt PHP measures in future rulemaking.
    Comment: One commenter voiced support for our efforts in working 
toward electronic quality of care measures in the PHP setting of care.
    Response: We note that we did not specifically discuss electronic 
quality-of-care measures for the PHP setting in the proposed rule. 
However, we are working diligently to implement electronic measures 
across the quality reporting programs, and we may consider electronic 
clinical quality measures for the PHP setting in the future.
    We thank the commenters for their views and will consider them as 
we develop future policies.
3. Behavioral Health Measures
    In addition to PHP measures, we are considering other measures 
specific to behavioral health in the outpatient setting, including 
measures addressing depression and alcohol abuse. Major depression is a 
leading cause of disability in the United States, complicates the 
treatment of other serious illnesses, and is associated with an 
increased risk of suicide. Major depression is a common mental health 
condition, affecting 6 to 9 percent of those over 55 years of age.\24\ 
Along with other serious mental health conditions, it has a higher 
Medicare inpatient readmission rate than all other conditions with the 
exception of heart failure.\25\ Alcohol use disorders are the

[[Page 66959]]

most prevalent type of addictive disorder in individuals ages 65 and 
over.\26\ Roughly 6 percent of the elderly are considered to be heavy 
users of alcohol.\27\ Alcohol abuse is often associated with depression 
and contributes to the etiology of serious medical conditions, 
including liver disease and coronary heart disease. Because of the 
prevalence of depression and alcohol abuse and their impact on the 
Medicare population, we believe that we should consider measures in 
these and other behavioral health areas for use in future Hospital OQR 
Program payment determination years. Therefore, we invited public 
comment on measures applicable to these areas that would be suitable 
for the Hospital OQR Program.
---------------------------------------------------------------------------

    \24\ O'Connor E, Whitlock E, Beil T, et al. Screening for 
depression in adult patients in primary care settings: a systematic 
evidence review. Annals of Internal Medicine 2009 December 
1:151(11):793-803.
    \25\ Stephen F. Jencks, M.D., M.P.H., Mark V. Williams, M.D., 
and Eric A. Coleman, M.D., M.P.H. Rehospitalizations among Patients 
in the Medicare Fee-for-Service Program. N Engl J Med 2009;360:1418-
28.
    \26\ Stephen Ross. Alcohol Use Disorders in the Elderly. 
Psychiatry Weekly (no date) Available at: http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19.
    \27\ AL Mirand and JW Welte. Alcohol consumption among the 
elderly in a general population, Erie County, New York. Am J Public 
Health. 1996 July; 86(7): 978-984.
---------------------------------------------------------------------------

    Comment: Many commenters supported CMS' efforts to develop and 
implement quality measurement tools related to alcohol abuse and 
depression because of the prevalence of these conditions within the 
Medicare population and the need to improve care coordination for these 
conditions. Commenters encouraged CMS to incorporate measures that 
address the following principles: (1) The patient's readiness for 
treatment; (2) the treatment will address mental health issues in 
conjunction with the alcohol abuse; and (3) the patient's willingness 
to participate in an alcohol abuse program without the need for coerced 
efforts.
    Response: We thank commenters for their support, and we will 
consider these principles if we choose to propose to adopt behavioral 
health measures in the future.
    Comment: One commenter suggested adopting a measure that evaluates 
screening for psychological/physical or sexual trauma, arguing that 
trauma informed care is critical to successful recovery and better 
engagement and retention in ambulatory care.
    Response: We agree that this clinical topic is important, and we 
will consider adopting a measure screening for trauma in the future.
    Comment: Some commenters argued that behavioral health measures are 
more suited to the IPFQR Program.
    Response: We disagree with this view. We believe all care settings 
should seek to improve the behavioral health outcomes of their 
patients.
    Comment: One commenter recommended that CMS work with the NQF to 
develop appropriate measures related to beneficiary wellness concerns. 
The commenter noted that behavioral health quality measures are used in 
the nursing home and home health care settings, and that these measures 
should be reviewed to determine if they are applicable to the 
outpatient setting. The commenter believed that any measures used 
should be claims-based and not generated by chart abstraction to 
minimize administrative burden.
    Response: We interpret ``beneficiary wellness concerns'' to mean 
measures of behavioral health. We endeavor to adopt measures that are 
NQF-endorsed and believe it is critical to work with stakeholders to 
develop measures. However, we note that not all of the measures adopted 
by the Hospital OQR Program are NQF-endorsed, nor is NQF endorsement a 
program requirement (section 1833(t)(17)(C)(i) of the Act) as consensus 
among affected parties can be reflected through means other than NQF 
endorsement. In addition, to the extent feasible, we believe it is 
important to align measures across all our quality reporting programs, 
and we will look to other settings for measures of behavioral health. 
Finally, we will continue to examine options for less burdensome 
reporting mechanisms for these and other program measures in the 
future; this includes claims-based and electronically submitted data.
    Comment: Some commenters recommended that behavioral health quality 
measures not be considered at this time for the Hospital OQR Program, 
arguing that additional research and education needs to be done to 
develop helpful behavioral measures.
    Response: We will continue to research appropriate measures and 
work with stakeholders as we consider behavioral health measures for 
the Hospital OQR Program in the future.
    Comment: One commenter urged CMS to work with its behavioral health 
Technical Experts Panel (TEP) and the MAP to identify and bring forward 
behavioral health measures that are suitable for this population and 
for consideration by all stakeholders.
    Response: We convene TEPs, groups of stakeholders and experts, to 
provide technical input on the development, selection, and maintenance 
of measures. Convening TEPs is one important step in the measure 
development or reevaluation process to ensure transparency and it 
provides an opportunity to receive multi-stakeholders input early in 
the process. We refer readers to http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/TechnicalExpertPanels.html for more information on TEPs. We believe it 
is important to work with stakeholders as we develop and adopt 
behavioral health measures. We will leverage both TEPs and the MAP as 
we consider future measures.
    Comment: One commenter recommended that CMS incorporate 
standardized behavioral health measures that are currently in 
widespread use, such as the National Center for Quality Assurance's 
behavioral health measures.
    Response: We thank the commenter for its recommendation, and we 
will consider these measures for future rulemaking.
    Comment: Some commenters supported CMS' efforts to identify 
depression and depression-related issues in the Medicare population. 
The commenters believed that an identification tool should be used for 
any new patient encounter and recommended that every Medicare provider 
should be required to use a depression screening tool at any initial 
patient screening/encounter. Some commenters, however, noted that 
depression screening in the ambulatory setting is nearly universal, 
and, therefore, such a measure may be ``topped-out'' even before 
adoption.
    Response: We thank commenters for their support. We interpret the 
commenters' suggestions to mean that we should include measures that 
encourage providers to screen patients to identify depression. We will 
consider depression screening measures in the future.
    We thank the commenters for their views on behavioral health 
measures in the outpatient setting and will consider them as we develop 
future policies.
4. National Quality Strategy and CMS Quality Strategy Measure Domains
    In considering future Hospital OQR Program measures, we are 
focusing on the following National Quality Strategy and CMS Quality 
Strategy measure domains: make care safer, strengthen person and family 
engagement, promote effective communication and coordination of care, 
promote effective prevention and treatment, work with communities to 
promote best practices of healthy living, and make care affordable. We 
believe measures in these areas will promote better care and align 
measures across multiple CMS quality programs, in particular, the 
Hospital OQR, Hospital IQR, and ASCQR Programs.

[[Page 66960]]

    We received the following comments on these future measures.
    Comment: Many commenters supported the Hospital OQR Program's 
effort to align future measures with the NQS priorities and CMS quality 
strategy, noting that doing so will make the Hospital OQR Program more 
consistent with the Hospital IQR Program. Commenters urged CMS to 
further align our measures with other quality reporting programs. One 
commenter stated that CMS should respond to all MAP recommendations as 
part of any proposed rule so that stakeholders may gain a better 
understanding of our decisions, particularly when a MAP recommendation 
is not being followed.
    Response: We thank the commenters for their support. To the extent 
practicable, we strive to align measures across our quality reporting 
programs. We also appreciate the feedback of the MAP and work to 
address its concerns before adopting measures in the Hospital OQR 
Program. As we stated above, to the extent feasible, we strive to state 
and address the MAP concerns when adopting a measure.
    Comment: Some commenters recommended that CMS introduce measures to 
track and monitor radiation dose exposure and contrast dose exposure, 
including organ-specific radiation exposure based on patient weight and 
contrast administration, and a meaningful tracking mechanism for 
patient longitudinal exposure. One commenter noted that the PQRS 
program has included some similar measures giving radiologists an 
incentive to track patient exposure. In addition, the commenter noted 
that The Joint Commission, the FDA, and the EPA have all issued 
guidance recommending that exposure to radiation through medical 
devices be minimized.
    Response: We thank the commenters for their recommendations, and we 
may consider these types of measures in future years.
    Comment: One commenter urged CMS to require hospitals to comply 
with all manufacturing standards for imaging equipment to facilitate 
patient safety and promote the overall quality of patient care in 
hospitals. The commenter also recommended a measure tracking the 
demonstrated reduction in suboptimal or nondiagnostic echocardiograms 
and the resulting improvements in diagnosis and reductions in costs to 
Medicare and beneficiaries.
    Response: We thank the commenter for its recommendation, and we may 
consider these types of measures in future years.
    Comment: One commenter encouraged the implementation of a CAHPS 
survey used to encourage patient experience improvement across the 
ambulatory surgery sector. The commenter urged CMS to continue to 
analyze and address the role of the survey and discuss the comparative 
roles of surveys across other care settings and quality reporting 
programs. Another commenter encouraged CMS to involve consumers and 
purchasers in refinement of the CAHPS survey for the outpatient 
setting.
    Response: We thank the commenters for these suggestions. We intend 
to include such survey measures for the outpatient setting on our 
December 1, 2014 Measures under Consideration (MUC) List for MAP 
review. We currently use patient experience-of-care surveys in a 
variety of health care settings. For example, both the ESRD QIP and the 
Hospital IQR Program use patient experience-of-care surveys, the In-
center Hemodialysis Consumer Assessment of Healthcare Providers and 
Systems (ICH CAHPS) and the Hospital Consumer Assessment of Healthcare 
Providers and Systems (HCAHPS), respectively. We agree that, to the 
extent feasible, survey instruments should be aligned and coordinated 
across settings. The developmental process of CAHPS and patient 
experience-of-care surveys involves several opportunities for input 
from patients, patient advocates, and stakeholders from the HOPD and 
ASC industry, including professional associations, clinicians, 
accreditation organizations, and the government. These opportunities 
include serving on the TEP, responding to the Federal Register notice 
requesting measures, topics, or public domain questionnaires, and 
providing comment on the survey through the OMB clearance process.
    Comment: One commenter recommended that CMS target high volume 
procedures that may be unnecessary at the composite, individual 
hospital, and physician levels, including those that are part of the 
Choosing Wisely campaign.
    Response: We thank the commenter for its recommendation, and we may 
consider these types of measures in future years.
    Comment: One commenter requested that CMS risk-adjust measures of 
clinical outcomes for SES in order to avoid disadvantaging hospitals, 
particularly safety-net hospitals that are evaluated on these outcomes.
    Response: We thank the commenter for this feedback. We addressed 
the topic of risk adjustment with respect to the Hospital IQR and 
Hospital Readmissions Reduction Programs in the FY 2015 IPPS/LTCH PPS 
final rule (79 FR 50219 and 50026 through 50027), and we believe the 
same approach would apply to risk adjustment for Hospital OQR Program 
measures because the Hospital OQR Program outcome measures are risk-
adjusted, and this approach aligns with outcome measures methodology 
used in other programs across settings. The purpose of risk adjustment 
when comparing outcome rates for two different outpatient facilities is 
to statistically compensate (or adjust) for risk factor differences in 
the two facilities so that the outcome rates can be compared 
legitimately despite the differences in risk factors.
    We appreciate the commenters' suggestions on the importance of 
addressing SES in the Hospital OQR Program. We continue to consider and 
evaluate stakeholder concerns regarding the impact of patients' SES on 
Hospital OQR measures.
    Comment: Many commenters urged CMS to adopt only NQF-endorsed 
measures for its quality reporting and pay-for-performance programs, 
arguing that the consensus-based process validates quality measures' 
rigor and ensures that the measures have been are reliable and have 
been carefully tested, validated, and scrutinized. Commenters also 
commended CMS for considering the MAP's input in selecting measures, 
particularly because the MAP considers NQF endorsement, measures' 
feasibility of implementation, stakeholder input, and validity.
    Response: We thank commenters for their support for the MAP 
process. To the extent feasible, we seek to adopt measures that have 
been NQF-endorsed. However, we also note that consensus among affected 
parties can be reflected through means other than NQF endorsement. We 
also refer readers to our discussion above in section XIII.E. of this 
final rule with comment period in response to a similar comment.
    Comment: Commenters suggested that CMS consider adopting measures 
of HAIs, such as SSI, CLABSI, CAUTI, MRSA, and C. difficile, or 
infection control process measures, such as MRSA colonization at 
admission or hand hygiene adherence, use of barrier precautions, or 
other process measures. Commenters noted that infections such as MRSA 
and C. difficile are a significant source of morbidity and mortality. 
One commenter encouraged CMS to develop composite measures of common 
surgical infections; another commenter requested that CMS adopt

[[Page 66961]]

measures that have aligned data elements with the CDC's NHSN.
    Response: We agree that it is important to minimize infection 
events that present significant health risks to patients. We also 
believe that infection prevention measures provide information critical 
to quality improvement efforts. We note that several measures that 
focus on these infections are already included in the Hospital IQR 
Program (79 FR 50202) and are aligned with the CDC's NHSN. We will 
consider including these types of measures for the outpatient setting 
in the Hospital OQR Program and aligning them with other quality 
reporting programs, such as the Hospital IQR Program, to the extent 
feasible in future years.
    Comment: One commenter suggested that CMS consider measures of 
adverse outcomes from high-volume procedures such as cataract removals, 
other eye procedures, endoscopies, musculoskeletal procedures, and 
colonoscopies.
    Response: We thank the commenter for its suggestion and may 
consider these types of measures in future years.
    We thank the commenters for their views and will consider them as 
we develop future policies.

G. Payment Reduction for Hospitals That Fail To Meet the Hospital 
Outpatient Quality Reporting (OQR) Program Requirements for the CY 2015 
Payment Update

1. Background
    Section 1833(t)(17) of the Act, which applies to subsection (d) 
hospitals (as defined under section 1886(d)(1)(B) of the Act), states 
that hospitals that fail to report data required to be submitted on the 
measures selected by the Secretary, in the form and manner, and at a 
time, required by the Secretary will incur a 2.0 percentage point 
reduction to their Outpatient Department (OPD) fee schedule increase 
factor; that is, the annual payment update factor. Section 
1833(t)(17)(A)(ii) of the Act specifies that any reduction applies only 
to the payment year involved and will not be taken into account in 
computing the applicable OPD fee schedule increase factor for a 
subsequent payment year.
    The application of a reduced OPD fee schedule increase factor 
results in reduced national unadjusted payment rates that apply to 
certain outpatient items and services provided by hospitals that are 
required to report outpatient quality data in order to receive the full 
payment update factor and that fail to meet the Hospital OQR Program 
requirements. Hospitals that meet the reporting requirements receive 
the full OPPS payment update without the reduction. For a more detailed 
discussion of how this payment reduction was initially implemented, we 
refer readers to the CY 2009 OPPS/ASC final rule with comment period 
(73 FR 68769 through 68772).
    The national unadjusted payment rates for many services paid under 
the OPPS equal the product of the OPPS conversion factor and the scaled 
relative payment weight for the APC to which the service is assigned. 
The OPPS conversion factor, which is updated annually by the OPD fee 
schedule increase factor, is used to calculate the OPPS payment rate 
for services with the following status indicators (listed in Addendum B 
to this proposed rule, which is available via the Internet on the CMS 
Web site): ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``V,'' 
or ``U.'' We note that we are finalizing our proposal to delete status 
indicator ``X''' as described in sections II.A.3. and X. of this final 
rule with comment period. We also note that we are finalizing our 
proposal to develop status indicator ``J1'' as part of our 
comprehensive APC policy, effective for CY 2015, discussed in section 
II.A.2.e. of the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74861 through 74910) and sections II.A.2.e. of the CY 2015 OPPS/ASC 
proposed rule and this final rule with comment period. Payment for all 
services assigned to these status indicators will be subject to the 
reduction of the national unadjusted payment rates for hospitals that 
fail to meet Hospital OQR Program requirements, with the exception of 
services assigned to New Technology APCs with assigned status indicator 
``S'' or ``T.'' We refer readers to the CY 2009 OPPS/ASC final rule 
with comment period (73 FR 68770 through 68771) for a discussion of 
this policy.
    The OPD fee schedule increase factor is an input into the OPPS 
conversion factor, which is used to calculate OPPS payment rates. To 
reduce the OPD fee schedule increase factor for hospitals that fail to 
meet reporting requirements, we calculate two conversion factors--a 
full market basket conversion factor (that is, the full conversion 
factor), and a reduced market basket conversion factor (that is, the 
reduced conversion factor). We then calculate a reduction ratio by 
dividing the reduced conversion factor by the full conversion factor. 
We refer to this reduction ratio as the ``reporting ratio'' to indicate 
that it applies to payment for hospitals that fail to meet their 
reporting requirements. Applying this reporting ratio to the OPPS 
payment amounts results in reduced national unadjusted payment rates 
that are mathematically equivalent to the reduced national unadjusted 
payment rates that would result if we multiplied the scaled OPPS 
relative payment weights by the reduced conversion factor. For example, 
to determine the reduced national unadjusted payment rates that applied 
to hospitals that failed to meet their quality reporting requirements 
for the CY 2010 OPPS, we multiplied the final full national unadjusted 
payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule 
with comment period by the CY 2010 OPPS final reporting ratio of 0.980 
(74 FR 60642).
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 
through 68772), we established a policy that the Medicare beneficiary's 
minimum unadjusted copayment and national unadjusted copayment for a 
service to which a reduced national unadjusted payment rate applies 
would each equal the product of the reporting ratio and the national 
unadjusted copayment or the minimum unadjusted copayment, as 
applicable, for the service. Under this policy, we apply the reporting 
ratio to both the minimum unadjusted copayment and national unadjusted 
copayment for services provided by hospitals that receive the payment 
reduction for failure to meet the Hospital OQR Program reporting 
requirements. This application of the reporting ratio to the national 
unadjusted and minimum unadjusted copayments is calculated according to 
Sec.  419.41 of our regulations, prior to any adjustment for a 
hospital's failure to meet the quality reporting standards according to 
Sec.  419.43(h). Beneficiaries and secondary payers thereby share in 
the reduction of payments to these hospitals.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68772), we established the policy that all other applicable adjustments 
to the OPPS national unadjusted payment rates apply when the OPD fee 
schedule 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

[[Page 66962]]

meet the quality data reporting requirements, the hospitals' costs are 
compared to the reduced payments for purposes of outlier eligibility 
and payment calculation. We established this policy in the OPPS 
beginning in the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60642). For a complete discussion of the OPPS outlier calculation and 
eligibility criteria, we refer readers to section II.G. of this final 
rule with comment period.
2. Reporting Ratio Application and Associated Adjustment Policy for CY 
2015
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41017), 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 2015 annual payment update factor. For the CY 2015 
OPPS, the proposed reporting ratio is 0.980, calculated by dividing the 
proposed reduced conversion factor of $72.692 by the proposed full 
conversion factor of $74.176. We proposed to continue to apply the 
reporting ratio to all services calculated using the OPPS conversion 
factor. For the CY 2015 OPPS, we proposed to apply the reporting ratio, 
when applicable, to all HCPCS codes to which we have assigned status 
indicators ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' ``R,'' ``S,'' ``T,'' ``V,'' 
and ``U'' (other than new technology APCs to which we have assigned 
status indicators ``S'' and ``T''). We note that we are finalizing our 
proposal to delete status indicator ``X'' as described in sections 
II.A.3. and X. of the proposed rule and this final rule with comment 
period. We note that we are finalizing our proposal to develop status 
indicator ``J1'' as part of our CY 2015 comprehensive APC policy, 
discussed in sections II.A.2.e. of the CY 2015 OPPS/ASC proposed rule 
and this final rule with comment period and to apply the reporting 
ratio to the comprehensive APCs. 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.
    We did not receive public comments on our proposal. Therefore, we 
are finalizing our proposal to apply the Hospital OQR Program reduction 
in the manner described above. We also are finalizing our proposal, 
with modification, to reflect the CY 2015 OPPS status indicators to 
which the adjustment would apply. For the CY 2015 OPPS, the final 
reporting ratio is 0.980, calculated by dividing the final reduced 
conversion factor of $72.661 by the final full conversion factor of 
$74.144.
    As a result, for the CY 2015 OPPS, we are applying a reporting 
ratio of 0.980 to the national unadjusted payments, minimum unadjusted 
copayments, and national unadjusted copayments for all applicable 
services for those hospitals failing to meet the Hospital OQR Program 
reporting requirements. This reporting ratio applies to HCPCS codes 
assigned status indicators ``J1,'' ``P,'' ``Q1,'' ``Q2,'' ``Q3,'' 
``R,'' ``S,'' ``T,'' ``U,'' or ``V,'' excluding services paid under New 
Technology APCs. 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 will continue to apply. We 
continue to calculate OPPS outlier eligibility and outlier payment 
based on the reduced rates for those hospitals that fail to meet the 
reporting requirements.

H. Requirements for Reporting Hospital OQR Program Data for the CY 2017 
Payment Determination and Subsequent Years

1. Administrative Requirements for the CY 2017 Payment Determination 
and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75108 through 75109) for a discussion of the Hospital OQR 
Program procedural requirements for the CY 2015 payment determination 
and subsequent years. In that final rule with comment period, we 
codified these procedural requirements at 42 CFR 419.46(a).
2. Form, Manner, and Timing of Data Submitted for the Hospital OQR 
Program
a. General Procedural Requirements
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75110 through 75111) for a discussion of Hospital OQR 
Program general procedural requirements. In that final rule with 
comment period, we finalized our proposal to codify these general 
procedural requirements at 42 CFR 419.46(c).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we proposed to 
correct a typographical error in 42 CFR 419.46(c). This section states, 
``Except as provided in paragraph (d) of this section, hospitals that 
participate in the Hospital OQR Program must submit to CMS data on 
measures selected under section 1833(17)(C) of the Act . . .'' We 
proposed to correct the erroneous reference of ``section 1833(17)(C)'' 
to ``section 1833(t)(17)(C).''
    We invited public comment on this proposal.
    We did not receive any public comments on this proposal. Therefore, 
we are finalizing the typographical correction as proposed.
b. Requirements for Chart-Abstracted Measures Where Data Are Submitted 
Directly to CMS for the CY 2017 Payment Determination and Subsequent 
Years
    The following chart-abstracted measures finalized previously and 
retained in the Hospital OQR Program require data to be submitted for 
the CY 2017 payment determination and subsequent years:
     OP-1: Median Time to Fibrinolysis;
     OP-2: Fibrinolytic Therapy Received Within 30 Minutes of 
ED Arrival (NQF # 0288);
     OP-3: Median Time to Transfer to Another Facility for 
Acute Coronary Intervention (NQF # 0290);
     OP-4: Aspirin at Arrival (NQF# 286)
     OP-5: Median Time to ECG (NQF # 0289);
     OP-18: Median Time from ED Arrival to ED Departure for 
Discharged ED Patients (NQF # 0496);
     OP-20: Door to Diagnostic Evaluation by a Qualified 
Medical Professional;
     OP-21: ED--Median Time to Pain Management for Long Bone 
Fracture (NQF # 0662);
     OP-22: ED--Left Without Being Seen;
     OP-23: ED--Head CT Scan Results for Acute Ischemic Stroke 
or Hemorrhagic Stroke who Received Head CT Scan Interpretation Within 
45 Minutes of Arrival (NQF # 0661);
     OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658); 
and
     OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous

[[Page 66963]]

Polyps--Avoidance of Inappropriate Use (NQF # 1536).
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68481 through 68484) for a discussion of the form and 
manner for data submission of these measures.
    As we noted in the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we 
neither proposed new chart-abstracted measures where patient-level data 
is submitted directly to CMS nor proposed new requirements for data 
submission for chart-abstracted measures.
c. Claims-Based Measure Data Requirements for the CY 2017 and CY 2018 
Payment Determination and Subsequent Years
    We proposed one additional claims-based measure for the CY 2017 
payment determination and subsequent years, OP-32: Facility 7-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy (79 FR 
41036 through 41039). However, as discussed in section XIII.E. of this 
final rule with comment period, we are finalizing this measure for the 
CY 2018 payment determination and subsequent years instead of the CY 
2017 payment determination and subsequent years as proposed. As 
discussed in section XIII.E. of this final rule with comment period, we 
will use claims data from January 1, 2016-December 31, 2016 to 
calculate OP-32 for the CY 2018 payment determination in order to use 
the most recently available data. Therefore, we are finalizing that to 
calculate OP-32, we will use claims data from January 1--December 31 of 
the calendar year 2 years prior to the payment determination year (for 
example, for the CY 2018 payment determination, we will use data from 
January 1, 2016--December 31, 2016).
    Therefore, there will be a total of seven claims-based measures for 
the CY 2017 payment determination and subsequent years:
     OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514);
     OP-9: Mammography Follow-Up Rates;
     OP-10: Abdomen CT--Use of Contrast Material;
     OP-11: Thorax CT--Use of Contrast Material;
     OP-13: Cardiac Imaging for Preoperative Risk Assessment 
for Non-Cardiac Low Risk Surgery (NQF # 0669);
     OP-14: Simultaneous Use of Brain Computed Tomography (CT) 
and Sinus Computed Tomography (CT); and
     OP-15: Use of Brain Computed Tomography (CT) in the 
Emergency Department for Atraumatic Headache.
    For the CY 2018 payment determination and subsequent years, there 
will be a total of eight claims-based measures:
     OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514);
     OP-9: Mammography Follow-Up Rates;
     OP-10: Abdomen CT--Use of Contrast Material;
     OP-11: Thorax CT--Use of Contrast Material;
     OP-13: Cardiac Imaging for Preoperative Risk Assessment 
for Non-Cardiac Low Risk Surgery (NQF # 0669);
     OP-14: Simultaneous Use of Brain Computed Tomography (CT) 
and Sinus Computed Tomography (CT);
     OP-15: Use of Brain Computed Tomography (CT) in the 
Emergency Department for Atraumatic Headache; and
     OP-32: Facility 7-Day Risk-Standardized Hospital Visit 
Rate after Outpatient Colonoscopy.
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75111 through 75112) for a discussion of the claims-based 
measure data submission requirements for the CY 2015 payment 
determination and subsequent years.
    In the CY 2012 OPPS/ASC final rule with comment period, we deferred 
the public reporting of OP-15 (76 FR 74456). We extended the 
postponement of public reporting for this measure in the CY 2013 and CY 
2014 OPPS/ASC final rules with comment period (77 FR 68481, 78 FR 
75111). As we noted in the CY 2015 OPPS/ASC proposed rule (79 FR 
41042), we did not propose any changes to this policy. Public reporting 
for OP-15 continues to be deferred, and this deferral has no effect on 
any payment determinations; however, hospitals are still required to 
submit data as previously finalized (76 FR 74456).
    Comment: One commenter supported the proposed deferral of the 
public reporting of OP-15. The commenter appreciated CMS' concerns 
regarding inappropriate use of brain CT imaging and the need for an 
established clinical guideline to address this issue. However, the 
commenter did not believe older adults or adults on anticoagulant 
medications should be included in OP-15, and noted that current 
research suggests headaches are a potential contraindication. The 
commenter also expressed concern that claims are not detailed enough to 
capture the clinical indications needed for appropriate exclusions. As 
a result, the commenter was concerned that this measure may discourage 
clinically appropriate brain CTs for higher-risk older populations. The 
commenter believed that CMS should focus its efforts on other CT 
measures, particularly after trauma or suspected pulmonary embolism. 
Another commenter asked CMS to remove OP-15 from the measure set.
    Response: Given stakeholder concerns, including those of this 
commenter, we continue to evaluate whether OP-15 needs to be refined 
before being publicly reported. We continue to believe, for the reasons 
stated in the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74456), that the measure has value, and we will continue to collect 
data with regard to this measure. However, we will also continue to 
defer public reporting until we have resolved these concerns. Because 
the measure is claims-based, this deferral does not affect data 
submission requirements for the Hospital OQR Program (that is, HOPDs do 
not submit data for claims-based measures other than the actual FFS 
claims), and an HOPD's payment determination will not be affected based 
on OP-15 while public reporting is deferred.
d. Data Submission Requirements for Measure Data Submitted via the CMS 
Web-Based Tool for the CY 2017 Payment Determination and Subsequent 
Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75112 through 75115) for a discussion of the requirements 
for measure data submitted via the Web-based tool on a CMS Web site 
(the QualityNet Web site) for the CY 2016 payment determination and 
subsequent years.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we did not 
propose any changes to the data submission requirements for data 
submitted via the CMS Web-based tool.
e. Population and Sampling Data Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2011 OPPS/ASC final rule with comment 
period (75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74482 through 74483) for discussions of our 
policy that hospitals may voluntarily submit aggregate population and 
sample size counts for Medicare and non-Medicare encounters for the 
measure populations for which chart-abstracted data must be submitted. 
In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we did not propose 
any changes to this policy.

[[Page 66964]]

f. Review and Corrections Period for Chart-Abstracted Measures
    Under the Hospital OQR Program, hospitals submit chart-abstracted 
data to CMS on a quarterly basis. These data are typically due 4 months 
after the quarter has ended, unless we grant an extension or exception, 
as further described in section XIII.J. of this final rule with comment 
period. We refer readers to the CY 2014 OPPS/ASC final rule with 
comment period for a discussion of our previously finalized policies 
regarding submissions deadlines for chart-abstracted measures (78 FR 
68482). Hospitals may begin submitting data on the first discharge day 
of any reporting quarter and can modify this data up until the close of 
the submission period (or 4 months after the quarter has ended). For 
example, if a hospital enters data on January 2, it could continue to 
review, correct, and change these data until August 1, the first 
quarter submission deadline. We generally provide rates for the 
measures that have been submitted for chart-abstracted, patient-level 
data 24 to 48 hours following submission. Hospitals are encouraged to 
submit data early in the submission schedule so that they can identify 
errors and resubmit data before the quarterly submission deadline.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41042 through 41043), 
we proposed to formalize this 4-month period as the review and 
corrections period for chart-abstracted data for the Hospital OQR 
Program. During this review and corrections period, hospitals can 
enter, review, and correct data submitted directly to CMS. However, 
after the submission deadline, hospitals would not be allowed to change 
these data. We believe that 4 months is sufficient time for hospitals 
to perform these activities.
    We invited public comment on this proposal.
    Comment: Many commenters did not support CMS' proposal to have the 
data submission period run concurrently with the review and corrections 
period, stating that CMS allows a separate time period for review and 
corrections for nearly all of CMS' other quality reporting programs. 
Commenters specifically stated that, with the proliferation of quality 
measures in each of CMS' quality reporting programs, hospitals need all 
of the time currently afforded to capture and report data accurately. 
Commenters recommended that CMS provide at least 30 days immediately 
after the submission deadline to allow hospitals to review and correct 
their data.
    Response: We disagree with the commenters who believed that our 
other quality reporting programs have a separate review and corrections 
period. Providers may review their data during the submission period, 
but are not afforded time after this period to correct their data. We 
note that our proposed review and corrections period is consistent with 
the informal review and corrections period of other quality reporting 
programs, including the Hospital IQR Program.
    As stated in the proposed rule (79 FR 41042-41043), hospitals 
typically have 4 months to submit, review, and correct their chart-
abstracted data, and we merely proposed to formalize this time period 
as the review and corrections period. We believe that 4 months is 
adequate because hospitals have been using this period of time to 
submit, view, and correct their chart-abstracted data for the life of 
the program. We strongly encourage hospitals to submit their data as 
early as possible so they can take full advantage of the time needed 
for review and correction. In addition, the length of time for data 
submission for chart-abstracted data that is validated affects the 
timeliness of the validation process; additional time would further 
lengthen the time from when care is rendered to when data can be made 
publicly available.
    After consideration of the public comments we received, and 
consistent with our policy in other quality reporting programs, we are 
finalizing the 4 months review and corrections period as proposed. We 
strongly encourage hospitals to submit their data to CMS as early as 
possible to have the maximum time to review and correct their data.
3. Hospital OQR Program Validation Requirements for Chart-Abstracted 
Measure Data Submitted Directly to CMS for the CY 2017 Payment 
Determination and Subsequent Years
a. Background
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68484 through 68487) for a discussion of finalized 
policies regarding our validation requirements. We codified these 
policies at 42 CFR 419.46(e). In the CY 2015 OPPS/ASC proposed rule (79 
FR 41043 through 41044), we proposed three changes to our validation 
procedures: (1) We proposed to change the eligibility requirements for 
hospitals selected for validation so that a hospital would be eligible 
if it submits at least one case to the Hospital OQR Program Clinical 
Data Warehouse during the quarter containing the most recently 
available data; (2) we proposed to give hospitals the option to either 
submit paper copies of patient charts or securely transmit electronic 
versions of medical information for validation; and (3) we proposed 
that a hospital must identify the medical record staff responsible for 
submission of records under the Hospital OQR Program to the designated 
CMS contractor.
b. Selection of Hospitals for Data Validation of Chart-Abstracted 
Measures for the CY 2017 Payment Determination and Subsequent Years
    We refer readers to the CY 2012 and CY 2013 OPPS/ASC final rules 
with comment period (76 FR 74484 through 74485 and 77 FR 68484 through 
68485) for a discussion of finalized policies regarding our sampling 
methodology, including sample size, eligibility for validation 
selection, and encounter minimums for patient-level data for measures 
where data is obtained from chart abstraction and submitted directly to 
CMS from selected hospitals.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we proposed 
one change to this process. Previously, to be eligible for random 
selection for validation, a hospital must have been coded as ``open'' 
in the CASPER system at the time of selection and must have submitted 
at least 10 encounters to the Clinical Data Warehouse during the data 
collection period for the applicable payment determination (76 FR 
74484). We proposed that, beginning with the CY 2015 encounter period 
for the CY 2017 payment determination and subsequent years, a hospital 
will be eligible for validation if it submits at least one case to the 
Hospital OQR Program Clinical Data Warehouse during the quarter 
containing the most recently available data. The quarter containing the 
most recently available data will be defined based on when the random 
sample is drawn. For example, if we draw a sample in December 2014, the 
most recent data available would be that from the second quarter of 
2014, which ends June 2014, because the submission deadline for second 
quarter data would be November 1, 2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1205442125082; 78 FR 68482). As another example, if a sample is drawn in 
October 2014, the most recent available data would be from quarter one, 
which ended in March 2014, because data must have been submitted by 
August 1, 2014. We believe this change is necessary because it 
increases the probability that selected hospitals

[[Page 66965]]

have current data in the Clinical Data Warehouse to be validated. 
Previously, hospitals that did not have data from the current year 
available could still be selected for validation.
    We invited public comment on this proposal.
    Comment: Many commenters supported CMS' proposal to allow a 
hospital to be eligible for validation if it submits at least one case 
to the Hospital OQR Program Clinical Data Warehouse during the quarter 
with the most recently available data. One commenter, however, 
recommended that CMS change the number of cases for a facility to be 
eligible for validation from at least 1 case to at least 12 cases 
because up to 12 records are required per hospital per quarter for 
validation. Commenters also urged CMS to evaluate the appropriateness 
of hospital selection based on this narrower criterion and to propose 
refinements, if necessary, in the future.
    Response: We thank commenters for their support. We agree with the 
suggestion that a hospital should only be eligible for random selection 
for validation if it submits at least 12 cases to the Hospital OQR 
Program Clinical Data Warehouse during the quarter with the most 
recently available data. As the commenter noted, currently, when a 
hospital is selected for validation, we request up to 12 cases per 
quarter per hospital. We stated our rationale for requesting up to 12 
cases per quarter in the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74486), where we explained that we attempt to balance 
burden to hospitals with data accuracy. Accordingly, we recognize that 
allowing a hospital to be eligible for random selection for validation 
if it is ``open'' or requiring only one case in the quarter containing 
the most recently available data may not allow us an adequate number of 
records to ensure data submitted by the hospital is valid and are 
modifying our proposal accordingly to align with our validation 
procedures and goals.
    After consideration of the public comments we received, and for the 
reasons stated above, we are finalizing our proposal with a 
modification that, beginning with the CY 2015 encounter period for the 
CY 2017 payment determination and subsequent years, a hospital will be 
eligible for random selection for validation if it submits at least 12 
cases, instead of just 1 as proposed, to the Hospital OQR Program 
Clinical Data Warehouse during the quarter containing the most recently 
available data. The quarter containing the most recently available data 
will be defined based on when the random sample is drawn.
c. Targeting Criteria for Data Validation Selection for the CY 2017 
Payment Determination and Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68485 through 68486) for a discussion of our targeting 
criteria. In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we did 
not propose any changes to these policies.
d. Methodology for Encounter Selection for the CY 2017 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68486) for a discussion of our methodology for encounter 
selection. In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we did 
not propose any changes to this policy.
e. Medical Record Documentation Requests for Validation and Validation 
Score Calculation for the CY 2017 Payment Determination and Subsequent 
Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68486 through 68487) for a discussion of our previously 
finalized procedures for requesting medical record documentation for 
validation and validation score calculation. In the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 75118), we codified these 
procedures at 42 CFR 419.46(e)(1) and (e)(2). In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41043 through 41044), we proposed two changes to 
these policies for the CY 2017 payment determination and subsequent 
years: (1) We proposed to give hospitals the option to either submit 
paper copies of patient charts or securely transmit electronic versions 
of medical information for validation; and (2) we proposed that a 
hospital must identify the medical record staff responsible for 
submission of records under the Hospital OQR Program to the designated 
CMS contractor.
    For records stored electronically, hospitals expend additional 
resources printing records onto paper that may be more efficiently 
transmitted electronically. In addition, the length of paper charts has 
been increasing, and the paper used to submit these records has an 
environmental impact. Therefore, we proposed to give hospitals the 
option to either submit copies of paper patient charts or securely 
transmit electronic versions of medical information, which has the 
potential to significantly reduce administrative burden, cost, and 
environmental impact. We have already finalized a similar policy for 
the Hospital IQR Program in the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50834 through 50836) that allows hospitals for the Hospital IQR Program 
to submit electronic records through the mail on a CD, DVD, or flash 
drive. In addition, in the FY 2015 IPPS/LTCH PPS final rule for the 
Hospital IQR Program (79 FR 50269), we finalized our proposal to also 
allow hospitals to submit patient charts using a Secure File Transfer 
Portal on the QualityNet Web site.
    The current Hospital OQR Program regulation at Sec.  419.46(e)(1) 
states: ``Upon written request by CMS or its contractor, a hospital 
must submit to CMS supporting medical record documentation that the 
hospital used for purposes of data submission under the program . . . 
.'' We proposed that this requirement may be met by employing either of 
the following options for the CY 2017 payment determination and 
subsequent years: (1) A hospital may submit paper medical records, the 
form in which we have historically requested them; or (2) a hospital 
may securely transmit electronic versions of medical information.
    For the CY 2017 payment determination and subsequent years, we 
proposed that hospitals that chose to securely transmit electronic 
versions of medical information should either: (1) Download or copy the 
digital image (that is, PDF) of the patient chart onto CD, DVD, or 
flash drive and ship the electronic media following instructions 
specified on the QualityNet Web site; or (2) securely submit digital 
images (PDFs) of patient charts using a Secure File Transfer Portal on 
the QualityNet Web site. The Secure File Transfer Portal would allow 
hospitals to transfer files through either a Web-based portal or 
directly from a client application using a secure file transfer 
protocol. The system provides a mechanism for securely exchanging 
documents containing sensitive information such as Protected Health 
Information (PHI) or Personally Identifiable Information (PII). 
Detailed instructions on how to use this system are available in the 
Secure File Transfer 1.0 User Manual available on QualityNet at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetBasic&cid=1228773343598.
    In addition, in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68486 through 68487), we stated that our validation contractor 
would request medical documentation from each hospital selected for 
validation via certified mail or other trackable method.

[[Page 66966]]

This request would be sent to ``the hospital's medical record staff 
identified by the hospital for the submission of records under the 
Hospital IQR Program (that is, the hospital's medical records staff 
identified by the hospital to the State QIO)'' (77 FR 68487). Quality 
Improvement Organizations (QIOs) are CMS contractors required by the 
Act (section 1152 through 1154) tasked with, among other 
responsibilities, assisting hospitals with quality improvement 
activities. Due to the evolution of the structure of the QIO program, 
beginning with CY 2015 for the CY 2017 payment determination and 
subsequent years, we proposed that a hospital must identify the medical 
record staff responsible for submission of records under the Hospital 
OQR Program to the designated CMS contractor; this CMS contractor may 
be a contractor other than the State QIO.
    Finally, we noted that a typographical error exists in our 
validation language in Sec.  419.46(e). This section states, ``CMS may 
validate one or more measures selected under section 1833(17)(C) of the 
Act . . . .'' ``[S]ection 1833(17)(C)'' should instead state ``section 
1833(t)(17)(C).'' We proposed to make this change in the regulation 
text.
    We invited public comment on these proposals.
    Comment: Commenters supported CMS' proposal to offer hospitals the 
option to submit, for validation purposes, either paper copies of 
patient charts or to securely transmit electronic versions of medical 
information using either electronic media (for example, CD, DVD, flash 
drive) or PDFs submitted using the Secure File Transfer Portal on the 
QualityNet Web site. Commenters noted that the prevalence of electronic 
medical records lends itself well to electronic submission of records.
    Response: We thank commenters for their support and we agree with 
their comments.
    Comment: Commenters supported CMS' proposal to require hospitals to 
identify the medical record staff responsible for submitting validation 
records for the Hospital OQR Program, but requested that CMS make every 
effort to work with State hospital associations to ensure that the 
correct individuals have been identified through this new process. 
Commenters also requested that CMS require contractors to update their 
lists quarterly to ensure that information is kept current.
    Response: We thank commenters for their support. We will consider 
commenters' concerns when instructing our contractors to keep 
validation contacts up-to-date, and, to the extent feasible, we will 
attempt to work with state hospital associations.
    After consideration of the public comments we received, we are 
finalizing our proposals: (1) To give hospitals the option to either 
submit: (a) Paper copies of patient charts; or (b) electronic versions 
of medical information by: (i) Downloading or copying the digital image 
(that is, PDF) of the patient chart onto encrypted CD, DVD, or flash 
drive and shipping the encrypted electronic media following 
instructions specified on the QualityNet Web site; or (ii) securely 
submitting PDFs of patient charts using a Secure File Transfer Portal 
on the QualityNet Web site; (2) that hospitals must identify the 
medical record staff responsible for submission of records under the 
Hospital OQR Program to the designated CMS contractor as proposed; and 
(3) to correct our typographical error in regulation text to read 
``section 1833(t)(17)(C)'' as proposed.

I. Hospital OQR Program Reconsideration and Appeals Procedures for the 
CY 2017 Payment Determination and Subsequent Years

    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68487 through 68489) and the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75118 through 75119) for a discussion of our 
reconsideration and appeals procedures. We codified this process by 
which participating hospitals may submit requests for reconsideration 
at 42 CFR 419.46(f). We also codified language at Sec.  419.46(f)(3) 
stating that a hospital that is dissatisfied with a decision made by 
CMS on its reconsideration request may file an appeal with the Provider 
Reimbursement Review Board.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41044), we did not 
propose any changes to the reconsideration and appeals procedures.

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

    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75119 through 75120), and 42 CFR 419.46(d) for a complete 
discussion of our extraordinary circumstances extension or waiver 
process under the Hospital OQR Program. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41044), we did not propose any substantive changes 
to these policies or the processes.
    However, in the future, we will refer to the process as the 
Extraordinary Circumstances Extensions or Exemptions process, instead 
of the Extraordinary Circumstances Extensions or Waiver process. We are 
in the process of revising the Extraordinary Circumstances/Disaster 
Extension or Waiver Request form (CMS-10432), approved under OMB 
control number 0938-1171. We are updating the forms and instructions so 
that a hospital or facility may apply for an extension for all 
applicable quality reporting programs at one time.
    In addition, we proposed to make a conforming change from the 
phrase ``extension or waiver'' to the phrase ``extension or exemption'' 
in 42 CFR 419.46(d).
    We proposed to revise the language in 42 CFR 419.46(d) at 79 FR 
41081 (July 14, 2014) to state that CMS may grant an extension or 
exception of one or more data submission deadlines and requirements in 
the event of extraordinary circumstances beyond the control of the 
hospital, such as when an act of nature affects an entire region or 
locale or a systemic problem with one of CMS' data collection systems 
directly or indirectly affects data submission. CMS may grant an 
extension or exception as follows:
     Upon request by the hospital. Specific requirements for 
submission of a request for an extension or exception are available on 
the QualityNet Web site.
     At the discretion of CMS. CMS may grant exceptions or 
extensions to hospitals that have not requested them when CMS 
determines that an extraordinary circumstance has occurred.
    We invited comments on this proposal.
    Comment: Commenters supported CMS' decision to update the forms and 
instructions for the extension or exception process so that a hospital 
may apply for an extension for all applicable quality programs at one 
time.
    Response: We thank commenters for their support.
    After consideration of the public comments we received, we are 
finalizing our proposal to change the phrase ``extension or waiver'' to 
the phrase ``extension or exemption'' at 42 CFR 419.46(d) as proposed.

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

A. Background

1. Overview
    We refer readers to section XIII.A.1. of this final rule with 
comment period for

[[Page 66967]]

a general overview of our quality reporting programs.
2. Statutory History of the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    We refer readers to section XIV.K.1. of the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74492 through 74493) for a detailed 
discussion of the statutory history of the ASCQR Program.
3. Regulatory History of the ASCQR Program
    We refer readers to section XV.A.3. of the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75122) for an overview of the 
regulatory history of the ASCQR Program.

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68493 through 68494) for a detailed discussion of the 
priorities we consider for ASCQR Program quality measure selection.
2. Policy for Removal of Quality Measures From the ASCQR Program
    We previously adopted a policy to retain measures from the previous 
year's ASCQR Program measure set for subsequent years' measure sets 
except when they are removed, suspended, or replaced as indicated (76 
FR 74504; 77 FR 68494 through 68495; 78 FR 75122). In the CY 2015 OPPS/
ASC proposed rule (79 FR 41045), we proposed a process for removing 
adopted measures.
    In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863 through 
43865), we finalized a process for immediate retirement (a term we 
later changed to ``removal'') of RHQDAPU Program (now referred to as 
the Hospital IQR Program) measures based on evidence that the continued 
use of the measure as specified raised patient safety concerns. We 
stated that we believe immediate retirement of quality measures should 
occur when the clinical evidence suggests that continued collection of 
the data may result in harm to patients. For example, we removed the 
AMI-6: Beta Blocker at Arrival measure from the Hospital IQR Program 
because it encouraged care that raised potential safety concerns 
according to newly published research suggesting that beta-blockers 
could increase mortality risks for certain patient populations (74 FR 
43863). Under such circumstances, we may not be able to wait until the 
annual rulemaking cycle or until we have had the opportunity to obtain 
input from the public to retire a measure because of the need to 
discourage potentially harmful practices, which may result from 
continued collection of the measure.
    In these situations, we would promptly retire the measure and 
notify hospitals and the public of the retirement of the measure and 
the reasons for its retirement through the usual communication 
channels. Further, we would confirm the retirement of the measure that 
was the subject of immediate retirement in the next program rulemaking. 
Finally, we stated that, in other circumstances where we do not believe 
that continued use of a measure raises specific safety concerns, we 
intend to use the rulemaking process to retire the measure. For the 
same reasons stated for the Hospital IQR Program, we believe that this 
process also would be appropriate for the ASCQR Program. Therefore, in 
the CY 2015 OPPS/ASC proposed rule (79 FR 41045), we proposed to adopt 
this same removal process for the ASCQR Program. Under this process, we 
would immediately remove an ASCQR Program measure based on evidence 
that the continued use of the measure as specified raised patient 
safety concerns. In these situations, we would promptly remove the 
measure and notify ASCs and the public of the removal of the measure 
and the reasons for its removal through the ASCQR Program ListServe and 
the ASCQR Program QualityNet Web site at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772879650. Further, we would confirm the removal of the measure that 
was the subject of immediate removal in the next OPPS/ASC rulemaking.
    For situations where we do not believe the continued use of a 
measure raises specific safety concerns, we proposed to use the regular 
rulemaking process to remove a measure to allow for public comment. In 
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53505 through 53506), we 
listed the criteria we have used to determine whether to remove 
measures from the Hospital IQR Program. These criteria are: (1) Measure 
performance among hospitals is so high and unvarying that meaningful 
distinctions and improvements in performance can no longer be made 
(``topped out'' measures); (2) availability of alternative measures 
with a stronger relationship to patient outcomes; (3) a measure does 
not align with current clinical guidelines or practice; (4) the 
availability of a more broadly applicable (across settings, 
populations, or conditions) measure for the topic; (5) the availability 
of a measure that is more proximal in time to desired patient outcomes 
for the particular topic; (6) the availability of a measure that is 
more strongly associated with desired patient outcomes for the 
particular topic; and (7) collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm. 
These criteria were suggested through public comment on proposals for 
the Hospital IQR Program, and we agreed that these criteria should be 
considered in evaluating the Hospital IQR Program quality measures for 
removal (75 FR 53506). We believe that these criteria also are 
applicable in evaluating ASCQR Program quality measures for removal 
because we have found them useful for evaluating measures in the 
Hospital IQR Program and our other quality reporting programs, which 
share similar goals to the ASCQR Program. Accordingly, we proposed to 
adopt these measure removal criteria for the ASCQR Program.
    We invited public comment on these proposals.
    Comment: Many commenters supported CMS' proposed measure removal 
policy and commended CMS for fostering an aligned approach for measures 
removal criteria across our quality reporting and value-based 
purchasing programs.
    Response: We thank the commenters for their support. We agree that 
for consistency, an approach to removing measures should be aligned 
across our quality reporting and value-based purchasing programs to the 
extent possible.
    Comment: One commenter supported CMS' proposal to immediately 
remove measures that raise public safety concerns. The commenter 
recommended that CMS notify ASCs by mail and also post notification on 
the CMS Web site on the ASCQR Web page under the ``Announcements'' 
heading, in addition to communication through the ASCQR Program 
ListServe and the QualityNet Web site.
    Response: We thank the commenter for supporting our proposal and 
the suggestions for notifying ASCs. Past experience indicates that the 
current notification process using the QualityNet Web site and the 
ASCQR Program ListServe is a fast, efficient, and effective means of 
publicly communicating information about the ASCQR Program, and using 
this process would be consistent with how other ASCQR Program 
information is provided. Therefore, we are not including these 
additional modes of communication with ASCs for purposes of ASCQR 
Program notices at this time.
    Comment: One commenter believed that proposed measure removal 
criteria (2) (availability of alternative measures

[[Page 66968]]

with a stronger relationship to patient outcomes) and (6) (the 
availability of a measure that is more strongly associated with desired 
patient outcomes for the particular topic) are duplicative, and that 
criterion (2) should read as ``performance or improvement on a measure 
does not result in better patient outcomes.'' The commenter also 
suggested that criterion (3) (a measure does not align with current 
clinical guidelines or practice) and criterion (7) (collection or 
public reporting of a measure leads to negative unintended consequences 
other than patient harm) should be applied to all measures, but the 
remaining criteria should be applied more selectively on a measure-by-
measure basis.
    Response: We thank the commenter for these recommendations. We 
disagree with the commenter that criterion (2) and criterion (6) are 
the same and that criterion (2) should be reworded as suggested. 
Criterion (2) applies when there is more than one alternative measure 
with a stronger relationship to patient outcomes that is available, and 
criterion (6) applies where there is only one measure that is strongly 
and specifically associated with desired patient outcomes for the 
particular topic that is available. For criterion (2), there may be 
different alternative measures available that meet this criterion to 
different degrees. The suggestion to rephrase criterion (2) to read 
``performance or improvement on a measure does not result in better 
patient outcomes'' would change the meaning of criterion (2).
    As we discuss earlier, the measure removal criteria have been 
developed through public comment on proposals for the Hospital IQR 
Program. We believe that these criteria also are applicable in 
evaluating the ASCQR Program quality measures for removal, because we 
have found them useful for evaluating measures in the Hospital IQR 
Program as well as other quality reporting programs, which share 
similar goals to the ASCQR Program. We note that we did not propose any 
changes to criterion (2) in the CY 2015 OPPS/ASC proposed rule. 
Further, based on our experience with the Hospital IQR Program, we 
believe criterion (2) is appropriate and do not believe that additional 
refinement is necessary. Therefore, we are not revising this criterion. 
We thank the commenters for their views and will take them into 
consideration as we continuously assess these criteria.
    With respect to the commenter's suggestion that criteria (3) and 
(7) apply to all measures but the remaining criteria be applied more 
selectively on a case-by-case basis, we disagree with respect to 
selective application of the criteria. We intend for all the criteria, 
including criteria (3) and (7), to apply to all measures to the extent 
possible. In any given situation, we will focus only on removal 
criteria that are relevant to a particular set of circumstances. If 
more than one of the measure removal criteria appears to be relevant, 
we intend to take a balanced approach in assessing the value of each of 
the different criteria in a given situation before removing any 
measure.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification on the measure removal 
process and criteria. Specifically, we will immediately remove an ASCQR 
Program measure based on evidence that the continued use of the measure 
as specified raises patient safety concerns. In these situations, we 
will promptly remove the measure and notify ASCs and the public of the 
removal of the measure and the reasons for its removal through the 
ASCQR Program ListServe and the ASCQR Program QualityNet Web site. 
Further, we will confirm the removal of the measure that was the 
subject of immediate removal in the next OPPS/ASC rulemaking.
    For situations where we do not believe the continued use of a 
measure raises specific safety concerns, we will use the regular 
rulemaking process to remove a measure to allow for public comment. In 
these situations, we will use the following criteria to determine 
whether to remove the measures from the ASCQR Program: (1) measure 
performance among ASCs is so high and unvarying that meaningful 
distinctions and improvements in performance can no longer be made 
(``topped out'' measures); (2) availability of alternative measures 
with a stronger relationship to patient outcomes; (3) a measure does 
not align with current clinical guidelines or practice; (4) the 
availability of a more broadly applicable (across settings, 
populations, or conditions) measure for the topic; (5) the availability 
of a measure that is more proximal in time to desired patient outcomes 
for the particular topic; (6) the availability of a measure that is 
more strongly associated with desired patient outcomes for the 
particular topic; and (7) collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm.
3. Criteria for Removal of ``Topped-Out'' Measures
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41045 through 41046), 
we proposed to define criteria for when we would consider a measure to 
be ``topped-out.'' A measure is ``topped-out'' when measure performance 
among ASCs is so high and unvarying that meaningful distinctions and 
improvements in performance can no longer be made (``topped-out'' 
measures). We do not believe that measuring ASC performance on 
``topped-out'' measures provides meaningful information on the quality 
of care provided by ASCs. We further believe that quality measures, 
once ``topped-out,'' represent care standards that have been widely 
adopted by ASCs. We believe such measures should be considered for 
removal from the ASCQR Program because their associated reporting 
burden may outweigh the value of the quality information they provide.
    Specifically, we proposed that a measure under the ASCQR Program is 
``topped-out'' when it meets both of the following criteria:
     Statistically indistinguishable performance at the 75th 
and 90th percentiles; and
     A truncated coefficient of variation less than or equal to 
0.10.
    To identify if a measure has statistically indistinguishable 
performance at the 75th and 90th percentiles, we would determine 
whether the difference between the 75th and 90th percentiles for an 
ASC's measure is within two times the standard error of the full 
dataset. The coefficient of variation (CV) is a descriptive statistic 
that expresses the standard deviation as a percentage of the sample 
mean; this provides a statistic that is independent of the units of 
observation. Applied to this analysis, a large CV would indicate a 
broad distribution of individual ASC scores, with large and presumably 
meaningful differences between ASCs in relative performance. A small CV 
would indicate that the distribution of individual facility scores is 
clustered tightly around the mean value, indicating that it is not 
useful to draw distinctions among individual ASCs on measure 
performance. The truncated CV excludes observations whose rates are 
below the 5th percentile and above the 95th percentile; this avoids 
undue effects of the highest and lowest outlier values, which, if 
included, can inappropriately widen the dispersion of the distribution. 
These same criteria for when we would consider a measure to be 
``topped-out'' have been adopted in the Hospital VBP Program (79 FR 
50055), the Hospital IQR Program (79 FR 50204), and the Hospital OQR 
Program (section XIII.C.2 of this final rule with comment period).

[[Page 66969]]

    We invited public comment on this proposal.
    Comment: Many commenters supported CMS' proposed ``topped-out'' 
criteria for measure removal and the alignment of these criteria across 
the Hospital IQR and Hospital VBP Programs. One commenter suggested 
that CMS refine the first criterion to ensure that measures exhibit 
sufficient lack of variability before they are removed. Several 
commenters suggested that CMS have a mechanism in place to identify a 
significant decline in adherence rates after a measure has been 
removed.
    Response: We thank the commenters for their support of the proposed 
topped-out criteria. We expect ASCs to always follow appropriate 
standards-of-care and clinical guidelines, regardless of whether a 
quality measure exists. We believe that ASCs are committed to providing 
quality care to patients, and we do not have any indication that ASCs 
will stop doing so when measures are removed.
    While it is possible that removing a measure could result in 
reduced performance, we have guarded against this possibility by 
setting topped-out criteria that evidence very high, unvarying levels 
of performance. Further, we intend to continue to work with quality 
measurement stakeholders to ensure that performance does not decline 
significantly after removing a measure. However, we must balance the 
costs of continued monitoring of a successful measure with high levels 
of performance with the adoption of other measures where there are 
opportunities for improvement in clinical quality.
    Regarding the suggestion to further refine the first criterion, 
which refers to determining that a measure exhibits sufficient lack of 
variability before removal, we proposed topped-out criteria that 
evidence very high, unvarying levels of performance and, at this time, 
do not believe additional refinement that would make the criteria more 
stringent is necessary. However, we will consider the need for 
refinement and, if we determine changes may be necessary, we will 
propose such changes in future rulemaking. In addition, we will not use 
our topped-out criteria exclusively when evaluating the retention or 
removal of a measure; a measure that meets our topped-out criteria 
could be retained for other program reasons as discussed below.
    Comment: One commenter cautioned against removing measures solely 
based on the proposed ``topped out'' criteria, and was concerned that 
these criteria might lead to the removal of valuable program measures. 
The commenter cited the example of patient safety measures and surgical 
site infection rates, which are intended to drive toward and sustain 
zero harm. The commenter believed that these types of measures could 
have performance scores that meet the topped out criteria over time. 
However, the commenter believed they would have enduring value to 
consumers and providers. Some commenters urged CMS to assess ``topped-
out'' measures individually, that is, case-by-case, and in a broader 
context before removing them from the ASCQR Program.
    Response: We agree that some measures that are quantitatively 
``topped-out'' may still be appropriate for other reasons. Therefore, 
as we do for the Hospital IQR Program and the Hospital VBP Program, and 
consistent with our discussion above in section XIV.B.3. of this final 
rule with comment period, we will evaluate several factors in 
considering the removal of measures for the ASCQR Program. We will 
assess the benefits of retaining a measure on a case-by-case basis 
before proposing to remove a measure from a quality data reporting 
program and will not remove a measure solely on the basis of meeting 
any specific criterion.
    Comment: One commenter requested clarification whether ASC-5: 
Prophylactic IV antibiotic timing is topped-out because this measure is 
topped-out in the HOPD setting.
    Response: We thank the commenter for this request. In response, we 
have reviewed data collected under the ASCQR Program. Our analysis 
indicated that performance for the prophylactic IV antibiotic timing 
measure is relatively high. However, because we continue to have some 
facilities with completeness of reporting issues and data have been 
collected for a relatively short time, we do not believe we have 
sufficient data to support a topped out analysis for the purposes of 
measure removal for the ASCQR Program at this time. Furthermore, we 
believe that a prophylactic antibiotic timing measure remains relevant 
clinically or for quality improvement purposes under the ASCQR Program.
    After consideration of the public comments we received, we are 
finalizing the proposed ``topped-out'' criteria. Specifically, we are 
finalizing a policy that a measure under the ASCQR Program is ``topped-
out'' when it meets both of the following criteria: (1) Statistically 
indistinguishable performance at the 75th and 90th percentiles; and (2) 
a truncated coefficient of variation less than or equal to 0.10. To 
identify if a measure has statistically indistinguishable performance 
at the 75th and 90th percentiles, we will determine whether the 
difference between the 75th and 90th percentiles for an ASC's measure 
is within two times the standard error of the full dataset.
    As we do for the Hospital IQR Program and the Hospital VBP Program, 
and consistent with our discussion above in section XIV.B.3. of this 
final rule with comment period, we will evaluate several factors in 
considering the removal of measures for the ASCQR Program. We will 
assess the benefits of retaining a measure on a case-by-case basis 
before proposing to remove a measure from the ASCQR Program and will 
not remove a measure solely on the basis of meeting any specific 
criterion.
4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492 
through 74517), we implemented the ASCQR Program beginning with the CY 
2014 payment determination. In the CY 2012 OPPS/ASC final rule with 
comment period, we adopted five claims-based measures for the CY 2014 
payment determination and subsequent years, two measures with data 
submission via an online Web page for the CY 2015 payment determination 
and subsequent years, and one process of care, healthcare-associated 
infection measure for CY 2016 payment determination and subsequent 
years (76 FR 74496 to 74511). In the CY 2014 OPPS/ASC final rule with 
comment period, we adopted three chart-abstracted measures for the CY 
2016 payment determination and subsequent years (78 FR 75124 to 75130).
    The quality measures that we previously adopted are listed in the 
chart below.

[[Page 66970]]

   ASC Program Measure Set Previously Adopted for the CY 2016 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
             ASC #                    NQF #             Measure name
------------------------------------------------------------------------
ASC-1.........................  0263.............  Patient Burn.
ASC-2.........................  0266.............  Patient Fall.
ASC-3.........................  0267.............  Wrong Site, Wrong
                                                    Side, Wrong Patient,
                                                    Wrong Procedure,
                                                    Wrong Implant.
ASC-4.........................  0265.............  Hospital Transfer/
                                                    Admission.
ASC-5.........................  0264.............  Prophylactic
                                                    Intravenous (IV)
                                                    Antibiotic Timing.
ASC-6.........................  N/A..............  Safe Surgery
                                                    Checklist Use.
ASC-7.........................  N/A..............  ASC Facility Volume
                                                    Data on Selected ASC
                                                    Surgical Procedures.
                                                   Procedure categories
                                                    and corresponding
                                                    HCPCS codes are
                                                    located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754 cid=1228772475754.
ASC-8.........................  0431.............  Influenza Vaccination
                                                    Coverage among
                                                    Healthcare
                                                    Personnel.
ASC-9.........................  0658.............  Endoscopy/Polyp
                                                    Surveillance:
                                                    Appropriate Follow-
                                                    Up Interval for
                                                    Normal Colonoscopy
                                                    in Average Risk
                                                    Patients.
ASC-10........................  0659.............  Endoscopy/Polyp
                                                    Surveillance:
                                                    Colonoscopy Interval
                                                    for Patients with a
                                                    History of
                                                    Adenomatous Polyps-
                                                    Avoidance of
                                                    Inappropriate Use.
ASC-11........................  1536.............  Cataracts:
                                                    Improvement in
                                                    Patient's Visual
                                                    Function within 90
                                                    Days Following
                                                    Cataract Surgery.*
------------------------------------------------------------------------
* Measure voluntarily collected as set forth in section XIV.E.3.c. of
  this final rule with comment period.

    The comments we received on these previously adopted measures and 
our responses are set forth below.
    Comment: Some commenters asked CMS to remove some previously 
adopted measures for ASCs, because they believed these measures were 
either inappropriate or too burdensome for ASCs.
    Response: We thank the commenters for their suggestions. At this 
time, we are not removing any of the measures suggested by commenters. 
We did not propose to remove any measures from the ASCQR Program in the 
CY 2015 OPPS/ASC proposed rule. Further, there is no evidence that 
continued use of the measures as specified raises patient safety 
concerns that would require immediate removal of the measures based on 
the process we are finalizing in this final rule with comment period. 
However, we will take these suggestions into consideration in future 
years using the measure removal criteria we are adopting in this final 
rule with comment period.
5. New ASCQR Program Quality Measure for the CY 2018 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75124) for a detailed discussion of our approach to ASCQR 
measure selection. In the CY 2015 OPPS/ASC proposed rule (79 FR 41046 
through 41048), we proposed to adopt one new claims-based measure into 
the ASCQR Program for the CY 2017 payment determination and subsequent 
years: ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate 
after Outpatient Colonoscopy.
    Colonoscopy is the most commonly performed ambulatory surgery in 
the United States.\28\ The most recent data available indicate that, in 
2002 alone, physicians performed an estimated 14 million colonoscopies 
in the United States.\29\ Colonoscopies are associated with a range of 
well-described and potentially preventable adverse events that can lead 
to hospital visits, repeat procedures, or surgical intervention for 
treatment, including colonic perforation, gastrointestinal (GI) 
bleeding, and cardiopulmonary events such as hypoxia, aspiration 
pneumonia, and cardiac arrhythmias. While hospital visits are generally 
unexpected after outpatient colonoscopy, the literature suggests that 
the majority of these visits occur within the first 7 
days.30 31 32 Reported hospital visit rates after outpatient 
colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post 
procedure, and from 2.4 to 3.8 percent at 30 days post 
procedure.33 34 35 Some adverse events such as bleeding 
occur after day 7, but based on input from clinical experts, public 
comment, and empirical analyses, we concluded that unplanned hospital 
visits within 7 days is the optimal outcome to ensure capture of 
procedure-related adverse events and to minimize capture of hospital 
visits unrelated to the procedure. This measure provides the 
opportunity for ASCs to improve quality of care and to lower the rates 
of adverse events leading to hospital visits after outpatient 
colonoscopy; this would encourage ASCs to achieve the outcome rates of 
the best performers.
---------------------------------------------------------------------------

    \28\ Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based 
Ambulatory Surgery, 2007: Statistical Brief #86. Healthcare Cost and 
Utilization Project (HCUP) Statistical Briefs. Rockville (MD) 2006.
    \29\ Seeff LC, Richards TB, Shapiro JA, et al. How many 
endoscopies are performed for colorectal cancer screening? Results 
from CDC's survey of endoscopic capacity. Gastroenterology. Dec 
2004; 127(6):1670-1677.
    \30\ Rathgaber SW., Wick TM. Colonoscopy completion and 
complication rates in a community gastroenterology practice. 
Gastrointest Endosc. 2006; 64:556-62.
    \31\ Rabeneck L, Saskin R, Paszat LF. Onset and clinical course 
of bleeding and perforation after outpatient colonoscopy: a 
population-based study. Gastrointest Endosc. 2011; 73:520-3.
    \32\ Ko CW, Riffle S, Michael L, et al. Serious complications 
within 30 days of screening and surveillance colonoscopy are 
uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73.
    \33\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor 
complications and time lost from normal activities after screening 
or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;65 
(4):648-656.
    \34\ Leffler DA, Kheraj R, Garud S, et al. The incidence and 
cost of unexpected hospital use after scheduled outpatient 
endoscopy. Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
    \35\ Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A, 
Brooks R. Is there a relationship between physician and facility 
volumes of ambulatory procedures and patient outcomes? J Ambul Care 
Manage. Oct-Dec 2008; 31(4):354-369.
---------------------------------------------------------------------------

    We believe it is important to reduce adverse patient outcomes 
associated with preparation for colonoscopy, the procedure itself, and 
follow-up care. Therefore, we proposed to include the ASC-12: Facility 
Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy measure, which is calculated from paid Medicare FFS claims, 
in the ASCQR Program for the CY 2017 payment determination and 
subsequent years. We expect the measure would promote improvement in 
patient care over time because transparency in publicly reporting

[[Page 66971]]

measure scores would make patient unplanned hospital visits (emergency 
department visits, observation stays, and inpatient admissions) 
following colonoscopies more visible to ASCs and patients and 
incentivize ASCs to incorporate quality improvement activities in order 
to reduce these visits. ASCs are often unaware of complications 
following colonoscopy for which patients visit the hospital.\36\ This 
risk-standardized quality measure would address this information gap 
and promote quality improvement by providing feedback to facilities and 
physicians, as well as transparency for patients on the rates and 
variation across facilities in unplanned hospital visits after 
colonoscopy.
---------------------------------------------------------------------------

    \36\ Leffler DA, Kheraj R, Garud S, et al. The incidence and 
cost of unexpected hospital use after scheduled outpatient 
endoscopy. Arch Intern Med. Oct 25 2010; 170(19):1752-1757.
---------------------------------------------------------------------------

    The outcome measured in the ASC-12 measure is all-cause, unplanned 
hospital visits (admissions, observation stays, and emergency 
department visits) within 7 days of an outpatient colonoscopy 
procedure. The measure score, also referred to as the facility-level 
risk-standardized hospital visit rate, is derived from the calculation 
of the ratio of the numerator to the denominator multiplied by the 
crude rate. The numerator is the number of predicted (meaning adjusted 
actual) hospital visits, which is the number of unplanned hospital 
visits within 7 days of colonoscopy that the facility is predicted to 
have based on its case-mix. The denominator is the number of expected 
hospital visits, which is the number of unplanned hospital visits the 
facility is expected to have based on the nation's performance with the 
facility's case-mix. The crude rate is the national unadjusted number 
of patients who had a hospital visit post-colonoscopy among all 
patients who had a colonoscopy.
    Based on discussions with clinical and technical panel experts, the 
measure excludes colonoscopies for patients undergoing concomitant 
high-risk upper GI endoscopy because these patients are at a higher 
risk for hospital visits than patients undergoing a typical 
colonoscopy, and patients with a history of inflammatory bowel disease 
(IBD) or diverticulitis in the year preceding the colonoscopy because 
we likely could not fully characterize and adjust for their pre-
procedure risk of needing a post-procedure hospital visit or identify 
whether these admissions are planned or unplanned. The measure also 
excludes procedures for patients who lack continuous enrollment in 
Medicare FFS Parts A and B in the first month after the procedure to 
ensure all patients included in the analysis have complete data 
available for outcome assessment. The statistical risk adjustment model 
includes 15 clinically relevant risk-adjustment variables that are 
strongly associated with risk of hospital visits within 7 days 
following a colonoscopy. Additional methodology details and information 
obtained from public comment for measure development are available at: 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
    Section 1890A of the Act requires the Secretary to establish a pre-
rulemaking process with respect to the selection of certain categories 
of quality and efficiency measures. Under section 1890A(a)(2) of the 
Act, the Secretary must make available to the public by December 1 of 
each year a list of quality and efficiency measures that the Secretary 
is considering for the Medicare program. The measure that we proposed 
was reviewed by the MAP and was included on a publicly available 
document entitled ``MAP Pre-Rulemaking Report: 2014 Recommendations on 
Measures for More than 20 Federal Programs'' (formerly referred to as 
the ``List of Measures Under Consideration'') on the NQF Web site at: 
http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx 
(``MAP Report''). We note that, at the time the measure was listed on 
the ``MAP Pre-Rulemaking Report: 2014 Recommendations on Measures for 
More than 20 Federal Programs,'' it was named ``High-Acuity Care Visits 
after Outpatient Colonoscopy Procedure.'' The MAP conditionally 
supported this measure for the ASCQR Program.
    The MAP Report stated that the measure ``[s]hould be submitted for 
and receive NQF endorsement; Measure is promising but needs further 
development'' (p. 187). Further, the MAP Report stated that the measure 
``would provide valuable outcome information to inform consumer 
decision and drive quality improvement'' and that the ``NQF endorsement 
process would resolve questions about the reliability and validity of 
the measure.'' The MAP also stated that NQF endorsement would resolve 
questions about ``the feasibility of the algorithm for attributing 
claims data in light of possible effects of the Medicare three-day 
payment window'' (p. 187, MAP Report). However, this concern with 
Medicare Part A hospital payments relates to the Hospital OQR Program 
and not the ASCQR Program. As required under section 1890A(a)(4) of the 
Act, we considered the input and recommendations provided by the MAP in 
selecting measures to propose for the ASCQR Program.
    We believe we have addressed the concerns raised by the MAP to the 
greatest extent possible. The measure was submitted to NQF for 
endorsement on February 21, 2014. The measure is well-defined and 
precisely specified for consistent implementation within and between 
organizations that will allow for comparability. Reliability testing 
demonstrated the measure data elements produced were repeatable; that 
is, the same results were produced a high proportion of the time when 
assessed in the same population in the same time period. Validity 
testing demonstrated that the measure data elements produce measure 
scores that correctly reflect the quality of care provided and that 
adequately identify differences in quality.
    Currently, there are no publicly available quality of care reports 
for ASCs that conduct outpatient colonoscopies. Therefore, adoption of 
this measure provides an opportunity to enhance the information 
available to patients choosing among ASCs that offer this elective 
procedure. We believe this measure would reduce adverse patient 
outcomes associated with preparation for colonoscopy, the procedure 
itself, and follow-up care by capturing and making more visible to ASCs 
and patients all unplanned hospital visits following the procedure. In 
addition, providing outcome rates to ASCs would make visible to 
clinicians meaningful quality differences and incentivize improvement.
    Sections 1833(i)(7)(B) and 1833(t)(17)(C)(i) of the Act, when read 
together, require the Secretary, except as the Secretary may otherwise 
provide, to develop measures appropriate for the measurement of the 
quality of care furnished by ASCs, that reflect consensus among 
affected parties and, to the extent feasible and practicable, that 
include measures set forth by one or more national consensus building 
entities. As stated in the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74465 and 74505), we believe that consensus among 
affected parties can be reflected through means other than NQF 
endorsement, including consensus achieved during the measure 
development process, consensus shown through broad acceptance and use 
of measures, and consensus through public comment. We believe this 
proposed measure meets these statutory

[[Page 66972]]

requirements. We believe that this measure is appropriate for the 
measurement of quality of care furnished by ASCs because this procedure 
is commonly performed in ASCs and, as discussed above, can signify 
important issues in the care being provided in ASCs. We also believe 
this measure reflects consensus among affected parties because the MAP, 
which represents stakeholder groups, reviewed and conditionally 
supported the measure, and stated that it ``would provide valuable 
outcome information to inform consumer decision and drive quality 
improvement.'' Further, the measure was subject to public comment 
during the MAP and measure development processes, with some public 
commenters agreeing with the MAP's conclusions on the measure (p. 187, 
MAP Report, January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.aspx)
.
    As discussed above, the statute also requires the Secretary, except 
as the Secretary may otherwise provide, to include measures set forth 
by one or more national consensus building entities to the extent 
feasible and practicable. This measure is not NQF-endorsed; however, as 
noted above, this measure is currently undergoing the NQF endorsement 
process. We note that sections 1833(i)(7)(B) and (t)(17) of the Act do 
not require that each measure we adopt for the ASCQR Program be 
endorsed by a national consensus building entity, or by the NQF 
specifically. Further, under section 1833(i)(7)(B) of the Act, section 
1833(t)(17)(C)(i) of the Act, which contains this requirement, applies 
to the ASCQR Program, except as the Secretary may otherwise provide. 
Under this provision, the Secretary has further authority to adopt 
nonendorsed measures.
    In summary, we proposed to adopt one new measure for the ASCQR 
Program for the CY 2017 payment determination and subsequent years.

------------------------------------------------------------------------
                                                       Proposed ASCQR
                                                     measure for the CY
             ASC #                    NQF #             2017 payment
                                                     determination and
                                                     subsequent years.
------------------------------------------------------------------------
ASC-12........................  Pending..........  Facility Seven-Day
                                                    Risk-Standardized
                                                    Hospital Visit Rate
                                                    after Outpatient
                                                    Colonoscopy.
------------------------------------------------------------------------

    We invited public comment on our proposal to include ASC-12: 
Facility Seven-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy in the ASCQR Program beginning with the CY 2017 
payment determination.
    Comment: Several commenters agreed that the ASC-12 measure 
addresses an important area to monitor for quality improvement, given 
the number of colonoscopy procedures performed annually in ASCs.
    Response: We thank the commenters for their support. We agree that 
the quality of care associated with colonoscopy procedures is an 
important clinical care area to assess quality of care for ASCs.
    Comment: Many commenters urged CMS not to adopt ASC-12 until it is 
NQF-endorsed. Several of these commenters also noted that the MAP 
supported this measure on condition of NQF-endorsement, noting that the 
NQF process would resolve a number of questions about the reliability, 
validity and feasibility of this measure. These commenters requested 
that, in general, CMS only include measures in the ASCQR Program that 
have been NQF-endorsed in order to avoid later suspending or removing 
these measures.
    Response: We appreciate the commenters' concerns. Under sections 
1833(i)(7)(B) and (t)(17)(C)(i) of the Act, except as the Secretary may 
otherwise provide, the Secretary must develop measures that reflect 
consensus among affected parties and, to the extent feasible and 
practicable, must include measures set forth by a national consensus 
building entity. Whenever possible, we strive to adopt NQF-endorsed 
measures because these measures will meet these requirements. However, 
we believe the requirements that measures reflect consensus among 
affected parties can be achieved in other ways, including through the 
measure development process, through broad acceptance and use of the 
measure, and through public comments.
    Further, it may not be feasible or practicable to adopt an NQF-
endorsed measure, such as when an NQF-endorsed measure does not exist. 
Section 1833(t)(17)(C)(i) of the Act does not require that each measure 
we adopt for the ASCQR Program be endorsed by a national consensus 
building entity, or by the NQF specifically. Moreover, section 
1833(i)(7)(B) of the Act states that section 1833(t)(17) of the Act, 
which contains this requirement, applies to the ASCQR Program, except 
as the Secretary may otherwise provide. Under this provision, the 
Secretary has further authority to adopt measures that do not reflect 
consensus among affected parties and that are not endorsed by a 
national consensus building entity. Therefore, not all of the measures 
adopted for the ASCQR Program are required to be NQF-endorsed.
    As discussed below, we believe the measure as developed exhibits 
sufficient levels of reliability, validity, and feasibility to be 
adopted for the ASCQR Program. As noted above, we also have submitted 
this measure to NQF for endorsement.
    Comment: Many commenters did not support CMS' proposal to finalize 
ASC-12 because complications from colonoscopies are very rare and ASCs 
already take steps to ensure colonoscopies are conducted to eliminate 
preventable complications. Many commenters noted that the literature on 
the measure indicates the incidence of complications following 
colonoscopy is less than 2 percent. These commenters suggested that 
this low incidence meant that the measure should not be included in the 
ASCQR Program as it may be topped out or that the quality concern 
addressed by the measure does not rise to the level of importance 
needed for a national quality measurement program.
    Response: Given the widespread use of colonoscopy for colorectal 
cancer screening in the outpatient setting, we consider colonoscopy a 
high volume procedure and measuring the quality of care associated with 
colonoscopies a high priority for us. We commend ASCs that are already 
taking steps to ensure colonoscopies are conducted to eliminate 
preventable complications. While we agree that the incidence of 
colonoscopy complications is relatively low, serious adverse events, 
such as perforation of the bowel and bleeding, may occur following 
colonoscopies. We view this measure as a critical outcome measure where 
the goal is to drive toward and sustain zero harm.
    In addition, some literature suggests that many facilities 
performing colonoscopies are unaware of patients accessing hospital-
based care with adverse events because patients return to different 
facilities, including hospitals and emergency departments, and would 
not return to the ASC

[[Page 66973]]

facility. For example, one study showed that physicians were unaware of 
nearly 75 percent of hospital admissions for adverse events following 
colonoscopy.\37\ While most colonoscopies are performed without 
subsequent complication, we note that, in our analysis of Medicare FFS 
data, this measure showed that among Medicare patients aged >=65, 1.6 
percent of outpatient colonoscopies resulted in an unplanned hospital 
visit within 7 days.\38\ This estimate is based on a 20 percent sample 
of nationwide Medicare fee-for-service patients. If we were to use full 
national data (that is, a 100 percent sample), we estimate 1.7 million 
colonoscopies would have been performed among Medicare FFS patients and 
nearly 27,000 unplanned hospitals visits would have occurred within 7-
days of the procedure. These findings suggest adverse events are not as 
rare or inconsequential as many believed and that quality measurement 
for colonoscopy procedures in the outpatient setting is important.
---------------------------------------------------------------------------

    \37\ Leffler DA, Kheraj R, Garud S, et al. The incidence and 
cost of unexpected hospital use after scheduled outpatient 
endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757.
    \38\ 2010 Medicare 20 percent fee-for-service sample. Based on 
an analysis of 20 percent sample of Medicare FFS data from 2010 
during measure development. The 20 percent sample included 332,391 
outpatient colonoscopies meeting the measure inclusion and exclusion 
criteria, and 1.6 percent of these colonoscopies were followed by an 
unplanned hospital visit. This equates to 5,331 unplanned hospital 
visits in the 20 percent sample.
---------------------------------------------------------------------------

    We agree with the commenters' statement that the low incidence rate 
may suggest that the measure is topped-out, but in addition to the 
reasons for adopting this measure discussed above, we believe that a 
low incidence rate does not conclusively determine whether a measure 
has reached topped-out status. After the measure has been implemented, 
over time, we will assess it again for topped-out status using the two 
topped-out criteria we are finalizing in section XIV.B.3. of this final 
rule with comment period.
    Comment: Many commenters expressed concern that ASC-12 is not 
sufficiently reliable to be included in the ASCQR Program, 
specifically, that the measure developer has indicated that the measure 
is only ``fairly'' reliable, with an interclass correlation coefficient 
(ICC) of 0.335. These commenters contended that ``fair'' reliability is 
not sufficient for publicly reported quality metrics because such 
information could misinform the public, and urged CMS to conduct an 
analysis on the measure's reliability to understand the amount of data 
required to achieve ``good'' reliability. Several commenters argued 
that ``good'' reliability should result in an ICC of at least 0.60. 
Other commenters believed that reliability will improve with several 
years' worth of data. Another commenter requested that data from this 
measure be withheld from public reporting until concerns about its 
reliability and validity can be thoroughly assessed.
    Response: We disagree with commenters and believe that ASC-12 is 
sufficiently reliable to be included in the ASCQR Program. The ICC 
value submitted in the initial NQF application (0.335) was calculated 
using a split sample of data from 2 years. We randomly split the 
patient cohort at each hospital into two equal halves, calculated the 
measure using each half, and then calculated the agreement between 
these two (the `test' and the `retest'). After submitting the measure 
to NQF for endorsement review, we conducted additional calculations of 
the reliability testing score, this time using the Spearman-Brown 
prophecy formula. The Spearman-Brown prophecy formula is an accepted 
statistical method which estimates the ICC if the sample were 
increased. Therefore, it allows us to estimate what the reliability 
score would be if all observations were used for public reporting 
rather than using a split sample. Our Spearman-Brown prophecy formula 
calculations resulted in a higher ICC of 0.43.
    The NQF considers the ICC values ranging from 0.21 to 0.40 as 
``fair'' reliability and values ranging from 0.41 to 0.60 as 
``moderate'' reliability. Therefore, the ICC values of 0.335 and 0.43 
are interpreted as ``fair'' and ``moderate'' reliability, respectively. 
These ICC values are also in line with other NQF-endorsed outcome 
measures used in other CMS programs. For example, in the Hospital 
Readmissions Reduction Program (76 FR 51667), the Inpatient Acute 
Myocardial Infarction (AMI) 30-day Risk Standardized Readmission 
measure (NQF #0505) has an ICC of 0.369 and the Pneumonia (PN) 30-day 
Risk Standardized Readmission measure (NQF #0506) has an ICC of 0.406. 
Both measures are NQF-endorsed. We consider the reliability of 0.335, 
as noted in the proposed rule, acceptable for the ASCQR Program.
    Regarding the concerns that we should withhold public reporting 
until the measure's reliability and validity is addressed, as stated 
above, we believe the reliability of the measure is sufficiently 
reliable for inclusion in the ASCQR Program and do not agree that the 
public may be misinformed or that we should withhold public reporting. 
In addition to our calculations above, reliability testing previously 
conducted by the measure steward demonstrated the measure data elements 
produced were repeatable; that is, the same results were produced a 
high proportion of the time when assessed in the same population in the 
same time period. Also, validity testing by the measure steward 
demonstrated that the measure data elements produce measure scores that 
correctly reflect the quality of care provided and that adequately 
identify differences in quality.
    As the commenters suggested, the measure reliability may be further 
improved by using several years' worth of data; however, we must 
balance the reliability of the measure with the timeliness of the 
measure. As discussed, at this time, we believe that 1 year of data 
appropriately balances these competing interests for payment 
determination purposes, but we will continue to assess this belief 
during the dry run we discuss below. Also, we will consider conducting 
additional reliability assessments of the measure using an extended 
data period.
    Moreover, we believe it is important to include this measure in the 
program because colonoscopy is a high volume, common procedure 
performed at outpatient facilities and is frequently performed on 
relatively healthy patients to screen for colorectal cancer. Given the 
widespread use of colonoscopy, understanding and minimizing procedure-
related adverse events is a high priority. These adverse events, such 
as abdominal pain, bleeding, and intestinal perforation, can result in 
unanticipated hospital visits post procedure. Physicians performing 
colonoscopies are often unaware that patients seek acute care at 
hospitals following the procedure and the associated adverse events are 
potentially preventable. We strongly believe that the measure would 
promote improvement in patient care over time because transparency in 
publicly reporting measure scores would make patient unplanned hospital 
visits (emergency department visits, observation stays, and inpatient 
admissions) following colonoscopies more visible to ASCs and patients 
and incentivize ASCs to incorporate quality improvement activities in 
order to reduce these visits.
    Finally, we believe this measure should be included in the program 
because currently this risk-standardized quality measure is the only 
measure available that would address this information gap and promote 
quality improvement by providing feedback to facilities and physicians, 
as well as transparency for patients on the rates

[[Page 66974]]

and variation across facilities in unplanned hospital visits after 
colonoscopy. There are no publicly available quality of care reports 
for ASCs that conduct outpatient colonoscopies. Therefore, adoption of 
this measure provides an opportunity to enhance the information 
available to patients choosing among ASCs that offer this elective 
procedure. We believe this measure would reduce adverse patient 
outcomes associated with preparation for colonoscopy, the procedure 
itself, and follow-up care by capturing and making more visible to ASCs 
and patients all unplanned hospital visits following the procedure. In 
addition, providing outcome rates to ASCs would make visible to 
clinicians meaningful quality differences and incentivize improvement.
    In response to comments, however, to allow sufficient time to 
conduct further analysis of this measure, we are finalizing the 
adoption of this measure beginning with the CY 2018 payment 
determination, rather than beginning with the CY 2017 payment 
determination as proposed. We plan to perform a dry run of the measure 
in 2015. From our perspective, a dry run is a preliminary analysis of 
data in which ASCs may review their measure results, and ask questions 
about and become familiar with the measure methodology. Dry runs will 
include three to four years of paid Medicare FFS claims. We will use 
the most recent complete claims samples (usually 6 to 9 months prior to 
the start date) for dry runs. For example, if the dry run begins in 
March 2015, the most recent data available may be July 2011 to June 
2014 (assuming 3 years of data). Because we use paid Medicare FFS 
claims, ASCs will not need to submit any data for the dry run. The 
general information on the dry run as well as the confidential dry run 
reports will be available for ASCs to review on their accounts at 
https://www.qualitynet.org. The dry run will generate confidential 
reports at the patient level, indicating whether the patient had a 
hospital visit, the type of visit (admission, emergency department 
visit, or observational stay), the admitting facility, and the 
principal discharge diagnosis. Further, the dry run will enable ASCs to 
see the measure score reports and have the opportunity to receive 
individual patient data and information contained within individual 
patient records. ASCs can use the information to identify performance 
gaps and develop quality improvement strategies. Dry run results are 
not linked to public reporting or payment determinations. We expect the 
dry run to take approximately 1 month to conduct once data are 
obtained, after which facilities will be provided the confidential 
report and the opportunity to review their performance and provide 
feedback to us.
    In addition, we will continue to generate these reports for ASCs 
after we implement the measure beginning with the CY 2018 payment 
determination. The measure will have no payment impact until the CY 
2018 payment determination and subsequent years. Public display of 
measure data will occur on or after December 1, 2017, but there will be 
no public display of the dry run data.
    With national implementation of a dry run of this measure, we also 
will review the appropriate cutoff volume for facilities, if necessary, 
in reporting the measure score. We require a minimum volume (cutoff 
volume) of colonoscopies per facility to be able to calculate a 
reliable measure score. We have yet to determine the minimum volume per 
facility (that is, the cutoff colonoscopy volume). Because we used a 
Medicare 20-percent sample to develop the measure, we could not 
estimate this cutoff during measure development. However, testing 
during the measure dry-run with 100 percent of the sample per facility 
will help us to determine the appropriate cutoff volume of 
colonoscopies per facility. ASCs will be notified via the QualityNet 
Web site of the cutoff volume of colonoscopies per facility, if any.
    While some ASCs perform too few colonoscopies for us to calculate a 
measure score and we would not publicly report their data, these 
facilities would remain in the measure cohort. Typically, for public 
reporting of hospital measures on the CMS Web site Hospital Compare, 
the measure score is reported as ``Number of cases too small'' for 
hospitals with fewer cases than the cutoff. We will use the same 
protocol when the measure is publicly reported for the ASCQR Program, 
and will report a measure score as ``Number of cases too small'' for 
ASCs with fewer cases than the cutoff on the QualityNet Web site.
    Comment: Several commenters pointed out that, from the perspective 
of using claims as a data source for this measure, the codes for ASCs 
are services rendered-driven, while the codes for HOPDs are diagnosis-
driven. Commenters were concerned that the coded information and the 
associated risk-adjustment for this measure may not be able to capture 
the sensitivity and specificity of the clinical care following an 
outpatient colonoscopy. Given the difference in coding practices and 
claims architecture between HOPDs and ASCs, commenters recommended 
further testing for a fair performance comparison between HOPDs and 
ASCs. One commenter inquired if CMS plans to field test this measure 
prior to implementation. Commenters contended that the measure must be 
systematically assessed to assure the measure results are attributable 
to differences in quality alone. The commenters suggested that the 
measure score should be directly validated against outpatient medical 
records and measure results across settings must be assessed to ensure 
that any comparisons are valid.
    Response: We thank the commenters for expressing their concerns 
regarding possible effects of coding practices and claims architecture 
on the data available through administrative claims in capturing the 
sensitivity and specificity of the clinical care following an 
outpatient colonoscopy. The measure is designed, however, to mitigate 
any differences in coding practices across HOPDs and ASCs. For example, 
to capture comorbidities for risk adjustment, the measure uses claims 
across care settings, including physician outpatient claims, so 
differences in claims submitted during the procedure are not likely to 
affect the comorbidities assigned to the patient. In addition, the 
outcome counts hospital visits regardless of whether they are billed as 
admissions, emergency room visits, or observations stays; therefore, if 
there are differences between colonoscopies done at ASCs and HOPDs in 
the type of hospital visit a patient with complications incurs (for 
example, whether observation stays or ED visits are used), the measure 
will be insensitive to these differences.
    We recognize that the claims architecture differs for HOPDs and 
ASCs because the two facility types utilize different bill forms and 
have different payment systems. However, we do not agree that our 
measure specifications do not account for differences in claims 
architecture and necessary billing codes in discerning hospital events 
following colonoscopy. The measure includes colonoscopies from all 
outpatient settings to ensure that the expected hospital visit rate for 
any facility is estimated using the full national experience of 
colonoscopy patients. Specifically, we include all outpatient 
colonoscopies to make sure that: (1) The effects that risk factors 
exert on the outcome are estimated based on colonoscopies performed 
among all outpatient settings; and (2) the national average rate of 
hospital visits following colonoscopy is calculated based on all 
outpatient colonoscopies. Our approach

[[Page 66975]]

includes all outpatient claims, including HOPD, ASC, and physician 
claims. To identify all outpatient colonoscopy claims, including claims 
affected by the Medicare 3-day payment window policy, the measure 
specifications link claims across multiple care settings (outpatient 
and inpatient). Furthermore, the measure specifications link claims 
across multiple care settings to derive comorbidity data to ensure the 
patient comorbidities are captured to the fullest extent possible for 
risk-adjustment and to identify patient outcomes.
    Linking patient claims across multiple settings largely mitigates 
the impact of potential difference in coding practice among settings 
and allows comparisons of colonoscopy quality across settings. For 
example, potential variation in the coding of comorbidities in the 
index colonoscopy claim may occur based on the setting. However, we 
derive comorbidities for risk adjustment from all inpatient and 
outpatient claims in the preceding 12 months. By using all claims in 
the preceding year, we capture patient comorbidities to the fullest 
extent possible and mitigate the impact of potential coding differences 
between settings that would occur if we used the index colonoscopy 
claim alone.
    Further, similar approaches to deriving comorbidities from claims 
data are used for other risk-adjusted outcome measures. The measure 
developer has validated the accuracy of this approach on multiple 
occasions for prior measures developed for the inpatient setting. For 
example, in the Hospital Readmissions Reduction Program (76 FR 51667), 
the Inpatient Acute Myocardial Infarction (AMI) 30-day Risk 
Standardized Readmission measure (NQF #0505) has an ICC of 0.369, and 
the Pneumonia (PN) 30-day Risk Standardized Readmission measure (NQF 
#0506) has an ICC of 0.406. Both measures are NQF-endorsed.
    Regarding the suggestion that the measure score should be directly 
validated against outpatient medical records, at this time, we believe 
that it would be overly burdensome to validate the reported data, 
because of the limited experience that ASCs have with reporting quality 
data to CMS coupled with the low incidence of cases for this measure. 
In addition, as stated in section XIV.D.6. of this final rule with 
comment period, we refer readers to the FY 2013 IPPS/LTCH PPS final 
rule (77 FR 53641 through 53642) for a complete discussion of our 
policy not to require validation of claims-based measures (beyond the 
usual claims validation activities conducted by our Medicare 
Administrative Contractors).
    We appreciate commenters' concerns regarding factors that may 
impact HOPDs and ASCs. In response to comments, to allow sufficient 
time to conduct further analysis of this measure, we are finalizing the 
adoption of this measure beginning with the CY 2018 payment 
determination, rather than beginning with the CY 2017 payment 
determination as proposed.
    In addition, we plan to perform a dry run (a preliminary analysis) 
of the measure in 2015. We refer readers to our discussion of the dry 
run above, in response to a previous comment.
    Comment: Several commenters disagreed with the statement in the 
proposed rule (79 FR 41047) that the ASC-12 measure is ``well-defined 
and precisely specified for consistent implementation within and 
between organizations that will allow for comparability.'' These 
commenters raised the issue that the Medicare payment window policy 
that applies to hospitals will result in under-detection of hospital 
events for colonoscopies performed by HOPDs; the 3-day (or 1-day) 
payment window applies to outpatient services furnished by hospitals 
and hospitals that are wholly owned or wholly operated Part B entities. 
Hospitals are required to bundle the technical component of all 
outpatient diagnostic services and related nondiagnostic services (for 
example, therapeutic) with the claim for an inpatient stay when 
services are furnished to a Medicare beneficiary in the 3 days (or, in 
the case of a hospital that is not a subsection (d) hospital, during 
the 1-day) preceding an inpatient admission in compliance with section 
1886 of the Act. Commenters expressed their concern that as a result of 
this payment policy, HOPDs may have systematic undercounting of 
hospital visits while ASCs get a full count of all hospital visits 
within 7 days subsequent to outpatient colonoscopy. Commenters did not 
believe the methodological solution proposed by the measure developer, 
using physician claims with an HOPD Place of Service (POS) code 
indicating the colonoscopy was performed at an HOPD, is adequate due to 
the high error rates in POS coding on physician claims. Commenters were 
concerned that these challenges would make comparison of HOPD and ASC 
data impossible, and significantly reduce the validity of the measure 
in the HOPD setting.
    Response: We disagree with the commenters, and we continue to 
believe this measure is ``well-defined and precisely specified for 
consistent implementation within and between organizations that will 
allow for comparability,'' as we stated in the CY 2015 OPPS/ASC 
proposed rule (79 FR 41047).
    We agree that the ability to detect meaningful variation is an 
important indication of the value of a measure. As the commenter has 
correctly noted, we have shown facility variation in unplanned hospital 
visits following colonoscopy in both nationwide Medicare data from 
HOPDs and also in the 2010 Healthcare Cost and Utilization Project 
(HCUP) data. We have also shown facility variation in unplanned 
hospital visits among ASCs alone using HCUP data from California.\39\ 
The observed average hospital visit rate and the variation in unplanned 
hospital visit rates among ASCs, which are unaffected by the 3-day 
payment window policy, were very similar to HOPDs suggesting that the 
measure performs equally well in both settings. Accordingly, we are 
confident that the variation shown is a reflection of facility 
variation in quality and not as a result of any issues to do with the 
3-day payment window policy.
---------------------------------------------------------------------------

    \39\ Center for Medicare and Medicaid Services, ``Facility 7-Day 
Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy,'' National Quality Form Measure Submission Form, 20.
---------------------------------------------------------------------------

    Based on our internal testing with claims data, we believe our 
current algorithm is appropriate and accurate. However, since we always 
strive for improvement, we will evaluate the colonoscopy measure dry 
run data and work with HOPDs and ASCs to further review and refine the 
algorithm if necessary.
    Regarding POS billing, the OIG has found billing errors incorrectly 
assigning the service site for both HOPDs and ASC-related claims on 
physician claims where there were matching HOPD or ASC claims and that 
the percentage of incorrectly billed claims was significantly higher 
for ASC-related claims.\40\ Many physicians' services can be furnished 
either in a facility setting such as an HOPD or ASC, or in a non-
facility setting such as a physician's office, urgent care center or 
independent clinic. For these services, Medicare has two different 
payment rates under the physician fee schedule (PFS). The PFS facility 
rate is generally lower to reflect the fact that certain resources are 
supplied by the facility, and Medicare makes a separate payment to the 
facility under another payment system. By matching both facility and 
physician colonoscopy claims for any given patient, the current measure 
methodology ensures that colonoscopy claims are identified to the 
fullest extent

[[Page 66976]]

possible and attribute the colonoscopy to the appropriate provider when 
billing is affected by the 3-day window payment policy.
---------------------------------------------------------------------------

    \40\ OIG, Physician services processed by Medicare Part B 
Contractors during Calendar Year 2009, September 2011, A-01-10-
00516.
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    We clarify that HOPD claims for colonoscopy procedures for 
calculation of the measure are identified using both physician and 
facility claims. We did not intend to imply that HOPD colonoscopy 
claims are identified solely from physician claims. For both ASCs and 
HOPDs, the measure first identifies colonoscopy claims using both the 
physician claim and the corresponding facility claim to ensure the site 
of the colonoscopy service is attributed to the appropriate provider. 
As a second step, the measure matches: (1) Physician claims that 
contain HOPD as the POS that do not have a matching facility claim with 
(2) inpatient claims to identify potential HOPD colonoscopies resulting 
in an inpatient admission. This second additional step identifies HOPD 
colonoscopy claims affected by the 3-day window payment policy.
    Therefore, we do not agree that ASCs will be adversely affected by 
use of POS billing to locate colonoscopies performed by physicians due 
to high levels of coding errors in POS coding on Part B for physician 
services because our measure calculation methodology addresses this 
concern.
    We also have taken steps to educate physicians about the 
appropriate POS coding and actively audit physicians to improve the 
accuracy of POS coding http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM7502.pdf. 
In addition, from 2012 onwards, Medicare billing introduced the ``PD'' 
modifier to indicate physician claims affected by the 3-day window 
payment policy.
    Comment: In reference to the statement in the CY 2015 OPPS/ASC 
proposed rule (79 FR 41047) that ``there are no publicly available 
quality of care reports for ASCs that conduct outpatient 
colonoscopies,'' one commenter stated that, on the Physician Compare 
Web site, CMS includes data on colonoscopy measures that provide a 
detailed look at the quality of colonoscopy services provided. This 
commenter suggested that CMS further enhance publicly available data by 
including measures captured by Qualified Clinical Data Registries to 
increase the robustness of publicly available data on colonoscopy 
provided across all sites of service.
    Response: We thank the commenter for providing this input, but note 
that the cited information is available at the physician level. We 
believe that quality of care measure information also should be 
reported at the facility level, and that facilities have a role in 
monitoring the surgical procedures performed at their facility and 
subsequent adverse outcomes. Patients and facilities should be able to 
review reported quality of care measure information at the ASC-facility 
level. We thank the commenter for the suggestion to include measures 
captured by Qualified Clinical Data Registries to further enhance 
publicly available data such as the colonoscopy data and we may take 
this into consideration in future rule making.
    Comment: While some commenters believed that a long collection 
period, such as three years, is needed in order to generate measure 
scores that are moderately reliable, they also were concerned that the 
publicly reported measure score would not be a reflection of current, 
or even recent, performance. Commenters were concerned that consumers 
could be misled by the outdated data.
    Response: As discussed previously, we agree with the commenter that 
a longer data collection period may increase measure reliability. 
However, we must balance the reliability of the measure with the 
timeliness of the measure and, as discussed later, at this time, we 
believe that 1 year of data appropriately balances these competing 
interests. We will continue to assess this belief during the dry run.
    Comment: Several commenters expressed concern that the measure that 
was put forth to NQF review retained elements of the inpatient measure. 
Commenters stated that including these elements was inappropriate, and 
interpreted this action to mean that the measure has not been 
thoroughly reviewed and fully adapted for outpatient use. These 
commenters gave examples of the alleged inappropriate inpatient 
elements: (1) Certain condition categories (CCs) are not included in 
risk adjustment if they are only recorded at the time of the 
colonoscopy, and yet they are considered to be possible adverse 
outcomes; and (2) although end stage renal disease (ESRD) would not be 
a complication of colonoscopy diagnosed and recorded at the time of the 
procedure, it was included on the list of CCs. Commenters urged CMS to 
ensure that revised specifications are developed and then independently 
reviewed to ensure outpatient adaptation is complete prior to measure 
implementation.
    Response: We appreciate the commenters' concerns. In keeping with 
good practice, we have continued to review and seek comment on the 
measure specifications subsequent to measure development and 
implementation to ensure the measure remains up-to-date in view of any 
potential new information. As the commenters noted, the measure 
technical specifications included a list of CCs that the measure does 
not consider for risk adjustment if the CC(s) occurred at the time of 
colonoscopy. In view of the comments, we have revised the list of CCs 
and updated the measure specifications to ensure only conditions 
relevant to colonoscopy are included. Of note, the inclusion of ESRD on 
the list was an error; we have revised the list and will use the 
revised list in implementing the measure. We corrected the list in 
subsequent measure descriptions during the NQF public comment period.
    Comment: Many commenters expressed concern that the ASC-12 measure 
includes hospital visits unrelated to colonoscopy. Some commenters 
requested explanation for why the measure uses an all-cause 
categorization rather than only admissions related to colonoscopies.
    Response: We clarify that this measure is purposely designed to use 
a broad outcome of hospital visits following surgery rather than a 
narrow set of easily identifiable complications. From a patient and 
health system perspective, the goal of this measure is to encourage and 
inform ASC efforts to minimize all potential acute complications, not 
just those narrowly related to procedural technique. This is important 
as the literature suggests,41, 42, 43, 44 that hospital 
visits following colonoscopy occur due to a range of adverse events 
relating to the bowel preparation, anesthesia, the colonoscopy 
procedure itself, and follow-up care. These include a range of symptoms 
and signs such as abdominal pain, bloating, dizziness and collapse, 
electrolyte disturbances, and cardiorespiratory symptoms (from sedation 
use), in addition to complications that are directly related to 
procedural technique such as bleeding and bowel perforation. The broad 
outcome of unplanned hospital visits captures all of these potential 
acute complications of colonoscopy.
---------------------------------------------------------------------------

    \41\ Ko CW, Dominitz JA. Complications of colonoscopy: magnitude 
and management. Gastrointest Endosc Clin N Am 2010;20:659-71.
    \42\ ASGE Standards of Practice Committee, Fisher DA, Maple JT, 
et al. Complications of colonoscopy. Gastrointest Endosc 
2011;74:745-52.
    \43\ Baudet JS, Diaz-Bethencourt D, Aviles J, et al. Minor 
adverse events of colonoscopy on ambulatory patients: the impact of 
moderate sedation. Eur J Gastroenterol Hepatol 2009;21:656-61.
    \44\ Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor 
complications and time lost from normal activities after screening 
or surveillance colonoscopy. 2007;65:648-56.

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[[Page 66977]]

    Our goal for the measure is to encourage ASCs to be mindful of 
reducing post-colonoscopy admissions caused by the prior colonoscopy 
procedure performed at their facility. For example, patients may be at 
higher risk of falls post-colonoscopy secondary to dehydration 
following the bowel preparation for the procedure and there may be 
opportunities for ASCs to minimize this risk. We removed planned 
admissions from the measure outcome adapting CMS' Planned Readmission 
Algorithm version 3.0.45 46 This algorithm removes nonacute 
admissions for scheduled procedures (for example, total hip 
replacement) and other types of care always considered planned (for 
example, rehabilitation or maintenance chemotherapy) from the outcome. 
That is, we removed planned admissions from the outcome because planned 
admissions do not reflect differences in colonoscopy quality of care.
---------------------------------------------------------------------------

    \45\ Horwitz L, Grady J, Dorsey K, Zhang W, Keenan M, Keshawarz 
A, Cohen D, Ngo C, Okai M, Nwosu C, Lin Z, Bhat K, Krumholz H, 
Bernheim S,. 2014 Measures Updates and Specifications Report: 
Hospital-Wide All-Cause Unplanned Readmission--Version 3.0. 2014: 
Centers for Medicare & Medicaid Services, 2014.
    \46\ Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html.
---------------------------------------------------------------------------

    Comment: One commenter requested that CMS clarify how the numerator 
and denominator for ASC-12 are calculated.
    Response: The measure score is the ratio of predicted hospital 
visits (numerator) over the expected hospital visits (denominator) 
multiplied by the crude national rate. The measure score numerator is 
the predicted rate, which is the number of unplanned hospital visits 
the facility is predicted to have within 7 days of colonoscopy, and it 
accounts for the observed unplanned hospital visit rate, the number of 
colonoscopies performed at the facility, and the facility's case mix. 
This is sometimes referred to as the ``adjusted actual rate.''
    The measure score denominator is the expected rate, which is the 
number of unplanned hospital visits the facility is expected to have, 
based on the nation's performance with that facility's case-mix. It is 
the sum of all patients' expected probabilities of a hospital visit, 
given their risk factors and the risk of readmission at an average 
hospital. The contribution of each risk factor (for example, age) to 
the patient's risk of a hospital admission is based on all of the 
patients in the measure cohort. The crude national rate is the average 
rate of hospital visits following colonoscopy observed in the entire 
measure cohort. We also refer readers to the measure discussion above 
and measure specifications (http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=75057) for a more detailed 
discussion of how the numerator and denominator are calculated.
    Comment: Many commenters were concerned that facilities would lack 
actionable information generated from ASC-12. Several of these 
commenters questioned whether this measure will benefit facilities and 
patients because each facility will only receive a report with an 
aggregate number of claims that will be based on historical data, which 
will make it difficult for the facility to set a course for improvement 
if needed. Commenters requested that CMS clarify its plan to report 
detailed patient-level data confidentially to ASCs that indicates 
whether the patient had a hospital visit, the type of visit (admission, 
emergency department visit, or observational stay), the admitting 
facility, and the principal discharge diagnosis to assist facilities 
with quality improvement, to enable facilities to understand their 
performance and take steps where remediation is needed. Several 
commenters also noted that ASCs do not provide post-operative follow-up 
care after patient discharges and do not have direct access to the 
records of other health care facilities. Consequently, this constraint 
would limit their ability to identify improvements based on the data 
provided by this measure.
    Response: The primary purpose of this measure is to illuminate the 
quality differences in colonoscopies that are presently not visible to 
patients and may not be visible to some facilities. In measure 
development, we found the facility variations in the measure score 
suggest some facilities provide worse than expected care. We believe 
the detailed patient-level data that we will provide confidentially to 
ASCs will help them identify areas for improvement efforts. The data 
would indicate whether the patient had a hospital visit, the type of 
visit (admission, emergency department visit, or observational stay), 
the admitting facility, and the principal discharge diagnosis. The dry 
run will enable ASCs to see the measure score reports and have the 
opportunity to receive individual patient data and information 
contained within individual patient records. We will continue to 
generate these reports for ASCs after we implement the measure 
beginning with the CY 2018 payment determination. ASCs can use the 
information to identify performance gaps and develop quality 
improvement strategies.
    We understand the challenges involved in following up with ASC 
patients. The colonoscopy measure addresses these challenges by 
providing feedback to facilities and clinicians about the outcomes 
experienced by their patients following colonoscopy. Many clinical 
experts noted that facilities were often unaware of patients' return 
visits to hospitals. They noted that many patients would often return 
to a different facility or an emergency department. One study noted 
that physicians were unaware of 75 percent of return hospital visits 
following colonoscopy at a major tertiary center.\47\
---------------------------------------------------------------------------

    \47\ Leffler DA, Kheraj R, Garud S, et al. The incidence and 
cost of unexpected hospital use after scheduled outpatient 
endoscopy. Arch Intern Med 2010;170:1752-7.
---------------------------------------------------------------------------

    Comment: Several commenters expressed concern that ASC-12 does not 
include risk-adjustment to account for patient differences, stating 
that CMS does not report the variation between ASCs once this risk 
adjustment has been applied and that there may be no statistically 
significant difference between an ASC's risk-adjusted visit rate and 
the national average making it impossible to identify low performers 
and high performers. One commenter specifically recommended that 
patients with conditions such as inflammatory bowel disease and 
diverticulitis should be included with appropriate risk adjustment. 
Commenters recommended CMS consider the drawbacks of the current 
methodology, conduct analysis to test the variation of the measure 
between ASCs, and reconsider this measure for inclusion in future 
proposals.
    Response: We thank the commenters for all the suggestions to 
improve the measure. In the measure application for NQF endorsement, we 
note that the measure, following risk-adjustment, is able to detect 
statistically significant variation between outpatient facilities by 
demonstrating measure score variation using the 2010 HCUP data from 
four States (California, New York, Nebraska, and Florida). Using a very 
conservative sampling technique (sampling with replacement),\48\ we 
constructed 95 percent interval estimates around the facility measure 
score (similar to confidence intervals) and used the estimates to place 
facilities into three performance categories: Worse than expected; no 
different than expected; and better than expected. Based on this 
analysis, we identified 5 outlier facilities among a total of 992

[[Page 66978]]

ASCs and HOPDs. This analysis included only about one-tenth of all 
outpatient facilities in the United States. Typically, we see greater 
variation between facilities when 100 percent of nationwide facilities 
are included for actual measure implementation and reporting.
---------------------------------------------------------------------------

    \48\ Efron, B. (1979). Bootstrap methods: Another look at 
jackknife. Ann. Stat. 7, 1-26.
---------------------------------------------------------------------------

    As to the commenter's recommendation to risk-adjust patients with 
certain conditions, we excluded patients with inflammatory bowel 
disease (IBD) and diverticulitis because it is difficult to assess from 
claims data whether these patients have an active or inactive disease 
which may alter their risk of the outcome. We determined that we could 
not adequately risk-adjust for the risk of the outcome for these 
patients. Second, our analysis suggested that nearly half of the 
patients with IBD and diverticulitis have post-colonoscopy hospital 
visits with a primary diagnosis of IBD and diverticulitis respectively. 
We could not tell from the claims data whether these visits were 
planned or unplanned. We did test for variation among ASCs and HOPDs 
independently using HCUP data from California (see Measure Technical 
Report). As we previously discussed, the measure was able to adequately 
detect variation in the measure score among ASCs.
    As for the inquiry about further testing the measure, we have more 
time to further test the measure because, in response to comments, we 
are finalizing the adoption of this measure beginning with the CY 2018 
payment determination, rather than beginning with the CY 2017 payment 
determination as proposed. We plan to perform a dry run (a preliminary 
analysis) of the measure in 2015. We refer readers to our discussion of 
the dry run above, in response to a previous comment.
    Comment: One commenter expressed concern that ASCs would have 
difficulty gathering and reporting the information for the proposed 
ASC-12 measure.
    Response: We thank the commenter for providing this input and note 
that this measure will be calculated completely from data obtained from 
paid Medicare FFS claims submitted by ASCs, hospitals, and physicians. 
For this reason, it will not require any additional information-
gathering on the part of ASCs.
    We continue to believe that quality of care measurement in the 
clinical area of outpatient colonoscopy is an important gap area with 
ample room for improvement and that this measure has sufficient 
reliability and validity for use in the ASCQR Program. Therefore, after 
consideration of the public comments we received, we are finalizing our 
proposal to adopt the ASC-12: Facility Seven-Day Risk-Standardized 
Hospital Visit Rate after Outpatient Colonoscopy measure for the ASCQR 
Program. However, to allow ASCs sufficient time to review their measure 
data from the dry run and utilize the confidential facility reports 
with patient-level associated hospital event information, we are 
finalizing the adoption of this measure for the CY 2018 payment 
determination and subsequent years, instead of the CY 2017 payment 
determination and subsequent years as proposed.
    We plan to perform a dry run (a preliminary analysis) of the 
measure in 2015. Also, with national implementation of a dry run of 
this measure, we also will review the appropriate cutoff volume for 
facilities, if necessary, in reporting the measure score. We refer 
readers to our discussion of the dry run and the cutoff volume above, 
in our response to a previous comment.
    The finalized measure set for the ASCQR Program CY 2017 payment 
determination and subsequent years, is listed below.

 Finalized ASC Program Measure Set for the CY 2017 Payment Determination
                          and Subsequent Years
------------------------------------------------------------------------
       ASC No.            NQF No.                 Measure name
------------------------------------------------------------------------
ASC-1...............            0263   Patient Burn.
ASC-2...............            0266   Patient Fall.
ASC-3...............            0267   Wrong Site, Wrong Side, Wrong
                                        Patient, Wrong Procedure, Wrong
                                        Implant.
ASC-4...............            0265   Hospital Transfer/Admission.
ASC-5...............            0264   Prophylactic Intravenous (IV)
                                        Antibiotic Timing.
ASC-6...............             N/A   Safe Surgery Checklist Use.
ASC-7...............             N/A   ASC Facility Volume Data on
                                        Selected ASC Surgical
                                        Procedures.
                                       Procedure categories and
                                        corresponding HCPCS codes are
                                        located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754 1228772475754.
ASC-8...............            0431   Influenza Vaccination Coverage
                                        among Healthcare Personnel.
ASC-9...............            0658   Endoscopy/Polyp Surveillance:
                                        Appropriate Follow-Up Interval
                                        for Normal Colonoscopy in
                                        Average Risk Patients.
ASC-10..............            0659   Endoscopy/Polyp Surveillance:
                                        Colonoscopy Interval for
                                        Patients with a History of
                                        Adenomatous Polyps-Avoidance of
                                        Inappropriate Use.
ASC-11..............            1536   Cataracts: Improvement in
                                        Patient's Visual Function within
                                        90 Days Following Cataract
                                        Surgery.*
------------------------------------------------------------------------
* Measure voluntarily collected starting as set forth in section
  XIV.E.3.c. of this final rule with comment period.

    The finalized measure set for the ASCQR Program CY 2018 payment 
determination and subsequent years, which includes previously finalized 
measures and the newly-adopted measure, ASC-12, is listed below.

 Finalized ASC Program Measure Set for the CY 2018 Payment Determination
                          and Subsequent Years
------------------------------------------------------------------------
       ASC No.            NQF No.                 Measure name
------------------------------------------------------------------------
ASC-1...............            0263   Patient Burn.
ASC-2...............            0266   Patient Fall.
ASC-3...............            0267   Wrong Site, Wrong Side, Wrong
                                        Patient, Wrong Procedure, Wrong
                                        Implant.
ASC-4...............            0265   Hospital Transfer/Admission.
ASC-5...............            0264   Prophylactic Intravenous (IV)
                                        Antibiotic Timing.
ASC-6...............             N/A   Safe Surgery Checklist Use.

[[Page 66979]]

 
ASC-7...............             N/A   ASC Facility Volume Data on
                                        Selected ASC Surgical
                                        Procedures.
                                       Procedure categories and
                                        corresponding HCPCS codes are
                                        located at: http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754 1228772475754.
ASC-8...............            0431   Influenza Vaccination Coverage
                                        among Healthcare Personnel.
ASC-9...............            0658   Endoscopy/Polyp Surveillance:
                                        Appropriate Follow-Up Interval
                                        for Normal Colonoscopy in
                                        Average Risk Patients.
ASC-10..............            0659   Endoscopy/Polyp Surveillance:
                                        Colonoscopy Interval for
                                        Patients with a History of
                                        Adenomatous Polyps-Avoidance of
                                        Inappropriate Use.
ASC-11..............            1536   Cataracts: Improvement in
                                        Patient's Visual Function within
                                        90 Days Following Cataract
                                        Surgery.*
ASC-12..............         Pending   Facility Seven-Day Risk-
                                        Standardized Hospital Visit Rate
                                        after Outpatient Colonoscopy.**
------------------------------------------------------------------------
* Measure voluntarily collected starting as set forth in section
  XIV.E.3.c. of this final rule with comment period.
** New measure finalized for CY 2018 payment determination and
  subsequent years.

6. ASCQR Program Measures for Future Consideration
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68493 through 68494), where we finalized our approach to 
future measure selection for the ASCQR Program. We seek to develop a 
comprehensive set of quality measures to be available for widespread 
use for informed ``patient decision-making and quality improvement in 
the ASC setting'' (77 FR 68496). We also seek to align these quality 
measures with the National Quality Strategy (NQS), the CMS Strategic 
Plan (which includes the CMS Quality Strategy), and our other quality 
reporting and value-based purchasing programs, as appropriate. 
Accordingly, as we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 
41048 through 41049), in considering future ASCQR Program measures, we 
are focusing on the following NQS and CMS Quality Strategy measure 
domains: Make care safer; strengthen person and family engagement; 
promote effective communication and coordination of care; promote 
effective prevention and treatment; work with communities to promote 
best practices of healthy living; and make care affordable.
    Comment: Commenters supported CMS' alignment efforts. One commenter 
supported the direction of the ASCQR Program to align future measures 
with the NQS priorities, noting that doing so will make the ASCQR 
Program more consistent with the Hospital IQR Program. Another 
commenter agreed with the goal of aligning measures in the ASCQR 
Program with the Hospital OQR Program and the Hospital IQR Program, and 
urged that the alignment should eliminate confusion and avoid 
disadvantaging ASCs.
    Response: We thank the commenters for supporting our alignment 
efforts. To the extent practicable, we strive to align measures with 
national priorities, including the NQS priorities as well as across our 
quality reporting and value-based purchasing programs.
    Comment: Several commenters requested that CMS collaborate with 
stakeholder communities to develop and implement appropriate ophthalmic 
measures for the ASC setting, potentially including measures of 
incidence of toxic anterior segment syndrome in cataract surgery 
patients, incorrect intraocular lens implantation in cataract surgery 
patients, and unplanned anterior vitrectomy in cataract surgery 
patients. Another commenter suggested that CMS consider several new 
measures in the future, including adverse outcomes from high-volume 
procedures such as cataract removals, other eye procedures, 
endoscopies, musculoskeletal procedures, and colonoscopies. This 
commenter also encouraged CMS to develop composite measures of common 
surgical infections and to involve consumers and purchasers in 
refinement of the CAHPS survey for the outpatient setting. In addition, 
this commenter urged CMS to continue to analyze and address the role of 
the survey and discuss the comparative roles of PQRS CAHPS, ACO CAHPS, 
S-CAHPS, or the HOSD/ASC CAHPS surveys.
    Response: We thank the commenters for these recommendations and 
will consider these types of measures in future years. We have included 
an unplanned anterior vitrectomy in cataract surgery patients and 
patient experience of care survey measures in our Measures under 
Consideration (MUC) list for the MAP for the ASC setting. We agree that 
the adoption and implementation of appropriate cataract surgery 
measures are important for the ASCQR Program, given the number of such 
procedures performed on Medicare beneficiaries in this setting.
    We use patient experience of care surveys in a variety of health 
care settings. We agree that, to the extent feasible, survey 
instruments should be aligned and coordinated across settings. The 
developmental process of CAHPS and patient experience of care surveys 
involves several opportunities for input from patients, patient 
advocates, and stakeholders from the HOPD and ASC industry, including 
professional associations, clinicians, accreditation organizations, and 
the government.
    Comment: One commenter requested that CMS provide additional 
guidance with respect to the process for suggesting and submitting 
future ASCQR Program measures. This commenter further requested that 
CMS distinguish, when establishing reporting requirements, between ASCs 
that are equipped for the performance of sterile surgical operations 
and ambulatory endoscopy centers that are equipped to perform 
nonsurgical endoscopy procedures.
    Response: We generally request comments on future ASCQR Program 
measure topics through the rulemaking process and did so in the CY 2014 
OPPS/ASC proposed rule (78 FR 43664). We also accepted measures for 
consideration from associations through ONC's measure project tracking 
system (http://oncprojectracking.org/); associations were invited via 
the CMS Listserv to attend a training session for how to submit 
measures into this system. Regarding distinguishing ASCs by the 
services provided, we are aware that ASCs vary in the types of services 
they provide. This variety presents challenges in devising a measure 
set that can glean applicable quality of care information across ASCs. 
With respect to current claims-based measures that include surgical 
procedures, at this time, we are not able to identify facilities that 
would never perform surgical procedures from the

[[Page 66980]]

information on claims. Therefore, we are not able to distinguish 
ineligibility for a measure from non-reporting.
    Comment: One commenter recommended that CMS consider the following 
measure topics for the ASCQR Program: (1) Equipment Reprocessing (for 
patient safety, high-level disinfection and sterilization, with a 
particular emphasis on endoscope reprocessing); and (2) Sedation 
Safety--A possible anesthesia-related measure could include the use of 
reversal agents to patients given moderate sedation agents (medications 
used to rescue patients from deeper levels of sedation than intended).
    Response: We thank the commenter for these recommendations and will 
consider these measure topics for the ASCQR Program in future years.
    Comment: One commenter noted that the program currently includes a 
measure on hospital transfer or admission after a procedure, which 
tracks whether patients are transferred or admitted directly to a 
hospital (including a hospital emergency room) upon discharge from an 
ASC. This commenter believed that this measure could be expanded to 
include patients who return home after the ASC procedure, but are 
admitted to a hospital shortly thereafter because of a problem related 
to the procedure because doing so would enable us to more 
comprehensively track patients who experience serious complications or 
medical errors related to an ASC procedure.
    Response: We thank the commenter for providing this information and 
note that the ASC-12: Facility Seven-Day Risk-Standardized Hospital 
Visit Rate after Outpatient Colonoscopy measure includes all unplanned 
hospital visits (emergency department visits, observation stays and 
inpatient admissions) within 7 days following the procedure. We will 
continue to consider additional measures that track hospital visits 
following ASC procedures as appropriate in the future.
    Comment: One commenter recommended that CMS develop a measure to 
track surgical site infection rates for ambulatory surgeries in ASCs. 
The commenter observed that CMS stated in the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74503 through 74504) that we would 
consider proposing an SSI measure and requested an update.
    Response: We agree that it is important to encourage the reduction 
of SSIs. In the CY 2012 OPPS/ASC rulemaking, we proposed but did not 
finalize the Surgical Site Infection Rate measure (NQF #0299), but 
stated that we will consider proposing the measure once a suitable set 
of procedures and a protocol for ASCs and HOPDs has been developed (76 
FR 74504). We are not aware of any updates to this measure, but will 
consider these types of measures in future years.
    Comment: One commenter recommended that the ASCQR Program should 
move to a value-based purchasing model no later than 2016, rewarding 
high-performing ASCs and penalizing low-performing ASCs.
    Response: We thank the commenter for this recommendation. As we 
noted in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75122), we currently do not have express statutory authority to 
implement a value-based purchasing program for ASCs.
    Comment: One commenter requested that CMS publish each year, as 
part of the proposed rule, a 2-year or 3-year timeline of anticipated 
changes to the ASCQR Program to facilitate ASC facility planning.
    Response: We thank the commenter for the comment and note that we 
seek to provide information to ASC facilities in advance whenever 
possible to support future planning. For example, in the CY 2012 OPPS/
ASC rulemaking, we finalized measures sets for the CY 2014, CY 2015, 
and CY 2016 payment determinations (76 FR 74496 to 74511). Similarly, 
in the CY 2013 OPPS/ASC final rule with comment period, we finalized a 
data collection and processing period policy for claims-based measures 
using QDCs for the CY 2015 payment determination and subsequent years 
(77 FR 68497 through 68498), and in the CY 2014 OPPS/ASC final rule 
with comment period, we finalized our policy regarding participation 
status for the CY 2016 payment determination and subsequent years (78 
FR 75134 through 75135). In this year's rulemaking, we also are 
finalizing policies that span more than one year, such as including the 
ASC-12 measure in the ASCQR Program measure set for the CY 2018 payment 
determination and subsequent years, the process for removing measures, 
and topped-out criteria. While we cannot commit to providing a 2-year 
or 3-year timeline at this point due to the rapidly evolving quality 
measurement and program environment, we will continue to provide 
information to ASCs through the QualityNet Web site, the ASCQR Program 
ListServe, and the rulemaking process as appropriate.
    Comment: Several commenters stated that they would welcome 
opportunities to work with CMS to explore alternative reporting options 
for measures that cut across CMS quality reporting programs, 
particularly measures that are included in both the ASCQR Program and 
PQRS.
    Response: We thank the commenters for their offer to collaborate 
with CMS on alternative reporting options. We will continue to look for 
opportunities to work with ASC community stakeholders to continuously 
improve the ASCQR Program.
    Comment: Several commenters expressed concern about the MAP, 
specifically the public comment process and the practice of submitting 
measure concepts for consideration. These commenters believed that the 
MAP does not adequately consider public comments, and stated that the 
MAP session agendas scheduled voting activities prior to public 
comments, which limited the ability of comments to impact voting, and 
that the public could not address the Coordinating Committee until 
after deliberations were completed. These commenters also stated that 
the public could comment on the draft MAP Pre-Rulemaking Report, but 
that these comments were not considered by the Coordinating Committee 
and, therefore, did not result in revisions to the final report. These 
commenters recommended that public comments be solicited prior to, 
rather than, after voting on agenda items, and that the MAP 
Coordinating Committee be required to formally consider and respond to 
public comments on the draft report. Several other commenters expressed 
concern regarding the MAP's review of measure ``concepts'' that have 
not been fully developed, saying that recommendations are premature for 
measure concepts or measure drafts. These commenters recommended that 
when ``concepts'' are presented, the MAP should determine whether the 
measure concept/draft would fill a measure gap but reserve further 
judgment for the completed measure. These commenters are further 
concerned that the inclusion of measure ``concepts'' results in an 
unreasonably large number of items for the MAP to consider, which can 
limit the time allotted to consider each measure.
    Response: We thank the commenters for their comments and concerns, 
but note that they do not directly address any proposals included in 
the CY 2015 OPPS/ASC proposed rule; rather, they are directed towards 
MAP-specific processes. We invite the commenters to submit their MAP-
specific concerns directly to the NQF, which convenes the MAP.
    In response to the comments concerning the MAP's review of measure 
``concepts'' that have not been fully developed, resulting in 
recommendations that are premature for

[[Page 66981]]

measure concepts or measure drafts, we interpret the commenters' use of 
the terms ``concept'' and ``draft'' to refer to measures under 
development as defined in our legend on page 87 of the List of Measures 
under Consideration for December 1, 2013 (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQFjAA&url=http%3A%2F%2Fwww.qualityforum.org%2FSetting_Priorities%2FPartnership%2FMeasures_Under_Consideration_List.aspx&ei=aQUuVJrsM6nIsAT61IDQAg&usg=AFQjCNFPjzG9-t7flmf-RFf-7o_rSvpxxQ&sig2=V6Hi_GdCM2OUcP5xkoudcw&bvm=bv.76802529,d.cWc). We 
strive to ensure that the pre-rulemaking process allows for thorough 
review by the MAP and other stakeholders of all measures under 
consideration.
    Comment: Some commenters suggested that CMS consider developing 
additional outcomes measures specific to colonoscopies and consider 
developing a measure of whether or not colonoscopy patients remain 
cancer free, specifically suggesting that we work with stakeholders to 
improve existing measures.
    Response: We thank the commenter for their recommendations and will 
consider these types of measures in future years.
    We also thank all commenters for providing their views and we will 
consider them as we develop future measures for the ASCQR Program.
7. Maintenance of Technical Specifications for Quality Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74513 through 74514), where we finalized our proposal to 
follow the same process for updating the ASCQR Program measures that we 
adopted for the Hospital OQR Program measures, including the 
subregulatory process for making updates to the adopted measures. In 
the CY 2013 OPPS/ASC final rule with comment period (77 FR 68496 
through 68497) and the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75131), we provided additional clarification regarding the ASCQR 
Program policy in the context of the previously finalized Hospital OQR 
Program policy, including the processes for addressing nonsubstantive 
and substantive changes to adopted measures.
    We maintain technical specifications for previously adopted ASCQR 
Program measures. These specifications are updated as we continue to 
develop the ASCQR Program. The manuals that contain specifications for 
the previously adopted measures can be found on the QualityNet Web site 
at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228772475754.
    Many of the quality measures used in Medicare and Medicaid 
reporting programs are NQF-endorsed. We note that two of the measures 
previously adopted for the ASCQR Program are not NQF-endorsed, and NQF 
endorsement is not a program requirement. However, for those measures 
that are NQF-endorsed, the NQF requires measure stewards to submit 
annual measure maintenance updates and undergo maintenance of 
endorsement review every 3 years as part of its regular maintenance 
process for NQF-endorsed performance measures. In the measure 
maintenance process, the measure steward (owner/developer) is 
responsible for updating and maintaining the currency and relevance of 
the measure and will confirm existing or minor specification changes 
with the NQF on an annual basis. The NQF solicits information from 
measure stewards for annual reviews, and it reviews measures for 
continued endorsement in a specific 3-year cycle.
    We note that the NQF's annual or triennial maintenance processes 
for endorsed measures may result in the NQF requiring updates to 
measures in order to maintain endorsement status. Other non-NQF 
measures may undergo maintenance changes as well. We believe that it is 
important to have in place the subregulatory process that we have 
adopted for the ASCQR Program to incorporate nonsubstantive updates 
into the measure specifications for measures so that the measure 
specifications remain current. We also recognize that some changes to 
measures are substantive in nature and might not be appropriate for 
adoption using a subregulatory process.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41049), we did not 
propose any changes to this policy.
8. Public Reporting of ASCQR Program Data
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 
through 74515), we finalized a policy to make data that an ASC 
submitted for the ASCQR Program publicly available on a CMS Web site 
after providing an ASC an opportunity to review the data to be made 
public. When available, these data will be displayed at the CCN level; 
we intend to make data collected under the ASCQR program publicly 
available in CY 2015. In the CY 2015 OPPS/ASC proposed rule (79 FR 
41049), we did not propose any changes to this policy.
    Comment: One commenter urged CMS to make the data submitted by ASCs 
available to the public after giving ASCs an opportunity to preview the 
data.
    Response: We thank the commenter for their comment, and note that 
in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 
through 74515), we finalized a policy to make data that an ASC 
submitted for the ASCQR Program publicly available on a CMS Web site 
after providing an ASC an opportunity to review the data to be made 
public. These data will be displayed at the CCN level. We did not 
propose any changes to this policy (79 FR 41049).

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

1. Statutory Background
    We refer readers to section XV.C.1. of the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75131 through 75132) for a detailed 
discussion of the statutory background regarding payment reductions for 
ASCs that fail to meet the ASCQR Program requirements.
2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the 
ASCQR Program Requirements for a Payment Determination Year
    The national unadjusted payment rates for many services paid under 
the ASC payment system equal the product of the ASC conversion factor 
and the scaled relative payment weight for the APC to which the service 
is assigned. Currently, the ASC conversion factor is equal to the 
conversion factor calculated for the previous year updated by the MFP-
adjusted CPI-U update factor, which is the adjustment set forth in 
section 1833(i)(2)(D)(v) of the Act. The MFP-adjusted CPI-U update 
factor is the Consumer Price Index for all urban consumers (CPI-U), 
which currently is the annual update for the ASC payment system, minus 
the MFP adjustment. As discussed in the CY 2011 MPFS final rule with 
comment period (75 FR 73397), if the CPI-U is a negative number, the 
CPI-U would be held to zero. Under the ASCQR Program, any annual update 
will be reduced by 2.0 percentage points for ASCs that fail to meet the 
reporting requirements of the ASCQR Program. This reduction applied 
beginning with the CY 2014 payment rates. For a complete discussion of 
the calculation of the ASC conversion factor, we refer readers to 
section XII.G. of this final rule with comment period.

[[Page 66982]]

    In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 
through 68500), in order to implement the requirement to reduce the 
annual update for ASCs that fail to meet the ASCQR Program 
requirements, we finalized our proposal that we would calculate two 
conversion factors: A full update conversion factor and an ASCQR 
Program reduced update conversion factor. We finalized our proposal to 
calculate the reduced national unadjusted payment rates using the ASCQR 
Program reduced update conversion factor that would apply to ASCs that 
fail to meet their quality reporting requirements for that calendar 
year payment determination. We finalized our proposal that application 
of the 2.0 percentage point reduction to the annual update may result 
in the update to the ASC payment system being less than zero prior to 
the application of the MFP adjustment.
    The ASC conversion factor is used to calculate the ASC payment rate 
for services with the following payment indicators (listed in Addenda 
AA and BB to this final rule with comment period, which are available 
via the Internet on the CMS Web site): ``A2,'' ``G2,'' ``P2,'' ``R2,'' 
``Z2,'' as well as the service portion of device-intensive procedures 
identified by ``J8.'' We finalized our proposal that payment for all 
services assigned the payment indicators listed above would be subject 
to the reduction of the national unadjusted payment rates for 
applicable ASCs using the ASCQR Program reduced update conversion 
factor.
    The conversion factor is not used to calculate the ASC payment 
rates for separately payable services that are assigned status 
indicators other than payment indicators ``A2,'' ``G2,'' ``J8,'' 
``P2,'' ``R2,'' and ``Z2.'' These services include separately payable 
drugs and biologicals, pass-through devices that are contractor-priced, 
brachytherapy sources that are paid based on the OPPS payment rates, 
and certain office-based procedures and radiology services where 
payment is based on the MPFS PE RVU amount and a few other specific 
services that receive cost-based payment. As a result, we also 
finalized our proposal that the ASC payment rates for these services 
would not be reduced for failure to meet the ASCQR Program requirements 
because the payment rates for these services are not calculated using 
the ASC conversion factor and, therefore, not affected by reductions to 
the annual update.
    Office-based surgical procedures (performed more than 50 percent of 
the time in physicians' offices) and separately paid radiology services 
(excluding covered ancillary radiology services involving certain 
nuclear medicine procedures or involving the use of contrast agents, as 
discussed in section XII.C.1.b. of this final rule with comment period) 
are paid at the lesser of the MPFS nonfacility PE RVU-based amounts or 
the amount calculated under the standard ASC ratesetting methodology. 
Similarly, in section XII.D.2.b. of this final rule with comment 
period, we are finalizing that payment for the new category of covered 
ancillary services (that is, certain diagnostic test codes within the 
medical range of CPT codes for which separate payment is allowed under 
the OPPS and when they are integral to an ASC covered surgical 
procedure) will be at the lesser of the MPFS nonfacility PE RVU-based 
amounts or the rate calculated according to the standard ASC 
ratesetting methodology. In the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68500), we finalized our proposal that the 
standard ASC ratesetting methodology for this type of comparison would 
use the ASC conversion factor that has been calculated using the full 
ASC update adjusted for productivity. This is necessary so that the 
resulting ASC payment indicator, based on the comparison, assigned to 
these procedures or services is consistent for each HCPCS code 
regardless of whether payment is based on the full update conversion 
factor or the reduced update conversion factor.
    For ASCs that receive the reduced ASC payment for failure to meet 
the ASCQR Program requirements, we believe that it is both equitable 
and appropriate that a reduction in the payment for a service should 
result in proportionately reduced copayment liability for 
beneficiaries. Therefore, in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68500), we finalized our proposal that the 
Medicare beneficiary's national unadjusted copayment for a service to 
which a reduced national unadjusted payment rate applies would be based 
on the reduced national unadjusted payment rate.
    In that final rule with comment period, we finalized our proposal 
that all other applicable adjustments to the ASC national unadjusted 
payment rates would apply in those cases when the annual update is 
reduced for ASCs that fail to meet the requirements of the ASCQR 
Program (77 FR 68500). For example, the following standard adjustments 
would apply to the reduced national unadjusted payment rates: The wage 
index adjustment, the multiple procedure adjustment, the interrupted 
procedure adjustment, and the adjustment for devices furnished with 
full or partial credit or without cost. We believe that these 
adjustments continue to be equally applicable to payment for ASCs that 
do not meet the ASCQR Program requirements.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75132), we did not make any changes to these policies. In the CY 2015 
OPPS/ASC proposed rule (79 FR 41049 through 41050), we did not propose 
any changes to these policies.

D. Administrative Requirements

    We received a public comment on the ASCQR Program requirements in 
general.
    Comment: One commenter expressed appreciation that CMS did not 
propose any substantial changes to participatory requirements, stating 
that this will provide ASCs with valuable time to stabilize the 
processes for what is currently required without adding additional 
burden on resources.
    Response: We interpret the commenter as referring to program 
administrative requirements overall, and not to just participation 
status as the commenter makes reference to issues of burden. We thank 
the commenter for this support. We agree that program administrative 
process stability to the extent possible is important in developing the 
ASCQR Program. We continue to look for ways to minimize burden as we 
pursue the quality objectives of the ASCQR Program.
1. Requirements Regarding QualityNet Account and Security Administrator
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75132 through 75133) for a detailed discussion of the 
QualityNet security administrator requirements, including setting up a 
QualityNet account, and the associated timelines, for the CY 2014 
payment determination and subsequent years. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41050), we did not propose any changes to these 
policies.
2. Requirements Regarding Participation Status
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75133 through 78 FR 75135) for a complete discussion of 
the participation status requirements for the CY 2014 payment 
determination and subsequent years. In the CY 2015 OPPS/ASC proposed 
rule (79 FR 41050), we did not propose any changes to these policies.

[[Page 66983]]

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

    We received public comments on alternate methods for submitting 
data for the ASCQR Program.
    Comment: One commenter recommended that CMS allow ASCs to meet the 
requirements of the ASCQR Program using registry-based reporting, 
noting that using a registry is an option under the PQRS and that other 
registries are already in existence. This commenter recommended CMS 
issue proposals regarding this option in next year's proposed rule. The 
commenter also recommended that ASCs should also have the option of 
submitting quality data to CMS through an EHR-based reporting 
mechanism, as there are ASCs that have implemented this technology and 
could benefit from this option.
    Response: We thank the commenter for these suggestions. We agree 
that it could reduce burden to have a registry-based mechanism for data 
submission. We have not proposed a registry-based reporting option 
because currently, there is not a registry in place that is collecting 
information on the quality measures that we have adopted for this 
program. Should registry-based reporting of the ASC quality measures 
adopted for the ASCQR Program become available in the future, we will 
explore further the viability of incorporating a registry-based 
reporting mechanism in the ASCQR Program.
    Regarding the use of EHR systems for reporting quality data, we 
agree that reporting by this method could reduce reporting burden. 
However, we are not aware of quality measures for ASCs that have been 
specified for electronic reporting. If such measures do exist, an 
understanding of the level of EHR adoption and capabilities of ASCs to 
utilize this method would be necessary before proposing their adoption 
by the ASCQR Program. As we discussed in the CY 2014 OPPS/ASC final 
rule with comment period (78 FR 75124 through 75126), in a recent 
environmental scan, which included an assessment of the readiness of 
ASC to electronically report quality data, we found evidence of low 
levels of EHR use by ASCs. We believe that ASCs continue to be slow to 
adopt EHRs because many of these facilities are small and the cost of 
EHRs may pose a barrier to adoption. Further, there has been no 
incentive program to encourage such adoption by ASCs.
    Comment: One commenter requested a batch-processing data submission 
option for entities that own multiple ASCs.
    Response: We interpret this comment as referring to the ability to 
send quality measure data electronically in a format that allows for 
data submission for multiple ASCs, rather than requiring individual ASC 
data entry as is currently required for data submitted via a CMS online 
data submission tool measure data. We thank the commenter for their 
request and are considering how to implement this capability into our 
data submission processes. In the event this method can be available 
for data submission, we would issue proposals through rulemaking for 
ASCQR Program implementation.
1. Requirements Regarding Data Processing and Collection Periods for 
Claims-Based Measures Using Quality Data Codes (QDCs)
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75135) for a complete summary of the data processing and 
collection periods for the claims-based measures using QDCs for the CY 
2014 payment determination and subsequent years. In the CY 2015 OPPS/
ASC proposed rule (79 FR 41050), we did not propose any changes to 
these policies.
    We did not receive any public comments on data submission for 
claims-based measures using QDCs.
2. Minimum Threshold, Minimum Case Volume, and Data Completeness for 
Claims-Based Measures Using QDCs
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75135 through 75137) for a complete discussion of the 
minimum thresholds, minimum case volume, and data completeness for 
successful reporting for the CY 2014 payment determination and 
subsequent years. In the CY 2015 OPPS/ASC proposed rule (79 FR 41050), 
we did not propose any changes to these policies.
    We received the following public comments on data collection using 
QDCs.
    Comment: One commenter recommended that CMS raise the 50 percent 
threshold for claims meeting measure specifications containing QDCs, 
noting that many of the issues in the early years of the program that 
led to this standard have been resolved.
    Response: We thank the commenter for the recommendation and, while 
we did not propose any changes to our QDC use threshold in this 
rulemaking, we will consider this comment as we move forward with 
program planning as ASCs now have experience in submitting data in this 
manner.
    Comment: One commenter supported CMS' decision not to propose any 
changes to minimum thresholds, minimum case volume, and data 
completeness for successful reporting, noting that program stability is 
important. Specifically, the commenter supports maintaining the sample 
size requirements for the endoscopy measures, ASC-9 and ASC-10.
    Response: We thank the commenter for its support of these data-
related policies, including the maintenance of the sample size 
requirements for the endoscopy measures.
3. Requirements for Data Submitted Via a CMS Online Data Submission 
Tool
a. Data Collection for ASC-6 and ASC-7
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74509) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75137 through 75138) for a complete discussion of the 
requirements for data collection and submission for the ASC-6: Safe 
Surgery Checklist Use and ASC-7: ASC Facility Volume Data on Selected 
ASC Surgical Procedures measures for the CY 2015 payment determination 
and subsequent years. In the CY 2015 OPPS/ASC proposed rule (79 FR 
41050), we did not propose any changes to these policies.
b. Delayed Data Collection for ASC-9 and ASC-10
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 
through 75130), we adopted ASC-9: Endoscopy/Polyp Surveillance: 
Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk 
Patients (NQF #0658) and ASC-10: Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous 
Polyps--Avoidance of Inappropriate Use (NQF #0659), two additional 
chart-abstracted measures, and we finalized a policy that aggregate 
data (numerators, denominators, and exclusions) on all ASC patients 
would be collected via an online Web-based tool that would be made 
available to ASCs via the QualityNet Web site.
    We finalized that the data collection time period would be the 
calendar year (January 1 to December 31) 2 years prior to the affected 
payment determination year, and the data collected would be submitted 
during the time period of January 1 to August 15 in the year prior to 
the affected payment determination year. Thus, for the CY 2016 payment 
determination, ASCs would be required to submit aggregate-level 
encounter data from January 1, 2014 to December 31, 2014 using our Web-
based tool during

[[Page 66984]]

the data submission window of January 1, 2015 to August 15, 2015 (78 FR 
75138 through 75139).
    On December 31, 2013, we issued guidance stating that we would 
delay the implementation of ASC-9 and ASC-10 for 3 months for the CY 
2016 payment determination, with a resulting encounter period of April 
1, 2014 to December 31, 2014 instead of January 1, 2014 to December 31, 
2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). The data submission timeframe and the encounter period for 
subsequent years remain as previously finalized (78 FR 75139).
c. Delayed Data Collection and Exclusion for ASC-11 for the CY 2016 
Payment Determination and Voluntary Data Collection for ASC-11 for the 
CY 2017 Payment Determination and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period, where we adopted ASC-11: Cataracts--Improvement in Patient's 
Visual Function within 90 Days Following Cataract Surgery (NQF #1536) 
beginning with the CY 2016 payment determination (78 FR 75129), and 
finalized the data collection and data submission timelines (78 FR 
75138 to 75139). This measure assesses the rate of patients 18 years 
and older (with a diagnosis of uncomplicated cataract) in a sample who 
had improvement in visual function achieved within 90 days following 
cataract surgery based on completing both a pre-operative and post-
operative visual function survey.
    Since our adoption of this measure, we have come to believe that it 
can be operationally difficult at this time for ASCs to collect and 
report this measure. Specifically, we are concerned that the results of 
the survey used to assess the pre-operative and post-operative visual 
function of the patient may not be shared across clinicians and 
facilities, making it difficult for ASCs to have knowledge of the 
visual function of the patient before and after surgery. We are also 
concerned about the surveys used to assess visual function; the measure 
allows for the use of any validated survey and results may be 
inconsistent should clinicians use different surveys.
    Therefore, on December 31, 2013, we issued guidance stating that we 
would delay data collection for ASC-11 for 3 months (data collection 
would commence with April 1, 2014 encounters) for the CY 2016 payment 
determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). We issued additional guidance on April 2, 2014, stating that we 
would further delay the implementation of ASC-11 for an additional 9 
months, until January 1, 2015 for the CY 2016 payment determination, 
due to continued concerns (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228773811586).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41051), we proposed to 
exclude ASC-11 Cataracts: Improvement in Patient's Visual Function 
within 90 Days Following Cataract Surgery (NQF #1536) from the CY 2016 
payment determination measure set. We would not subject ASCs to a 
payment reduction with respect to this measure for the CY 2016 payment 
determination.
    We continue to believe that this measure addresses an area of care 
that is not adequately addressed in our current measure set and the 
measure serves to drive coordination of care (78 FR 75129). Further, we 
believe ASCs should be a partner in care with physicians and other 
clinicians using their facility and that this measure provides an 
opportunity to do so. Therefore, we are continuing to include this 
measure in the ASCQR Program measure set for the CY 2017 payment 
determination and subsequent years. However, we understand the concerns 
and, therefore, proposed that data collection and submission be 
voluntary for this measure for the CY 2017 payment determination and 
subsequent years. ASCs would not be subject to a payment reduction for 
failing to report this measure during the period of voluntary 
reporting. For ASCs that choose to submit data, we continue to request 
that they submit such data using the means and timelines finalized in 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75138 to 
75139). Data submitted voluntarily will be publicly reported as 
discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 75138 to 75139).
    We invited public comment on this proposal.
    Comment: Some commenters stated that complications following 
cataract surgery are not acceptable and believed that ASC-11 tracks 
patient-centered clinical outcomes. The commenters stated that the 
measure would promote and improve care coordination among providers. 
Some commenters commended CMS' recognition of the associated 
operational issues and taking the approach to delay implementation of 
this measure as well as allowing voluntary collection.
    Response: We appreciate the commenters that supported and agreed 
with our view and the approach we take for this measure. We agree that 
complications following cataract surgery are not acceptable. While ASC-
11 does not address complications following cataract surgery, it does 
address improvement in visual function following cataract surgery and 
it tracks an important patient-centered clinical outcome.
    Comment: Some commenters did not support voluntary data reporting 
based on concerns regarding the extent to which ASCs would report data 
for ASC-11 if reporting was voluntary. Some commenters stated that 
incomplete display of data is not meaningful to consumers. Other 
commenters expressed concerns that the display of data from some ASCs 
but not others would lead some patients to conclude that some ASCs are 
more committed to improving cataract surgery. Several other commenters 
predicted that very few ASCs will report data for the ASC-11 measure, 
leading to an insufficient sample.
    Response: We thank the commenters for their views. We note that the 
proposal, which we are finalizing in this final rule with comment 
period, is for the measure to be voluntarily reported by ASCs. 
Therefore, ASCs would be able to choose whether to implement data 
collection and reporting processes for this measure. We continue to 
believe the ASC-11 measure has value in this care setting. We do not 
agree that an insufficient sample of facilities will report data for 
the ASC-11 measure because we also have self-reports from ASCs that 
some did put processes in place to collect data for this measure, and 
that these ASCs would like to report data for this measure because they 
view the measure as an important quality measure for facilities.
    We do not agree that ASC-11 data reported on a voluntary basis 
would not be meaningful for consumers. There are many situations where 
ASCs do not submit information to the ASCQR Program because they do not 
have such information due to lack of cases or low case volume. In the 
CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 through 
74515), we finalized a policy to make data that an ASC submitted for 
the ASCQR Program publicly available on a CMS Web site after providing 
an ASC an opportunity to review the data to be made public. Therefore, 
when ASCs' information is submitted, we will make this information 
publicly available. Where this information is not submitted, we will 
state that the information is not

[[Page 66985]]

available. We also do not agree that reporting of measure data by some 
ASCs and not others under voluntary reporting would affect the validity 
of data reported for this Web-based measure because this situation is 
no different than any other measure where not all ASCs had cases.
    Comment: Many commenters requested that CMS remove the ASC-11 
measure from the program entirely, rather than delaying implementation 
and allowing voluntary reporting. These commenters reiterated similar 
concerns expressed in the CY 2014 OPPS/ASC final rule with comment 
period regarding associated burden, suitability for ASCQR Program 
versus PQRS, program alignment of this measure, nonstandardization of 
collected information, NQF endorsement, MAP recommendation, and 
coordination challenges faced by facilities.
    Response: We continue to believe this measure addresses the 
importance area of care coordination and responsibility for monitoring 
patient outcomes between performing physicians, practitioners that 
assess visual function, and facilities where procedures are performed; 
therefore, we are not removing ASC-11 from the ASCQR Program measure 
set for the CY 2017 payment determination and subsequent years.
    With respect to the concerns raised by commenters about the 
measure, we refer commenters to the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75124 through 75126, 75129, and 75138 through 
75139) where we previously have responded to these concerns.
    After consideration of the public comments we received, for the 
reasons discussed above, we are finalizing our proposal to allow 
voluntary data collection and reporting of this measure for the CY 2017 
payment determination and subsequent years. We also are finalizing our 
proposal to exclude the measure entirely from the CY 2016 payment 
determination measure set. ASCs will be able to begin reporting with 
January 1, 2015 services as described above in section XIV.E.3. of this 
final rule with comment period. For ASCs that choose to submit data, we 
request that they submit such data using the means and timelines 
finalized in the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75138 to 75139). ASCs will not be subject to a payment reduction for 
failing to report this measure during the period of voluntary 
reporting. Data voluntarily submitted will be publicly reported.
4. Claims-Based Measure Data Requirements for the New Measure for the 
CY 2018 Payment Determination and Subsequent Years
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41046-41048), we 
proposed to adopt the ASC-12: Facility Seven-Day Risk-Standardized 
Hospital Visit Rate after Outpatient Colonoscopy measure, which is a 
claims-based measure that does not require any additional data 
submission apart from standard Medicare FFS claims. In the CY 2015 
OPPS/ASC proposed rule (79 FR 41051), we also proposed that, for this 
measure, which uses ASC Medicare claims data as specified in the ASCQR 
Specifications Manual and does not require any additional data 
submission such as QDCs, we would use paid Medicare FFS claims from a 
12-month period from July 1 of the year 3 years before the payment 
determination year to June 30 of the following year. Thus, we stated, 
for the CY 2017 payment determination for this measure, claims from 
July 1, 2014 to June 30, 2015 would be used. We noted that we proposed 
to adopt this measure under the ASCQR Program as well as the Hospital 
OQR Program, as described in section XIII.H.2.c. of the proposed rule. 
We stated that this ASCQR Program time period provides for the 
timeliest data possible while aligning the proposed data submission 
requirements with our Hospital OQR Program proposal, which would use 
the claims-based measure data submission requirements for the CY 2015 
payment determination and subsequent years that we adopted in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 75111 through 
75112).
    We invited public comment on this proposal.
    Comment: Many commenters expressed concern that, if finalized, the 
ASC-12 measure's data collection period would begin July 1, 2014, 
several months before adoption of the measure is finalized. Several 
commenters recommended that data collection begin July 1, 2015.
    Response: As we stated above in section XIV.B.5. of this final rule 
with comment period, we are finalizing the adoption of ASC-12 for the 
CY 2018 payment determination and subsequent years instead of the CY 
2017 payment determination and subsequent years as proposed. We are 
finalizing the data submission time period for ASC-12 to use paid 
Medicare FFS claims from the calendar year 2 years before the payment 
determination calendar year. For the CY 2018 payment determination, we 
will use paid Medicare FFS claims from January 1, 2016 to December 31, 
2016. We believe the reliability of the measure using 1 year of data is 
sufficiently reliable. While we believe that measure reliability may be 
further improved by using a longer time period, we must balance the 
reliability of the measure with the timeliness of the measure. At this 
time, we believe that 1 year of data appropriately balances these 
competing interests, but we will continue to assess this belief during 
the dry run.
    After consideration of the public comments we received, we are not 
finalizing our proposal to use paid Medicare FFS claims from a 12-month 
period from July 1 of the year 3 years before the payment determination 
year to June 30 of the following year. Instead, we will use paid 
Medicare FFS claims from the calendar year 2 years before the payment 
determination calendar year. Specifically, with respect to the CY 2018 
payment determination, for calculating ASC-12, we will use paid 
Medicare FFS claims from January 1, 2016 to December 31, 2016.
5. Data Submission Requirements for ASC-8 (Influenza Vaccination 
Coverage Among Healthcare Personnel) Reported via the National 
Healthcare Safety Network (NHSN) for the CY 2016 Payment Determination 
and Subsequent Years
a. Previously Adopted Requirements for the CY 2016 Payment 
Determination
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74510) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75139 through 75140) for a complete discussion of the 
ASC-8 measure (Influenza Vaccination Coverage among Healthcare 
Personnel) (NQF #0431), including the data collection timeframe and the 
data reporting standard procedures for the CY 2016 payment 
determination.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75139 
through 75140), we finalized our proposal to use the data submission 
and reporting standard procedures that have been set forth by the CDC 
for NHSN participation in general and for submission of this measure to 
NHSN. We refer readers to the CDC's NHSN Web site for detailed 
procedures for enrollment (http://www.cdc.gov/nhsn/ambulatory-surgery/enroll.html), set-up (http://www.cdc.gov/nhsn/ambulatory-surgery/setup.html), and reporting (https://sams.cdc.gov) (user authorization 
through Secure Access Management Services (SAMS) is required for access 
to NHSN). We note

[[Page 66986]]

that the reporting link was updated in the CY 2015 OPPS/ASC proposed 
rule (79 FR 41051).
b. Data Collection Timeframes for the CY 2017 Payment Determination and 
Subsequent Years and Submission Deadlines for the CY 2016 Payment 
Determination and Subsequent Years
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74510), we finalized our policy that data collection for the CY 2016 
payment determination would be from October 1, 2014 through March 31, 
2015 (the 2014-2015 influenza season data). In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41051 through 41052, we proposed that for the CY 
2017 payment determination and subsequent years, ASCs would collect 
data from October 1 of the year 2 years prior to the payment 
determination year to March 31 of the year prior to the payment 
determination year. For example, the CY 2017 payment determination 
would require data collection from October 1, 2015 to March 31, 2016.
    In the CY 2014 OPPS/ASC proposed rule, we proposed that ASCs would 
have until August 15, 2015 to submit their 2014-2015 influenza season 
data (October 1, 2014 through March 31, 2015) to NHSN. We stated that 
this date is the latest date possible for data entry that would provide 
sufficient time for us to make the CY 2016 payment determinations and 
is aligned with the data entry deadline for the measures entered via 
the CMS online tool (78 FR 43670). While some commenters supported this 
proposal, others expressed disagreement with this proposal because it 
differed from the May 15 deadline proposed for the Hospital IQR Program 
(78 FR 27700, 50822) and the Hospital OQR Program (78 FR 43656, 75116 
through 75117) and they believed this difference in deadlines could 
cause confusion, thereby disadvantaging ASCs (78 FR 75140). Other 
commenters believed that providing ASCs with a later deadline would 
provide an unfair advantage because ASCs would have longer to submit 
their data. Due to these concerns, we did not finalize the August 15, 
2015 deadline. We stated that we intended to propose a submission 
deadline for this measure for the CY 2016 payment determination in this 
proposed rule.
    In the proposed rule, we proposed that May 15 of the year in which 
the influenza season ends be the submission deadline for each payment 
determination year, similar to the Hospital IQR and OQR Programs. For 
example, for the CY 2016 payment determination, ASCs would be required 
to submit their 2014-2015 influenza season data (October 1, 2014 
through March 31, 2015) by May 15, 2015. Similarly, for the CY 2017 
payment determination, ASCs would be required to submit their 2015-2016 
influenza season data (October 1, 2015 through March 31, 2016) by May 
15, 2016. We believe a May 15 reporting deadline would enable ASCs to 
use data summarizing the results of their previous influenza 
vaccination campaign to set targets and make plans for their influenza 
vaccination campaigns prior to the next influenza season. This deadline 
also would enable us to post and the public to review the summary data 
before the start of the next influenza season. Finally, this date 
aligns to the May 15 deadline used in the Hospital IQR and OQR Programs 
for this measure.
    We invited public comment on this proposal.
    Comment: Many commenters supported the proposed submission deadline 
of May 15 for ASC-8. One commenter expressed concern that there is a 
time lag for reporting this data, and urged that the public should have 
access to the data at the time the data is most useful.
    Response: We thank the commenters for their support. We believe a 
May 15 reporting deadline will enable ASCs to use data summarizing the 
results of their previous influenza vaccination campaign to set targets 
and make plans for their influenza vaccination campaigns prior to the 
next influenza season. This deadline also will enable us to post and 
the public to review the summary data before the start of the next 
influenza season. Finally, this date aligns with the May 15 deadline 
used in the Hospital IQR and OQR Programs for this measure.
    Comment: Several commenters opposed setting the submission deadline 
for ASC-8 to May 15, arguing that the August 15 deadline considered in 
the prior year rule was better aligned with the other measures in the 
ASCQR Program and would minimize confusion and reporting burden. One 
commenter suggested that the Hospital IQR and Hospital OQR Programs 
should move their deadlines to August 15 to support program alignment.
    Response: We thank the commenters for supporting last year's 
proposal regarding a data submission deadline for the ASC-8 measure. We 
proposed an August 15 data submission deadline in the CY 2014 OPPS/ASC 
proposed rule (78 FR 43670), but did not finalize this proposal due to 
commenters' concerns with nonalignment with other quality reporting 
programs (78 FR 75140).
    While we seek to align reporting deadlines whenever possible within 
the ASCQR Program (78 FR 75140), we believe alignment across programs 
with the May 15 reporting deadline will prevent confusion in reporting 
across different facilities. We also believe this earlier deadline will 
enable us to make the data publicly available in time for ASCs to use 
the data summarizing the results of their previous influenza 
vaccination campaign to set targets and make plans for their influenza 
vaccination campaigns prior to the next influenza season. This would be 
very difficult to achieve with an August 15 reporting deadline.
    After consideration of the public comments we received, for the 
reasons set forth above, we are finalizing our proposal without 
modification to adopt May 15 of the year in which the influenza season 
ends as the data submission deadline for the ASC-8 measure for each 
payment determination year, beginning with the CY 2016 payment 
determination. We also are finalizing our proposal without modification 
that, for the CY 2017 payment determination and subsequent years, ASCs 
will collect data from October 1 of the year 2 years prior to the 
payment determination year to March 31 of the year prior to the payment 
determination year.
6. ASCQR Program Validation of Claims-Based and CMS Web-Based Measures
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53641 through 53642) for a complete discussion of our policy not to 
require validation of claims-based measures (beyond the usual claims 
validation activities conducted by our Medicare Administrative 
Contractors) or Web-based measures for the ASCQR Program, which is in 
alignment with our requirements for the Hospital IQR and OQR Programs. 
In the CY 2015 OPPS/ASC proposed rule (79 FR 41052), we did not propose 
any changes to this policy.
    We received the following comment on data validation for the ASCQR 
Program.
    Comment: One commenter recommended that CMS develop an ASCQR data 
validation program to assure the accuracy and integrity of quality data 
that will be publicly reported under the ASCQR Program.
    Response: We thank the commenter for the comment, and note that we 
continue to evaluate the feasibility of data validation for the ASCQR 
Program.

[[Page 66987]]

We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53641 
through 53642) for a complete discussion of our policy not to require 
validation of claims-based measures (beyond the usual claims validation 
activities conducted by our Medicare Administrative Contractors) or 
Web-based measures for the ASCQR Program. At this time, we believe that 
it would be overly burdensome to validate the reported data given the 
inexperience that ASCs have with reporting quality data to CMS coupled 
with the low incidence of cases for the claims-based measures. As we 
gain more experience with the ASCQR Program, we will reassess whether a 
data validation process for claims-based measures and measures where 
aggregate data are reported via an online tool is needed.
7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017 
Payment Determination and Subsequent Years
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75140 through 75141) for a complete discussion of our 
extraordinary circumstances extension or waiver process under the ASCQR 
Program. In the CY 2015 OPPS/ASC proposed rule (79 FR 41052), we did 
not propose any substantive changes to these policies or the processes. 
However, in the future, we will refer to the process as the 
``Extraordinary Circumstances Extensions or Exemptions'' process rather 
than the ``Extraordinary Circumstances Extensions or Waivers'' process.
    We also are in the process of revising the Extraordinary 
Circumstances/Disaster Extension or Waiver Request form (CMS-10432), 
approved under OMB control number 0938-1171. We are updating the 
instructions and the form so that a hospital or facility may apply for 
an extension for all applicable quality reporting programs at the same 
time. In addition, the instructions for the form will be updated.
8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment 
Determination and Subsequent Years
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53643 through 53644) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75141) for a complete discussion of our informal 
reconsideration process for the ASCQR Program for the CY 2014 payment 
determination and subsequent years. In the CY 2015 OPPS/ASC proposed 
rule (79 FR 41052), we did not propose any changes to the informal 
reconsideration process.

XV. Changes to the Rural Provider and Hospital Ownership Exceptions to 
the Physician Self-Referral Law: Expansion Exception Process

A. Background

1. Statutory Basis
    Unless the requirements of an applicable exception are satisfied, 
section 1877 of the Act, also known as the ``physician self-referral 
law''--(1) prohibits a physician from making referrals for certain 
designated health services payable by Medicare to an entity with which 
the physician (or an immediate family member) has a financial 
relationship (ownership or compensation); and (2) prohibits the entity 
from submitting claims to Medicare (or billing another individual, 
entity, or third party payer) for those designated health services 
furnished as a result of a prohibited referral. The Act establishes a 
number of specific exceptions to the physician self-referral law and 
grants the Secretary the authority to create regulatory exceptions for 
financial relationships that the Secretary determines pose no risk of 
program or patient abuse. Since the original enactment of the statute 
in 1989, we have published a series of final rules interpreting the 
statute and promulgating numerous exceptions.
    Section 1877(d) of the Act sets forth exceptions related to 
ownership and investment interests held by a physician (or an immediate 
family member of a physician) in an entity that furnishes designated 
health services. Section 1877(d)(2) of the Act provides an exception 
for ownership and investment interests in rural providers. Under the 
provision of section 1877(d)(2) of the Act, in order for an ownership 
or investment interest to qualify for the exception, the designated 
health services must be furnished in a rural area (as defined in 
section 1886(d)(2) of the Act), and substantially all of the designated 
health services furnished by the entity must be furnished to 
individuals residing in a rural area. Section 1877(d)(3) of the Act 
provides the hospital ownership exception, often referred to as the 
``whole hospital exception,'' for ownership and investment interests in 
a hospital located outside of Puerto Rico, provided that the referring 
physician is authorized to perform services at the hospital and the 
ownership or investment interest is in the hospital itself (and not 
merely in a subdivision of the hospital).
2. Affordable Care Act Amendments to the Rural Provider and Hospital 
Ownership Exceptions to the Physician Self-Referral Law
    Section 6001(a) of the Affordable Care Act amended the rural 
provider and whole hospital exceptions to the physician self-referral 
law to impose additional restrictions on physician ownership and 
investment in rural providers and hospitals. Section 6001(a) defines a 
``physician owner or investor'' as a physician, or immediate family 
member of a physician, who has a direct or indirect ownership or 
investment interest in a hospital. We refer to hospitals with direct or 
indirect physician owners or investors as ``physician-owned 
hospitals.''
    Section 6001(a)(3) of the Affordable Care Act established new 
section 1877(i) of the Act, which imposes additional requirements for 
physician-owned hospitals to qualify for the rural provider or whole 
hospital exception. In addition to other requirements, section 
1877(i)(1) of the Act prohibits a physician-owned hospital from 
expanding its facility capacity beyond the number of operating rooms, 
procedure rooms, and beds for which the hospital was licensed as of 
March 23, 2010, unless an exception is granted by the Secretary.
    Section 1877(i)(3) of the Act requires the Secretary to establish 
and implement an exception process to the prohibition on expansion of 
facility capacity. We refer to this process as the ``expansion 
exception process.'' Section 1877(i)(3)(A)(i) of the Act provides that 
a hospital qualifying as an ``applicable hospital'' or a ``high 
Medicaid facility'' may apply for an expansion exception. Section 
1877(i)(3)(E) of the Act sets forth the eligibility criteria for 
applicable hospitals, which include criteria concerning inpatient 
Medicaid admissions, bed capacity, and bed occupancy. Section 
1877(i)(3)(F) of the Act sets forth the eligibility criteria for high 
Medicaid facilities, which include a criterion concerning inpatient 
Medicaid admissions.
    In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
72240), we addressed many of the additional requirements that were 
established by section 6001(a) of the Affordable Care Act for the rural 
provider and whole hospital exceptions, including the prohibition on 
expansion of facility capacity. In that final rule with comment period, 
we finalized regulations at 42 CFR 411.362(b)(2) that prohibit a 
physician-owned hospital from increasing the number of operating rooms, 
procedure rooms, and beds

[[Page 66988]]

beyond that for which the hospital was licensed on March 23, 2010 (or, 
in the case of a physician-owned hospital that did not have a provider 
agreement in effect as of that date, but did have a provider agreement 
in effect on December 31, 2010, the effective date of such agreement), 
if the hospital seeks to avail itself of the rural provider or whole 
hospital exception.
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74517), we promulgated regulations under 42 CFR 411.362(c) that govern 
the expansion exception process. Section 411.362(c)(2) sets forth the 
criteria for a physician-owned hospital to qualify for an expansion 
exception as an applicable hospital. Specifically, Sec.  411.362(c)(2) 
states that: (1) The hospital's annual percent of total inpatient 
admissions under Medicaid must be equal to or greater than the average 
percent with respect to such admissions for all hospitals located in 
the county in which the hospital is located during the most recent 
fiscal year for which data are available as of the date that the 
hospital submits its exception request; (2) the hospital must be 
located in a State in which the average bed capacity in the State is 
less than the national average bed capacity during the most recent 
fiscal year for which data are available as of the date that the 
hospital submits its request; and (3) the hospital must have an average 
bed occupancy rate that is greater than the average bed occupancy rate 
in the State in which the hospital is located during the most recent 
fiscal year for which data are available as of the date that the 
hospital submits its request.
    Section 411.362(c)(3) specifies the criteria for a physician-owned 
hospital seeking an exception under the expansion exception process on 
the basis that it is a high Medicaid facility, including the 
requirement that, with respect to each of the three most recent fiscal 
years for which data are available as of the date that the hospital 
submits its exception request, the hospital must have an annual percent 
of total inpatient admissions under Medicaid that is estimated to be 
greater than such percent with respect to such admissions for any other 
hospital located in the county in which the hospital is located.
    In the CY 2012 OPPS/ASC proposed rule (76 FR 42350 through 42352), 
we proposed that filed Medicare hospital cost report data from the CMS 
Healthcare Cost Report Information System (HCRIS) be used to determine 
whether a hospital satisfies the inpatient Medicaid admissions, bed 
capacity, and bed occupancy criteria for applicable hospitals and the 
inpatient Medicaid admissions criterion for high Medicaid facilities. 
We requested public comments concerning alternative data sources that 
could result in more accurate determinations as to whether a hospital 
satisfies the relevant criteria (76 FR 42350). The public comments that 
we received provided no persuasive support for a data source more 
accurate than the filed hospital cost report data reported to HCRIS. 
Therefore, we finalized the requirement to use filed hospital cost 
report data for purposes of facility capacity expansion exception 
requests in the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74518). In this final rule with comment period, we refer to the filed 
hospital cost report data that are required under our existing 
regulations as ``HCRIS data.''
    As required by section 1877(i)(3)(A) of the Act, the regulations 
addressing the expansion exception process in the CY 2012 OPPS/ASC 
final rule with comment period were issued by January 1, 2012, and the 
process was implemented on February 1, 2012.

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

    Following the implementation of the expansion exception process on 
February 1, 2012, industry stakeholders informed us of what they 
believed to be certain limitations regarding the required use of HCRIS 
data under the regulations at 42 CFR 411.362. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41053), we discussed the existing required use of 
HCRIS data and certain limitations of the data that were identified by 
stakeholders and CMS. We do not repeat that information here; rather, 
we refer readers to the proposed rule for a complete discussion of the 
issues. To address the limitations regarding the required use of HCRIS 
data, we proposed to modify the expansion exception process to permit 
the use of certain non-HCRIS data sources for the inpatient Medicaid 
admissions, bed capacity, and bed occupancy criteria.
    As of the publication date of the CY 2015 OPPS/ASC proposed rule, a 
correctly completed hospital cost report did not include Medicaid 
managed care admissions or discharges and, therefore, Medicaid managed 
care admissions and discharges were not available in HCRIS. As a 
result, the information collected to date through HCRIS cannot be used 
to estimate reliably Medicaid managed care admissions or discharges for 
purposes of estimating the percentages of inpatient Medicaid admissions 
under Sec. Sec.  411.362(c)(2)(ii) and (c)(3)(ii). In addition, a 
hospital that has not participated as a provider in the Medicare 
program for each of the 3 most recent fiscal years for which data is 
available would be precluded from seeking a facility expansion 
exception as a high Medicaid facility. It would be similarly 
prohibitive if the requesting hospital is seeking an exception as 
either an applicable hospital or high Medicaid facility, and the 
hospitals in the county in which the requesting hospital is located 
were not Medicare participating providers or were not participating in 
the Medicare program during each of the years for which comparisons are 
required under the statute and our regulations.
    We believe that some physician-owned hospitals that serve a 
significant number of Medicaid managed care patients and are interested 
in the expansion exception process may fail to qualify for an exception 
due to the exclusion of Medicaid managed care data. Accordingly, as 
detailed in section XV.C. of the CY 2015 OPPS/ASC proposed rule (79 FR 
41054), we proposed to revise the expansion exception process to permit 
physician-owned hospitals to use filed hospital cost report data, data 
from internal data sources, or data from external data sources to 
estimate the required percentages of inpatient admissions under 
Medicaid. (We referred in the proposal to the non-HCRIS internal data 
sources and external data sources that we proposed to permit for 
purposes of the expansion exception process as ``supplemental data 
sources.'') Also, as explained in section XV.B. of the CY 2015 OPPS/ASC 
proposed rule (79 FR 41054), we proposed to revise the expansion 
exception process to permit the use of supplemental data sources for 
the bed capacity and bed occupancy criteria for applicable hospitals.

C. Changes to the Physician-Owned Hospital Expansion Exception Process

    Below we discuss the provisions of the proposed rule and summarize 
and respond to the public comments we received in response to our 
proposals. For ease of reference, we have divided the comments and 
responses into the following categories: supplemental data sources; 
fiscal year standard; community input and timing of complete request; 
and additional considerations.
1. Supplemental Data Sources
    Given the limitations regarding the required use of HCRIS data 
(which we described in sections XV.B.1. and XV.B.2. of the CY 2015 
OPPS/ASC proposed rule (79 FR 41053 through 41054)), we proposed to 
revise our

[[Page 66989]]

regulations at Sec. Sec.  411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and 
(c)(3)(ii) to permit physician-owned hospitals to use data from certain 
internal data sources or external data sources, in addition to HCRIS 
data, in order to estimate the percentages of inpatient Medicaid 
admissions, and to determine the bed capacities and the bed occupancy 
rates referenced in those sections. We stated in the proposed rule that 
we were not prescribing that hospitals use a specific individual data 
source or combination of data sources.
    We proposed that, for purposes of the expansion exception process, 
internal data sources would be sources generated, maintained, or under 
the control of the Department, and we gave as examples the Healthcare 
Cost and Utilization Project (HCUP), the Medicaid Statistical 
Information System (MSIS), and the Medicaid Analytic Extract (MAX). We 
sought public comments that recommended other possible internal data 
sources. We also proposed that, for purposes of the expansion exception 
process, ``external data sources'' would be data sources generated, 
maintained, or under the control of a State Medicaid agency, and we 
sought public comments that recommended other possible external data 
sources, including those of other State agencies or departments. 
Finally, we proposed to amend 42 CFR 411.351: (1) to define ``internal 
data source'' to include only non-HCRIS data sources that are reliable 
and transparent, and that maintain or generate data that are accurate, 
complete, and objectively verifiable for purposes of the expansion 
exception process, and to define ``external data source'' to include 
only data sources that are reliable and transparent, and that maintain 
or generate data that are accurate, complete, and objectively 
verifiable for purposes of the expansion exception process; and (2) to 
state that internal data sources and external data sources must 
maintain data that are readily available and accessible to the 
requesting hospital, comparison hospitals, and to CMS for purposes of 
the expansion exception process.
    We noted in the proposed rule that the expansion exception process 
includes both the physician-owned hospital's completion of its request 
and CMS' consideration of the physician-owned hospital's request.
    We stated in the proposed rule that we believe that the 
supplemental data sources should--
     Be transparent regarding what comprises the data, where 
the data originated, and the manner and method by which the data source 
received the data;
     Be maintained on a secure database that prevents 
distortion or corruption of data and that ensures the accuracy of the 
data;
     Contain sufficient information to enable accurate 
estimates of the percentages of inpatient Medicaid admissions, and 
accurate determinations of bed capacities and bed occupancy rates;
     Contain sufficient information to enable the comparisons 
required by Sec.  411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and 
(c)(3)(ii) for the fiscal year(s) at issue; and
     Contain sufficiently clear and detailed data that will 
enable multiple users to produce consistent results and outcomes when 
using the same data set.
    In the proposed rule, we recognized that, if a physician-owned 
hospital uses data from a supplemental data source, the hospital may 
ultimately need to make estimates or determinations in addition to 
those referenced in our existing regulations. Accordingly, we proposed 
to revise our regulations to allow for the additional estimates or 
determinations that may be necessary under our revised process. 
Specifically, we proposed to permit a requesting hospital to use data 
from a supplemental data source to:
     Estimate its own annual percentage of inpatient Medicaid 
admissions (Sec.  411.362(c)(2)(ii)).
     Estimate the average percentage with respect to such 
admissions for all hospitals located in the county in which the 
hospital is located (Sec.  411.362(c)(2)(ii)).
     Determine the average bed capacity in the State in which 
the hospital is located (Sec.  411.362(c)(2)(iv)).
     Determine the national average bed capacity (Sec.  
411.362(c)(2)(iv)).
     Determine its own average bed occupancy rate (Sec.  
411.362(c)(2)(v)).
     Determine the average bed occupancy rate for the State in 
which the hospital is located (Sec.  411.362(c)(2)(v)).
     Estimate its annual percentage of total inpatient 
admissions under Medicaid for each of the 3 most recent fiscal years 
for which data are available (Sec.  411.362(c)(3)(ii)).
     Estimate the annual percentages of total inpatient 
admissions under Medicaid for every other hospital located in the 
county in which the hospital is located for each of the 3 most recent 
fiscal years for which data are available (Sec.  411.362(c)(3)(ii)).
    We respond below to the specific comments that we received in 
response to our proposal.
a. Internal Data Sources
    Comment: All of the commenters supported CMS' efforts to permit 
physician-owned hospitals to use supplemental data sources in the 
expansion exception process because of the limitations of the HCRIS 
data, especially with respect to the inpatient Medicaid admissions 
criteria. The commenters generally agreed that a more flexible approach 
would help ensure that the physician-owned hospitals that satisfy the 
statutory criteria are able to expand facility capacity under the CMS 
process.
    Response: We appreciate the commenters' support. Accordingly, we 
are finalizing a number of our proposals to revise the expansion 
exception process to provide for the flexibility called for by the 
commenters and other industry stakeholders to effectuate the purpose of 
section 6001(a) of the Affordable Care Act.
    Comment: One commenter stated that it appreciated CMS' efforts to 
permit physician-owned hospitals to use supplemental data sources but 
also expressed concern that an internal data source as defined in the 
proposed rule would have limited utility in the expansion exception 
process. With respect to the internal data sources provided as examples 
in the proposed rule, the commenter identified limitations concerning 
the data sources' completeness for purposes of the expansion exception 
process. Specifically, the commenter stated that certain States do not 
provide information to the HCUP and that the MSIS does not provide 
sufficient detail at the State or county level for purposes of the 
expansion exception process. The commenter added that the Medicaid 
Analytic Extract (MAX) would not be appropriate for the expansion 
exception process because it may not be used for nonresearch purposes.
    Response: We share the concerns identified by the commenter. After 
publication of the proposed rule, we made additional inquiries into the 
utility of internal data sources with respect to the inpatient Medicaid 
admissions criteria. As a result of those inquiries and further review, 
we agree with the commenter that these data sources contain significant 
limitations, including incomplete data for purposes of the exception 
process, as well as issues related to timeliness, availability, and 
accessibility of the data. Accordingly, we do not believe that the 
three sources listed in the proposed rule satisfy all of the standards 
that we set forth in the proposed rule for supplemental data sources 
(79 FR

[[Page 66990]]

41055), which we continue to believe are critical for any supplemental 
data source that could be used in the expansion exception process. None 
of the commenters provided information regarding other potentially 
acceptable internal data sources, and we are unaware of any other 
internal data sources that could be used to estimate accurately and 
reliably the percentages of inpatient Medicaid admissions required. 
Therefore, we are not finalizing our proposal to permit the use of any 
non-HCRIS internal data source for the inpatient Medicaid admissions 
criteria required at Sec. Sec.  411.362(c)(2)(ii) and (c)(3)(ii).
    We also believe that many of the limitations that the commenter and 
our review identified regarding the proposed internal data sources 
would also apply to the bed capacity and bed occupancy criteria at 
Sec.  411.362(c)(2)(iv) and (c)(2)(v). Specifically, we do not believe 
that internal data sources other than HCRIS would include relevant and 
adequate information to determine accurately the average bed capacity 
for hospitals within a State or nationally; nor do we believe internal 
data sources other than HCRIS would include information to determine 
accurately bed occupancy rates in a State. Accordingly, we are not 
finalizing our proposed revisions to Sec. Sec.  411.362(c)(2)(iv) and 
(c)(2)(v) that would permit the use of any non-HCRIS internal data 
source for those criteria. Because no internal data source, other than 
HCRIS, will be permitted in the expansion exception process under this 
final rule with comment period, we are not finalizing our proposal to 
add a definition of ``internal data source'' to Sec.  411.351.
    Comment: One commenter recommended that physician-owned hospitals 
be allowed to use as an internal data source the same Medicaid 
eligibility determination process that hospitals use for Medicare 
disproportionate share hospital (DSH) determinations.
    Response: Medicare DSH determinations are based on Medicaid days, 
not admissions (or discharges). Based on our review, we do not believe 
that Medicaid days, without additional detailed information for the 
requesting and each comparison hospital, could be used in calculations 
to estimate accurately or reliably the required percentages of 
inpatient Medicaid admissions. The commenter did not explain how 
Medicaid eligibility data could be used to estimate inpatient 
admissions under Medicaid for the requesting hospital and each 
comparison hospital, when required. Without further explanation, we 
cannot agree that the Medicaid eligibility determination process that 
hospitals use for Medicare DSH determinations should be considered a 
data source.
b. External Data Sources
    Comment: Most commenters urged CMS to finalize its proposal to 
permit the use of data from external data sources for the inpatient 
Medicaid admissions criteria. One commenter stated that its State 
Medicaid agency's data on inpatient Medicaid admissions includes fee-
for-service and managed care data, and that the data on total patient 
admissions are readily available from the Medicaid agency. The 
commenter indicated that the State Medicaid agency data could be used 
to determine accurately the percentages of inpatient Medicaid 
admissions referenced in Sec.  411.362(c)(2)(ii) and (c)(3)(ii). The 
commenter also stated that the State did not charge a fee for providing 
the necessary data.
    Response: We believe that States have a significant interest in 
ensuring that data generated, maintained, or under the control of the 
State Medicaid agency are accurate and reliable. In general, submission 
of data to a State Medicaid agency is not voluntary, and hospitals are 
incented to provide accurate data and other information to receive 
payment for the services that they provide to the State's Medicaid 
enrollees. Accordingly, we are persuaded to finalize our proposal to 
permit the use of an external data source for the inpatient Medicaid 
admissions criteria at Sec.  411.362(c)(2)(ii) and (c)(3)(ii) with the 
modification stemming from the recent revision to the Medicare hospital 
cost report described in this response. We also are adopting as final 
our proposed definition of ``external data source'' with no 
modification. We are adding this definition at Sec.  411.362(a), rather 
than at Sec.  411.351 as proposed, because the definition of ``external 
data source'' applies only to our regulations at Sec.  411.362.
    We note that CMS recently revised the hospital cost report to 
require the reporting of Medicaid managed care discharges in addition 
to Medicaid fee-for-service discharges. As a result of this revision, a 
correctly completed hospital cost report will include Medicaid managed 
care discharges and, thus, Medicaid managed care discharges eventually 
will be available in HCRIS. At such time, the limitations that led to 
our proposal will be resolved, and HCRIS should be sufficiently 
complete to estimate the percentages of Medicaid inpatient admissions 
required in Sec.  411.362(c)(2)(ii) and (c)(3)(ii). However, we 
anticipate that it will take several years before physician-owned 
hospitals that are interested in requesting an expansion exception will 
be able to utilize the necessary Medicaid managed care data through 
HCRIS. Therefore, we are permitting physician-owned hospitals to use 
data from an external data source for the inpatient Medicaid admissions 
criteria until such time that the Secretary determines that HCRIS 
contains sufficiently complete inpatient Medicaid discharge data. At 
that time, going forward, physician-owned hospitals may use only filed 
Medicare hospital cost report data for the inpatient Medicaid 
admissions criteria. For additional information about the recent 
revisions to the hospital cost report, we refer readers to Transmittal 
6 on the CMS Web site at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R6P240.html.
    We did not receive any public comments regarding whether an 
external data source would contain adequate information to determine 
the remaining four calculations required for the Secretary to grant an 
exception to the facility expansion prohibition for an applicable 
hospital (that is, the average bed capacity in the State where the 
requesting hospital is located, national average bed capacity, the 
requesting hospital's average bed occupancy, and the average bed 
occupancy for all hospitals in the State where the requesting hospital 
is located). Based on our own review, we do not believe that an 
external data source would meet the standards set forth in the proposed 
rule when used for the criteria at Sec.  411.362(c)(2)(iv) and 
(c)(2)(v). Therefore, we are not finalizing our proposal to permit the 
use of external data sources for the four calculations specified in 
this paragraph and, thus, we are limiting the use of external data 
sources to the estimations of the percentages of inpatient Medicaid 
admissions at Sec.  411.362(c)(2)(ii) and (c)(3)(ii).
    Comment: One commenter suggested that physician-owned hospitals 
seeking an expansion exception be permitted to use the most current 
external data available, regardless of source.
    Response: We interpret the comment as a suggestion that a 
requesting hospital should be able to use multiple external data 
sources to achieve the goal of using the ``most current'' data 
available when requesting an expansion exception, provided that each 
data source meets the criteria for an ``external data source.'' We 
disagree with the commenter because we believe that the use of more 
than one data

[[Page 66991]]

source would add unnecessary complexity to the Secretary's review and 
lead to inconsistent results, including from year to year where 
multiple-year comparisons are required. In order to ensure accurate and 
consistent estimates and determinations and to facilitate the 
Secretary's review of a physician-owned hospital's request for a 
facility expansion exception, all of the data necessary for a 
physician-owned hospital to estimate or determine the percentages of 
inpatient Medicaid admissions referenced in Sec. Sec.  
411.362(c)(2)(ii) and (c)(3)(ii) must come from a single data source. 
Specifically, the same data source, whether HCRIS or an external data 
source, must be used in the numerator and denominator when determining 
or estimating the percentages of inpatient admissions under Medicaid 
for the requesting hospital and any other comparison hospital required 
under Sec.  411.362(c)(2)(ii) and (c)(3)(ii). We will continue to 
monitor the use of data sources in the expansion exception process and, 
if necessary, we will provide additional guidance on the CMS Web site 
regarding how an external data source should be used for the inpatient 
Medicaid admissions criteria.
    Comment: One commenter identified potential shortcomings in the 
data that its State Medicaid agency collects. Specifically, this 
commenter stated that its State collects Medicaid inpatient admissions 
data from general acute care hospitals but not psychiatric or specialty 
hospitals. (The commenter did not define ``specialty hospital.'') For 
this reason, the commenter claimed that its State Medicaid agency data 
would be incomplete if the requesting hospital is a psychiatric or 
specialty hospital or must compare itself to a psychiatric or specialty 
hospital.
    Response: Although we understand the potential implication of a 
State Medicaid agency not requiring a particular type of hospital to 
report admissions (or discharges) data to the agency, we note that 
HCRIS remains available under the policies set forth in this final rule 
with comment period. No Medicare participating hospital is exempt from 
reporting cost report data in HCRIS. Hospitals requesting an exception 
to the Affordable Care Act's facility expansion prohibition may use 
HCRIS data to make the necessary estimates and determinations required 
under the statute and our regulations.
    Comment: One commenter recommended that physician-owned hospitals 
be permitted to use a State-provided listing of Medicaid DSH-eligible 
hospitals as an external data source. The commenter suggested that, if 
a hospital has been determined by its State Medicaid agency to be 
eligible for Medicaid DSH payments, the supporting data that show the 
Medicaid inpatient utilization rate or low-income utilization rate 
status of the hospital would be an adequate external data source.
    Response: We do not believe that a listing of Medicaid DSH-eligible 
hospitals, even if developed by a State Medicaid agency, qualifies as 
an external data source under our proposed definition. Moreover, we are 
not persuaded to expand the definition of ``external data source'' to 
include such a listing because we are unclear how a listing, by itself, 
could provide the data necessary to estimate the percentages of 
inpatient Medicaid admissions required under the statute and our 
regulations.
    Comment: One commenter suggested that admissions data, which it was 
able to obtain from the State health and human services commission, 
should be preferred over discharge data for purposes of the inpatient 
Medicaid admissions criteria.
    Response: In the CY 2012 OPPS/ASC final rule with comment period 
(76 FR 74519), we determined that discharge data may be used to 
estimate the percentages of inpatient Medicaid admissions. We did not 
propose to revise this policy in the CY 2015 OPPS/ASC proposed rule. 
However, we are clarifying in this CY 2015 OPPS/ASC final rule with 
comment period that either admissions data or discharge data may be 
used to either determine or estimate the percentages referenced in 
Sec.  411.362(c)(2)(ii) and (c)(3)(ii), provided that the data being 
used are from a permitted data source. We are not persuaded to rank or 
prioritize these types of data. The Secretary will determine whether an 
estimate is accurate or appropriate given the specific facts and 
circumstances underlying a physician-owned hospital's expansion 
exception request.
c. Completeness of Supplemental Data Sources
    Comment: One commenter expressed concern about the utility of an 
external data source, as defined in the proposed rule, for purposes of 
the expansion exception process. The commenter stated that, in some 
States, certain types of hospitals are not required to report any data 
to the States in which they are located. The commenter did not provide 
information regarding whether State Medicaid agencies can or do 
generate on their own (that is, without relying on reported information 
from hospitals) inpatient admissions data for those hospitals not 
required to report such data. The commenter requested that CMS clarify 
whether the State Medicaid sources would be considered ``complete'' for 
purposes of the expansion exception process under such circumstances.
    Response: We recognize the possibility that a State Medicaid agency 
may not generate, maintain, or otherwise control a data source that 
would contain sufficient data for the inpatient Medicaid admissions 
criteria, the only eligibility criteria for which we are permitting the 
use of an external data source in this final rule with comment period. 
Thus, the utility of the external data sources that we are permitting 
likely will depend on the State in which the physician-owned hospital 
is located.
    Whether an external data source is considered complete depends on 
the facts and circumstances of the particular situation. For example, 
if a physician-owned hospital is seeking to qualify as a high Medicaid 
facility and the State's data source does not include data on one of 
the comparison hospitals, the State's data would not be considered 
complete for purposes of the process because a high Medicaid facility 
must compare itself against each other hospital in the county in which 
it is located.
d. Other Issues Related to Supplemental Data Sources
    Comment: One commenter expressed concern that contradictory data 
sources could create confusion for requesting physician-owned 
hospitals, those who wish to comment on an expansion exception request, 
and the Secretary in her review of a request. The commenter provided an 
example where a physician-owned hospital chooses to utilize available 
HCRIS data for its expansion request, but the available data from the 
State Medicaid agency conflict with the HCRIS data, appearing to show 
that the physician-owned hospital was not the highest Medicaid facility 
in a more recent fiscal year(s). Two commenters recommended that CMS 
consider issuing guidance as to how external data sources will be 
characterized or measured in comparison to HCRIS data, how CMS and the 
Secretary will evaluate comments received from opposing hospitals, and 
what criteria the Secretary intends to rely upon to make the ultimate 
determinations. Another commenter recommended that CMS not prioritize 
or rank additional data sources, given that access to supplemental data 
sources will vary based upon the entity requesting an expansion 
exception.

[[Page 66992]]

    Response: Determinations regarding expansion exception requests 
will be made on a case-by-case basis, with consideration given to all 
information available to CMS at the time of the review. We are not able 
to provide the specific guidance requested by the first commenter 
because the example provided is hypothetical in nature and not part of 
an actual request for the Secretary's consideration. As we stated in 
the proposed rule, we believe that permissible data sources should, 
among other things, be transparent, be secure, enable accurate 
estimates of the percentages of inpatient Medicaid admissions, and 
provide for consistent results in order to enable the Secretary to make 
an informed decision regarding whether a requesting physician-owned 
hospital satisfies the statutory requirements for an exception to the 
facility expansion prohibition. We continue to believe in the 
importance of these attributes, and all data sources utilized by a 
requesting hospital and any community comments provided during the 
exception expansion process will be evaluated with them in mind. 
Because each request will be reviewed on a case-by-case basis, we 
decline to issue guidance regarding the relative priority of data 
sources. The Secretary will make determinations based on the criteria 
enumerated in the Affordable Care Act, as set forth in section 
1877(i)(3) of the Act and our regulations.
    Comment: One commenter recommended that, in addition to considering 
other data sources, CMS consider other factors when reviewing an 
expansion exception request. The commenter claimed that Medicaid 
patient days are a better metric than Medicaid admissions because 
Medicaid patient days reflect a hospital's use of resources to care for 
a Medicaid patient. The commenter also suggested that CMS consider the 
specialty services, such as neonatal intensive care unit (NICU) 
services, that a hospital provides. Specifically, the commenter 
suggested that CMS consider the bed occupancy of a particular specialty 
service if that service treats a very large Medicaid population.
    Response: We do not have the authority to revise the expansion 
exception process to incorporate the factors that the commenter 
recommended. Section 6001(a) of the Affordable Care Act established 
criteria that physician-owned hospitals must satisfy in order to 
qualify for an expansion exception request, including criteria 
concerning inpatient Medicaid admissions. As we understand the comment, 
the commenter is recommending that we substitute (or additionally 
consider) a hospital's inpatient Medicaid days as a criterion for 
granting an exception to the prohibition on facility expansion. The 
statute does not provide the Secretary discretion to consider inpatient 
Medicaid days in lieu of the inpatient Medicaid admissions criteria. 
Similarly, we lack the authority to consider the bed occupancy of 
specific specialty services, a factor which, even if permissible, would 
complicate our review of an exception request.
e. Summary of Final Provisions Regarding Supplemental Data Sources
    After consideration of the public comments we received on the use 
of supplemental data sources, we are not finalizing the proposed 
revisions to Sec.  411.362(c)(2)(ii) and (c)(3)(ii) that would permit 
physician-owned hospitals to use data from an internal data source 
other than HCRIS to estimate the percentages of inpatient Medicaid 
admissions referenced in those sections. Accordingly, we are not 
finalizing our proposal to add a definition of the term ``internal data 
source'' under Sec.  411.351. As finalized, Sec.  411.362(c)(2)(ii) and 
(c)(3)(ii) reflect modifications from our proposal that would have 
permitted physician-owned hospitals to use data from an external data 
source to estimate the percentages of inpatient Medicaid admissions 
referenced in those sections. Specifically, we are revising these 
sections to require the use of HCRIS data once they are complete and 
permit the use of data from an external data source only until then. We 
also are finalizing the definition of ``external data source'' without 
modification, although we are adding the definition at Sec.  
411.362(a), rather than at Sec.  411.351 as proposed. Finally, we are 
not finalizing the proposed revisions to those sections that would 
permit physician-owned hospitals to use data from a non-HCRIS data 
source to determine State average bed capacity, national averaged bed 
capacity, the requesting physician-owned hospital's average bed 
occupancy rate, or the State average bed occupancy rate. We provide the 
following chart of the final provisions to assist the reader.

----------------------------------------------------------------------------------------------------------------
                                                                  Permissible data
            Regulation                     Requirement               source(s)                Limitations
----------------------------------------------------------------------------------------------------------------
Sec.   411.362(c)(2)(ii).........  Estimate the requesting     HCRIS, external data   An external data source
                                    hospital's own annual       source.                may be used only until
                                    percentage of inpatient                            such time as the
                                    Medicaid admission.                                Secretary determines that
                                                                                       HCRIS contains
                                                                                       sufficiently complete
                                                                                       inpatient Medicaid
                                                                                       discharge data.
Sec.   411.362(c)(2)(ii).........  Estimate the average        HCRIS, external data   An external data source
                                    percentage with respect     source.                may be used only until
                                    to such admissions for                             such time as the
                                    all hospitals located in                           Secretary determines that
                                    the county in which the                            HCRIS contains
                                    requesting hospital is                             sufficiently complete
                                    located.                                           inpatient Medicaid
                                                                                       discharge data.
Sec.   411.362(c)(2)(iv).........  Determine the average bed   HCRIS                  ..........................
                                    capacity in the State in
                                    which the requesting
                                    hospital is located.
Sec.   411.362(c)(2)(iv).........  Determine the national      HCRIS                  ..........................
                                    average bed capacity.
Sec.   411.362(c)(2)(v)..........  Determine the requesting    HCRIS                  ..........................
                                    hospital's own average
                                    bed occupancy rate.
Sec.   411.362(c)(2)(v)..........  Determine the average bed   HCRIS                  ..........................
                                    occupancy rate for the
                                    State in which the
                                    requesting hospital is
                                    located.
Sec.   411.362(c)(3)(ii).........  Estimate the requesting     HCRIS, external data   An external data source
                                    hospital's annual           source.                may be used only until
                                    percentage of total                                such time as the
                                    inpatient admissions                               Secretary determines that
                                    under Medicaid for each                            HCRIS contains
                                    of the three most recent                           sufficiently complete
                                    fiscal years for which                             inpatient Medicaid
                                    data are available.                                discharge data.

[[Page 66993]]

 
Sec.   411.362(c)(3)(ii).........  Estimate the annual         HCRIS, external data   An external data source
                                    percentages of total        source.                may be used only until
                                    inpatient admissions                               such time as the
                                    under Medicaid for every                           Secretary determines that
                                    other hospital located in                          HCRIS contains
                                    the county in which the                            sufficiently complete
                                    requesting hospital is                             inpatient Medicaid
                                    located for each of the                            discharge data.
                                    three most recent fiscal
                                    years for which data are
                                    available.
----------------------------------------------------------------------------------------------------------------

2. Fiscal Year Standard
    Section 1877(i)(3)(F) of the Act requires that a high Medicaid 
facility use data from each of the 3 most recent fiscal years for which 
data are available. In the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74518), we stated that we consider the most recent fiscal 
year for which data are available to be the most recent year for which 
HCRIS contains data from at least 6,100 hospitals. We currently apply 
this standard to expansion exception requests for both applicable 
hospitals and high Medicaid facilities.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41055), we proposed to 
revise our standard so that the most recent fiscal year for which data 
are available would be the year for which the data source(s) used in an 
expansion exception request contain sufficient data to perform the 
comparisons required under Sec.  411.362(c)(2)(ii), (c)(2)(iv), 
(c)(2)(v), and (c)(3)(ii). Specifically, we proposed that data sources, 
either alone or in combination with other data sources, would be 
considered to contain ``sufficient data'' if they contain all data from 
the requesting hospital and each hospital to which the requesting 
hospital must compare itself that are necessary to perform the 
estimates required in the expansion exception process. In addition, 
with respect to a hospital seeking an expansion exception as an 
applicable hospital, we proposed that, in order to be considered to 
contain ``sufficient data,'' the data sources, either alone or in 
combination with other data sources, must contain the data necessary to 
determine the State and national average bed capacity and the average 
bed occupancy rate in the State in which the requesting hospital is 
located for purposes of the expansion exception process.
    We also proposed to require that data from the same fiscal year be 
used for the applicable hospital eligibility criteria at Sec.  
411.362(c)(2)(ii), (c)(2)(iv) and (c)(2)(v), even if the hospital uses 
multiple data sources for those criteria. We stated our belief that 
requiring the use of data from the same fiscal year will ensure 
consistency and equitability in the expansion exception process. We 
sought public comments on our proposal to revise the standard that 
determines the most recent fiscal year(s) for which data are available, 
as well as other ways to define ``sufficient data'' for purposes of the 
expansion exception process.
a. Summary of Public Comments and Our Responses Regarding the Fiscal 
Year Standard
    Comment: All of the commenters that addressed this issue supported 
CMS' proposal to revise the interpretation of the standard ``the most 
recent fiscal year for which data are available.'' The commenters 
stated generally that external data sources often have more recent data 
than the fiscal year for which HCRIS contains data from at least 6,100 
hospitals. Two commenters recommended deeming a data source 
``sufficient'' and, thus, acceptable for use in an expansion exception 
request, if it contains all of the information necessary to complete 
the calculations required to determine eligibility for an exception as 
a high Medicaid facility or applicable hospital. Another commenter 
similarly supported the proposal and suggested that CMS consider the 
sufficiency of data on a case-by-case basis.
    Response: We agree with the commenters that recommended that we 
deem a data source ``sufficient'' and, thus, acceptable for use in an 
expansion exception request, if it contains all of the information 
necessary to complete the calculations required to determine 
eligibility for an exception as a high Medicaid facility or applicable 
hospital. Although determining the sufficiency of a data source on a 
case-by-case basis could significantly lengthen the period of time 
required for a thorough review of an expansion exception request, we 
believe that evaluating the sufficiency of data on a modified case-by-
case basis is nonetheless appropriate, as explained more fully below.
    We are adopting separate standards to determine the sufficiency of 
data sources for the Medicaid inpatient admissions criteria and the bed 
capacity and occupancy criteria set forth in our regulations. For 
purposes of the Medicaid inpatient admissions estimates required in 
Sec.  411.362(c)(2)(ii) and (c)(3)(ii), we are adopting a standard 
under which we will consider a data source sufficient when it contains 
data from the requesting hospital and every hospital located in the 
same county as the requesting hospital. This applies to both external 
data sources and HCRIS. The statutory criteria at sections 
1877(i)(3)(E)(ii) and (i)(3)(F)(ii) of the Act afford no flexibility to 
make these determinations based on data from fewer than all of the 
hospitals located in the same county as the requesting hospital. For 
purposes of the bed capacity and occupancy determinations required in 
Sec.  411.362(c)(2)(iv) and (c)(2)(v), we will consider HCRIS 
sufficient for a particular fiscal year on a State-by-State basis, 
rather than the current ``6,100 hospitals reporting'' standard. 
Specifically, this final rule with comment period requires a requesting 
physician-owned hospital to satisfy the bed capacity criterion in Sec.  
411.362(c)(2)(iv) during the most recent fiscal year for which HCRIS 
contains data from a sufficient number of hospitals in the requester's 
State to determine the State's average bed capacity and a sufficient 
number of hospitals nationally to determine the national average bed 
capacity. In addition, this final rule with comment period requires a 
requesting physician-owned hospital to satisfy the bed occupancy 
criterion in Sec.  411.362(c)(2)(v) during the most recent fiscal year 
for which HCRIS contains data from a sufficient number of hospitals in 
the State to determine the requesting hospital's average bed occupancy 
rate and the State's average bed occupancy rate. ``Sufficient number'' 
means that enough hospitals have reported data such that the 
determinations in Sec.  411.362(c)(2)(iv) and (c)(2)(v) would not 
materially change after additional hospital data are reported.
    We will consult with the CMS Office of the Actuary to determine 
whether average bed capacity and bed occupancy rates would materially 
change upon additional hospital reporting. CMS intends to report on its 
Web site each State's average bed capacity, the national average bed 
capacity, and each State's average bed occupancy, per fiscal year, as 
they become available. A

[[Page 66994]]

requesting physician-owned hospital may use only the averages posted on 
the CMS Web site as of the date that the hospital submits its expansion 
exception request.
    We provide the following examples to illustrate the application of 
the standard applicable to the determinations required in Sec.  
411.362(c)(2)(iv) and (c)(2)(v). Assume that, for FY 2013, the 
requesting hospital is one of 200 Medicare-participating hospitals 
located in State A. Assume also that, after consultation with the CMS 
Office of the Actuary, we determine that State A's FY 2013 average bed 
capacity and bed occupancy rates would not materially change once HCRIS 
contains data from at least 85 percent of State A hospitals (170 
hospitals). Finally, assume that CMS is able to determine the FY 2013 
national average bed capacity rate once 5,500 hospitals have reported 
bed capacity data in HCRIS, and that this rate would not materially 
change even if the remaining Medicare-participating hospitals reported 
data in HCRIS. Under the standard adopted in this final rule with 
comment period, the requesting hospital may use FY 2013 HCRIS data to 
make the State bed capacity and occupancy determinations required in 
Sec.  411.362(c)(2)(iv) and (c)(2)(v) once HCRIS contains data from at 
least 170 of the Medicare-participating hospitals in State A for that 
fiscal year. The requesting hospital may use FY 2013 HCRIS data to 
determine the national average bed capacity required in Sec.  
411.362(c)(2)(iv) once HCRIS contains data from at least 5,500 
Medicare-participating hospitals for that fiscal year.
    In contrast, assume that, for FY 2013, there are only 10 Medicare-
participating hospitals in State B. Assume also that, after 
consultation with the CMS Office of the Actuary, we determine that 
State B's FY 2013 average bed capacity and bed occupancy rates would 
materially change unless HCRIS contains data from all of State B's 
hospitals. Thus, a physician-owned hospital located in State B could 
not use FY 2013 HCRIS data until all 10 Medicare-participating 
hospitals in State B reported their bed capacity and occupancy data in 
HCRIS for that fiscal year.
    With respect to external data sources, because we recognize that 
State Medicaid agencies likely will have varying collection time 
periods that may not line up with the Federal fiscal year end for which 
HCRIS data are available (for example, calendar year or State fiscal 
year), we are permitting the use of any 12-month period for the data, 
provided that all 3 years use the same 12-month cycle. For example, a 
State Medicaid agency may collect Medicaid inpatient admissions data on 
a calendar year cycle. A physician-owned hospital requesting an 
expansion exception as a high Medicaid facility may use calendar years 
2013, 2012 and 2011 if the external data source, for each of those 
years, contains all data from the requesting hospital and every 
hospital located in the same county as the requesting hospital.
    We note that, if the latest year for which HCRIS contained data 
sufficient to determine the average bed capacity in the State in which 
the requesting hospital is located and the national bed capacity was FY 
2011, but HCRIS contained FY 2012 data sufficient to determine the 
requesting hospital's own average bed occupancy and the average bed 
occupancy rate for the State in which the requesting hospital is 
located, the hospital could use FY 2011 data for the determinations 
required in Sec.  411.362(c)(2)(iv) and FY 2012 data for the 
determinations required in Sec.  411.362(c)(2)(v). We recognize that 
using different years from the same permissible data source to make the 
estimates or determinations set forth in the criteria for applicable 
hospitals may require additional review of an expansion exception 
request by the Secretary. However, in light of our interpretation that 
each criterion that a physician-owned hospital seeking a facility 
expansion exception must meet is analyzed separately, we believe that 
allowing a requesting hospital to use data from 12-month periods that 
may be different for each criterion will permit use of the most recent 
data, result in more accurate determinations, and best effectuate the 
plain meaning of the statutory and regulatory language regarding these 
criteria.
b. Summary of Final Provisions Regarding the Fiscal Year Standard
    After consideration of the public comments we received on the 
standard regarding the most recent available data, we are finalizing 
our proposals with several modifications. For purposes of the estimates 
required in Sec.  411.362(c)(2)(ii) and (c)(3)(ii), the most recent 12-
month period for which data are available is the most recent 12-month 
period for which the data source used contains all data from the 
requesting hospital and each hospital to which the requesting hospital 
must compare itself. For purposes of the determinations required in 
Sec.  411.362(c)(2)(iv), we require a requesting physician-owned 
hospital to satisfy the criterion during the most recent fiscal year 
for which HCRIS contains data from a sufficient number of hospitals to 
determine the relevant State's average bed capacity and the national 
average bed capacity. For purposes of the determinations required in 
Sec.  411.362 (c)(2)(v), we require a requesting physician-owned 
hospital to satisfy the criterion during the most recent fiscal year 
for which HCRIS contains data from a sufficient number of hospitals to 
determine the requesting hospital's average bed occupancy rate and the 
relevant State's average bed occupancy rate. Because we are continuing 
to require the use of HCRIS data for the determinations required in 
Sec.  411.362(c)(2)(iv) and (c)(2)(v), we believe that this bifurcated 
approach is necessary.
    Finally, we note that we analyze each estimate or determination 
required under Sec.  411.362(c)(2) separately. We interpret the statute 
and our regulations to allow the use of different time periods for each 
estimate or determination, provided that the data source (or time 
period) used to perform the necessary calculation contains: (1) for 
purposes of Sec.  411.362(c)(2)(ii) and (c)(3)(ii), all data from the 
requesting hospital and each hospital to which the requesting hospital 
must compare itself; (2) for purposes of Sec.  411.362(c)(2)(iv), data 
from a sufficient number of hospitals to determine the relevant State's 
average bed capacity and the national average bed capacity; and (3) for 
purposes of Sec.  411.362(c)(2)(v), data from a sufficient number of 
hospitals to determine the requesting hospital's average bed occupancy 
rate and the relevant State's average bed occupancy rate, respectively. 
CMS will continue to determine and make available on its Web site State 
bed capacity and occupancy rates and the national average bed capacity 
rate. ``Sufficient number'' means that enough hospitals have reported 
data such that the determinations in Sec.  411.362(c)(2)(iv) and 
(c)(2)(v) would not materially change even if data that may be missing 
from comparison hospitals were included.
3. Community Input and Timing of a Complete Request
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41055 through 41056), 
we proposed to require that a physician-owned hospital requesting an 
expansion exception provide actual notification directly to hospitals 
whose data are part of the comparisons set forth under Sec.  
411.362(c)(2)(ii) and (c)(3)(ii) of the regulations. Under proposed 
Sec.  411.362(c)(5), the notification must be in writing, in either 
electronic or hard copy form, and must be provided at the same time 
that the hospital discloses on

[[Page 66995]]

any public Web site for the hospital that it is requesting an 
exception. We stated in the proposed rule that we believe that this 
additional safeguard would ensure that comparison hospitals are aware 
of the opportunity to confirm or dispute the accuracy or reliability of 
the data in the physician-owned hospital's request.
    Our existing regulations at Sec.  411.362(c)(5) set forth the 
process for community input and the timing of a complete expansion 
exception request. These regulations provide for a 30-day comment 
period following publication in the Federal Register of notice of the 
physician-owned hospital's expansion exception request and a 30-day 
rebuttal period for the requesting hospital to respond, if it chooses, 
to any written comments that CMS receives from the community. 
Currently, an expansion exception request is considered complete at the 
end of the 30-day comment period if CMS does not receive written 
comments from the community. If CMS receives written comments from the 
community, the request is considered complete at the end of the 30-day 
rebuttal period, regardless of whether the requesting hospital submits 
a rebuttal statement.
    In the proposed rule, we explained that permitting the use of non-
HCRIS data in an expansion exception request would likely require 
additional time for our review of the request, including any comments 
submitted with respect to the request. Therefore, we proposed to revise 
our regulations at Sec.  411.362(c)(5) to extend the date by which 
certain expansion exception requests will be deemed complete. 
Specifically, we proposed to revise Sec.  411.362(c)(5) to provide 
that, where the request, any written comments, and any rebuttal 
statement include only HCRIS data, the current timeframes would apply. 
That is, such an expansion exception request would be deemed complete 
no later than: (1) The end of the 30-day comment period if no written 
comments from the community are received; and (2) the end of the 30-day 
rebuttal period if written comments from the community are received, 
regardless of whether the physician-owned hospital submitting the 
request submits a rebuttal statement. We also proposed that, where the 
request, any written comments, or a rebuttal statement includes data 
from a supplemental data source, an expansion exception request would 
be deemed complete no later than: (1) 180 days after the end of the 30-
day comment period if no written comments from the community are 
received; and (2) 180 days after the end of the 30-day rebuttal period 
if written comments from the community are received, regardless of 
whether the physician-owned hospital submitting the request submits a 
rebuttal statement.
a. Summary of Public Comments and Our Responses Regarding Community 
Input and Timing of a Complete Request
    Comment: Some commenters encouraged CMS not to finalize the actual 
notification requirement, stating that it would impose a burden (both 
procedural and financial) on the requesting hospital or could lead to 
an increase in comments regarding each request and the complexity of 
those comments. One commenter stated that requiring actual notification 
to other hospitals located in the same county as the requesting 
hospital goes beyond the intent of the Congress in enacting this 
provision of the Affordable Care Act.
    Response: We believe that an actual notification requirement is 
important to ensure that comparison hospitals are aware of the 
opportunity to confirm or dispute the accuracy or reliability of the 
data in the physician-owned hospital's request, and that any burden on 
the requesting hospital is outweighed by the facilitation of robust 
community input that can help inform the Secretary's review of an 
expansion exception request. We believe that thorough vetting of all 
relevant information, both from the requesting hospital and the 
community in which the hospital is located, in fact, was the intent of 
the Congress. We disagree with the commenter that stated that this 
requirement goes beyond the congressional intent or our statutory 
authority.
    Comment: One commenter opposed CMS' proposal to deem an expansion 
exception request that relies on a non-HCRIS data source complete no 
later than 180 days after the end of the 30-day comment period if no 
written comments from the community are received, and 180 days after 
the end of the 30-day rebuttal period if written comments from the 
community are received, regardless of whether the physician-owned 
hospital submitting the request submits a rebuttal statement. The 
commenter stated that the additional time beyond the 30-day period 
provided for in our existing regulations is particularly unnecessary if 
the requesting hospital uses inpatient admissions data from a State 
Medicaid agency that shows the percentage of Medicaid admissions for 
all of the hospitals operating in the same county as the requesting 
hospital.
    Response: The purpose of our proposed policy extending the 
timeframe for deeming complete an expansion exception request where the 
request itself, any community input, or any rebuttal statement includes 
non-HCRIS data is to provide CMS with sufficient time to address any 
potential conflicts between data presented by the requesting hospital 
and data or other information presented by a commenter or in the 
possession of CMS. As we noted in the CY 2012 OPPS/ASC final rule with 
comment period, the limitations on data sources that may be used in a 
physician-owned hospital's expansion exception request do not apply to 
members of the community or to CMS (76 FR 74522). Therefore, it is 
possible (if not likely) that, when reviewing an expansion exception 
request, CMS would need to verify the data (and other information, if 
any) provided by the requesting hospital and any commenters, as well as 
consider the data in light of the information otherwise available to 
CMS. This review could involve the use of internal experts or 
contractors, which will require additional time. We note that the 
timeframe for deeming an expansion exception request complete will be 
``no later than'' 180 days after the end of the 30-day comment period 
(if no written comments from the community are received) and 180 days 
after the end of the 30-day rebuttal period (if written comments from 
the community are received) does not preclude an earlier timeframe 
where the information submitted by the requesting hospital does not 
conflict with any community input or information otherwise available to 
CMS.
b. Final Provisions Regarding Community Input and Timing of a Complete 
Request
    After consideration of the public comments we received on community 
input and timing of a complete response, we are finalizing our 
proposal, without modification, recognizing that, under this final rule 
with comment period, the only permissible supplemental data sources are 
external data sources, as defined in this final rule with comment 
period at Sec.  411.362.

D. Additional Considerations

    We recognize the importance of an accurate and consistent expansion 
exception process. We stated in the CY 2015 OPPS/ASC proposed rule (79 
FR 41056) that we are aware that data sources have unique 
characteristics due to their inputs, collection methods, compilation, 
and other factors, and that we would take this into consideration if we 
finalized our proposal to permit the use of supplemental data sources. 
In an effort to implement an accurate and consistent expansion 
exception process,

[[Page 66996]]

we solicited comments on the utility, appropriateness, and limitations 
of our proposal to permit the use of supplemental data sources. 
Specifically, we sought comments that:
     Address whether permitting the use of supplemental 
internal or external data sources would significantly affect the 
outcomes for any of the estimates or determinations required in our 
regulations.
     Address whether permitting the use of supplemental data 
sources would materially affect a physician-owned hospital's ability to 
request an exception or CMS' determination on an exception request.
     Describe the length of time that would be necessary to 
obtain or generate the required data from a specific data source.
     Address whether and when the data will be available and 
accessible per fiscal year.
     Address whether the data will be available and accessible 
in a format that enables the requesting hospital to perform the 
necessary comparisons.
     Describe how supplemental data sources could or should be 
prioritized, including, but not limited to, rankings related to 
accuracy or reliability.
     Describe how data from a particular data source could be 
used in the expansion exception process. We encouraged commenters to 
specify whether a particular data source already maintains the 
percentages or rates required, or whether calculations will be 
necessary to generate the required percentages or rates. If 
calculations will be necessary, we requested that commenters describe 
the calculations.
     Describe the cost to industry stakeholders, State 
governments, and the Federal government for obtaining or generating 
data from any potential data sources. We consider cost to include both 
resources (for example, human capital and information technology) and 
actual financial burden (for example, fees to use or purchase the 
data).
    We also solicited comments on whether any additional burdens would 
affect the quality of care for beneficiaries as a result of additional 
costs borne by a requesting hospital.
    We note that our inquiries were limited to solicitations of 
comments intended to inform our decision making regarding our actual 
proposals and, therefore, do not require a response in this final rule 
with comment period. However, we have chosen to summarize and respond 
to the comments that addressed ranking or prioritizing data sources and 
types of data because we believe discussion of these issues helps 
clarify how our revisions to the expansion exception process that we 
are finalizing will be implemented.
    Comment: A few commenters who addressed the additional 
considerations set forth in the proposed rule discussed ranking or 
prioritizing permitted data sources. One commenter recommended that CMS 
not prioritize or rank additional data sources, given that access to 
supplemental data sources will vary based on the hospital seeking the 
exception. Another commenter suggested that CMS give the highest 
priority to admissions data from State Medicaid agencies for the 
inpatient Medicaid admissions criteria. The commenter stated that the 
State in which the commenter is located provides an unbiased, reliable, 
single source of inpatient Medicaid admissions percentages that would 
eliminate the need for independent calculations by the requesting 
hospital and individuals and entities in the community in which the 
hospital is located. The commenter further suggested that if actual 
admissions data are unavailable through the State Medicaid agency, CMS 
permit the use of other data, including estimates of Medicaid 
admissions based on discharges using supplemental data.
    Response: We share the concerns of the commenters that noted that 
the external data sources available to requesting hospitals will vary 
from State to State. We also believe that the quality and completeness 
of the external data sources available to requesting hospitals will 
vary in the same manner. We further note the complexity involved in 
making a generally applicable policy as to how to rank or prioritize 
various data sources. Therefore, we decline to provide guidance 
regarding the rank or prioritization of potentially available data 
sources for use in the expansion exception process. Our goal remains to 
ensure a fair, accurate, and consistent process to implement section 
6001 of the Affordable Care Act. As discussed elsewhere in this 
preamble, each expansion exception request will be considered on a 
case-by-case basis. The Secretary will consider only reliable, credible 
information to determine whether a requesting physician-owned hospital 
qualifies for an exception to the facility expansion prohibition.

E. Summary of the Final Provisions Regarding the Expansion Exception 
Process Under the Rural Provider and Hospital Ownership Exceptions to 
the Physician Self-Referral Law

    In this final rule with comment period, we are finalizing the 
following policies related to the expansion exception process for 
physician-owned hospitals:
     We are permitting the use of external data sources to 
estimate a physician-owned hospital's annual percentage of inpatient 
admissions under Medicaid (Sec.  411.362(c)(2)(ii) and (c)(3)(ii)), the 
average percentage of inpatient admissions under Medicaid of all 
hospitals in the county in which a physician-owned hospital requesting 
an expansion exception as an ``applicable hospital'' is located (Sec.  
411.362(c)(2)(ii)), and the annual percentage of inpatient admissions 
under Medicaid of any other hospital in the county in which a 
physician-owned hospital requesting an expansion exception as a ``high 
Medicaid facility'' is located (Sec.  411.362(c)(3)(ii)). However, on 
or after such date that the Secretary determines that HCRIS contains 
sufficiently complete inpatient Medicaid discharge data, a hospital may 
use only filed Medicare hospital cost report data to estimate the 
percentages of inpatient Medicaid admissions referenced in Sec.  
411.362(c)(2)(ii) and (c)(3)(ii).
     We are defining ``external data source'' at Sec.  411.362 
to mean a data source that (1) is generated, maintained, or under the 
control of a State Medicaid agency; (2) is reliable and transparent; 
(3) maintains data that, for purposes of the process described in Sec.  
411.362(c), are readily available and accessible to the requesting 
hospital, comparison hospitals, and CMS; and (4) maintains or generates 
data that, for purposes of the process described in Sec.  411.362(c), 
are accurate, complete, and objectively verifiable. We are not 
finalizing our proposed definition of ``internal data source.''
     For purposes of Sec.  411.362(c)(2)(ii) and (c)(3)(ii), we 
are interpreting the most recent 12-month period for which data are 
available as the most recent 12-month period for which the data source 
used contains all data from the requesting hospital and each hospital 
to which the requesting hospital must compare itself.
     For purposes of the determinations required in Sec.  
411.362(c)(2)(iv), we require a requesting physician-owned hospital to 
satisfy the criterion during the most recent fiscal year for which 
HCRIS contains data from a sufficient number of hospitals to determine 
a State's average bed capacity and the national average bed capacity. 
For purposes of the determinations required in Sec.  411.362 (c)(2)(v), 
we require a requesting physician-owned hospital to satisfy the 
criterion during the most recent fiscal year for which HCRIS contains 
data from a sufficient number of hospitals to determine the requesting 
hospital's average bed occupancy rate and the relevant State's average 
bed

[[Page 66997]]

occupancy rate. ``Sufficient number of hospitals'' means in this final 
rule with comment period that enough hospitals have reported data such 
that the determinations in Sec.  411.362(c)(2)(iv) and (c)(2)(v) would 
not materially change even if data that may be missing from comparison 
hospitals were included.
     Where the request, any written comments, and any rebuttal 
statement include only HCRIS data, we will consider a request for an 
expansion exception complete no later than: (1) The end of the 30-day 
comment period if no written comments from the community are received; 
and (2) the end of the 30-day rebuttal period if written comments from 
the community are received, regardless of whether the physician-owned 
hospital submitting the request submits a rebuttal statement (Sec.  
411.362(c)(5)(i)).
     Where the request, any written comments, or any rebuttal 
statement include data from an external data source (as defined in this 
final rule with comment period), we will consider a request for an 
expansion exception complete no later than: (1) 180 days after the end 
of the 30-day comment period if no written comments from the community 
are received; and (2) 180 days after the end of the 30-day rebuttal 
period if written comments from the community are received, regardless 
of whether the physician-owned hospital submitting the request submits 
a rebuttal statement (Sec.  411.362(c)(5)(ii)).
    We are not finalizing our proposal to revise the bed capacity and 
bed occupancy criteria at Sec.  411.362(c)(2)(iv) and (c)(2)(v) to 
permit the use of non-HCRIS data sources. However, we are revising 
Sec. Sec.  411.362(c)(2)(iv) and (c)(2)(v) to clarify the fiscal year 
periods that requesting hospitals must use to make the determinations 
required in those sections.

XVI. Revision of the Requirements for Physician Certification of 
Hospital Inpatient Services Other Than Psychiatric Inpatient Services

    In the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27644 through 
27650), we discussed the statutory requirement for certification of 
hospital inpatient services for payment under Medicare Part A. The 
certification requirement for inpatient services other than psychiatric 
inpatient services is found in section 1814(a)(3) of the Act, which 
provides that Medicare Part A payment will only be made for such 
services ``which are furnished over a period of time, [if] a physician 
certifies that such services are required to be given on an inpatient 
basis.''
    As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 41056 
through 41058), in commenting on our FY 2014 proposal mentioned above, 
some commenters argued that the statutory reference to services 
furnished ``over a period of time'' and the then-existing regulation's 
lack of any specific deadline for physician certifications in 
nonoutlier cases indicated that no certification was required for 
short-stay cases. In support of their argument, the commenters cited 
the legislative history of section 1814(a)(3) of the Act, which these 
commenters interpreted as indicating that the certification 
requirements should apply only to certain long-term stays.
    As we indicated in our response to these public comments in the FY 
2014 IPPS/LTCH PPS final rule (78 FR 50939), we do not agree with the 
assertion that the only possible interpretation of the statute is that 
the requirement for physician certification only applies to long-stay 
cases. The statute does not define ``over a period of time,'' and 
further provides that ``such certification shall be furnished only in 
such cases, and with such frequency, and accompanied by such supporting 
material . . . as may be provided by regulations.'' By this language, 
Congress explicitly delegated authority to the agency to elucidate this 
provision of the statute by regulation.
    In our previous regulations, we interpreted the statute's 
requirement of a physician certification for inpatient hospital 
services furnished ``over a period of time'' to apply to all inpatient 
admissions. While this is not the only possible interpretation of the 
statute, we believe that it is a permissible interpretation.
    We continue to believe that an order from a physician or other 
qualified practitioner in order to trigger an inpatient hospital 
admission as specified in 42 CFR 412.3 is necessary for all inpatient 
admissions. As described more fully in the FY 2014 IPPS/LTCH PPS final 
rule (78 FR 50938 through 50954), the requirement for a physician order 
for a hospital inpatient admission has long been clear in the Medicare 
hospital conditions of participation (CoPs), and we promulgated Sec.  
412.3 to make more explicit that admission pursuant to this order is 
the means whereby a beneficiary becomes a hospital inpatient and, 
therefore, is required for payment of hospital inpatient services under 
Medicare Part A. A beneficiary becomes a hospital inpatient when 
admitted as such after a physician (or other qualified practitioner as 
provided in the regulations) orders inpatient admission in accordance 
with the CoPs, and Medicare pays under Part A for such an admission if 
the order is documented in the medical record. The order must be 
supported by objective medical information for purposes of the Part A 
payment determinations. Thus, the physician order must be present in 
the medical record and be supported by the physician admission and 
progress notes in order for the hospital to be paid for hospital 
inpatient services.
    As further noted in the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50938 through 50954), we believe the additional certification 
requirements now specified under Sec.  424.13(a)(2), (a)(3), and (a)(4) 
(that is, the reason for hospitalization, the estimated time the 
patient will need to remain in the hospital, and the plan of 
posthospital care, if applicable) generally can be satisfied by 
elements routinely found in a patient's medical record, such as 
progress notes.
    However, as we look to achieve our policy goals with the minimum 
administrative requirements necessary, and after considering previous 
public comments and our experience with our existing regulations, we 
believe that, in the majority of cases, the additional benefits (for 
example, as a program safeguard) of formally requiring a physician 
certification may not outweigh the associated administrative 
requirements placed on hospitals. Because we continue to believe that 
an inpatient admission order is necessary for all inpatient admissions, 
we proposed in the CY 2015 OPPS/ASC proposed rule (79 FR 41057) to 
require such orders as a condition of payment based upon our general 
rulemaking authority under section 1871 of the Act rather than as an 
element of the physician certification under section 1814(a)(3) of the 
Act. Section 1871 of the Act authorizes the Secretary to ``prescribe 
such regulations as may be necessary to carry out the administration of 
the insurance programs under [Title XVIII].'' A clear regulatory 
definition of when and how a beneficiary becomes an inpatient is 
necessary to carry out the administration of Medicare Part A. Section 
1861(b) of the Act defines ``inpatient hospital services'' as certain 
items and services furnished to ``an inpatient of a hospital,'' but 
does not define ``an inpatient of a hospital.'' Accordingly, Sec.  
412.3 provides the necessary definition for purposes of Medicare Part A 
payment by clarifying when ``an individual is considered an inpatient 
of a hospital, including a critical access hospital.'' We proposed to 
remove paragraph (c) from Sec.  412.3. As

[[Page 66998]]

we proposed to rely on a different statutory authority for such 
regulation, we proposed that an admission order would no longer be a 
required component of physician certification of medical necessity.
    As to the physician certification requirement, we maintain that our 
prior longstanding policy was based upon a permissible interpretation 
of section 1814(a)(3) of the Act pursuant to that provision's express 
delegation of authority to the agency to determine the circumstances 
under which such certification should be required. Nonetheless, after 
consideration of public feedback, our experience under the then-
existing regulations, and our policy goals, in the CY 2015 OPPS/ASC 
proposed rule (79 FR 41057), we proposed to change our interpretation 
of section 1814(a)(3) of the Act to require a physician certification 
only for long-stay cases and outlier cases.
    As noted above, we believe that, in most cases, the admission 
order, medical record, and progress notes will contain sufficient 
information to support the medical necessity of an inpatient admission 
without a separate requirement of an additional, formal, physician 
certification. However, we believe that evidence of additional review 
and documentation by a treating physician beyond the admission order is 
necessary to substantiate the continued medical necessity of long or 
costly inpatient stays. While granting the Secretary broad discretion 
to determine the circumstances under which a physician certification 
should be required, the statute specifies that the certification by a 
physician with respect to inpatient hospital services (other than 
inpatient psychiatric hospital services) ``shall be furnished no later 
than the 20th day'' of the stay. Because the statute specifically 
requires that certification must occur no later than the 20th day, we 
believe that, at a minimum, Congress intended that physicians should 
conduct a more thorough review of such cases to help ensure that all 
requirements of medical necessity continue to be met. We also note the 
regulations at Sec.  424.13(f)(2) specify our longstanding requirement 
that the physician certification for cost outlier cases occur no later 
than 20 days into the hospital stay, and we did not propose to change 
the requirements for these cases. Therefore, we believe that, for 
nonoutlier cases, 20 days is also an appropriate minimum threshold for 
the physician certification, and we proposed to define long-stay cases 
as cases with stays of 20 days or longer.
    Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 41057), 
we proposed to revise paragraph (a) of Sec.  424.13 to specify that 
Medicare Part A pays for inpatient hospital services (other than 
inpatient psychiatric facility services) for cases that are 20 
inpatient days or more, or are outlier cases under subpart F of Part 
412 of this chapter, only if a physician certifies or recertifies the 
following:
    (1) The reasons for either--
    (i) Continued hospitalization of the patient for medical treatment 
or medically required diagnostic study; or (We note that, in setting 
out the corresponding regulation text for this provision in the 
proposed rule (79 FR 41083), we inadvertently omitted the word 
``Continued'' at the beginning of this paragraph (a)(1)(i). We are 
making a conforming correction in this final rule with comment period. 
We do not believe that this conforming correction results in any 
substantive change in policy.)
    (ii) Special or unusual services for cost outlier cases (under the 
prospective payment system set forth in subpart F of Part 412 of this 
chapter).
    (2) The estimated time the patient will need to remain in the 
hospital.
    (3) The plans for posthospital care, if appropriate.
    We also proposed to revise paragraph (b) of Sec.  424.13 to specify 
that certifications for long-stay cases must be furnished no later than 
20 days into the hospital stay.
    Because the care furnished in inpatient psychiatric facilities is 
often purely custodial and therefore not covered under Medicare and 
because the primary purpose of the certification of these cases is to 
help ensure that Medicare pays only for services of the type 
appropriate for Medicare coverage, we did not propose changes to the 
certification requirements for inpatient psychiatric hospital services.
    As discussed more fully in the FY 2014 IPPS/LTCH PPS final rule (78 
FR 50942 through 50943), there also are inherent differences in the 
operation of and beneficiary admission to IRFs. Therefore, we also did 
not propose any changes to the admission requirements for IRFs.
    We invited public comment on these proposals. Summaries of the 
public comments we received and our responses to those public comments 
are set forth below.
    Comment: Most commenters were supportive of the proposal to 
eliminate physician certification requirements for the majority of 
inpatient cases (other than long stay and cost outlier cases). Many 
commenters stated that the proposal would improve efficiency and would 
reduce the overall administrative burden on hospitals. Several 
commenters stated that the proposal would resolve ongoing issues within 
hospitals wherein certain practitioners routinely and appropriately 
admit patients, but are unable to complete the certification 
requirement because they do not meet the statutory definition of a 
physician. The commenters indicated that, because these cases rarely 
exceed 20 days, and do not typically exceed outlier thresholds, these 
practitioners would not be required to seek approval from a physician 
to complete a physician certification statement.
    Response: We thank the commenters for their support of our proposal 
to apply certification requirements at Sec.  424.13 only to long-stay 
and outlier cases. We agree that our proposal would reduce 
administrative burden in general, and in particular would reduce the 
administrative burden associated with the majority of cases involving 
an admission order issued by a practitioner qualified to issue the 
order but who did not meet the statutory definition of a physician and 
therefore could not certify the case.
    Comment: Several commenters, while appreciative of the proposal to 
limit physician certification requirements, continued to disagree that 
CMS has the statutory authority to require signed admission orders for 
all inpatient cases. The commenters contended that CMS cannot use its 
general rulemaking authority under section 1871 of the Act to require a 
signed physician order for every inpatient admission. These commenters 
argued that that the continued requirement for admission orders is 
essentially the same as the certification requirement and stated that 
section 1814(a)(2) of the Act is explicit in requiring physician 
certification only for services ``furnished over a period of time'' and 
not for all services.
    Response: We disagree with these commenters. While the inpatient 
admission order was a required component of the physician certification 
under our previous policy, the order and the physician certification do 
not serve identical policy goals under our proposal, which we are now 
finalizing. For all cases, a properly authorized and documented 
admission order is necessary because the admission order is integral to 
a clear regulatory definition of when and how a beneficiary becomes an 
inpatient. Such a definition is necessary to carry out the 
administration of Medicare Part A because, as noted previously, section 
1861(b) of the Act defines ``inpatient hospital services'' as certain 
items and services furnished to ``an inpatient of a hospital,'' but 
does not define ``an

[[Page 66999]]

inpatient of a hospital.'' Accordingly, for all cases, our admission 
order requirements at Sec.  412.3 provide the necessary definition for 
purposes of Medicare Part A payment by clarifying when ``an individual 
is considered an inpatient of a hospital, including a critical access 
hospital.'' The development of admission order requirements is a 
necessary and appropriate use of our general rulemaking authority under 
section 1871 of the Act.
    In most cases, the admission order, along with the medical record 
and progress notes, may also provide sufficient information to support 
the medical necessity of an inpatient admission without the separate 
requirement of an additional, formal, physician certification. However, 
for long or very costly inpatient stays, we believe that additional 
review and documentation by a treating physician are necessary to help 
substantiate the continued medical necessity of such stays, and a 
physician certification provides evidence of such additional review. 
The fact that we have determined, in the majority of cases, that the 
additional benefits (for example, as a program safeguard) of formally 
requiring a physician certification do not outweigh the associated 
administrative requirements placed on hospitals in no way changes the 
necessity and appropriateness of requiring a signed admission order for 
all cases.
    Comment: Some commenters requested that CMS require the admission 
order to be signed by the time of billing, not before discharge, as is 
permitted for CAH certification requirements. The commenters cited the 
administrative burden and logistical challenges involved with CMS' 
requirements.
    Response: We believe that, in most cases, matters relating to the 
determination of patient status should be resolved before discharge, 
due to the consequences that flow from such a determination. For 
example, whether services are billed under Medicare Part A or Part B 
can have a significant impact on a beneficiary's financial liability. 
Therefore, we do not believe it is appropriate to change our existing 
policy which requires that inpatient orders be signed prior to 
discharge by a practitioner familiar with the case and authorized by 
the hospital to admit inpatients.
    In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50163 through 
50165), we did finalize a provision to allow CAHs to complete 
certification requirements (including completion of the admission 
order) no later than 1 day before the date on which the claim for 
payment is submitted as they had been allowed to do prior to FY 2014. 
However, this policy exists in part to provide CAHs with greater 
flexibility in meeting certification requirements unique to CAHs. For 
example, CAHs face a statutory requirement that a physician certify 
that a patient will be expected to be transferred or discharged within 
96 hours of admission. We do not believe it would be appropriate to 
apply this historical CAH policy more broadly to hospitals that do not 
face the same circumstances as CAHs.
    Comment: Several commenters requested that CMS provide additional 
guidance regarding the required content and format of the physician 
certification statement. Some commenters asked that CMS confirm that 
the policy requiring physician certification only for long-stay and 
outlier cases did not otherwise alter the inpatient hospital admission 
guidelines discussed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 
50944 through 50953). Others commenters requested general guidance and 
clarification regarding CMS policies in this area.
    Response: As discussed previously in the section, the physician 
certification requirements at Sec.  424.13 generally may be satisfied 
by elements routinely found in a patient's medical record, such as 
progress notes. CMS does not require that a physician certification 
comply with a specific standard or format--only that it ensures that 
the conditions at Sec.  424.13(a) were met. If the medical record 
adequately describes the reasons for continued hospitalization, the 
estimated time the patient is expected to require inpatient care, and 
discharge planning (where appropriate), and the medical record is 
signed by a physician involved with and responsible for the patient's 
care, this would satisfy certification requirements.
    Our proposed policy change regarding the physician certification 
requirements does not change unrelated requirements implemented in the 
FY 2014 IPPS/LTCH PPS final rule such as the requirements related to 
the 2-midnight policy. It also does not alter or remove any 
requirements for hospitals regarding admission orders.
    We are committed to continuing to work closely with and provide 
outreach to stakeholders regarding inpatient admission policies and 
certification requirements.
    Comment: Some commenters requested that CMS provide guidance on how 
MACs will review cases in the interim time period between publication 
of this final rule and the effective date of the regulation changes 
(January 1, 2015).
    Response: Since the effective date of the FY 2014 IPPS/LTCH PPS 
final rule, we have worked closely with the MACs to ensure that the 2-
midnight policy and related certification requirements are applied 
appropriately. As discussed previously, we believe that physician 
certification requirements for a high percentage of inpatient stays can 
be readily satisfied by elements routinely found in the medical record. 
Hospitals need to comply with all existing certification requirements 
until the finalized policy changes in this final rule with comment 
period go into effect on January 1, 2015. We are committed to continue 
to work with the MACs to prioritize medical review cases.
    In summary, after consideration of the public comments we received, 
we continue to believe our certification proposal satisfies our policy 
goals while reducing the administrative burden on hospitals. Therefore, 
we are finalizing the policy as proposed in the CY 2015 OPPS/ASC 
proposed rule, which limits the requirement for physician certification 
to long-stay (20 days or longer) and outlier cases. We are finalizing 
our proposed revisions of paragraph (a) of Sec.  424.13, with one minor 
modification. We are adding the word ``Continued'' at the beginning of 
paragraph (a)(1)(i), which we inadvertently omitted when we set out the 
regulation text in the proposed rule. We note that the preamble 
discussion in the proposed rule included this word (79 FR 41057), as 
discussed earlier. We also are finalizing our proposed revision of 
paragraph (b) of Sec.  424.13, without modification, to specify that 
certifications for long-stay cases must be furnished no later than 20 
days into the hospital stay.

XVII. CMS-Identified Overpayments Associated With Payment Data 
Submitted by Medicare Advantage (MA) Organizations and Medicare Part D 
Sponsors (Sec. Sec.  422.330 and 423.352)

A. Background

    Medicare Part C and Part D payments to Medicare Advantage (MA) 
organizations and Part D sponsors are determined, in part, using data 
submitted to CMS by the MA organizations and Part D sponsors. These 
``payment data'' include diagnosis data that are used by CMS to risk 
adjust Part C and Part D payments, Prescription Drug Event (PDE) data 
that are used by CMS to cost reconcile various Part D subsidies, as 
well as other types of data discussed below. MA organizations and Part 
D sponsors are

[[Page 67000]]

obliged to submit accurate, complete, and truthful payment-related 
data, as described in regulations at 42 CFR 422.504(l) and 423.505(k). 
Through our review and oversight of payment data submitted by MA 
organizations and Part D sponsors, CMS identifies situations where MA 
organizations and/or Part D sponsors have submitted payment data to CMS 
that should not have been submitted either because the data submitted 
are inaccurate or because the data are inconsistent with Part C and 
Part D requirements. (Throughout this section, we refer to these data 
submissions as ``erroneous payment data.'') If an MA organization or 
Part D sponsor submits erroneous payment data to CMS, the MA 
organization or Part D sponsor can address errors by submitting 
corrected data to CMS payment systems. Our approach thus far to these 
types of situations has been to request that MA organizations and Part 
D sponsors make these data corrections voluntarily.
    However, in instances where the MA organization or Part D sponsor 
fails to make the requested data correction, the payment amount for the 
plan, calculated using that erroneous payment data, may also be 
incorrect. As a result, we have concluded that CMS needs to establish a 
formal process that allows us to recoup overpayments that result from 
the submission of erroneous payment data by an MA organization or Part 
D sponsor in the limited circumstances when the organization fails to 
correct those data. We emphasize that, in our experience, the 
circumstance where an MA organization or Part D sponsor fails to 
correct identified erroneous payment data arises very infrequently.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41058 through 41063), 
we proposed a new process that is not intended to replace established 
recovery and appeals processes such as the Risk Adjustment Data 
Validation (RADV) audit dispute and appeal process described at 42 CFR 
422.311 or the Part D payment appeals process described at 42 CFR 
423.350. We stated that this proposed process would not constitute a 
change to the existing Part C or Part D payment methodologies. Rather, 
we merely proposed to adopt a procedural mechanism for recouping 
overpayments that CMS will use in those limited circumstances when an 
MA organization or Part D sponsor fails to correct erroneous payment 
data after notice and request from CMS to do so. The established 
recovery and appeals processes do not support this scenario. Section 
1856(b) of the Act establishes authority for CMS to add standards for 
Part C and MA organizations. Section 1853 of the Act for Part C and 
sections 1860D-14 and 1860D-15 of the Act for Part D establish the 
methodology for computing payments to MA organizations and Part D 
sponsors, respectively. We believe that inherent in the methodology 
under which we calculate payments to MA organizations and Part D 
sponsors is the authority for CMS to establish a process for 
identifying and recouping overpayments in order to ensure that payments 
are made consistent with the payment framework established in the 
statute. Therefore, we proposed to implement such a process through 
changes to our regulations.
1. Medicare Part C Payment Background
    For Medicare Part C, CMS makes prospective monthly payments to MA 
organizations for each enrollee in the plan. CMS' monthly Part C 
payment for each MA plan enrollee consists of two components: the 
capitated payment for each enrollee (calculated as the plan-specific 
county payment rate multiplied by the enrollee risk score), plus the 
plan rebate amount (if any). The plan-specific county rates and the 
plan rebate amount are based on the bid approved by CMS and are set in 
advance for a payment year. In addition, payment rates may be adjusted 
for enrollees with end-stage renal disease, enrollees in Medical 
Savings Account MA plans, and enrollees in religious fraternal benefit 
society MA plans under Sec.  422.304. Prospective payments are made 
during the year, subject to a reconciliation after the end of the year.
    CMS adjusts the plan-specific county payment rate for each enrollee 
based on an enrollee risk score. Enrollee risk scores are determined 
using the CMS-Hierarchical Condition Category (CMS-HCC) risk adjustment 
model in effect for the payment year, plan-submitted diagnoses for the 
data collection year, and other data that CMS determines to be 
appropriate to perform risk adjustment. The CMS-HCC model is 
prospective in that it uses diagnosis information from a base year 
(data collection year) to adjust payments for the next year (payment 
year or coverage year). For example, the risk adjustment model uses 
diagnosis data from 2013 to adjust payments to MA organizations for 
coverage in 2014.
    To determine the appropriate risk score for each beneficiary, CMS 
uses demographic characteristics of beneficiaries and diagnostic 
information gathered in the administration of Original Medicare and 
submitted by MA organizations. MA organizations are currently required 
to submit an occurrence of an HCC model-relevant diagnosis only once 
during the data collection year, even though a beneficiary may have 
several service dates in a data collection year associated with a given 
diagnosis. The minimum data elements currently collected from MA 
organizations under Sec.  422.310 are: Health Insurance Claim (HIC) 
Number; provider type (hospital inpatient, hospital outpatient, or 
physician); service from date; service through date; and ICD-9 codes at 
the level of specificity used by the HCC model. In addition, effective 
January 2012, CMS collects more detailed Part C utilization and cost 
data from MA organizations (often referred to as encounter data), that 
will be used in setting risk scores.
    CMS allows 13 months after the end of a data collection year for MA 
organizations to update the risk adjustment data submitted under Sec.  
422.310; this period provides MA organizations an opportunity to 
identify and correct errors in data they have submitted for that data 
collection year (that is, by deleting diagnoses from CMS' systems) and 
to identify and submit additional diagnoses not submitted during the 
data collection year. During this 13-month period, CMS uses the 
diagnosis data that MA organizations have submitted up to that point to 
calculate interim beneficiary risk scores for adjusting prospective 
payments made during the payment year. The end of this 13-month period 
is called the final risk adjustment data submission deadline (Sec.  
422.310(g)(2)(ii)).
    For each payment year, we apply three sets of risk scores to adjust 
payments: initial and midyear risk scores during the payment year (both 
sets are based on incomplete diagnosis data from the data collection 
year) and final risk scores after the payment year using data MA 
organizations submitted as of the final deadline for risk adjustment 
data (which reflect complete data for the data collection year). During 
the year, CMS makes monthly prospective payments to MA organizations 
based on enrollment information and using interim risk scores 
calculated based on the data available before the final risk adjustment 
data submission deadline. CMS calculates the preliminary risk scores 
before the first payment is made (that is, for January of the payment 
year) and again in the middle of the payment year; an interim 
reconciliation is made so that the prospective payments to MA 
organizations are based on the most recent risk score available for 
each enrollee.
    After the final risk adjustment data submission deadline, CMS 
conducts a

[[Page 67001]]

reconciliation, in which the prospective Part C payments made during 
the coverage year based on interim risk scores are compared to Part C 
payments recalculated using final risk scores and the latest enrollment 
data. While changes in enrollment data are updated every month by CMS' 
systems during the payment year (for example, disenrollments from MA 
organizations and dates of death from the Social Security 
Administration (SSA)), risk adjustment data are not finalized until the 
final risk adjustment data submission deadline.
    We note that after the deadline for submission of final risk 
adjustment data, MA organizations are allowed to submit corrected 
diagnosis data to correct overpayments they received from CMS. However, 
after this deadline, MA organizations are not allowed to submit 
diagnosis codes for additional payment, as specified in Sec.  
422.310(g)(2)(ii); this provision was recently adopted in the final 
rule entitled ``Medicare Program; Contract Year 2015 Policy and 
Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' (79 FR 29843). When such 
corrections are submitted, CMS conducts another reconciliation to 
correct the payments made to the MA organization using the established 
payment adjustment process. In addition, under Sec.  422.311, CMS 
conducts Risk Adjustment Data Validation (RADV) audits of the risk 
adjustment data submitted by MA organizations pursuant to Sec.  
422.310. Such RADV audits are conducted at the MA organization contract 
level and are designed to calculate a contract-level error rate and 
payment adjustment amount for a specific payment year under audit.
2. Medicare Part D Payment Background
    For Medicare Part D, the Medicare Prescription Drug Benefit, 
Improvement, and Modernization Act (MMA), which amended the Act by 
adding Part D under Title 18, provides four payment mechanisms: direct 
subsidy (codified at Sec.  423.329(a)); reinsurance subsidy (codified 
at Sec.  423.329(c)); low-income subsidy (codified at Sec. Sec.  
423.780 and 423.782); and risk sharing (codified at Sec.  423.336(b)). 
As a condition of payment, section 1860D-15(d)(2)(A) of the Act 
requires that Part D sponsors submit data and information necessary for 
CMS to carry out those payment provisions. Part D sponsors submit PDE 
data, direct and indirect remuneration (DIR) data and risk adjustment 
data to CMS for payment purposes.
    Throughout the coverage year, CMS makes prospective payments to 
Part D sponsors that cover three subsidies: the direct subsidy; the 
low-income cost-sharing subsidy; and the reinsurance subsidy. The 
payment amounts are based on information in the approved basic bid and 
on data received by CMS that are used to update payments throughout the 
year. Following the end of the coverage year, the prospective payments 
are reconciled against the actual costs of the Part D sponsor. 
Reconciliation of the low-income cost-sharing subsidy and reinsurance 
and the calculation of risk sharing are based on PDE and DIR data 
submitted by the Part D sponsor, as well as data captured from other 
CMS systems. CMS instructs Part D sponsors that they should continually 
monitor their submitted data throughout the year in order to ensure 
that the reconciliation and final payment determinations are accurate.
    The final Part D payment determination may be reopened and revised 
at CMS discretion under Sec.  423.346. In our final rule, ``Medicare 
Program; Medicare Prescription Drug Benefit'' published in the Federal 
Register on January 28, 2005 (70 FR 4194), we stated that including the 
Medicare Part D reopening provision at Sec.  423.346 would ``ensure 
that the discovery of any overpayment or underpayments could be 
rectified'' (70 FR 4316). However, this is only possible to the extent 
that the data submitted by Part D sponsors are accurate. Accordingly, 
prior to making a payment determination for a coverage year, either 
through a reconciliation described at Sec.  423.343 or a reopening 
described at Sec.  423.346, CMS periodically makes requests that Part D 
sponsors correct payment data that do not comply with program 
requirements (that is, what we have defined as ``erroneous payment 
data''). These may be general requests to all Part D sponsors to look 
for a type of payment issue (see for example, the Health Plan 
Management System (HPMS) memorandum, ``Correcting Missing, Invalid, and 
Inactive Prescriber Identifiers on 2012 Prescription Drug Event (PDE) 
Records,'' dated February 4, 2013.) or targeted requests to specific 
Part D sponsors known to have particular payment issues (as was done in 
the ``Prescriber NPI Project'' announced in the HPMS memorandum, 
``Announcement of Prescriber NPI Project and Web site Release,'' dated 
December 4, 2012). If a Part D sponsor fails to correct its payment 
data, the erroneous payment data remain in the payment system, 
rendering the reopening provision ineffective for rectifying 
overpayments as it was intended.

B. Provisions of the Proposed Rule and Final Policies

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41058 through 41063), 
we proposed to establish regulations at 42 CFR 422.330, relating to MA 
organizations, and at 42 CFR 423.352, relating to Part D sponsors, that 
would specify the procedural mechanism for CMS to recoup overpayments 
associated with data errors identified by CMS in payment data submitted 
by MA organizations and Part D sponsors. We also proposed to create a 
process whereby an MA organization or Part D sponsor can appeal the 
finding that payment data are erroneous.
    We noted that our proposed policy is intended to establish a 
process to address data errors and payment adjustments that are not 
addressed by existing processes such as the RADV audit and appeal 
process or overpayments identified by the MA organization or Part D 
sponsor, which are subject to separate procedures. If an MA 
organization or a Part D sponsor self-identifies an overpayment, that 
overpayment must be reported and returned to CMS in accordance with 
section 1128J(d) of the Act, which was added by section 6402 of the 
Affordable Care Act. Regulations implementing section 1128J(d) have 
recently been adopted at Sec. Sec.  422.326 and 423.360 in the final 
rule entitled ``Medicare Program; Contract Year 2015 Policy and 
Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs'' (79 FR 29843).
    Comment: Several commenters supported the establishment of a formal 
overpayment collection and appeals process.
    Response: We appreciate the commenters' support.
    Comment: Several commenters expressed concern about including Part 
C and Part D proposed provisions in the OPPS/ASC proposed rule. The 
commenters stated that these proposed provisions are unrelated to the 
OPPS and ASC payment systems.
    Response: The Secretary generally has discretion to schedule and 
group topics for rulemaking, meaning any proposed and final rule 
published in the Federal Register, as long as proper public notice is 
given that includes an explanation of the proposed policies, the 
rationale and basis for the proposal, and the public is given an 
opportunity to comment.
    Comment: A few commenters requested that CMS make clear that the 
proposal regarding CMS-identified overpayments has no relationship to 
other CMS overpayment regulations,

[[Page 67002]]

specifically the overpayment regulations that were promulgated to 
implement the requirements of section 6402 of the Affordable Care Act, 
codified at section 1128J(d) of the Act (79 FR 29847). Commenters 
expressed concern that, given the connection between plan-identified 
overpayments and the False Claims Act, there is a potential for 
confusion and significant unintended consequences.
    Response: In the preamble to the CY 2015 OPPS/ASC proposed rule, we 
expressly limited the scope of our proposal to establishing a process 
to address data errors and payment adjustments that are not addressed 
by existing processes. We stated that overpayments identified by an MA 
organization or a Part D sponsor are subject to separate procedures and 
that if an MA organization or a Part D sponsor self-identifies an 
overpayment, the overpayment must be reported and returned to CMS in 
accordance with Sec. Sec.  422.326 and 423.360 of the regulations. We 
are further clarifying here that the CMS-identified overpayment process 
that is being finalized is separate and distinct from the overpayment 
rule that implemented the Affordable Care Act requirements regarding 
plan-identified overpayments codified at section 1128J(d) of the Act.
    Comment: A few commenters provided comments on and questioned the 
provisions of Sec. Sec.  422.326 and 423.360 which relate to reporting 
and returning of overpayments identified by MA organizations and Part D 
sponsors, respectively.
    Response: We consider these public comments to be out of the scope 
of the provisions of the proposed rule. The proposed rule was limited 
to the issue of CMS-identified overpayments arising from the submission 
of erroneous payment data. Therefore, we are not addressing these 
comments in this final rule.
    Comment: A few commenters stated that it is essential that CMS has 
overall control over the CMS-identified overpayment process to ensure 
proper identification and monitoring of overpayments. The commenters 
stated that this control is necessary to ensure that requests from 
separate CMS components or the Department's Office of the Inspector 
General (OIG) for payment data changes are consistent with CMS-issued 
payment regulations and guidance. The commenters recommended that CMS 
provide adequate resources to the appropriate staff components in order 
to effectively coordinate and manage this process.
    Response: In the CY 2015 OPPS/ASC proposed rule, we stated that we 
may identify payment data that need to be corrected through a variety 
of different mechanisms, including, but not limited to, CMS analyses of 
payment data, audits, and/or communications with the MA organization or 
Medicare Part D sponsor. Regardless of how a potential overpayment is 
identified, CMS will conduct an independent evaluation of the erroneous 
data finding, before issuing a data correction notice to an MA 
organization or Part D sponsor. Although CMS may utilize OIG reports or 
other information to help to identify erroneous payment data, it is 
CMS, not the OIG, which will issue the request to correct payment data. 
Likewise, other separate CMS components may identify erroneous payment 
data, but it is the Medicare Part C and Part D payment components at 
CMS that will determine if that erroneous payment data could result in 
an overpayment and whether or not the CMS-identified overpayment 
process will be used to correct the overpayment. In addition, requests 
to correct payment data will only be issued after CMS has thoroughly 
reviewed the source or the mechanism that identified the payment data 
and has concurred with the findings that the payment data were 
erroneous.
    We appreciate and agree with the commenters' suggestion that the 
CMS administration should provide adequate resources to the payment 
staff in order to effectively coordinate and manage this process.
    Comment: One commenter asked CMS to clarify whether this regulation 
would be used as a means to collect any alleged improper payments 
identified through the Recovery Audit Contractors (RAC) process.
    Response: As we indicated in the preamble of the proposed rule, 
this process is not intended to replace established recovery and 
appeals processes. We do not anticipate using this process to collect 
any overpayments identified through the RAC process at this time.
    Comment: Several commenters expressed concern that the proposed 
rule does not address underpayments identified by CMS or the health 
plan. A few commenters suggested that CMS add language to the 
regulation to explain how health plans recover underpayments that they 
or CMS have identified. One commenter suggested that CMS offset 
identified underpayments against overpayments before recouping any 
overpayments.
    Response: The purpose of the proposed provisions is to recover 
overpayments identified by CMS and return them to the Medicare Trust 
Funds. The offset calculation used to determine the overpayments will 
follow the Medicare Part C and Part D payment rules, and, as a result, 
the offset calculation may capture some underpayments. The extent to 
which underpayments will be recognized in the offset calculation to net 
out an overpayment will be limited and will vary depending on the 
circumstance surrounding the overpayment. The purpose of the provisions 
is not to provide the opportunity for MA organizations and Part D 
sponsors to secure additional payment by submitting additional data 
after the data submission deadlines. As noted in the preamble of the 
proposed rule, MA organizations and Part D sponsors have a period of 
time after the end of the data collection and coverage years, 
respectively, to update and supplement the payment data submitted 
throughout the year. In Part C, that period is 13 months, and in the 
Part D context, it is approximately 6 months. We believe that these 
periods are adequate for MA organizations and Part D sponsors to ensure 
that they have submitted the data necessary to substantiate their 
payments.
    Comment: One commenter expressed concern that MA organizations' or 
Part D sponsors' benefit filings, current business dealings, and 
statutory rights and obligations may be affected if the plan's 
financial information is rendered uncertain due to an overpayment 
recovery by CMS.
    Response: While we understand the commenter's concern that the 
possibility of returning overpayments may introduce some financial 
uncertainty for MA organizations and Part D sponsors, CMS has an 
obligation to ensure that payments to MA organizations and Part D 
sponsors are made consistent with the applicable program requirements. 
Thus, we believe that CMS has the authority to recover, and MA 
organizations and Part D sponsors have an obligation to return, 
identified overpayments.
    Comment: A few commenters stated that overpayment recoupments from 
Part D sponsors may negatively impact beneficiaries. Commenters urged 
CMS to ensure that any adjustments made to recoup CMS overpayments from 
Part D sponsors continue to be appropriate to ensure that beneficiaries 
are not financially negatively impacted.
    Response: We understand the commenters' concerns that overpayment 
recoupments not negatively affect beneficiaries. However, CMS has 
previously issued regulations that address this issue. Section 
423.466(a) of the regulations states that whenever a Part D sponsor 
receives information that

[[Page 67003]]

necessitates a retroactive claims adjustment, the Part D sponsor must 
process the adjustment and issue refunds or recovery notices within 45 
days of the Part D sponsor's receipt of complete information regarding 
the claims adjustment. In addition, Sec.  423.466(b) states that 
Medicare Part D sponsors must coordinate benefits with State 
Pharmaceutical Assistance Programs (SPAPs), other entities providing 
prescription drug coverage, beneficiaries, and other third party 
entities paying on the beneficiaries' behalf for a period not to exceed 
3 years from the date on which the prescription for a covered Part D 
drug was filled.
    Comment: A few commenters expressed concern about the burden 
imposed on providers. Commenters stated that the overpayment recovery 
process might cause financial consequences or penalties for physicians. 
Commenters expressed concern over the burden of related documentation 
requests. One commenter urged CMS to ensure that any associated 
provider record requests are limited to the specific instance of 
erroneous data under dispute. The commenter suggested that the plan 
requesting medical records be required to provide documentation on the 
scope of the erroneous data dispute identified by CMS and to limit the 
data request to the specific data issue identified.
    Response: These commenters appear to be focused on Part C and risk 
adjustment data. We recognize the commenters' concerns that recoupment 
of overpayments may entail negative financial consequences for 
physicians. However, it is CMS' responsibility to make payments to MA 
organizations and Part D sponsors that are consistent with the 
applicable statutes and regulations; this includes the authority to 
recover overpayments and return them to the Medicare Trust Funds. In 
addition, CMS is not allowed to interfere with the financial 
arrangements between MA organizations and their providers. Therefore, 
CMS is limited in how we can respond to the commenters' concern. While 
we recognize there may be some burden relating to the request for 
documentation, it is important for the integrity of the payment process 
that overpayments are properly identified and documented.
    Comment: One commenter suggested that any Medical Loss Ratio (MLR) 
remittances paid by the plan to CMS should be considered when computing 
the overpayment recovery amount. For example, if a plan had an MLR 
below the statutory minimum and paid an MLR remittance to CMS, and 
then, at a later date, it was determined that the plan was overpaid for 
that year, the remittance would reduce the overpayment recovery amount.
    Response: From a conceptual perspective, we believe that the impact 
or relationship between an MLR remittance and the overpayment offset 
amount is an issue about the payment calculation methodology and MLR 
administration, rather than a procedural issue. This regulation 
narrowly specifies a procedural mechanism for, first, recovering 
overpayments from MA organizations and Part D sponsors and, second, 
providing an appeals process related to the accuracy and correctness of 
the payment data underlying the offset. Therefore, we believe that 
these comments relating to MLR remittances are out of the scope of the 
provisions of the proposed rule.
    Comment: One commenter expressed concern that there might be a 
large number of complications in situations where a contract has been 
terminated, or where there have been mergers or acquisitions involving 
the sponsor, or where other significant plan changes have occurred. The 
commenter requested guidance from CMS on the process in these 
situations. The commenter also asked that CMS be flexible in these 
scenarios.
    Response: We hold entities contracting with CMS responsible for 
returning overpayments, regardless of their merger and acquisition 
history.
    After consideration of the public comments we received, we are 
finalizing the proposal to establish a process for recovering CMS-
identified overpayments associated with erroneous payment data 
submitted by MA organizations and Part D sponsors.
1. Definitions of ``Payment Data'' and ``Applicable Reconciliation 
Date''
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41060), we proposed to 
define ``payment data'' to mean data controlled and submitted to CMS by 
an MA organization or a Part D sponsor that is used for payment 
purposes (proposed Sec. Sec.  422.330(a) and 423.352(a)). The MA 
organization or Part D sponsor is responsible for the accuracy of such 
data. MA organizations and Part D sponsors are currently required to 
attest to the accuracy, completeness, and truthfulness of such data 
under Sec.  422.504(l) and Sec.  423.505(k), respectively. For Medicare 
Part C, the data submitted by the MA organization to CMS include, for 
example, enrollment data and risk adjustment data specified at Sec.  
422.310. For Medicare Part D, data submitted by the Part D sponsor to 
CMS include enrollment data and data submitted under Sec.  
423.329(b)(3) (risk adjustment data), Sec.  423.336(c)(1) (cost data), 
Sec.  423.343 (data for retroactive adjustments and reconciliations), 
and data provided for purposes of supporting allowable reinsurance 
costs and allowable risk corridor costs as defined in Sec.  423.308, 
which include data submitted to CMS regarding direct or indirect 
remuneration (DIR).
    There are additional payment-related data that CMS uses to 
calculate Part C and Part D payments that are submitted directly to CMS 
by other entities, such as SSA. These entities are the authoritative 
source for data that they submit to CMS, and MA organizations and Part 
D sponsors are not the official source for data submitted by these 
other entities. For example, the SSA is the authoritative source for 
date of death of Medicare beneficiaries. An MA organization or a Part D 
sponsor generally does not submit a beneficiary's date of death 
directly to CMS' systems; such data come from the SSA data feed. When 
the SSA submits corrected data regarding a beneficiary's date of death 
to CMS, CMS' systems recalculate the payments made to the plan for that 
beneficiary and correct any incorrect payment through a routine 
retroactive payment adjustment process. Therefore, we proposed to 
define ``payment data'' as only data that the MA organization or Part D 
sponsor controls and submits to CMS for payment purposes.
    For MA organizations under Part C, in the CY 2015 OPPS/ASC proposed 
rule (79 FR 41060), we proposed that the ``applicable reconciliation 
date'' occurs on the date of the annual final risk adjustment data 
submission deadline set under Sec.  422.310(g)(2)(ii). While changes in 
enrollment data are updated every month by CMS' systems during the 
payment year (for example, disenrollments from MA organizations and 
dates of death from the SSA), risk adjustment data are not finalized 
until the final risk adjustment data submission deadline. Prior to that 
deadline, CMS allows the MA organization to continue submitting 
corrected and new diagnosis data. However, once the final risk 
adjustment data submission deadline has passed, CMS uses this final 
diagnosis data to calculate the final risk scores for the payment year. 
CMS then uses those final risk scores for payment reconciliation. By 
proposing that the applicable reconciliation date occurs on the risk 
adjustment data submission deadline, we intend to signal that the 
normal payment process for the year has been concluded.

[[Page 67004]]

    For Part D sponsors, in the CY 2015 OPPS/ASC proposed rule (79 FR 
41060), we proposed that the ``applicable reconciliation date'' is the 
later of either: the annual deadline for submitting PDE data for the 
annual Part D payment reconciliations referenced in Sec.  423.343(c) 
and (d); or the annual deadline for submitting DIR data. The annual 
deadline for submitting PDE data is the last Federal business day prior 
to June 30 of the year following the coverage year being reconciled. 
The annual deadline for submitting DIR data is announced annually 
through subregulatory guidance and generally occurs around the last 
business day in June of the year following the coverage year being 
reconciled. We selected these events to define the Part D applicable 
reconciliation date because data must be submitted by these deadlines 
in order to be used for the purposes of the final Part D payment 
reconciliation.
    We noted in the proposed rule that the proposed definitions of 
``applicable reconciliation date'' are nearly identical to the 
definitions of ``applicable reconciliation'' at existing Sec. Sec.  
422.326 and 423.360. Similarly, the proposed definitions of ``payment 
data'' are nearly identical to the definitions of ``funds'' at existing 
Sec. Sec.  422.326 and 423.360. Although proposed Sec. Sec.  422.330 
and 423.352 addressed overpayments to MA organizations and Part D 
sponsors that have been identified by CMS, whereas Sec. Sec.  422.326 
and 423.360 address overpayments that are identified by the MA 
organization or Part D sponsor, we stated in the proposed rule that we 
do not believe that the issue of which entity (CMS or the plan) 
identified the overpayment is relevant to the question of when the 
overpayment occurred or what information is at issue. Both the 
regulations regarding overpayments identified by MA organizations and 
Part D sponsors finalized earlier this year in the final rule entitled 
``Medicare Program; Contract Year 2015 Policy and Technical Changes to 
the Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs'' and the regulations we proposed in the CY 2015 OPPS/ASC 
proposed rule to establish offset and appeal procedures for CMS-
identified overpayments were intended to address circumstances in which 
an overpayment has been identified; therefore, we believe it would be 
appropriate and avoid unnecessary confusion to use similar definitions.
    Comment: A few commenters requested that CMS clarify the definition 
of ``payment data.'' Specifically, commenters stated that the 
definition of ``payment data'' in the proposed rule is supposed to 
correspond to the definition of ``funds'' at Sec. Sec.  422.326 and 
423.360. However, the commenters pointed out that, in the proposed 
rule, CMS defined ``payment data'' as ``data controlled and submitted 
by'' an MA organization or a Part D sponsor. Commenters noted that 
definition of ``funds'' omits the word ``controlled.'' Commenters 
expressed concern over the inclusion of the word ``controlled'' in the 
definition of ``payment data'' because MA organizations and Part D 
sponsors do not control all relevant data. Commenters requested that 
CMS revise the definition of ``payment data'' to conform to the 
definition of ``funds'' at Sec. Sec.  422.326 and 423.360.
    Response: We agree with the commenters. Our intent was to align the 
definitions of ``payment data'' with the definition of ``funds'' at 
Sec. Sec.  422.326 and 423.360 (79 FR 41060). Therefore, we are 
removing the word ``controlled'' from the regulatory definition of 
``payment data'' in this final rule.
    Comment: One commenter requested that CMS define ``erroneous claims 
data'' as used in the proposed rule.
    Response: We did not use the phrase ``erroneous claims data'' in 
the preamble language or regulation text of the proposed rule. In the 
preamble of the proposed rule, we used the phrase ``erroneous payment 
data'' to mean ``. . .payment data. . .that should not have been 
submitted--either because the data submitted are inaccurate or because 
the data are inconsistent with Part C and Part D requirements'' (79 FR 
41058). We are adding the definition of ``erroneous payment data'' to 
the final regulation text at Sec. Sec.  422.330(a) and 423.352(a).
    Comment: A few commenters noted that, in the preamble of the 
proposed rule, CMS referenced specific provisions of Sec. Sec.  422.504 
and 423.505 of the regulations and stated that MA organizations and 
Part D sponsors are required to certify the accuracy, completeness, and 
truthfulness of their payment data. Commenters were concerned that CMS 
did not include the phrase ``based on best knowledge, information, and 
belief'' that is included under Sec. Sec.  422.504 and 423.505. 
Commenters requested that CMS revise the preamble language of the final 
rule to acknowledge the ``best knowledge, information, and belief'' 
standard articulated at Sec. Sec.  422.504 and 423.505 and to remove 
any incorrect references suggesting that MA organizations (or Part D 
sponsors) bear unqualified responsibility for data accuracy.
    Response: We did not intentionally exclude ``based on best 
knowledge, information, and belief'' from the preamble discussion. We 
acknowledge that MA organizations and Part D sponsors certify, based on 
best knowledge, information, and belief, the accuracy, completeness, 
and truthfulness of all data related to payment as stated at Sec. Sec.  
422.504 and 423.505. After a review of the preamble language, we do not 
believe that additional edits are necessary as a result of the 
omission.
    After consideration of the public comments we received, we are 
finalizing the proposed regulatory definition of ``payment data,'' with 
a modification to remove the reference to ``controlled,'' as described 
earlier. We also are adding a definition of ``erroneous payment data'' 
in the final regulation text at Sec. Sec.  422.330(a) and 423.352(a).
2. Request for Corrections of Payment Data
    Because MA organizations and Part D sponsors are required to submit 
accurate payment data, we have the authority to request that erroneous 
data be corrected when errors are discovered. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41060), we proposed a mechanism for recouping 
overpayments in situations where CMS has identified an error in payment 
data, the MA organization or Part D sponsor has not corrected that 
erroneous data upon request, and CMS determines that, as a result of 
the erroneous payment data, an overpayment was made. Under proposed 
Sec. Sec.  422.330(b) and 423.352(b), we proposed that CMS would make 
the request through a data correction notice that would contain or make 
reference to the specific payment data identified by CMS as erroneous, 
the reason why CMS believes that the payment data are erroneous, and 
the timeframe in which the MA organization or Part D sponsor must make 
corrections to the data. This proposal was not intended to limit our 
authority to request correction of erroneous payment data to only those 
narrow circumstances in which an overpayment has already been 
identified. CMS may identify payment data that need to be corrected 
through a variety of different mechanisms, including, but not limited 
to, CMS analyses of payment data, CMS audits, or communications with 
the MA organization or Part D sponsor.
    We understand that, at some point, it would no longer be practical 
for MA organizations and Part D sponsors to correct payment data for 
coverage years that have long since been reconciled. Therefore, 
consistent with the look-back period for overpayments that are

[[Page 67005]]

identified by the MA organization or Part D sponsor found at existing 
Sec. Sec.  422.326 and 423.360, in the CY 2015 OPPS/ASC proposed rule 
(79 FR 41060), we proposed that CMS would request corrections to 
erroneous payment data only if the erroneous data affects payments for 
one or more of the 6 most recently completed payment years. That would 
mean, for example, that after the initial reconciliation takes place 
for Part D payments under Sec.  423.343 (that is, the determination of 
the final amount of direct subsidy described in Sec.  423.329(a)(1), 
final reinsurance payments described in Sec.  423.329(c), the final 
amount of the low-income subsidy described in Sec.  423.329(d), or 
final risk corridor payments as described in Sec.  423.336) for 
contract year 2015 (which would take place in 2016), CMS may request 
corrections to erroneous payment data for contract years 2010 through 
2015. We proposed to use the same 6-year look-back period as applies to 
plan-identified overpayments under existing Sec. Sec.  422.326 and 
423.360 because both overpayment policies are intended to address 
circumstances in which an overpayment has been identified, and we do 
not believe that the issue of which entity (CMS or the plan) identified 
the overpayment is relevant to the length of the look-back period.
    We proposed that the timeframes for correcting payment data would 
be the same as under our current practice for correcting payment data 
described in existing procedural rules and subregulatory guidance and 
would be explained in additional procedural rules and subregulatory 
guidance, as necessary. For example, current Part D guidance states 
that corrections to PDE data must be completed within 90 days from 
discovery of the issue. We refer readers to the Health Plan Management 
System (HPMS) memorandum entitled ``Revision to Previous Guidance 
Titled `Timely Submission of Prescription Drug Event (PDE) Records and 
Resolution of Rejected PDEs,''' dated October 6, 2011.
    Comment: A few commenters believed that the proposed rule on CMS-
identified overpayments should only apply to actual overpayments, not 
merely the submission of incorrect payment data. These commenters were 
concerned that CMS incorrectly assumes that erroneous payment data 
equates to an overpayment.
    Response: We understand that correcting erroneous payment data 
submitted by an MA organization or a Part D sponsor and rerunning the 
payment process to determine the payment that should have been made may 
reflect an underpayment, overpayment, or no change when comparing the 
two results. Consistent with Sec. Sec.  422.504(l) and 423.505(k), MA 
organizations and Part D sponsors must submit accurate payment data 
(based on best knowledge, information, and belief). We clarify that CMS 
may make the request to correct erroneous payment data, regardless of 
whether or not that data would result in an overpayment under our 
existing and inherent authority related to administration of the 
payment processes; this rule does not change or limit that authority. 
Rather, this rule provides authority to initiate an offset to recover 
overpayments when erroneous payment data have been submitted, the 
erroneous payment data resulted in an overpayment, and the erroneous 
payment data were not subsequently corrected upon request from CMS. The 
intent of the provisions at Sec. Sec.  422.330 and 423.352 is to 
provide a process whereby CMS-identified overpayments can be recovered; 
this process begins with CMS' request for correction of the erroneous 
payment data that caused the overpayment to occur. We will establish 
the existence and extent of an overpayment by applying the Part C and 
Part D payment rules and formulas applicable to the payment year in 
question.
    Comment: Commenters requested that CMS clarify that the overpayment 
recoupment process would apply only to contract years for which CMS has 
completed final reconciliation. Commenters noted that CMS did not link 
the proposed regulatory definition of ``applicable reconciliation 
date'' to other subsections of the proposed regulations. The commenters 
stated that based on the proposed regulations, if CMS identifies an 
error in payment data and the payment error identified affects payments 
for any of the 6 most recently completed payment years, CMS may send a 
data correction notice to the MA organization or the Part D sponsor. 
However, CMS does not define ``recently completed'' or correlate the 
definition with the phrase ``applicable reconciliation date.'' 
Commenters requested that CMS clarify its intention to recoup 
overpayments only following the ``applicable reconciliation date.''
    Response: Our determination that an overpayment has occurred will 
be made after the applicable reconciliation date, as defined in this 
final rule, for the contract year in which the erroneous payment data 
were identified. In addition, the payment error must affect payment in 
one of the 6 most recently completed payment years. For example, after 
the initial reconciliation takes place for Part D payments under Sec.  
423.343 (that is, the determination of the final amount of direct 
subsidy described in Sec.  423.329(a)(1), final reinsurance payments 
described in Sec.  423.329(c), the final amount of the low-income 
subsidy described in Sec.  423.329(d), or final risk corridor payments 
as described in Sec.  423.336) for contract year 2015 (which would take 
place in 2016), the 6 most recently completed payment years would be 
2010 through 2015.
    Consistent with our statements above regarding our existing and 
inherent authority related to administration of the payment processes 
to make the request to correct erroneous payment data, regardless of 
whether or not that data would result in an overpayment, we believe we 
have authority to request the correction of erroneous data at any time. 
Accordingly, we are moving the language that limits CMS to the 6-year 
look-back period at Sec. Sec.  422.330(b) and 423.352(b), ``Request to 
correct payment data,'' and associating it with Sec. Sec.  422.330(c) 
and 423.352(c), ``Payment offset,'' in order to clarify that, while we 
may request the correction of erroneous payment data at any time, we 
will only use the payment offset procedures established in this rule to 
recover overpayments in the 6 most recently completed payment years.
    Therefore, we are modifying proposed Sec. Sec.  422.330(c) and 
423.352(c) to indicate that when the MA organization or Part D sponsor 
fails to correct payment data in response to a request under Sec. Sec.  
422.330(b) and 423.352(b), CMS will conduct a payment offset against 
payments made to the MA organization or Part D sponsor if: (1) the 
payment error affects payments for any of the 6 most recently completed 
payment years; and (2) the payment error for a particular payment year 
is identified after the applicable reconciliation date for that payment 
year.
    Comment: One commenter requested that CMS institute a single, 
uniform timeframe to correct any payment data errors before CMS 
initiates payment-offset procedures. The commenter believed that the 
different time periods associated with the resubmission or correction 
of various data points can lead to unnecessary confusion and the 
potential for missed deadlines. This commenter recommended that CMS 
create a uniform timeframe of at least 120 days to submit data 
corrections. The commenter expressed concern that the process for 
collecting and verifying corrected data will involve numerous steps and 
that the process also likely will involve third parties, potentially 
including vendors no longer under contract, which would add additional

[[Page 67006]]

steps and time to the process of collecting and validating the data. 
The commenter stated that a turnaround time of less than 120 days 
creates a risk for not being able to collect the payment data and 
conduct a diligent and fulsome analysis before responding to CMS.
    Response: We understand that it makes sense to have a uniform 
timeframe for submitting corrected payment data in response to a CMS 
notification of CMS-identified erroneous payment data. We also 
understand that different timeframes for submitting corrected data 
could lead to confusion and missed deadlines. However, we disagree with 
the commenter that 120 days is necessary to correct all types of 
payment data. As we cited in the preamble of the proposed rule, current 
Part D guidance in the HPMS memorandum dated October 6, 2011, states 
that corrections to PDE data must be completed within 90 days from 
discovery of the issue. We have no reason to believe that the 90-day 
timeframe for correcting Part D data under this provision is 
inadequate. Therefore, we will not be making changes to this policy at 
this time. Timeframes for correcting Part C payment data will be 
explained in additional procedural rules and subregulatory guidance.
    Comment: One commenter requested clarification regarding the 
submission of payment data corrections between the final risk 
adjustment submission deadline and when a payment reconciliation or 
payment rerun is conducted.
    Response: This commenter's request appears to be directed at Part C 
and risk adjustment data. An overpayment may exist once applicable 
reconciliation has occurred, which is the final deadline for the 
submission of risk adjustment data for Part C. MA organizations should 
submit data corrections to correct an overpayment the MA organization 
has identified as soon as the MA organization recognizes the 
overpayment has occurred (Sec.  422.326). In the context of that rule 
and the process adopted under this rule, the operational action of 
conducting a risk adjustment payment rerun will be implemented 
according to our policy and schedules. The submission of data 
corrections should not be delayed relative to the timing of a risk 
adjustment rerun. If the data correction is not submitted, and we have 
identified the erroneous risk adjustment payment data, we may move 
forward with a payment offset. We agree that additional information on 
this issue would be helpful to MA organizations and will be providing 
further guidance as needed.
    Comment: A few commenters noted that, in the proposed rule, CMS 
stated that if the MA organization or Part D sponsor submits corrected 
payment data in response to CMS' request, CMS will perform a 
reconciliation in the payment system using the established payment 
adjustment process. The commenters requested that CMS clarify that the 
referenced reconciliation is in reference to the established reopening 
of a payment adjustment reconciliation process. The commenter stated 
that the current reopening process is well-established and equitable, 
balancing the rights and obligations of Part D sponsors and CMS, and, 
therefore, there is an appropriate adjustment of both overpayments and 
underpayments to the Part D sponsor. The commenters urged CMS to invest 
additional operational resources to strengthen the existing reopening 
process.
    Response: If an MA organization or a Part D sponsor submits 
corrected payment data, as requested by CMS, we will recoup any 
overpayment amounts by performing a payment reconciliation according to 
our payment processing policies and schedules. We appreciate the 
commenter's suggestion to invest additional operational resources to 
strengthen the existing reopening process, and will take this 
suggestion into consideration.
    Comment: Several commenters expressed concern regarding the length 
of the 6-year look-back period. Some of the commenters indicated the 
length of the look-back period would place undue burden on plans and 
providers. Another commenter stated that a 6-year timeframe is 
typically reserved for fraud and abuse processes and is not considered 
appropriate for routine operational processes. A few commenters 
recommended that the look-back period be 3 years.
    Response: We believe that a 6-year look-back period is an 
appropriate timeframe for identifying overpayments. As stated in the 
proposed rule, the 6-year look-back period is consistent with the look-
back period established for overpayments that are identified by MA 
organizations or Part D sponsors (Sec. Sec.  422.326 and 423.360). Also 
as stated in the proposed rule, we proposed to use the same 6-year 
look-back period as applies to plan-identified overpayments because 
both overpayment policies are intended to address circumstances in 
which an overpayment has occurred and has been identified. We do not 
believe that the issue of which entity (CMS or the plan) identified the 
overpayment is relevant to the length of the look-back period.
    Comment: A few commenters recommended that the look-back period be 
implemented prospectively. One commenter stated that a 6-year look-back 
period could affect many distributed risk arrangements between plans 
and providers that cross multiple years and have already been 
reconciled. Another commenter asked that CMS phase in the look-back 
period, beginning with a 1-year look-back period and each year adding 
an additional year to the look-back period, until 2020 when a 6-year 
look-back could be applied.
    Response: We disagree with the commenters' recommendations to 
implement the look-back period prospectively. We proposed 6 years as 
the length of the look-back period because we believe that this 
timeframe best balances the government's interest in having 
overpayments returned with entities' interest in finality. We note that 
the statute of limitations related to the False Claims Act is 6 years 
from the date of the violation or 3 years from the date the relevant 
government official learns of the situation, but in no case more than 
10 years from the date of the violation. Furthermore, under Sec.  
422.504(d) and Sec.  423.505(d), MA organizations and Part D sponsors 
are required to maintain, for 10 years books, records, documents, and 
other evidence of accounting procedures and practices related to costs, 
financial statements, cash flow, among others.
    After consideration of the public comments we received, we are 
finalizing proposed Sec. Sec.  422.330(b) and 423.352(b) and proposed 
Sec. Sec.  422.330(c) and 423.352(c) with modifications. We are moving 
the language regarding the 6-year look-back period from proposed 
Sec. Sec.  422.330(b) and 423.352(b) to Sec. Sec.  422.330(c)(1) and 
423.352(c)(1) in order to indicate that if the MA organization or Part 
D sponsor fails to correct payment data, CMS will conduct a payment 
offset if the payment error affects payments for any of the 6 most 
recently completed payment years and the payment error for a particular 
payment year is identified after the applicable reconciliation date for 
that payment year.
3. Payment Offset
    If the MA organization or Part D sponsor submits corrected payment 
data in response to CMS' request pursuant to proposed Sec.  422.330(b) 
and Sec.  423.352(b), CMS will perform a reconciliation in the payment 
system using the established payment adjustment process. CMS' systems 
will conduct a payment reconciliation and determine the associated 
payment adjustment based

[[Page 67007]]

on the corrected data using established payment policies and 
procedures. However, if the MA organization or Part D sponsor fails to 
correct the erroneous payment data, in the CY 2015 OPPS/ASC proposed 
rule (79 FR 41061), we proposed that CMS would conduct a payment offset 
from plan payments (proposed Sec. Sec.  422.330(c) and 423.352(c)).
a. Offset Amount
    Because the data would not have been corrected in the routine 
payment process, in the CY 2015 OPPS/ASC proposed rule (79 FR 41061 
through 41062), we proposed, to be codified at Sec. Sec.  422.330(c) 
and 423.352(c), that CMS determine the overpayment offset amount by 
applying a payment calculation algorithm to simulate the payment 
calculations currently applied by CMS to produce the routine Part C and 
Part D payments. The payment calculation algorithm would apply the Part 
C or Part D payment rules for the applicable year to calculate what the 
correct payment should have been using corrected payment data. CMS 
currently simulates payment error amounts for a variety of different 
purposes, including for the annual Part C and Part D error rate 
reporting (required by the Improper Payment Elimination and Recovery 
Act (IPERA) and subject to the annual agency's Chief Financial 
Officer's (CFO) audit and reported in the annual Agency Financial 
Report (AFR)), RADV payment error estimation (subject to public 
comment), and the Part C and Part D monthly payment validation required 
by CFO auditors. These payment error calculations are all conducted 
outside of the suite of payment systems that CMS uses to make routine 
payments to MA organizations and Part D sponsors. In the proposed rule, 
we stated that we believe that these calculations are reliable and an 
accurate reflection of what the routine payment systems would calculate 
using the corrected data if the MA organization or Part D sponsor had 
submitted corrected payment data.
    The actual process for calculating the overpayment will be 
different for Part C and Part D because of the different payment rules 
for the two programs. The Part C and Part D programs are both subject 
to risk adjustment payment error resulting from invalid diagnoses and 
to payment error due to inaccurate enrollment data. The Part D program 
is further subject to payment reconciliation error resulting from 
errors in PDE data and/or DIR data. The two programs also are subject 
to different schedules with regard to the applicable reconciliation 
date and subsequent payment reconciliation processes.
    When new payment-related data are submitted to CMS payment systems, 
there is generally a change to the correct amount of payment once CMS 
conducts a payment reconciliation using the established payment 
adjustment process. However, it is not sufficient for the plan to just 
submit the new corrected risk adjustment, PDE, or DIR data to CMS 
systems because data submission does not automatically trigger a system 
reconciliation and payment adjustment. A change in payment will only 
occur if a payment reconciliation is conducted. If the applicable 
reconciliation has already been performed, CMS, at its discretion, may 
conduct risk adjustment reruns or Part D reopenings to ensure that 
payments also are corrected to reflect the newly corrected data.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41061), we proposed 
that, under the payment calculation algorithm, CMS would calculate the 
payment to the MA organization or Part D sponsor with and without the 
corrected data as of a specified date. The difference in the two 
amounts--that is, the amount by which the payments already made to the 
MA organization or Part D sponsor exceed the payments that should have 
been made as reflected in the calculation using the corrected data--
would be the payment recovery or offset amount. We provided the 
following examples of how the offset amount would be calculated for 
Part C and Part D overpayments relative to two different types of 
payment data errors to illustrate our proposal:
     Part C Offset Calculation. The example for Part C relates 
to incorrect diagnosis data identified by CMS in the process of 
calculating the national payment error estimate. A beneficiary's final 
risk score and annual payment will be recalculated outside of the 
routine payment system without the invalid diagnoses but using all the 
other data used in the routine payment system. The year-appropriate 
CMS-HCC risk adjustment methodology will be used to produce the revised 
risk scores. The difference in payment for the beneficiary pre- and 
post-change in the invalid diagnosis will be the offset amount. This 
offset amount--generated using the same process for each beneficiary 
for whom erroneous payment data are identified by CMS--will be summed 
across all beneficiaries.
     Part D Offset Calculation. The example for Part D relates 
to the situation in which a Part D plan sponsor has submitted PDE 
records for a beneficiary that include invalid National Drug Codes 
(NDCs). For payment purposes, PDEs are required to reference valid 
NDCs. In order to calculate the Part D payment offset amount, all of 
the beneficiary's entire post-reconciliation PDE data will be pulled, 
and the incorrect PDEs will be deleted or adjusted. The programmed 
calculation logic will keep track of a variety of payment-related 
information; for example, a beneficiary's benefit phase, gross covered 
drug cost, true out-of-pocket (TrOOP) costs, low-income cost-sharing 
subsidies (if any), and plan payment as the beneficiary progresses 
through the Part D coverage benefit. The calculation algorithm will tap 
into a variety of different data sets, such as health plan benefit 
parameters, beneficiary low-income subsidy status, and standard low-
income cost-sharing subsidy parameters. Reports will then be produced 
on Gross Covered Drug Cost (GCDC) and low-income cost-sharing subsidy 
payment differentials. These payment differential amounts will be 
incorporated into final reinsurance, low-income cost-sharing subsidy, 
and risk sharing summary totals for a contract. DIR adjustments will be 
factored into these calculations to arrive at the related payment 
offset amount to be applied at the contract level. The difference in 
reinsurance, low-income cost-sharing subsidy, and risk sharing dollars 
with and without the correction to the PDEs will constitute the payment 
offset related to the beneficiaries with the incorrect PDEs.
    If the erroneous payment data in question is subsequently corrected 
through the CMS payment system, the offset amount will be reversed, and 
the payment to the MA organization or Part D sponsor will be updated 
through the routine payment process. However, if the data in the CMS 
system are not corrected and CMS conducts a reconciliation or reopening 
for the applicable payment year after the offset has been determined, 
the data will not be properly synchronized, and it is possible that the 
resulting payment adjustments could be incorrect. In order to resolve 
this problem, CMS may reverse the original offset and recalculate the 
offset using the more recent data used in the most recent payment 
reconciliation or reopening. The new offset amount will replace the 
previous offset amount, and CMS would need to evaluate and act on the 
resulting overpayment or underpayment.
    Comment: A few commenters expressed concern about the payment 
calculation algorithm that will be used to determine the overpayment 
amount that should be recouped. Other commenters stated that they could 
not understand why CMS cannot simply

[[Page 67008]]

correct the data in the payment systems of record and ``run a 
reopening.'' Commenters requested that CMS clarify why the traditional 
reopening process cannot adequately address the types of payment issues 
outlined in the proposed rule. The commenters noted that CMS has used 
its existing authority in the past to remove PDEs it believed should 
not have been submitted. One commenter stated that this proposal 
creates an environment where the sponsor's records of the PDEs and the 
TrOOP accumulators would be out of sync with CMS systems timing and 
would pose challenges during the reconciliations of PDEs and payment 
data, as well as readjudication of beneficiary claims, and as a result, 
recommended that CMS withdraw the proposal and assess whether there are 
other current less onerous mechanisms that can be adopted to better 
meet its goals.
    Response: For the Part C program and the Part D program, we believe 
that the traditional risk adjustment rerun and other reopening 
processes are the best mechanisms to recoup overpayments. We believe 
that these processes will be adequate to recoup overpayments in most 
cases because we assume that the majority of MA organizations and Part 
D sponsors will adjust their payment data upon request by CMS. However, 
as we stated in the preamble to our proposed rule, if an MA 
organization or Part D sponsor fails to correct erroneous payment data, 
the established risk adjustment rerun and reopening processes are 
inadequate. Because the data would not have been corrected in the CMS 
payment system, we will have to determine the overpayment amount by 
applying a payment calculation algorithm to simulate the payment 
calculations currently applied by CMS systems to produce routine Part C 
and Part D payments. It is true, as one commenter stated, that, in the 
Part D program, CMS has used existing authority to remove PDE data that 
should not have been submitted. We use that authority in very limited 
circumstances when the erroneous data is PDE data. Part D payment data 
also includes, however, direct and indirect remuneration (DIR) data, 
for which we do not have a means to ``correct'' erroneous data. 
Likewise, we do not have a process in place to ``correct'' erroneous 
data in the Part C program. In addition, because we only expect to 
conduct these types of data corrections in a limited set of 
circumstances, and it would require significant resources to make the 
payment system changes to support such corrections, CMS is prepared to 
use a more economical process based on running a payment calculation 
algorithm to recover the improper payments.
    As stated in the proposed rule, CMS already simulates Part C and 
Part D payments outside of the core payment systems to accurately 
calculate payments and payment errors for a variety of different 
purposes. Therefore, we believe that this procedural mechanism is the 
least onerous mechanism that can be adopted to recoup overpayments, 
return them to the Medicare Trust Funds, and ensure that payments are 
made consistent with the payment framework established in statute. 
Therefore, we are not withdrawing the proposal, as one commenter 
recommended.
    Comment: One commenter stated that CMS should not implement any 
type of extrapolation methodology when calculating the payment offset 
for MA organizations or Part D sponsors. The commenter believed that 
CMS may seek to extrapolate the results of erroneous payment data to 
all beneficiaries enrolled under a contract if the MA organization or 
Part D sponsor does not submit corrected data as requested by CMS. The 
commenter believed that the proposed provision could be interpreted to 
mean that CMS may apply the offset amount to all beneficiaries, even 
though not all beneficiaries may have been affected by the incorrect 
data. The commenter opined that it would not be appropriate to 
extrapolate payment-offset calculations without providing MA 
organizations and Part D sponsors with notice or an explanation of the 
methodologies that CMS would employ. Commenters recommended that CMS 
expressly state that extrapolation will not be involved in payment 
recoupment under the CMS-identified overpayment regulations, and the 
payment offsets should be applied based on payment errors that have 
been determined for specific beneficiaries.
    Response: CMS may identify erroneous payment data submitted by MA 
organizations or Part D sponsors through a variety of different means. 
In the proposed rule, we discussed the procedures that CMS would 
undertake when erroneous payment data are identified, but did not 
address the means by which CMS would identify erroneous payment data. 
Therefore, this comment is outside the scope of the proposed rule.
    Comment: Several commenters raised the issue that, in cases where a 
CMS-identified overpayment is a result of errors in diagnosis data 
submitted by MA organizations, CMS' determination of the overpayment 
amount should take into account the fact that the CMS-HCC risk 
adjustment model used to risk-adjust payments to MA organizations is 
calibrated on diagnoses from Medicare fee-for-service claims not MA 
organizations' claims. Commenters referred to this as the ``data 
inconsistency issue.'' Specifically, commenters noted that CMS has 
recognized, in the contract-level RADV context, that individual errors 
in risk adjustment data cannot be equated with overpayments without 
first accounting for the error rate in the fee-for-service (``FFS'') 
claims data. Commenters also stated that CMS has acknowledged when 
calculating overpayments based on medical record review for RADV audits 
that it must ``account for the fact that the documentation standard 
used in RADV audits to determine a contract's payment error (medical 
records) is different from the documentation standard used to develop 
the Part C risk-adjustment model (FFS claims).'' Further, commenters 
noted that, to address this problem, CMS implemented a ``FFS Adjuster'' 
that offsets the payment recovery amount to account for FFS and MA 
program differences in documentation standards. These commenters 
believed that CMS' application of the ``FFS Adjuster'' in the RADV 
context does fulfill the actuarial equivalence requirement under the 
risk adjustment provisions in the Act, and failure to maintain logical 
consistency by applying this adjuster in the context of the CMS-
identified overpayments addressed by this rule would be contrary to the 
actuarial standard in statute.
    Response: We understand from these comments that commenters are 
specifically recommending that any risk adjustment payment recovery 
amounts be adjusted to reflect medical record coding documentation 
differentials between FFS providers and MA organizations. We note that 
this type of adjustment would not apply to other types of data errors, 
such as those that might be found in PDE data. We further interpret the 
commenters to be saying that the overpayment amounts should be adjusted 
downward to take the medical record coding documentation differential 
into account. From a conceptual perspective, we believe that the 
application of a FFS adjuster is a payment calculation methodology 
issue, rather than a procedural issue. Our proposal was narrowly 
tailored to specify a procedure for correcting the inaccurate data that 
MA organizations and Part D sponsors have submitted for payment and 
providing an appeals process. Therefore, we believe that these

[[Page 67009]]

comments relating to data inconsistency and the application of a FFS 
adjuster to overpayments are outside the scope of the proposed 
provision.
    After consideration of the public comments we received, we are 
finalizing our proposal, as proposed, without modification.
b. Payment Offset Notification
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed 
that CMS would provide a payment offset notice to the MA organization 
or Part D sponsor (proposed Sec. Sec.  422.330(d)(1) through (d)(3) and 
423.352(d)(1) through (d)(3)). The notice would provide the dollar 
amount to be offset against a plan's monthly prospective payments and 
an explanation of how the erroneous data were identified and of the 
calculation of the payment offset amount. Under our proposal, the 
payment offset notice would also explain that, in the event that the MA 
organization or Part D sponsor disagrees with the payment offset, it 
may request an appeal within 30 days of the issuance of the payment 
offset notice.
    Comment: A number of commenters requested that CMS provide for an 
appeals process prior to conducting the payment recovery or offset.
    Response: We are concerned that if we allow for appeals prior to 
the offset, we are at risk of having an extensive process that 
inordinately delays the offset and the recovery of the overpayment. 
However, we are willing to engage in a dialogue with plans prior to the 
offset. We anticipate that this dialogue will help to resolve data 
issues prior to implementing the payment offset and recovery. 
Therefore, we are not making the requested changes to the proposed 
process for payment offset notification.
    After consideration of the public comments we received, we are 
finalizing our proposal. However, we are making a minor modification to 
the accompanying regulation text at Sec.  422.330(d) and Sec.  
423.352(d) to clarify that the payment offset notice will include at 
least the information outlined in the regulation, but may include other 
information relevant to the payment offset.
4. Appeals Process for MA Organizations and Part D Sponsors
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed an 
appeals process for MA organizations and Part D sponsors with three 
levels of review, including reconsideration (described at proposed 
Sec. Sec.  422.330(e)(1) and 423.352(e)(1)), an informal hearing 
(described at proposed Sec. Sec.  422.330(e)(2) and 423.352(e)(2)), and 
an Administrator review (described at proposed Sec. Sec.  422.330(e)(3) 
and 423.352(e)(3)).
a. Reconsideration
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed 
that an MA organization or Part D sponsor must file its request for 
reconsideration within 30 days from the date that CMS issued the 
payment offset notice to the MA organization or the Part D sponsor 
(proposed Sec. Sec.  422.330(e)(1)(i) and 423.352(e)(1)(i)). At 
proposed Sec. Sec.  422.330(e)(1)(ii) and 423.352(e)(1)(ii), we address 
the information that must be included in the MA organization's or Part 
D sponsor's request for reconsideration. The request would have to 
contain the findings or issues with which the MA organization or Part D 
sponsor disagrees, the reasons for its disagreement, and any additional 
documentary evidence that the MA organization or Part D sponsor wishes 
to submit in support of its position. This additional evidence would 
have to be submitted with the request for reconsideration. Under our 
proposal, any information submitted after this time would be rejected 
as untimely.
    Under our proposal, the CMS reconsideration official would review 
the underlying data that were used to determine the amount of the 
payment offset and any additional documentary evidence that the MA 
organization or Part D sponsor timely submitted with its 
reconsideration request (Sec. Sec.  422.330(e)(1)(iii) and 
423.352(e)(1)(iii)). We note that, in some instances, the CMS 
reconsideration official's review of the underlying data may include 
review of information identifying or explaining the error in the 
payment data, such as information from the source that identified the 
erroneous payment data. We proposed at Sec. Sec.  422.330(e)(1)(iv) and 
423.352(e)(1)(iv) that the CMS reconsideration official would inform 
the MA organization or Part D sponsor of the decision. We proposed at 
Sec. Sec.  422.330(e)(1)(v) and 423.352(e)(1)(v) that a reconsideration 
decision would be final and binding unless a timely request for an 
informal hearing is filed by the MA organization or Part D sponsor.
    Comment: Several commenters stated that a 30-day window to submit 
an appeal request is too short. A few commenters asked that CMS provide 
at least 60 days from the time a data correction notice is issued for 
Part D sponsors to appeal the data correction decision. One commenter 
suggested a timeframe of 30 days to appeal and an additional 60 days 
for researching the issue and gathering supporting documents necessary 
for consideration.
    Response: We have considered these concerns and suggestions, and we 
continue to believe that 30 days is sufficient time to file the appeal, 
particularly because the MA organization or Part D sponsor would have 
received an earlier notification and request to correct the erroneous 
data.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification.
b. Informal Hearing
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed 
that if the MA organization or Part D sponsor is dissatisfied with CMS' 
reconsideration decision, it would be entitled to request an informal 
hearing (proposed Sec. Sec.  422.330(e)(2) and 423.352(e)(2)). As 
proposed at Sec. Sec.  422.330(e)(2)(i) and 423.352(e)(2)(i), a request 
for an informal hearing must be made in writing and filed within 30 
days of the date of CMS' reconsideration decision. The request must 
include a copy of CMS' reconsideration decision and must specify the 
findings or issues in the decision with which the MA organization or 
Part D sponsor disagrees and the reasons for its disagreement (proposed 
Sec. Sec.  422.330(e)(2)(ii) and 423.352(e)(2)(ii)).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we set forth 
the proposed procedures for conducting the informal hearing at proposed 
Sec. Sec.  422.330(e)(2)(iii) and 423.352(e)(2)(iii). Under these 
procedures, CMS would provide written notice of the time and place of 
the informal hearing at least 10 days before the scheduled date of the 
hearing (proposed Sec.  422.330(e)(2)(iii)(A) and Sec.  
423.352(e)(2)(iii)(A)); the informal hearing would be conducted by a 
CMS hearing officer. The hearing officer would be limited to reviewing 
the record that was before CMS when CMS made its reconsideration 
determination (proposed Sec.  422.330(e)(2)(iii)(B) and Sec.  
423.352(e)(2)(iii)(B)). Under our proposal, no new or additional 
documentation or evidence may be submitted at this hearing. At proposed 
Sec.  422.330(e)(2)(iii)(C) and Sec.  423.352(e)(2)(iii)(C), we 
proposed that the CMS hearing officer would review the record of the 
proceeding before the CMS reconsideration official using the clearly 
erroneous standard of review. CMS' reconsideration decision would not 
be reversed unless the MA organization or Part D sponsor establishes 
that the decision was clearly erroneous in light of the evidence in the

[[Page 67010]]

record before the CMS reconsideration official.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), at proposed 
Sec. Sec.  422.330(e)(2)(iv) and 423.352(e)(2)(iv), we proposed that 
the CMS hearing officer would send a written decision of the informal 
hearing to the MA organization or Part D sponsor explaining the basis 
for the decision. The CMS hearing officer's decision would be final and 
binding, unless the decision is reversed or modified by the 
Administrator (proposed Sec. Sec.  422.330(e)(2)(v) and 
423.352(e)(2)(v)).
    Comment: One commenter recommended that CMS allow plans the 
opportunity to present oral arguments during the informal hearing 
appeal stage and that written notice addressing the time and location 
of the hearing be provided at least 30 days prior, as opposed to the 
proposed 10 days.
    Response: As proposed and finalized, this rule will permit MA 
organizations and Part D sponsors, at the informal hearing stage, to 
present oral arguments regarding whether or not the CMS reconsideration 
official's decision was clearly erroneous. At the informal hearing, the 
hearing officer will review, and the parties may discuss, the contents 
of the administrative record, which was before the reconsideration 
official. We understand that 10 days' notice of the time and place of 
the hearing may be insufficient notice for some MA organizations and 
Part D sponsors to arrange for travel to the hearing location. 
Therefore, we are accepting the commenters' suggestion to extend the 
timeframe for CMS to provide written notice of the time and place of 
the hearing, and are extending that timeframe to 30 days before the 
scheduled date for the informal hearing.
    Comment: A few commenters stated that with the ``clearly 
erroneous'' standard, CMS is unfairly placing the burden of proving CMS 
wrong completely on the MA organizations and Part D sponsors. 
Commenters pointed out that a sponsor may be unable--not unwilling--to 
collect the data required to refute CMS' assertions. One commenter 
stated that while the burden of proof falls to the sponsors to disprove 
CMS' claims, there is no explicit requirement that CMS must be able to 
substantiate its concerns regarding data before it triggers the 
proposed incorrect payment notification process. The commenter is 
concerned that without changes to these standards the possibility 
exists for abuse of the process, putting sponsors on a continual 
defensive cycle. The commenter suggested that CMS be obligated to 
provide reasonable substantiation of its overpayment claim and that the 
standard for review be that the MA organization or Part D sponsor 
provide reasonable evidence, in light of the available data, that the 
CMS claim is not supportable.
    Response: The issue of whether or not payment data submitted by an 
MA organization or Part D sponsor are erroneous is a factual issue that 
is determined by looking at the payment data in relation to the payment 
framework established in statute and regulation, which the MA 
organizations and Part D sponsors agree to be contractually bound by 
when they sign the agreement with CMS to operate a Medicare Advantage 
and/or a Voluntary Medicare Prescription Drug Plan. Under the clearly 
erroneous standard of review, the hearing officer will only overturn 
the reconsideration official's decision if that decision, based on the 
record before the reconsideration official, contains plain errors of 
fact or law. Because the determination of whether or not payment data 
submitted by an MA organization or Part D sponsor are erroneous is a 
factual one, we believe that the clearly erroneous standard is 
appropriate. The CMS reconsideration official reviews the underlying 
data that were submitted by the MA organization or Part D sponsor and 
any additional documentary evidence timely submitted by the MA 
organization or Part D sponsor, and thus is in the best position to 
determine the facts underlying the determination that erroneous payment 
data have been submitted. Accordingly, the reconsideration official's 
decision should only be disturbed in the case of a clear error.
    We believe commenters are concerned that there is no requirement 
that CMS substantiate its claims of an overpayment and that could lead 
to abuse of the process. To the contrary, paragraph (b) of both Sec.  
422.330 and Sec.  423.352 imposes a burden and a requirement on CMS. 
Under these provisions, we can request corrections to payment data 
through a notice in which we are obligated to include or make reference 
to the specific data that need to be corrected and the reason why we 
believe that the data are erroneous. ``Erroneous payment data,'' as 
stated in the preamble of the proposed rule and the text of the 
regulations being adopted in this final rule, are data that should not 
have been submitted because the data are either inaccurate or 
inconsistent with Part C or Part D requirements. We will determine 
payment data to be erroneous based on the applicable statutes and 
regulations. Based on the payment framework established in statute and 
regulation, we will determine whether or not that erroneous data result 
in an overpayment prior to conducting the payment offset.
    Commenters are concerned that they will be unable--not unwilling--
to refute CMS' decision that the submission of erroneous payment data 
has resulted in an overpayment. As we stated in the preamble to our 
proposed rule, we proposed to establish a process for identifying and 
recouping overpayments to ensure that payments are made consistent with 
the payment framework established by statute. If we determine that an 
overpayment has occurred, the MA organization or Part D sponsor must be 
able to provide evidence to refute the finding that the underlying 
payment data are erroneous in order to succeed on appeal. As stated in 
the proposed rule at Sec. Sec.  422.330(f) and 423.352(f), the MA 
organization or Part D sponsor must be able to prove by a preponderance 
of the evidence that our finding that the payment data are erroneous 
was incorrect or otherwise inconsistent with applicable program 
requirements. Thus, we believe that it is reasonable to expect that MA 
organizations and Part D sponsors provide evidence to support how their 
payment data are correct and consistent with program requirements in 
order for the CMS hearing officer to reverse both an initial 
determination by CMS and a reconsideration decision by the CMS 
reconsideration official that erroneous payment data have been 
submitted.
    After consideration of the public comments we received, we are 
finalizing our proposals with respect to the procedures that will apply 
to a request for an informal hearing, with a modification to provide 
that we will provide written notice of the time and place of the 
hearing 30 days before the scheduled date, as described above.
c. Review by Administrator
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed 
that the MA organization or Part D sponsor may request review of the 
hearing officer's decision by the Administrator within 30 days of 
issuance of the hearing officer's decision (proposed Sec. Sec.  
422.330(e)(3)(i) and 423.352(e)(3)(i)). The MA organization or Part D 
sponsor may provide written arguments to the Administrator for review. 
Under proposed Sec. Sec.  422.330(e)(3)(ii) and 423.352(e)(3)(ii), 
after receiving the request for review, the Administrator would have 
the discretion to elect to review the hearing determination or decline 
to review it. As provided at proposed Sec. Sec.  422.330(e)(3)(iii) and

[[Page 67011]]

423.352(e)(3)(iii), if the Administrator declines to review the hearing 
officer's decision, the hearing officer's decision would be final and 
binding. At proposed Sec. Sec.  422.330(e)(3)(iv) and 
423.352(e)(3)(iv), we proposed that if the Administrator elects to 
review the hearing officer's decision, the Administrator would review 
the hearing officer's decision, as well as any other information 
included in the record of the hearing officer's decision and any 
written arguments submitted by the MA organization or Part D sponsor. 
The Administrator would be able to uphold, reverse, or modify the 
hearing officer's decision. The Administrator's determination would be 
final and binding (proposed Sec. Sec.  422.330(e)(3)(v) and 
423.352(e)(3)(v)).
    We did not receive any public comments on the proposal for review 
by the Administrator and are finalizing this proposal without 
modification.
5. Matters Subject To Appeal and Burden of Proof
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41063), at proposed 
Sec. Sec.  422.330(f)(1) and (2) and 423.352(f)(1) and (2), we proposed 
to limit the subject-matter that an MA organization or Part D sponsor 
may appeal under this provision and establish the burden of proof that 
the MA organization or Part D sponsor must meet in its appeal. Under 
this provision, an MA organization or a Part D sponsor would be able to 
appeal the notice of payment offset solely on the grounds that CMS' 
finding that the MA organization's or Part D sponsor's payment data 
were either erroneous or otherwise inconsistent with applicable program 
requirements. The MA organization or Part D sponsor would bear the 
burden of proof by a preponderance of the evidence in demonstrating 
that CMS' finding was incorrect or inconsistent with applicable program 
requirements.
    At proposed Sec. Sec.  422.330(g) and 423.352(g), we proposed that 
the appeals process under paragraph (e) of these sections would apply 
only to payment offsets described at proposed Sec. Sec.  422.330(c) and 
423.352(c). It would not apply to any other CMS payment offset process.
    Comment: One commenter noted that, in the proposed rule, CMS stated 
that the burden of proof is on the MA organization or Part D sponsor to 
prove that the CMS finding was ``incorrect or otherwise inconsistent 
with applicable program requirements.'' This commenter asked that CMS 
clarify that plans would not be expected to conform to FFS requirements 
or business models in coding practices. The commenter stated that in 
the past there have been occasions when CMS has relied on the use of 
FFS requirements or customary practices in the absence of specific MA 
or Part D guidelines. The commenter stated that this creates an 
unreasonable burden of regulations, rules, manuals, notices, and 
bulletins that must be considered in the process of identifying, 
reporting, and appealing matters of data accuracy and potential 
overpayment. In addition, the commenter believed that this practice 
does not address the fact that an error may have been solely caused by 
provider error, over which a plan has no control, and therefore places 
an unreasonable burden on the plan.
    Response: We are not clear about the commenter's concern. In the 
preamble of the proposed rule, the phrase ``applicable program 
requirements'' is referring to MA program requirements, not to FFS 
program requirements. If the commenter is asking about coding 
practices, CMS does not provide specific MA guidelines on how to code, 
but instead requires that MA organizations use the code sets and 
guidelines in whatever version of the International Classification of 
Diseases that is in effect for the classification and reporting of 
diseases for all U.S. health care settings (not just Medicare). 
Further, we are unsure as to what the commenter is referring in the 
statement ``in the past there have been occasions when CMS has relied 
on the use of FFS requirements or customary practices in the absence of 
specific MA or Part D guidelines.'' The commenter did not provide any 
examples, so we are unable to respond to this concern. Regarding the 
statement that an MA organization has no control over provider errors 
in data submission, we refer readers to the contracting provisions in 
the MA regulation at Sec.  422.504 regarding the MA organization's 
responsibility for data submissions.
    After consideration of the public comments we received, we are 
finalizing our proposal without modification.
6. Effective Date of Appeals Process Provisions
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41063), we proposed 
that this new procedural mechanism for a payment offset at proposed 
Sec.  422.330 and Sec.  423.352 would apply after the effective date of 
any final rule implementing the new payment offset and appeals process, 
but that requests to correct payment data under proposed Sec. Sec.  
422.330(b) and 423.352(b) and the payment offsets under proposed 
Sec. Sec.  422.330(c) and 423.352(c) may apply to any payment year, 
subject to the 6-year limitation under Sec. Sec.  422.330(b) and 
423.352(b).
    We invited public comments on these proposals regarding the 
effective date and application of the rule.
    We did not receive any public comments on these proposals, and we 
are finalizing our proposals with the modification discussed above to 
codify the 6-year limitation in paragraph (c) of Sec. Sec.  422.330 and 
423.352.
    In summary, we are finalizing the provisions at Sec. Sec.  422.330 
and 423.352, with the following modifications. We are removing the 
phrase ``controlled and'' from the definition of ``payment data'' at 
Sec. Sec.  422.330(a) and 423.352(a). We are adding the definition of 
``erroneous payment data'' to the final regulation text at Sec. Sec.  
422.330(a) and 423.352(a). At Sec. Sec.  422.330(b) and 423.352(b), we 
are moving language regarding the 6-year look-back period to Sec. Sec.  
422.330(c)(1) and 423.352(c)(1) to indicate that if the MA organization 
or Part D sponsor fails to correct payment data, CMS will conduct a 
payment offset if the payment error identified affects payments for any 
of the 6 most recently completed payment years and the payment error 
for a particular payment year is identified after the applicable 
reconciliation date for that payment year. At Sec. Sec.  422.330(c) and 
423.352(c), we are adding paragraph (2) to clarify that CMS will 
calculate the payment offset amount using the correct payment data. In 
addition, we are making a minor modification to the regulation text at 
Sec.  422.330(d) and Sec.  423.352(d) to clarify that the payment 
offset notice will include at least the information outlined in the 
regulation, but may include other information relevant to the payment 
offset. Finally, we are revising Sec. Sec.  422.330(e)(2)(iii)(A) and 
423.352(e)(2)(iii)(A) to state that we will provide written notice of 
the time and place of the informal hearing at least 30 days before the 
scheduled date.

XVIII. Files Available to the Public via the Internet

    Addendum J to this final rule with comment period is a new addendum 
that we proposed for CY 2015, in response to requests by public 
commenters on the CY 2014 OPPS/ASC final rule with comment period for 
additional data regarding ratesetting for the new comprehensive APCs 
established in that final rule with comment period, which are discussed 
in section II.A.2.e. of this final rule with comment period. Addendum J 
lists the HCPCS code pairs for which we are finalizing complexity 
adjustments for

[[Page 67012]]

CY 2015, by clinical family; the HCPCS codes finalized for exclusion 
from the comprehensive APC payment bundle; and the relevant cost 
statistics.
    The public comments that we received related to the proposed 
Addendum J to the CY 2015 OPPS/ASC proposed rule are discussed in 
detail in section II.A.2.e. of this final rule with comment period. We 
are finalizing our proposal to create Addendum J without modification.
    The Addenda to the OPPS/ASC proposed rules and the final rules with 
comment period are published and available only via the Internet on the 
CMS Web site. To view the Addenda to this final rule comment period 
pertaining to CY 2015 payments under the OPPS, we refer readers to the 
CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; select ``1613-FC'' from the list of regulations. All OPPS 
Addenda to this final rule with comment period are contained in the 
zipped folder entitled ``2015 OPPS 1613-F Addenda'' at the bottom of 
the page. To view the Addenda to this final rule with comment period 
pertaining to the CY 2015 payments under the ASC payment system, we 
refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; select ``1613-FC'' from the list of regulations. All ASC 
Addenda to this final rule with comment period are contained in the 
zipped folders entitled ``Addendum AA, BB, DD1 and DD2,'' and 
``Addendum EE''.

XIX. Collection of Information Requirements

A. Legislative Requirements for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and to solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    In the CY 2015 OPPS/ASC proposed rule (79 FR 741063 through 41067), 
we solicited public comments on each of the issues outlined above for 
the information collection requirements discussed below.

B. Requirements in Regulation Text: Changes to the Rural Provider and 
Hospital Ownership Exceptions to the Physician Self-Referral Law: 
Expansion Exception Process (Sec.  411.362)

    As discussed in section XV.C. of the CY 2015 OPPS/ASC proposed rule 
(79 FR 41054 through 41056) and in section XV.C. of this final rule 
with comment period, we proposed to modify the physician-owned hospital 
expansion exception process under the rural provider and hospital 
ownership exceptions to the physician self-referral law. Specifically, 
we proposed to permit physician-owned hospitals to use certain non-
HCRIS data sources to demonstrate satisfaction of the expansion 
exception process eligibility criteria.
    In section XIX.B. of the CY 2015 OPPS/ASC proposed rule (79 FR 
41063), we stated that we believe the burden associated with our 
modifications to the physician-owned hospital expansion exception 
process is exempt from the PRA under 5 CFR 1320.3(c) because the 
information collection will not impact 10 or more entities in a 12-
month period. We did not receive any public comments on the proposed 
stated burden of our proposed modifications to the physician-owned 
hospital expansion exception process.
    As discussed in section XV.C. of this final rule with comment 
period, we are finalizing our proposal with certain modifications. The 
provisions are exempt from the PRA under 5 CFR 1320.3(c) because the 
information collection will not impact 10 or more entities in a 12-
month period.

C. Associated Information Collections Not Specified in Regulatory Text

    In the CY 2015 OPPS/ASC proposed rule, we made reference to 
proposed associated information collection requirements that were not 
discussed in the regulation text contained in the proposed rule. The 
following is a discussion of those requirements, any public comments we 
received, and our responses to those public comments.
1. Hospital OQR Program
    As we stated in section XIV. of the CY 2012 OPPS/ASC final rule 
with comment period, the Hospital OQR Program has been generally 
modeled after the quality data reporting program for the Hospital IQR 
Program (76 FR 74451). We refer readers to the CY 2011 OPPS/ASC final 
rule with comment period (75 FR 72111 through 72114), the CY 2012 OPPS/
ASC final rule with comment period (76 FR 74549 through 74554), the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68527 through 
68532), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75170 through 75172) for detailed discussions of Hospital OQR Program 
information collection requirements we have previously finalized.
a. Revisions to the CY 2016 Payment Determination Estimates
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
75103), we finalized the adoption of four new measures for the CY 2016 
payment determination and subsequent years: (1) OP-27: Influenza 
Vaccination Coverage among Healthcare Personnel (NQF # 0431); (2) OP 
29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients (NQF # 0658); (3) OP 30: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use (NQF # 
0659); and (4) OP-31: Cataracts--Improvement in Patient's Visual 
Function within 90 Days Following Cataract Surgery (NQF # 1536). In the 
CY 2014 OPPS/ASC final rule with comment period (78 FR 75171), we 
estimated measures OP-29, OP-30, and OP-31 would require 40 hours of 
reporting per quarter (96 cases x 0.417 hours). We also estimated that 
reporting these measures via our Web-based tool would take 10 minutes 
(or 0.167 hours) per measure per year (or 2.5 minutes for each 
quarter's data, which are submitted on an annual basis) (78 FR 75171 
through 75172).
    We noted in section XIII.D.2. of the CY 2015 OPPS/ASC proposed rule 
and this final rule with comment period that we have delayed reporting 
for OP-29 and OP-30 for the CY 2016 payment determination by one 
quarter. Therefore, we estimate a reduction in burden of 40 hours for 
each of these measures (40 hours per quarter for reporting + 2.5 
minutes of reporting via the Web-based tool) per hospital for the CY 
2016 payment determination. In addition, in section XIII.D.3. of the CY 
2015 OPPS/ASC proposed rule and this final rule

[[Page 67013]]

with comment period, we are finalizing our proposal to exclude OP-31 
from the CY 2016 payment determination measure set. Therefore, we 
estimate that there will be no burden for reporting OP-31 for the CY 
2016 payment determination, and an overall reduction in burden of 160 
hours ((40 hours per quarter for reporting x 4 quarters) + 0.167 hours 
per year for reporting via the Web-based tool) per hospital for the CY 
2016 payment determination.
    Combining the estimated reductions in burden for all three of these 
measures, we estimate a total reduction in burden of 240 hours (40 
hours + 40 hours + 160 hours) per hospital for the CY 2016 payment 
determination due to delayed data collection for OP-29 and OP-30 and 
the exclusion of OP-31. We estimate that approximately 3,300 hospitals 
will participate in the Hospital OQR Program for the CY 2016 payment 
determination. Therefore, we estimate a total reduction in burden of 
792,000 hours (240 hours x 3,300 hospitals) for the CY 2016 payment 
determination from our original estimate of 1.6 million hours (160 
hours/measure x 3 measures x 3,300 hospitals) as discussed in the CY 
2014 OPPS/ASC final rule with comment period (78 FR 75171 through 
75172) for all hospitals participating in the Hospital OQR Program 
based on the data collection delays for OP-29 and OP-30 and the 
exclusion of OP-31. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75171), we estimated that these measures would result in 
a financial burden of $30 per hour. Therefore, we estimate that the 
changes to these three measures will result in a reduction in financial 
burden of $23.8 million ($30/hour x 792,000 hours) for the CY 2016 
payment determination from our original estimate of $76.8 million ($1.6 
million x $30) as discussed in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75171 through 75172).
b. Hospital OQR Program Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    As we stated in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75171), we believe there is a burden associated with successful 
participation in the Hospital OQR Program, where successful 
participation results in a full annual payment update (APU) for the 
particular payment determination. For the reasons stated in that rule, 
we believe that the burden associated with these requirements is 42 
hours per hospital or 138,600 hours for all hospitals for the CY 2017 
payment determination and subsequent years. We estimate a financial 
burden for these requirements of $4.2 million ($30/hour x 138,600) for 
all hospitals.
(1) Claims-Based Measures for the CY 2017 and CY 2018 Payment 
Determinations and Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68530) for detailed discussions of the information 
collection requirements for the previously finalized claims-based 
measures (OP-8, OP-9, OP-10, OP-11, OP-13, OP-14, and OP-15). In 
section XIII.E. of this final rule with comment period, we are 
finalizing our proposal to adopt one additional claims-based measure, 
OP-32: Facility Seven-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy, but are finalizing its inclusion in the measure 
set for the CY 2018 payment determination and subsequent years instead 
of for the CY 2017 payment determination and subsequent years as 
proposed. Before publicly reporting this measure, however, we will 
conduct a dry run (a preliminary analysis) for facilities to review 
their performance and provide feedback. For more detailed information 
about the dry run, we refer readers to our discussion in section 
XIII.E. of this final rule with comment period.
    As we noted in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68530) and consistent with the modifications we are finalizing 
in this final rule with comment period, we calculate claims-based 
measures using Medicare FFS claims data that do not require additional 
hospital data submissions.
(2) Chart-Abstracted Measures for the CY 2017 Payment Determination and 
Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68530 through 68531) and the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75171) for detailed discussions of the 
information collection requirements for the previously finalized chart-
abstracted measures (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6, OP-7, OP-18, 
OP-20, OP-21, OP-22, OP-23, OP-29, OP-30, and OP-31).
    In the CY 2015 OPPS/ASC proposed rule (79 FR 41034), we proposed to 
remove three chart-abstracted measures from the Hospital OQR Program 
beginning with the CY 2017 payment determination, OP-4: Aspirin at 
Arrival (NQF # 0286); OP-6: Timing of Prophylactic Antibiotics; and OP-
7: Perioperative Care: Prophylactic Antibiotic Selection for Surgical 
Patients (NQF # 0528). In section XIII.C.3. of this final rule with 
comment period, we are finalizing our proposal to remove two of these 
measures (OP-6 and OP-7) from the Hospital OQR Program for the CY 2017 
payment determination and subsequent years. We are not finalizing our 
proposal to remove OP-4 and refer readers to section XIII.C.3. of this 
final rule with comment period for a detailed discussion. We previously 
estimated that each participating hospital will spend 35 minutes (or 
0.583 hours) per case to collect and submit the data required for the 
chart-abstracted measures finalized for the CY 2015 payment 
determination and subsequent years (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6, 
OP 7, OP-18, OP-20, OP-21, OP-22, and OP-23) (78 FR 75171). Because we 
are finalizing our proposals to remove two of these measures, we 
believe that the time to chart-abstract measures will be reduced by 
16.7 percent (2 of 12 measures) per case. Therefore, we estimate that 
hospitals will spend approximately 29 minutes (0.483 hours) per case to 
collect and submit these data.
    Data submitted for the CY 2014 payment determination indicate that 
the average hospital will submit approximately 1,266 cases per year for 
these measures. Therefore, as a result of our removal of 2 chart-
abstracted measures, we estimate that the time it will take for the 
average hospital to abstract data for all of the chart-abstracted 
measures will be 612 hours per year (1,266 cases x 0.483 hours). We 
estimate that there will be approximately 3,300 hospitals that 
participate in the Hospital OQR Program for the CY 2017 payment 
determination and subsequent years. Therefore, we estimate that the 
chart-abstracted measures for the CY 2017 payment determination and 
subsequent years will result in a burden of 2.02 million hours (612 
hours x 3,300 hospitals) for all participating hospitals, for a total 
financial burden of approximately $61 million (2.02 million hours x 
$30/hour).
    In addition, in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75171), we estimated that OP-29 and OP-30 would require 25 
minutes (0.417 hours) per case per measure to chart-abstract. We also 
estimated that hospitals would abstract 384 cases per year for each of 
these measures. Our estimate for the CY 2017 payment determination and 
subsequent years has not changed from last year's estimate (although, 
as noted above, we have changed our estimate for the CY 2016 payment 
determination based on the delay of reporting OP-29 and OP-30).

[[Page 67014]]

Therefore, for the CY 2017 payment determination and subsequent years, 
we estimate a burden of 1.1 million hours (3,300 hospitals x 0.417 
hours/case x 384 case/measure x 2 measures) for all participating 
hospitals for OP-29 and OP-30 for a total financial burden of 
approximately $33 million ($30/hour x 1.1 million hours).
    In section XIII.D.3. of this final rule with comment period, we are 
finalizing our proposal to exclude OP-31 from the CY 2016 payment 
determination measure set and, for the CY 2017 payment determination 
and subsequent years, to change this measure from required to 
voluntary. Hospitals will not be subject to a payment reduction with 
respect to this measure for the CY 2016 payment determination or during 
the period of voluntary reporting. We continue to believe this measure 
addresses an important area of care, and anticipate that many 
facilities will report this measure on a voluntary basis. In the CY 
2014 ASC/OPPS final rule with comment period (78 FR 75171), we 
estimated that OP-31 would require 25 minutes (0.417 hours) per case to 
chart-abstract. We also estimated that hospitals would abstract 384 
cases per year for this measure. We estimate that approximately 20 
percent of hospitals (660 hospitals (3,300 hospitals x 0.2)) will elect 
to report this measure on a voluntary basis. Therefore, we are revising 
the estimated burden for this measure to 105,685 hours (660 hospitals x 
0.417 hours/case x 384 cases) for participating hospitals for the CY 
2017 payment determination and subsequent years, for a total financial 
burden of approximately $3.2 million ($30/hour x 105,685 hours).
    Therefore, for the chart-abstracted measures, we estimate a total 
burden for all participating hospitals of 3.23 million hours (2.02 
million hours + 105,685 hours + 1.1 million hours) and $96.9 million 
(3.23 million hours x $30/hour) for the CY 2017 payment determination 
and subsequent years.
(3) Web-Based Measures Submitted Directly to CMS for the CY 2017 
Payment Determination and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75171) for detailed discussions of the information 
collection requirements for the previously finalized measures submitted 
via the Web-based tool. For the reasons stated in that final rule with 
comment period, we estimate that each participating hospital would 
spend 10 minutes per measure per year to collect and submit the data 
for the six measures (OP-12, OP-17, OP-25, OP-26, OP-29, and OP-30) 
submitted via the Web-based tool. Therefore, the estimated annual 
burden associated with these measures for all participating hospitals 
is 3,307 hours (3,300 hospitals x 0.167 hours/measure x 6 measures/
hospital) for the CY 2017 payment determination and subsequent years.
    As stated above, in section XIII.D.3. of this final rule with 
comment period, we are finalizing our proposal that hospitals have the 
option to voluntarily collect and submit OP-31 data beginning with the 
CY 2015 encounter period for the CY 2017 payment determination and 
subsequent years; failing to report this measure will not affect 
hospitals' payment determinations for CY 2017 and subsequent years. We 
continue to believe this measure addresses an important area of care 
and estimate that approximately 20 percent of hospitals or 660 
hospitals (3,300 hospitals x 0.2) will elect to report this measure on 
a voluntary basis. Therefore, we are revising the estimated burden for 
this measure for all participating hospitals to 111 hours (660 
hospitals x 0.167 hours) for the CY 2017 payment determination and 
subsequent years.
    Moreover, we estimate that the financial burden incurred for the 
Web-based submission of these measures for all participating hospitals 
will be $119,070 ($30/hour x (3,858 hours + 111 hours)) for the CY 2017 
payment determination and subsequent years.
(4) NHSN HAI Measure for the CY 2017 Payment Determination and 
Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75172) for detailed discussions of the information 
collection requirements for OP-27: Influenza Vaccination Coverage among 
Healthcare Personnel. In section XIII.D.1. of this final rule with 
comment period, we are clarifying the submission deadline for this 
measure. We do not believe there will be a change in burden due to this 
clarification because it was a typographical error and our previous 
estimates were based on the correct submission timeframe. We also noted 
that facilities should collect and submit a single vaccination count 
for each health care facility enrolled in NHSN by the facility OrgID. 
Although we believe an overall reduction in burden will occur because 
hospitals will only be required to submit this information once for 
both the Hospital IQR Program and the Hospital OQR Program, we do not 
believe there is a reduction in burden that is directly attributable to 
the Hospital OQR Program. That is, this requirement is independent of 
the Hospital IQR Program requirements. Therefore, our burden analysis 
remains the same. For the reasons discussed in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 75172), we estimate a total 
burden for all participating hospitals of 106,940 hours and a total 
financial burden of $3,208,203 associated with this measure.
c. Review and Corrections Period Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    In section XIII.H.2.f. of this final rule with comment period, we 
are finalizing our proposal to formalize that the time during which 
hospitals submit chart-abstracted data is the review and corrections 
period for those data. Because this proposal does not require hospitals 
to submit additional data, we do not believe it will increase burden 
for these hospitals.
d. Hospital OQR Program Validation Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    In sections XIII.H.3.b. and XIII.H.3.e. of this final rule with 
comment period, we are finalizing three changes to our validation 
procedures: (1) A hospital will be eligible for random selection for 
validation if it submits at least 12 cases to the Hospital OQR Program 
Clinical Data Warehouse during the quarter containing the most recently 
available data (we note that this is a modification of our proposal 
that a hospital would be eligible for random selection for validation 
if it submitted 1 case); (2) hospitals will have the option to either 
submit paper copies of patient charts or securely transmit electronic 
versions of medical information for validation; and (3) hospitals must 
identify the medical records staff responsible for submission of 
records under the Hospital OQR Program to the designated CMS 
contractor. We do not believe that these changes to the eligibility 
requirements will result in additional burden because we will continue 
to select 500 hospitals for validation consistent with our previous 
burden estimates indicate (78 FR 75172). In addition, we do not believe 
requiring hospitals to identify the medical records staff responsible 
for submission of records will result in additional burden since 
hospitals must already submit this information to our designated 
contractors (the State QIO), and only the contractor to whom the data 
is submitted may change. However, we do believe that the second 
requirement regarding the method of submission may result in a change 
in burden.

[[Page 67015]]

    We are finalizing our proposal that the requirement to submit 
patient charts for validation of Hospital OQR Program data may be met 
by employing either of the following options: (1) A hospital may submit 
paper medical records, the form in which we have historically requested 
them; or (2) a hospital may securely transmit electronic versions of 
medical information beginning in the CY 2017 payment determination and 
for subsequent years. We are finalizing our proposal that hospitals 
that choose to securely transmit electronic versions of medical 
information should either: (1) download or copy the digital image (that 
is., a PDF) of the patient chart onto an encrypted CD, DVD, or flash 
drive and ship the encrypted electronic media following instructions 
specified on the QualityNet Web site; or (2) securely submit PDFs of 
patient charts using a Secure File Transfer Portal on the QualityNet 
Web site. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50834 through 
50835), the Hospital IQR Program previously finalized a similar policy 
that also allows hospitals to submit electronic versions of records for 
validation using the first method. In the FY 2015 IPPS/LTCH PPS final 
rule, the Hospital IQR Program finalized secure submission of digital 
images via a Secure File Transfer Portal (79 FR 50269). For the same 
reasons outlined in the Hospital IQR Program (78 FR 50956), we are 
finalizing our proposal to set a reimbursement rate of $3.00 per 
patient chart submitted electronically (using either of the finalized 
methods for electronic submission) for validation for the CY 2017 
payment determination and subsequent years. We will continue to 
reimburse hospitals at a rate of 12 cents per page, plus shipping, for 
records provided on paper (76 FR 74577).
    The burden associated with validation is the time and effort 
necessary to submit validation data to the CMS contractor. For some 
hospitals, we believe that submitting these data electronically may 
result in a reduction in burden; for others we believe that submitting 
paper copies will be the least burdensome option. As we have previously 
stated in the CY 2014 OPPS/ASC final rule with comment period, we 
sample 500 hospitals for validation, and we estimate that it will take 
each hospital 12 hours to comply with the data submission requirements 
(78 FR 75172). Therefore, because the number of hospitals we sample for 
validation will remain the same, we estimate a total burden of 
approximately 6,000 hours (500 hospitals x 12 hours/hospital) and a 
total financial impact of $180,000 ($30/hour x 6,000 hours) for the CY 
2017 payment determination and subsequent years.
e. Extraordinary Circumstances Extensions or Exemptions Process
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68489), the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75119 through 75120), and 42 CFR 419.46(d) for a complete 
discussion of our extraordinary circumstances extension or waiver 
process under the Hospital OQR Program. In this final rule with comment 
period, we are finalizing our proposal to change the phrase ``extension 
or waiver'' to ``extension or exemption'' throughout the regulation. In 
section XIII.J. of this final rule with comment period, we note that we 
intend to make certain changes to the form to ensure that the form is 
consistent across CMS quality reporting programs. We do not anticipate 
that these minor changes will affect the collection of information 
burden estimates for this process.
f. Reconsideration and Appeals
    While there is burden associated with filing a reconsideration 
request, the regulations at 5 CFR 1320.4 for the PRA (44 U.S.C. 
3518(c)(1)(B)) exclude collection activities during the conduct of 
administrative actions such as reconsiderations or appeals.
    We invited public comment on the burden associated with these 
information collection requirements. We did not receive any public 
comments on this burden.
2. ASCQR Program Requirements
a. Background
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74554), the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53672), the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68532 through 68533), and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75172 through 75174) for detailed discussions of the 
ASCQR Program information collection requirements we have previously 
finalized.
b. Revisions to the CY 2016 Payment Determination Estimates
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 
through 75130), we finalized the adoption of three new measures for the 
CY 2016 payment determination and subsequent years: ASC-9: Endoscopy/
Polyp Surveillance: Appropriate Follow-up Interval for Normal 
Colonoscopy in Average Risk Patients (NQF # 0658); ASC-10: Endoscopy/
Polyp Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use (NQF # 0659); and 
ASC-11: Cataracts--Improvement in Patient's Visual Function within 90 
Days Following Cataract Surgery (NQF # 1536). In that final rule with 
comment period, we estimated that each participating ASC would spend 35 
minutes per case to collect and submit the data for these measures, 
resulting in a total estimated burden for ASCs with a single case per 
ASC of 3,067 hours (5,260 ASCs x 0.583 hours per case per ASC). We also 
stated that we expected ASCs would vary greatly as to the number of 
cases per ASC due to ASC specialization (78 FR 75173).
    As we stated in section XIV.E.3. of the CY 2015 OPPS/ASC proposed 
rule and this final rule with comment period, we have delayed reporting 
for ASC-9 and ASC-10 for the CY 2016 payment determination by one 
quarter. Therefore, we estimate a 25-percent reduction in cases and 
burden for these measures for the CY 2016 payment determination. As we 
stated in section XIV.E.3.c. of the CY 2015 OPPS/ASC proposed rule and 
this final rule with comment period, we delayed reporting of ASC-11 by 
1 year. We also are finalizing our proposal to exclude ASC-11 from the 
CY 2016 payment determination measure set. As a result, we do not 
believe there would be any burden associated with this measure for the 
CY 2016 payment determination.
c. Claims-Based Measures for the CY 2017 Payment Determination and 
Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68532) and CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75172 through 75174) for detailed discussions of the 
information collection requirements for the five previously-adopted 
claims-based ASCQR Program measures (four outcome measures and one 
process measure). The five previously adopted measures are: ASC-1: 
Patient Burn (NQF # 0263); ASC-2: Patient Fall (NQF # 0266); ASC-3: 
Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant 
(NQF # 0267); ASC-4: Hospital Transfer/Admission (NQF # 0265); and ASC-
5: Prophylactic Intravenous (IV) Antibiotic Timing (NQF # 0264). For 
the reasons we discussed in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75172 through 75173), we estimate that the 
reporting burden to report Quality Data Codes (QDCs) for these five 
claims-

[[Page 67016]]

based outcome measures would be nominal for the CY 2017 payment 
determination and for subsequent years.
    In section XIV.B.5. of this final rule with comment period, we are 
finalizing our proposal to add one additional claims-based measure to 
the ASCQR Program, but are finalizing its inclusion in the measure sets 
for the CY 2018 payment determination and subsequent years, instead of 
the measure set we proposed for the CY 2017 payment determination and 
subsequent years. Before publicly reporting this measure, we plan to 
perform a dry run (a preliminary analysis) of the measure in 2015. We 
refer readers to section XIV.B.5 of this final rule with comment period 
for a detailed discussion of the dry run.
    Because this measure, ASC-12: Facility Seven-Day Risk-Standardized 
Hospital Visit Rate after Outpatient Colonoscopy, will be computed by 
CMS based on paid Medicare FFS claims, and will not require ASCs to 
submit QDCs, we do not anticipate that this measure would create 
additional burden to ASCs during the dry run or for the CY 2018 payment 
determination and subsequent years.
d. Web-Based Measures for the CY 2017 Payment Determination and 
Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68532) and CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75172 through 75174) for detailed discussions of the 
information collection requirements for the five previously-adopted 
Web-based measures, excluding ASC-11, which we proposed for voluntary 
inclusion in the ASCQR Program for the CY 2017 payment determination 
and subsequent years. The five previously adopted measures are: ASC-6: 
Safe Surgery Checklist Use; ASC-7: ASC Facility Volume Data on Selected 
ASC Surgical Procedures; ASC-8: Influenza Vaccination Coverage Among 
Healthcare Personnel (NQF # 0431); ASC-9: Endoscopy/Polyp Surveillance: 
Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk 
Patients (NQF # 0658); and ASC-10: Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous Polyps-
Avoidance of Inappropriate Use (NQF # 0659).
    For the reasons we discussed in the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75173 through 75174), we estimate that the 
reporting burden for the ASC-6: Safe Surgery Checklist Use and the ASC-
7: ASC Facility Volume measures would be 1,756 hours (5,260 ASCs x 2 
measures x 0.167 hours per ASC) and $52,680 (1,756 hours x $30.00 per 
hour) annually for the CY 2017 payment determination and for subsequent 
years.
    For the reasons discussed in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75173 through 75174), we estimate that the 
reporting burden for the ASC-8: Influenza Vaccination Coverage Among 
Healthcare Personnel (NQF #0431) measure would be 18,005 hours and 
$540,150 (18,005 hours x $30.00 per hour) annually for the CY 2017 
payment determination and for subsequent years.
    For the reasons discussed in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75173 through 75174), we estimate that the 
reporting burden for ASCs with a single case per ASC for the chart-
abstracted ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up 
Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658) 
and ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for 
Patients with a History of Adenomatous Polyps-Avoidance of 
Inappropriate Use (NQF # 0659) measures would be 3,067 hours and 
$92,010 (3,067 hours x $30.00 per hour) annually for the CY 2017 
payment determination and for subsequent years.
    In section XIV.E.3.c. of this final rule with comment period, we 
are finalizing our proposal that data collection and submission be 
voluntary for the CY 2017 payment determination and subsequent years 
for ASC-11: Cataracts: Improvement in Patient's Visual Function within 
90 Days Following Cataract Surgery (NQF # 1536), meaning we would not 
subject ASCs to a payment reduction with respect to this measure during 
the period of voluntary reporting. We continue to believe this measure 
addresses an important area of care, and anticipate that many 
facilities will report this measure on a voluntary basis. In the CY 
2014 ASC/OPPS final rule with comment period (78 FR 75173), we 
estimated that each participating ASC would spend 35 minutes per case 
to collect and submit the data for this measure, making the total 
estimated burden for ASCs with a single case per ASC 3,067 hours (5,260 
ASCs x 0.583 hours per case per ASC) annually. We expect that ASCs 
would vary greatly as to the number of cases per ASC due to ASC 
specialization. We estimate that approximately 20 percent of ASCs would 
elect to report this measure on a voluntary basis; therefore, we 
estimate the total estimated burden for ASCs with a single case per ASC 
to be 613 hours (1,052 ASCs x 0.583 hours per case per ASC) and $18,390 
(613 hours x $30.00 per hour) annually for the CY 2017 payment 
determination and subsequent years.
e. Extraordinary Circumstances Extension or Exemptions Process
    We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53642 through 53643) and the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75140) for a complete discussion of our extraordinary 
circumstances extension or waiver process under the ASCQR Program. In 
the CY 2015 OPPS/ASC proposed rule, we did not propose to make any 
substantive changes to this process. However, in the future, we will 
refer to the process as the extraordinary circumstances extensions or 
exemptions process. In section XIV.E.7. of this final rule with comment 
period, we note that we intend to make certain changes to the form to 
ensure that the form is consistent across CMS quality reporting 
programs. We do not anticipate that these minor changes would affect 
the burden estimates for this process.
f. Reconsideration
    While there is burden associated with filing a reconsideration 
request, the regulations at 5 CFR 1320.4 for the PRA (44 U.S.C. 
3518(c)(1)(B)) exclude collection activities during the conduct of 
administrative actions such as reconsiderations.
    We invited public comment on the burden associated with these 
information collection requirements. We did not receive any public 
comments on this burden.

XX. Waiver of Proposed Rulemaking and Response to Comments

A. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on a proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and substance 
of the proposed rule or a description of the subjects and issues 
involved. This procedure can be waived, however, if an agency finds 
good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    We utilize HCPCS codes for Medicare payment purposes. The HCPCS is 
a national coding system comprised of Level I codes (CPT codes) and 
Level II codes that are intended to provide uniformity to coding 
procedures,

[[Page 67017]]

services, and supplies across all types of medical providers and 
suppliers. CPT codes are copyrighted by the AMA and consist of several 
categories, including Category I codes which are 5-digit numeric codes, 
and Category III codes which are temporary codes to track emerging 
technology, services, and procedures. The AMA issues an annual update 
of the CPT code set each Fall, with January 1 as the effective date for 
implementing the updated CPT codes. The HCPCS, including both CPT codes 
and Level II codes, is similarly updated annually on a calendar year 
basis. Annual coding changes are not available to the public until the 
Fall immediately preceding the annual January update of the OPPS and 
the ASC payment system. Because of the timing of the release of these 
new codes, it is impracticable for us to provide prior notice and 
solicit comment on these codes and the payments assigned to them in 
advance of publication of the final rule that implements the OPPS and 
the ASC payment system. However, it is imperative that these coding 
changes be accounted for and recognized timely under the OPPS and the 
ASC payment system for payment because services represented by these 
codes will be provided to Medicare beneficiaries in hospital outpatient 
departments and ASCs during the calendar year in which they become 
effective. Moreover, regulations implementing the HIPAA (42 CFR Parts 
160 and 162) require that the HCPCS be used to report health care 
services, including services paid under the OPPS and the ASC payment 
system. We assign interim payment amounts and status indicators to any 
new codes according to our assessment of the most appropriate APC based 
on clinical and resource homogeneity with other procedures and services 
in the APC. If we did not assign payment amounts to new codes on an 
interim basis, the alternative would be to not pay for these services 
during the initial calendar year in which the codes become effective. 
We believe it would be contrary to the public interest to delay 
establishment of payment amounts for these codes.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking for the establishment of payment amounts for selected HCPCS 
codes identified with comment indicator ``NI'' in Addendum B and 
Addendum BB to this final rule with comment period. We are providing a 
60-day public comment period.

B. 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 final rule 
with comment period, and, when we proceed with a subsequent 
document(s), we will respond to those comments in the preamble to that 
document.

XXI. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this final rule with comment 
period, as required by Executive Order 12866 on Regulatory Planning and 
Review (September 30, 1993), Executive Order 13563 on Improving 
Regulation and Regulatory Review (January 18, 2011), the Regulatory 
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 
1102(b) of the Social Security Act, section 202 of the Unfunded 
Mandates Reform Act of 1995 (UMRA) (March 22, 1995, Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), and the Contract 
with America Advancement Act of 1996 (Pub. L. 104-121) (5 U.S.C. 
804(2)). This section of the final rule with comment period contains 
the impact and other economic analyses for the provisions that we are 
finalizing.
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule with comment period has been designated as 
an economically significant rule under section 3(f)(1) of Executive 
Order 12866 and a major rule under the Contract with America 
Advancement Act of 1996 (Pub. L. 104-121). Accordingly, this final rule 
with comment period has been reviewed by the Office of Management and 
Budget. We have prepared a regulatory impact analysis that, to the best 
of our ability, presents the costs and benefits of this final rule with 
comment period. We solicited comments on the regulatory impact analysis 
in the proposed rule, and we address the public comments we received in 
this section below and in other sections of this final rule with 
comment period as appropriate.
2. Statement of Need
    This final rule with comment period is necessary to update the 
Medicare hospital OPPS rates. It is necessary to make changes to the 
payment policies and rates for outpatient services furnished by 
hospitals and CMHCs in CY 2015. We are required under section 
1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion 
factor used to determine the payment rates for APCs. We also are 
required under section 1833(t)(9)(A) of the Act to review, not less 
often than annually, and revise the groups, the relative payment 
weights, and the wage and other adjustments described in section 
1833(t)(2) of the Act. We must review the clinical integrity of payment 
groups and relative payment weights at least annually. We are revising 
the APC relative payment weights using claims data for services 
furnished on and after January 1, 2013, through and including December 
31, 2013 and processed through June 30, 2014, and updated cost report 
information.
    This final rule with comment period also is necessary to update the 
ASC payment rates for CY 2015, enabling CMS to make changes to payment 
policies and payment rates for covered surgical procedures and covered 
ancillary services that are performed in an ASC in CY 2015. Because ASC 
payment rates are based on the OPPS relative payment weights for the 
majority of the procedures performed in ASCs, the ASC payment rates are 
updated annually to reflect annual changes to the OPPS relative payment 
weights. In addition, we are required under section 1833(i)(1) of the 
Act to review and update the list of surgical procedures that can be 
performed in an ASC not less frequently than every 2 years.
3. Overall Impacts for the OPPS and ASC Payment Provisions
    We estimate that the total increase in Federal government 
expenditures under the OPPS for CY 2015 compared to CY 2014 due to the 
changes in this final rule with comment period, will be approximately 
$900 million. Taking into account our estimated changes in enrollment, 
utilization, and case-mix, we estimate that the OPPS expenditures for 
CY 2015 will be approximately $5.135 billion higher relative to 
expenditures in CY 2014. Because this final rule with comment period is 
economically significant as measured by the threshold of an additional 
$100 million in expenditures in one year, we have prepared this 
regulatory impact analysis that, to the best of our ability,

[[Page 67018]]

presents its costs and benefits. Table 49 displays the redistributional 
impact of the CY 2015 changes in OPPS payment to various groups of 
hospitals and for CMHCs.
    We estimate that the update to the conversion factor and other 
adjustments (not including the effects of outlier payments, the pass-
through estimates, and the application of the frontier State wage 
adjustment for CY 2015) will increase total OPPS payments by 2.2 
percent in CY 2015. The changes to the APC weights, the changes to the 
wage indexes, the continuation of a payment adjustment for rural SCHs, 
including EACHs, and the payment adjustment for cancer hospitals will 
not increase OPPS payments because these changes to the OPPS are budget 
neutral. However, these updates will change the distribution of 
payments within the budget neutral system. We estimate that the total 
change in payments between CY 2014 and CY 2015, considering all 
payments, including changes in estimated total outlier payments, pass-
through payments, and the application of the frontier State wage 
adjustment outside of budget neutrality, in addition to the application 
of the 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 2.3 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 under the 
ASC payment system for CY 2015 compared to CY 2014 to be approximately 
$236 million. Because the provisions for the ASC payment system are 
part of a final rule that is economically significant as measured by 
the $100 million threshold, we have prepared a regulatory impact 
analysis of the changes to the ASC payment system that, to the best of 
our ability, presents the costs and benefits of this portion of the 
final rule with comment period. Table 50 and Table 51 of this final 
rule with comment period display the redistributional impact of the CY 
2015 changes on ASC payment, grouped by specialty area and then grouped 
by procedures with the greatest ASC expenditures, respectively.
4. Detailed Economic Analyses
a. Estimated Effects of OPPS Changes in This Final Rule With Comment 
Period
(1) Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the CY 2015 policy changes on various hospital groups. As we did for 
the proposed rule, we post on the CMS Web site our hospital-specific 
estimated payments for CY 2015 with the other supporting documentation 
for this final rule with comment period. To view the hospital-specific 
estimates, we refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the Web site, select ``regulations and notices'' from 
the left side of the page and then select ``CMS-1613-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 49 below. We do not show hospital-
specific impacts for hospitals whose claims we were unable to use. We 
refer readers to section II.A. of this final rule with comment period 
for a discussion of the hospitals whose claims we do not use for 
ratesetting and 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 addition, we 
do not make adjustments for future changes in variables such as service 
volume, service-mix, or number of encounters. In the CY 2015 OPPS/ASC 
proposed rule (79 FR 41068), we solicited public comment and 
information about the anticipated effects of our proposed changes on 
providers and our methodology for estimating them. Any public comments 
that we received are addressed in the applicable sections of the final 
rule with comment period that discuss the specific policies.
(2) Estimated Effects of OPPS Changes on Hospitals
    Table 49 below shows the estimated impact of this final rule with 
comment period 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-BBA amount. We also include CMHCs in the first 
line that includes all providers. We now include a second line for all 
hospitals, excluding permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 49, and we discuss 
them separately below, because CMHCs are paid only for partial 
hospitalization services under the OPPS and are a different provider 
type from hospitals. In CY 2015, we are continuing to pay CMHCs under 
APC 0172 (Level I Partial Hospitalization (3 services) for CMHCs) and 
APC 0173 (Level II Partial Hospitalization (4 or more services) for 
CMHCs), and we are paying hospitals for partial hospitalization 
services under APC 0175 (Level I Partial Hospitalization (3 services) 
for hospital-based PHPs) and APC 0176 (Level II Partial Hospitalization 
(4 or more services) for hospital-based PHPs).
    The estimated increase in the total payments made under the OPPS is 
determined largely by the increase to the conversion factor under the 
statutory methodology. The distributional impacts presented do not 
include assumptions about changes in volume and service-mix. The 
conversion factor is updated annually by the OPD fee schedule increase 
factor as discussed in detail in section II.B. of this 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 IPPS market basket percentage increase for FY 2015 is 2.9 percent 
(79 FR 49994). Section 1833(t)(3)(F)(i) of the Act reduces that 2.9 
percent by the multifactor productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act, which is 0.5 percentage point for FY 
2015 (which is also the MFP adjustment for FY 2015 in the FY 2015 IPPS/
LTCH PPS final rule (79 FR 49994)); and sections 1833(t)(3)(F)(ii) and 
1833(t)(3)(G)(iv) of the Act further reduce the market basket 
percentage increase by 0.2 percentage point, resulting in the OPD fee 
schedule increase factor of 2.2 percent. We are using the OPD fee 
schedule increase factor of 2.2 percent in the calculation of the CY 
2015 OPPS conversion factor. Section 10324 of the Affordable Care Act, 
as amended by HCERA, further authorized additional expenditures outside 
budget neutrality for hospitals in certain frontier States that have a 
wage index less than 1.00. The amounts attributable to this frontier 
State wage index adjustment are incorporated in the CY 2015 estimates 
in Table 49.
    To illustrate the impact of the CY 2015 changes, our analysis 
begins with a baseline simulation model that uses the CY 2014 relative 
payment weights, the FY 2014 final IPPS wage indexes that include 
reclassifications, and the final CY 2014 conversion factor. Table

[[Page 67019]]

49 shows the estimated redistribution of the increase in payments for 
CY 2015 over CY 2014 payments to hospitals and CMHCs as a result of the 
following factors: The impact of the APC reconfiguration and 
recalibration changes between CY 2014 and CY 2015 (Column 2); the wage 
indexes and the provider adjustments (Column 3); the combined impact of 
all the changes described in the preceding columns plus the 2.2 percent 
OPD fee schedule increase factor update to the conversion factor 
(Column 4); the combined impact shown in Column 4 plus the CY 2015 
frontier State wage index adjustment (Column 5); and the estimated 
impact taking into account all payments for CY 2015 relative to all 
payments for CY 2014, including the impact of changes in estimated 
outlier payments and changes to the pass-through payment estimate 
(Column 6).
    We did not model an explicit budget neutrality adjustment for the 
rural adjustment for SCHs because we are finalizing our proposal to 
maintain the current adjustment percentage for CY 2015. Because the 
updates to the conversion factor (including the update of the OPD fee 
schedule increase factor), the estimated cost of the rural adjustment, 
and the estimated cost of projected pass-through payment for CY 2015 
are applied uniformly across services, observed redistributions of 
payments in the impact table for hospitals largely depend on the mix of 
services furnished by a hospital (for example, how the APCs for the 
hospital's most frequently furnished services will change), and the 
impact of the wage index changes on the hospital. However, total 
payments made under this system and the extent to which this final rule 
with comment period will redistribute money during implementation also 
will depend on changes in volume, practice patterns, and the mix of 
services billed between CY 2014 and CY 2015 by various groups of 
hospitals, which CMS cannot forecast.
    Overall, we estimate that the rates for CY 2015 will increase 
Medicare OPPS payments by an estimated 2.3 percent. Removing payments 
to cancer and children's hospitals because their payments are held 
harmless to the pre-OPPS ratio between payment and cost and removing 
payments to CMHCs results in an estimated 2.3 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 49 shows the total number of 
facilities (4,006), including designated cancer and children's 
hospitals and CMHCs, for which we were able to use CY 2013 hospital 
outpatient and CMHC claims data to model CY 2014 and CY 2015 payments, 
by classes of hospitals, for CMHCs and for dedicated cancer hospitals. 
We excluded all hospitals and CMHCs for which we could not plausibly 
estimate CY 2014 or CY 2015 payment and entities that are not paid 
under the OPPS. The latter entities include CAHs, all-inclusive 
hospitals, and hospitals located in Guam, the U.S. Virgin Islands, 
Northern Mariana Islands, American Samoa, and the State of Maryland. 
This process is discussed in greater detail in section II.A. of this 
final rule with comment period. At this time, we are unable to 
calculate a disproportionate share hospital (DSH) variable for 
hospitals not participating in the IPPS. Hospitals for which we do not 
have a DSH variable are grouped separately and generally include 
freestanding psychiatric hospitals, rehabilitation hospitals, and long-
term care hospitals. We show the total number of OPPS hospitals 
(3,871), excluding the hold-harmless cancer and children's hospitals 
and CMHCs, on the second line of the table. We excluded cancer and 
children's hospitals because section 1833(t)(7)(D) of the Act 
permanently holds harmless cancer hospitals and children's hospitals to 
their ``pre-BBA amount'' as specified under the terms of the statute, 
and therefore, we removed them from our impact analyses. We show the 
isolated impact on 72 CMHCs at the bottom of the impact table and 
discuss that impact separately below.
Column 2: APC Recalibration--All 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 will experience no 
change, with the impact ranging from an increase of 0.3 percent to a 
decrease of -0.1 percent, depending on the number of beds. Rural 
hospitals will experience no change, with the impact ranging from an 
increase of 0.3 percent to a decrease of -0.4 percent, depending on the 
number of beds. Major teaching hospitals will experience an increase of 
0.7 percent overall.
Column 3: New 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 fiscal year 
(FY) 2015 IPPS post-reclassification wage indexes; and the rural 
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 
2014 conversion factor that included the OPD fee schedule increase and 
a budget neutrality adjustment for differences in wage indexes.
    Column 3 reflects the independent effects of the updated wage 
indexes, including the application of budget neutrality for the rural 
floor policy on a nationwide basis. This column excludes the effects of 
the frontier State wage index adjustment, which is not budget neutral 
and is included in Column 5. We did not model a budget neutrality 
adjustment for the rural adjustment for SCHs because we are finalizing 
our proposal to continue the rural payment adjustment of 7.1 percent to 
rural SCHs for CY 2015, as described in section II.E. 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 2015 
scaled weights and a CY 2014 conversion factor that included a budget 
neutrality adjustment for the effect of changing the wage indexes 
between CY 2014 and CY 2015. The FY 2015 wage policy results in modest 
redistributions.
    There is no difference in impact between the CY 2014 cancer 
hospital payment adjustment and the CY 2015 cancer hospital payment 
adjustment because we are finalizing our proposal to use the same 
payment-to-cost ratio target in CY 2015 as in CY 2014.
Column 4: All Budget Neutrality Changes Combined With the Market Basket 
Update
    Column 4 demonstrates the combined impact of all the changes 
previously described and the update to the conversion factor of 2.2 
percent. Overall, these changes will increase payments to urban 
hospitals by 2.3 percent and to rural hospitals by 1.9 percent. Most 
classes of hospitals will receive an increase in line with the 2.2 
percent overall increase after the update is applied to the budget 
neutrality adjustments.

[[Page 67020]]

Column 5: All Adjustments With the Frontier State Wage Index Adjustment
    This column shows the impact of all budget neutrality adjustments, 
application of the 2.2 percent OPD fee schedule increase factor, and 
the nonbudget-neutral impact of applying the CY 2015 frontier State 
wage adjustment. Rural hospitals in West North Central and Mountain 
States will experience estimated increases in payment of 3.4 and 4.2 
percent, respectively, as a result of the frontier State wage index 
adjustment, while urban hospitals in those States will experience 
estimated increases of 3.2 and 2.5 percent, respectively.
Column 6: All Changes for CY 2015
    Column 6 depicts the full impact of the CY 2015 policies on each 
hospital group by including the effect of all of the changes for CY 
2015 and comparing them to all estimated payments in CY 2014. Column 6 
shows the combined budget neutral effects of Column 2 and 3; the OPD 
fee schedule increase; the impact of the frontier State wage index 
adjustment; the impact of estimated OPPS outlier payments as discussed 
in section II.G. of this 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 XIII. of this final rule with 
comment period); and the difference in total OPPS payments dedicated to 
transitional pass-through payments.
    Of those hospitals that failed to meet the Hospital OQR Program 
reporting requirements for the full CY 2014 update (and assumed, for 
modeling purposes, to be the same number for CY 2015), we included 37 
hospitals in our model because they had both CY 2013 claims data and 
recent cost report data. We estimate that the cumulative effect of all 
changes for CY 2015 will increase payments to all facilities by 2.3 
percent for CY 2015. We modeled the independent effect of all changes 
in Column 6 using the final relative payment weights for CY 2014 and 
the relative payment weights for CY 2015. We used the final conversion 
factor for CY 2014 of $72.672 and the CY 2015 conversion factor of 
$74.144 discussed in section II.B. of this final rule with comment 
period.
    Column 6 contains simulated outlier payments for each year. We used 
the 1-year charge inflation factor used in the FY 2015 IPPS/LTCH PPS 
final rule (79 FR 50379) of 5.09 percent (1.0509) to increase 
individual costs on the CY 2013 claims, and we used the most recent 
overall CCR in the July 2014 Outpatient Provider-Specific File (OPSF) 
to estimate outlier payments for CY 2014. Using the CY 2013 claims and 
a 5.09 percent charge inflation factor, we currently estimate that 
outlier payments for CY 2014, using a multiple threshold of 1.75 and a 
fixed-dollar threshold of $2,900 will be approximately 0.8 percent of 
total payments. The estimated current outlier payments of 0.8 percent 
are incorporated in the comparison in Column 6. We used the same set of 
claims and a charge inflation factor of 10.44 percent (1.1044) and the 
CCRs in the July 2014 OPSF, with an adjustment of 0.9821, to reflect 
relative changes in cost and charge inflation between CY 2013 and CY 
2015, to model the CY 2015 outliers at 1.0 percent of estimated total 
payments using a multiple threshold of 1.75 and a fixed-dollar 
threshold of $2,775. The charge inflation and CCR inflation factors are 
discussed in detail in the FY 2015 IPPS/LTCH PPS final rule (79 FR 
50379 through 50380).
    We estimate that the anticipated change in payment between CY 2014 
and CY 2015 for the hospitals failing to meet the Hospital OQR Program 
requirements will be negligible. Overall, we estimate that facilities 
will experience an increase of 2.3 percent under this final rule with 
comment period in CY 2015 relative to total spending in CY 2014. This 
projected increase (shown in Column 6) of Table 49 reflects the 2.2 
percent OPD fee schedule increase factor, less 0.13 percent for the 
change in the pass-through estimate between CY 2014 and CY 2015, plus 
0.18 percent for the difference in estimated outlier payments between 
CY 2014 (0.82 percent) and CY 2015 (1.0 percent), less 0.1 percent due 
to the frontier State wage index adjustment in CY 2014, plus 0.1 
percent due to the frontier State wage index adjustment in CY 2015. We 
estimate that the combined effect of all changes for CY 2015 will 
increase payments to urban hospitals by 2.3 percent.
    Overall, we estimate that rural hospitals will experience a 1.9 
percent increase as a result of the combined effects of all changes for 
CY 2015. We estimate that rural hospitals that bill less than 5,000 
lines of OPPS services will experience a decrease of -2.0 percent and 
rural hospitals that bill 11,000 or more lines of OPPS services will 
experience adjustments ranging from 0.9 to 2.1 percent.
    Among hospitals by teaching status, we estimate that the impacts 
resulting from the combined effects of all changes will include an 
increase of 3.1 percent for major teaching hospitals and 2.0 percent 
for nonteaching hospitals. Minor teaching hospitals will experience an 
estimated increase of 2.0 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 2.4 percent, proprietary hospitals will 
experience an increase of 1.7 percent, and governmental hospitals will 
experience an increase of 2.1 percent.

                        Table 49--Estimated Impact of the CY 2015 Changes for the Hospital Outpatient Prospective Payment System
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    All budget neutral  All budget neutral
                                                                        APC         New wage index   changes (combined  changes and update
                                                    Number of      Recalibration     and provider     cols 2, 3) with     (column 4) with    All changes
                                                    hospitals      (all changes)     adjustments       market basket       frontier wage
                                                                                                          update         index adjustment
                                                            (1)              (2)              (3)                 (4)                 (5)           (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL FACILITIES *...............................           4,006              0.0              0.0                 2.2                 2.3           2.3
ALL HOSPITALS..................................           3,871              0.0              0.0                 2.2                 2.3           2.3
(excludes hospitals permanently held harmless
 and CMHCs)
URBAN HOSPITALS................................           3,008              0.0              0.0                 2.3                 2.4           2.3
    LARGE URBAN (GT 1 MILL.)...................           1,646              0.1              0.2                 2.5                 2.5           2.5
    OTHER URBAN (LE 1 MILL.)...................           1,362              0.0             -0.1                 2.1                 2.3           2.1

[[Page 67021]]

 
RURAL HOSPITALS................................             863              0.0             -0.3                 1.9                 2.2           1.9
    SOLE COMMUNITY.............................             376              0.1             -0.2                 2.2                 2.6           2.2
    OTHER RURAL................................             487             -0.2             -0.3                 1.6                 1.7           1.6
BEDS (URBAN):
    0-99 BEDS..................................           1,067              0.0              0.0                 2.3                 2.4           2.3
    100-199 BEDS...............................             856              0.0              0.0                 2.2                 2.3           2.2
    200-299 BEDS...............................             458             -0.1              0.1                 2.2                 2.4           2.2
    300-499 BEDS...............................             410             -0.1              0.1                 2.2                 2.4           2.3
    500 + BEDS.................................             217              0.3             -0.1                 2.4                 2.4           2.5
BEDS (RURAL):
    0-49 BEDS..................................             345              0.1             -0.2                 2.2                 2.4           2.2
    50-100 BEDS................................             315              0.3             -0.3                 2.2                 2.5           2.2
    101-149 BEDS...............................             116             -0.3             -0.1                 1.8                 2.1           1.8
    150-199 BEDS...............................              46             -0.4             -0.4                 1.4                 2.1           1.4
    200 + BEDS.................................              41             -0.3             -0.4                 1.5                 1.5           1.5
VOLUME (URBAN):
    LT 5,000 Lines.............................             544             -1.7             -0.3                 0.2                 0.4           0.4
    5,000-10,999 Lines.........................             135             -0.8             -0.2                 1.3                 1.3           1.4
    11,000-20,999 Lines........................             117             -1.5              0.0                 0.6                 1.2           0.9
    21,000-42,999 Lines........................             228             -0.7              0.0                 1.5                 1.5           1.6
    42,999-89,999 Lines........................             526             -0.3              0.0                 1.9                 1.9           1.9
    GT 89,999 Lines............................           1,458              0.1              0.0                 2.3                 2.4           2.4
VOLUME (RURAL):
    LT 5,000 Lines.............................              34             -3.8             -0.3                -1.9                 1.1          -2.0
    5,000-10,999 Lines.........................              27             -1.8             -0.5                -0.1                 1.1           0.0
    11,000-20,999 Lines........................              42             -1.1             -0.3                 0.8                 0.8           0.9
    21,000-42,999 Lines........................             161              0.2             -0.3                 2.1                 2.7           2.1
    GT 42,999 Lines............................             599              0.0             -0.3                 1.9                 2.1           1.9
REGION (URBAN):
    NEW ENGLAND................................             152              1.1              0.2                 3.5                 3.5           3.4
    MIDDLE ATLANTIC............................             361              0.5              0.5                 3.2                 3.2           3.2
    SOUTH ATLANTIC.............................             482             -0.2             -0.3                 1.7                 1.7           1.7
    EAST NORTH CENT............................             473              0.1             -0.1                 2.2                 2.1           2.2
    EAST SOUTH CENT............................             179             -0.9             -0.5                 0.9                 0.9           0.9
    WEST NORTH CENT............................             194              0.0             -0.2                 2.0                 3.2           2.0
    WEST SOUTH CENT............................             527             -0.7             -0.5                 1.0                 1.0           1.1
    MOUNTAIN...................................             203              0.0             -0.1                 2.1                 2.5           2.2
    PACIFIC....................................             389              0.3              1.1                 3.6                 3.6           3.7
    PUERTO RICO................................              48             -0.4              0.3                 2.1                 2.1           1.9
REGION (RURAL):
    NEW ENGLAND................................              23              1.6             -0.1                 3.6                 3.6           3.6
    MIDDLE ATLANTIC............................              58              0.8              0.2                 3.2                 3.2           3.2
    SOUTH ATLANTIC.............................             130             -0.6             -0.5                 1.0                 1.0           1.0
    EAST NORTH CENT............................             120              0.0              0.0                 2.2                 2.2           2.1
    EAST SOUTH CENT............................             165             -0.8             -0.5                 0.9                 0.9           0.9
    WEST NORTH CENT............................             101              0.2             -0.2                 2.2                 3.4           2.1
    WEST SOUTH CENT............................             181             -0.7             -0.8                 0.7                 0.7           0.7
    MOUNTAIN...................................              61              0.7             -0.4                 2.5                 4.2           2.6
    PACIFIC....................................              24              0.8              0.9                 4.0                 3.9           3.9
TEACHING STATUS:
    NON-TEACHING...............................           2,839             -0.2              0.0                 2.0                 2.1           2.0
    MINOR......................................             706             -0.2             -0.1                 1.9                 2.2           2.0
    MAJOR......................................             326              0.7              0.1                 3.1                 3.0           3.1
DSH PATIENT PERCENT:
    0..........................................              21              0.0              0.3                 2.5                 2.5           2.5
    GT 0-0.10..................................             328              0.3              0.2                 2.7                 2.8           2.7
    0.10-0.16..................................             334              0.1              0.0                 2.3                 2.5           2.3
    0.16-0.23..................................             680              0.1              0.0                 2.2                 2.3           2.2
    0.23-0.35..................................           1,076              0.0              0.0                 2.1                 2.3           2.1
    GE 0.35....................................             824              0.1              0.1                 2.3                 2.3           2.4
    DSH NOT AVAILABLE **.......................             608             -3.6              0.0                -1.4                -1.4          -1.5
URBAN TEACHING/DSH:
    TEACHING & DSH.............................             938              0.2              0.0                 2.4                 2.6           2.5
    NO TEACHING/DSH............................           1,477             -0.2              0.1                 2.1                 2.1           2.1
    NO TEACHING/NO DSH.........................              18             -0.1              0.4                 2.5                 2.5           2.5

[[Page 67022]]

 
    DSH NOT AVAILABLE **.......................             575             -3.3              0.1                -1.0                -0.9          -1.0
TYPE OF OWNERSHIP:
    VOLUNTARY..................................           2,006              0.1              0.0                 2.4                 2.5           2.4
    PROPRIETARY................................           1,322             -0.4             -0.1                 1.7                 1.8           1.7
    GOVERNMENT.................................             543             -0.1             -0.1                 2.1                 2.1           2.1
CMHCs..........................................              72              0.0             -0.5                 1.7                 1.7           1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all CY 2015 OPPS policies and compares those to the CY 2014 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2015 hospital inpatient wage index, including all hold harmless
  policies and transitional wages. The rural adjustment continues our current policy of 7.1 percent so the budget neutrality factor is 1. The budget
  neutrality adjustment for the cancer hospital adjustment is 1.000 because the payment-to-cost ratio target remains the same as in CY 2014.
Column (4) shows the impact of all budget neutrality adjustments and the addition of the 2.2 percent OPD fee schedule update factor (2.9 percent reduced
  by 0.5 percentage point for the final productivity adjustment and further reduced by 0.2 percentage point in order to satisfy statutory requirements
  set forth in the Affordable Care Act).
Column (5) shows the nonbudget neutral impact of applying the frontier State wage adjustment in CY 2015.
Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, adding estimated outlier
  payments, and applying payment wage indexes.
* These 4,006 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care
  hospitals.

(3) Estimated Effects of OPPS Changes on CMHCs
    The last line of Table 49 demonstrates the isolated impact on 
CMHCs, which furnish only partial hospitalization services under the 
OPPS. In CY 2014, CMHCs are paid under two APCs for these services: APC 
0172 (Level I Partial Hospitalization (3 services) for CMHCs) and APC 
0173 (Level II Partial Hospitalization (4 or more services) for CMHCs). 
Hospitals are paid for partial hospitalization services under APC 0175 
(Level I Partial Hospitalization (3 services) for hospital-based PHPs) 
and APC 0176 (Level II Partial Hospitalization (4 or more services) for 
hospital-based PHPs). We use our standard ratesetting methodology to 
derive the payment rates for each APC based on the cost data derived 
from claims and cost data for the provider-type-specific APC. For CY 
2015, we are finalizing our proposal to continue the provider-type-
specific APC structure that we adopted in CY 2011. We modeled the 
impact of this APC policy assuming that CMHCs will continue to provide 
the same number of days of PHP care, with each day having either 3 
services or 4 or more services, as seen in the CY 2013 claims data used 
for this final rule with comment period. We excluded days with 1 or 2 
services because our policy only pays a per diem rate for partial 
hospitalization when 3 or more qualifying services are provided to the 
beneficiary. We estimate that CMHCs will experience an overall 1.3 
percent increase in payments from CY 2014 (shown in Column 6).
    Column 3 shows that the estimated impact of adopting the FY 2015 
wage index values will result in a small decrease of -0.5 percent to 
CMHCs. We note that all providers paid under the OPPS, including CMHCs, 
will receive a 2.2 percent OPD fee schedule increase factor. Column 4 
shows that combining this OPD fee schedule increase factor, along with 
changes in APC policy for CY 2015 and the FY 2015 wage index updates, 
will result in an estimated increase of 1.7 percent. Column 5 shows 
that adding the frontier State wage index adjustment will result in no 
change to the cumulative 1.7 percent increase. Column 6 shows that 
adding the changes in outlier and pass-though payments will result in a 
-0.4 percent decrease in payment for CMHCs, for a total increase of 1.3 
percent. This reflects all changes to CMHCs for CY 2015.
(4) 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 share of payment will 
increase for services for which the OPPS payments will rise and will 
decrease for services for which the OPPS payments will fall. For 
further discussion on the calculation of the national unadjusted 
copayments and minimum unadjusted copayments, we refer readers to 
section II.I. of this 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 
will be 20.0 percent for all services paid under the OPPS in CY 2015. 
The estimated aggregate beneficiary coinsurance reflects general system 
adjustments, including recalibration of the APC relative payment 
weights, change in the portion of OPPS payments dedicated to pass-
through payments, and the CY 2015 comprehensive APC payment policy 
discussed in section II.A.2.e. of this final rule with comment period.
(5) 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 XII. 
of this final rule with comment period. No types of providers or 
suppliers other than hospitals, CMHCs and ASCs will be affected by the 
proposed changes in this final rule with comment period.
(6) Estimated Effects of OPPS Changes on the Medicare and Medicaid 
Programs
    The effect on the Medicare program is expected to be $900 million 
in additional program payments for OPPS

[[Page 67023]]

services furnished in CY 2015. The effect on the Medicaid program is 
expected to be limited to increased copayments that Medicaid may make 
on behalf of Medicaid recipients who are also Medicare beneficiaries. 
We refer readers to our discussion of the impact on beneficiaries in 
section XXI.A. of this final rule with comment period.
(7) Alternative OPPS Policies Considered
    Alternatives to the OPPS changes we proposed and are finalizing and 
the reasons for our selected alternatives are discussed throughout this 
final rule with comment period. In this section, we discuss some of the 
major issues and the alternatives considered.

 Alternatives Considered for the Establishment of Comprehensive 
APCs

    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 74861 through 74910 and 75184 through 75185) for a 
discussion of our policy to establish comprehensive APCs for CY 2015 
and the alternatives we considered. We note that we published tables in 
that final rule with comment period to demonstrate how this policy 
would have been implemented in CY 2014, and stated that we would be 
considering any additional public comments we receive when we update 
the policy for CY 2015 to account for changes that may occur in the CY 
2013 claims data.
b. Estimated Effects of CY 2015 ASC Payment System Policies
    Most ASC payment rates are calculated by multiplying the ASC 
conversion factor by the ASC relative payment weight. As discussed 
fully in section XII. of this final rule with comment period, we are 
setting the CY 2015 ASC relative payment weights by scaling the CY 2015 
OPPS relative payment weights by the ASC scaler of 0.9225. The 
estimated effects of the updated relative payment weights on payment 
rates are varied and are reflected in the estimated payments displayed 
in Tables 50 and 51 below.
    Beginning in CY 2011, section 3401 of the Affordable Care Act 
requires that the annual update to the ASC payment system (which 
currently is the CPI-U) after application of any quality reporting 
reduction be reduced by a productivity adjustment. The Affordable Care 
Act defines the productivity adjustment to be equal to the 10-year 
moving average of changes in annual economy-wide private nonfarm 
business multifactor productivity (MFP) (as projected by the Secretary 
for the 10-year period ending with the applicable fiscal year, year, 
cost reporting period, or other annual period). For ASCs that fail to 
meet their quality reporting requirements, the CY 2015 payment 
determinations will be based on the application of a 2.0 percentage 
point reduction to the annual update factor, which currently is the 
CPI-U. We calculated the CY 2015 ASC conversion factor by adjusting the 
CY 2014 ASC conversion factor by 0.9998 to account for changes in the 
pre-floor and pre-reclassified hospital wage indexes between CY 2014 
and CY 2015 and by applying the CY 2015 MFP-adjusted CPI-U update 
factor of 1.4 percent (projected CPI-U update of 1.9 percent minus a 
projected productivity adjustment of 0.5 percentage point). The CY 2015 
ASC conversion factor is $44.071.
(1) Limitations of Our Analysis
    Presented here are the projected effects of the changes for CY 2015 
on Medicare payment to ASCs. A key limitation of our analysis is our 
inability to predict changes in ASC service-mix between CY 2013 and CY 
2015 with precision. We believe that the net effect on Medicare 
expenditures resulting from the CY 2015 changes will 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 will experience changes 
in payment that differ from the aggregated estimated impacts presented 
below.
(2) Estimated Effects of ASC Payment System Policies on ASCs
    Some ASCs are multispecialty facilities that perform the gamut of 
surgical procedures from excision of lesions to hernia repair to 
cataract extraction; others focus on a single specialty and perform 
only a limited range of surgical procedures, such as eye, digestive 
system, or orthopedic procedures. The combined effect on an individual 
ASC of the update to the CY 2015 payments will depend on a number of 
factors, including, but not limited to, the mix of services the ASC 
provides, the volume of specific services provided by the ASC, the 
percentage of its patients who are Medicare beneficiaries, and the 
extent to which an ASC provides different services in the coming year. 
The following discussion presents tables that display estimates of the 
impact of the CY 2015 updates to the ASC payment system on Medicare 
payments to ASCs, assuming the same mix of services as reflected in our 
CY 2013 claims data. Table 50 depicts the estimated aggregate percent 
change in payment by surgical specialty or ancillary items and services 
group by comparing estimated CY 2014 payments to estimated CY 2015 
payments and Table 51 shows a comparison of estimated CY 2014 payments 
to estimated CY 2015 payments for procedures that we estimate will 
receive the most Medicare payment in CY 2014.
    Table 50 shows the estimated effects on aggregate Medicare payments 
under the ASC payment system by surgical specialty or ancillary items 
and services group. We have aggregated the surgical HCPCS codes by 
specialty group, grouped all HCPCS codes for covered ancillary items 
and services into a single group, and then estimated the effect on 
aggregated payment for surgical specialty and ancillary items and 
services groups. The groups are sorted for display in descending order 
by estimated Medicare program payment to ASCs. The following is an 
explanation of the information presented in Table 50.
     Column 1--Surgical Specialty or Ancillary Items and 
Services Group indicates the surgical specialty into which ASC 
procedures are grouped and the ancillary items and services group which 
includes all HCPCS codes for covered ancillary items and services. To 
group surgical procedures by surgical specialty, we used the CPT code 
range definitions and Level II HCPCS codes and Category III CPT codes 
as appropriate, to account for all surgical procedures to which the 
Medicare program payments are attributed.
     Column 2--Estimated CY 2014 ASC Payments were calculated 
using CY 2013 ASC utilization (the most recent full year of ASC 
utilization) and CY 2014 ASC payment rates. The surgical specialty and 
ancillary items and services groups are displayed in descending order 
based on estimated CY 2014 ASC payments.
     Column 3--Estimated CY 2015 Percent Change is the 
aggregate percentage increase or decrease in Medicare program payment 
to ASCs for each surgical specialty or ancillary items and services 
group that are attributable to updates to ASC payment rates for CY 2015 
compared to CY 2014.
    As seen in Table 50, for the six specialty groups that account for 
the most ASC utilization and spending, we estimate that the update to 
ASC rates for CY 2015 will result in a 1-percent decrease in aggregate 
payment amounts for eye and ocular adnexa procedures, a 6-percent 
increase in aggregate payment

[[Page 67024]]

amounts for digestive system procedures, a 1-percent increase in 
aggregate payment amounts for nervous system procedures, a 2-percent 
increase in aggregate payment amounts for musculoskeletal system 
procedures, a 3-percent increase in aggregate payment amounts for 
genitourinary system procedures, and a 5-percent increase in aggregate 
payment amounts for integumentary system procedures.
    An estimated increase in aggregate payment for the specialty group 
does not mean that all procedures in the group will experience 
increased payment rates. For example, the estimated increase for CY 
2015 for digestive system procedures is likely due to an increase in 
the ASC payment weight for some of the high volume procedures, such as 
CPT code 43239 (Upper GI endoscopy biopsy) where estimated payment will 
increase by 9 percent for CY 2015.
    Also displayed in Table 50 is a separate estimate of Medicare ASC 
payments for the group of separately payable covered ancillary items 
and services. The payment estimates for the covered surgical procedures 
include the costs of packaged ancillary items and services. We estimate 
that aggregate payments for these items and services will decrease by 4 
percent for CY 2015.

   Table 50--Estimated Impact of the CY 2015 Update to the ASC Payment
    System on Aggregate CY 2015 Medicare Program Payments by Surgical
             Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
                                           Estimated  CY
                                             2014  ASC     Estimated CY
        Surgical specialty group           payments  (in   2015 percent
                                             millions)        change
(1)                                                  (2)             (3)
------------------------------------------------------------------------
Total...................................          $3,819               1
Eye and ocular adnexa...................           1,560              -1
Digestive system........................             781               6
Nervous system..........................             568               1
Musculoskeletal system..................             472               2
Genitourinary system....................             165               3
Integumentary system....................             137               5
Respiratory system......................              53               3
Cardiovascular system...................              36              -1
Ancillary items and services............              24              -4
Auditory system.........................              14               1
Hematologic & lymphatic systems.........               6              14
------------------------------------------------------------------------

    Table 51 below shows the estimated impact of the updates to the 
revised ASC payment system on aggregate ASC payments for selected 
surgical procedures during CY 2015. The table displays 30 of the 
procedures receiving the greatest estimated CY 2014 aggregate Medicare 
payments to ASCs. The HCPCS codes are sorted in descending order by 
estimated CY 2014 program payment.
     Column 1--CPT/HCPCS code.
     Column 2--Short Descriptor of the HCPCS code.
     Column 3--Estimated CY 2014 ASC Payments were calculated 
using CY 2013 ASC utilization (the most recent full year of ASC 
utilization) and the CY 2014 ASC payment rates. The estimated CY 2014 
payments are expressed in millions of dollars.
     Column 4--Estimated CY 2015 Percent Change reflects the 
percent differences between the estimated ASC payment for CY 2014 and 
the estimated payment for CY 2015 based on the update.

  Table 51--Estimated Impact of the CY 2015 Update to the ASC Payment System on Aggregate Payments for Selected
                                                   Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                   Estimated CY
                                                                                     2014 ASC      Estimated CY
             CPT/HCPCS Code                          Short descriptor              payments (in    2015  percent
                                                                                     millions)        change
(1)                                      (2)....................................             (3)             (4)
----------------------------------------------------------------------------------------------------------------
66984..................................  Cataract surg w/iol, 1 stage...........          $1,131             -1%
43239..................................  Upper GI endoscopy, biopsy.............             170              10
45380..................................  Colonoscopy and biopsy.................             167               7
45385..................................  Lesion removal colonoscopy.............             107               6
66982..................................  Cataract surgery, complex..............              93              -1
64483..................................  Inj foramen epidural l/s...............              90               0
62311..................................  Inject spine l/s (cd)..................              79               0
45378..................................  Diagnostic colonoscopy.................              72               6
66821..................................  After cataract laser surgery...........              63               3
64493..................................  Inj paravert f jnt l/s 1 lev...........              47               0
G0105..................................  Colorectal scrn; hi risk ind...........              45               1
64635..................................  Destroy lumb/sac facet jnt.............              45              -5
63650..................................  Implant neuroelectrodes................              41               4
G0121..................................  Colon ca scrn not hi rsk ind...........              41               1
64590..................................  Insrt/redo pn/gastr stimul.............              38              -1
15823..................................  Revision of upper eyelid...............              35               2

[[Page 67025]]

 
63685..................................  Insrt/redo spine n generator...........              34              29
29827..................................  Arthroscop rotator cuff repr...........              34               1
64721..................................  Carpal tunnel surgery..................              32              -1
29881..................................  Knee arthroscopy/surgery...............              30              -1
29824..................................  Shoulder arthroscopy/surgery...........              27               1
29880..................................  Knee arthroscopy/surgery...............              25              -1
43235..................................  Uppr gi endoscopy diagnosis............              23              10
62310..................................  Inject spine c/t.......................              23               0
29823..................................  Shoulder arthroscopy/surgery...........              22               1
52000..................................  Cystoscopy.............................              22               1
G0260..................................  Inj for sacroiliac jt anesth...........              21               0
45384..................................  Lesion remove colonoscopy..............              21               7
67042..................................  Vit for macular hole...................              21               1
26055..................................  Incise finger tendon sheath............              19              -2
----------------------------------------------------------------------------------------------------------------

(3) Estimated Effects of ASC Payment System Policies on Beneficiaries
    We estimate that the CY 2015 update to the ASC payment system will 
be generally positive for beneficiaries with respect to the new 
procedures that we are adding to the ASC list of covered surgical 
procedures and for those that we are designating as office-based for CY 
2015. First, other than certain preventive services where coinsurance 
and the Part B deductible is waived to comply with section 1833(a)(1) 
and (b) of the Act, the ASC coinsurance rate for all procedures is 20 
percent. This contrasts with procedures performed in HOPDs under the 
OPPS, where the beneficiary is responsible for copayments that range 
from 20 percent to 40 percent of the procedure payment (other than for 
certain preventive services). Second, in almost all cases, the ASC 
payment rates under the ASC payment system are lower than payment rates 
for the same procedures under the OPPS. Therefore, the beneficiary 
coinsurance amount under the ASC payment system will almost always be 
less than the OPPS copayment amount for the same services. (The only 
exceptions would be if the ASC coinsurance amount exceeds the inpatient 
deductible. The statute requires that copayment amounts under the OPPS 
not exceed the inpatient deductible.) Beneficiary coinsurance for 
services migrating from physicians' offices to ASCs may decrease or 
increase under the revised ASC payment system, depending on the 
particular service and the relative payment amounts under the MPFS 
compared to the ASC. However, for those additional procedures that we 
are designating as office-based in CY 2015, the beneficiary coinsurance 
amount under the ASC payment system generally will be no greater than 
the beneficiary coinsurance under the MPFS because the coinsurance 
under both payment systems generally is 20 percent (except for certain 
preventive services where the coinsurance is waived under both payment 
systems).
(4) Alternative ASC Payment Policies Considered
    Alternatives to the minor changes that we are making to the ASC 
payment system and the reasons that we have chosen specific options are 
discussed throughout this final rule with comment period. There are no 
major changes to ASC policies for CY 2015.
c. Accounting Statements and Tables
    As required by OMB Circular A-4 (available on the Office of 
Management and Budget Web site at: http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a-4.pdf), we have 
prepared two accounting statements to illustrate the impacts of this 
final rule with comment period. The first accounting statement, Table 
52 below, illustrates the classification of expenditures for the CY 
2015 estimated hospital OPPS incurred benefit impacts associated with 
the CY 2015 OPD fee schedule increase, based on the 2014 Trustee's 
Report. The second accounting statement, Table 53 below, illustrates 
the classification of expenditures associated with the 1.4 percent CY 
2015 update to the ASC payment system, based on the provisions of this 
final rule with comment period and the baseline spending estimates for 
ASCs in the 2014 Trustee's Report. Lastly, the tables classify most 
estimated impacts as transfers.

     Table 52--Accounting Statement: CY 2015 Estimated Hospital OPPS
 Transfers From CY 2014 to CY 2015 Associated With the CY 2015 Hospital
                  Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $900 million.
From Whom to Whom......................  Federal Government to
                                          outpatient hospitals and other
                                          providers who receive payment
                                          under the hospital OPPS.
                                        --------------------------------
    Total..............................  $900 million.
------------------------------------------------------------------------

[[Page 67026]]

  Table 53--Accounting Statement: Classification of Estimated Transfers
  From CY 2014 to CY 2015 as a Result of the CY 2015 Update to the ASC
                             Payment System
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $42 million.
From Whom to Whom......................  Federal Government to Medicare
                                          Providers and Suppliers.
                                        --------------------------------
    Total..............................  $42 million.
------------------------------------------------------------------------

d. Effects of Requirements for the Hospital OQR Program
    In section XIII. of this final rule with comment period, we are 
finalizing policies affecting the Hospital OQR Program. Of 3,325 
hospitals that met eligibility requirements for the CY 2014 payment 
determination, we determined that 88 hospitals did not meet the 
requirements to receive the full OPD fee schedule increase factor. Most 
of these hospitals (70 of the 88) chose not to participate in the 
Hospital OQR Program for the CY 2014 payment determination. We estimate 
that approximately 90 hospitals will not receive the full OPD fee 
schedule increase factor for the CY 2017 payment determination and 
subsequent years.
    In section XIII.E. of this final rule with comment period, we are 
finalizing our proposal to add one claims-based quality measure, OP-32: 
Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy, for the Hospital OQR Program for the CY 2018 payment 
determination and subsequent years, instead of the CY 2017 payment 
determination and subsequent years as proposed. Because this measure is 
claims-based, it will not require additional burden from data reporting 
or other action on the part of the hospitals. Therefore, we do not 
anticipate that this measure will cause any additional facilities to 
fail to meet requirements the Hospital OQR Program for the CY 2018 
payment determination and subsequent years.
    In section XIII.C.3. of this final rule with comment period, for 
the CY 2017 payment determination and subsequent years, we are 
finalizing our proposal to remove OP-6 and OP-7 from the Hospital OQR 
Program. However, we are not finalizing our proposal to remove OP-4 and 
are retaining that measure in the Hospital OQR Program for reasons 
discussed in section XIII.C.3. In sections XIII.D.3.b. and c. of this 
final rule with comment period, we are also finalizing our proposal to 
exclude OP-31 from the CY 2016 payment determination measure set and to 
change that measure from required to voluntary for the CY 2017 payment 
determination and subsequent years. Hospitals will not be subject to a 
payment reduction with respect to this measure for the CY 2016 payment 
determination or during the period of voluntary reporting.
    We anticipate a reduction in burden of approximately 840,517 hours 
or $25.2 million across participating hospitals from the two measures 
we are removing and the measure we are making voluntary, as further 
detailed in sections XIII.C.3. and XIII.D.3.c. of this final rule with 
comment period, respectively, and the information collection 
requirements in section XIX.C.1. of this final rule with comment 
period. We refer readers to the information collection requirements 
section of this final rule with comment period (section XIX.C.1. of 
this final rule with comment period) for a detailed discussion of the 
financial burden of the requirements of the Hospital OQR Program.
    The validation requirements that we are finalizing for the CY 2017 
payment determination and subsequent years will result in medical 
record documentation of approximately 6,000 cases per quarter (up to 12 
cases per quarter for 500 hospitals) submitted to the designated CMS 
contractor. In section XIII.H.3.e. of this final rule with comment 
period, we are finalizing our proposal to allow hospitals to submit 
medical record documentation for validation using either of two 
methods: (1) Through paper medical records; or (2) by securely 
transmitting electronic versions of medical information by either (a) 
downloading or copying the digital image (that is, a PDF) of the 
patient chart onto CD, DVD, or flash drive and shipping the electronic 
media following instructions specified on the QualityNet Web site; or 
(b) securely submitting digital images (PDFs) of patient charts using a 
Secure File Transfer Portal on the QualityNet Web site.
    As stated in prior rulemaking (76 FR 74577), we will pay for the 
cost of sending paper medical record documentation to the designated 
CMS contractor at the rate of 12 cents per page for copying and 
approximately $1.00 per case for postage. For both new electronic 
methods, we are finalizing our proposal in the information collection 
requirements section of this final rule with comment period to 
reimburse hospitals for sending medical records electronically at a 
rate of $3.00 per patient chart.
    As we stated in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75192), we have found that an outpatient medical chart generally 
contains up to 10 pages. However, because we do not yet know how many 
hospitals will choose to submit data electronically or through paper, 
we cannot estimate the total cost of expenditures and are unable to 
estimate the number of hospitals that will fail the validation 
documentation submission requirement for the CY 2017 payment 
determination. Because we will pay for the data collection effort, we 
believe that a requirement for medical record documentation for up to12 
cases per quarter for 500 hospitals for CY 2015 represents a minimal 
burden to Hospital OQR Program participating hospitals.
e. Effects of CY 2015 Policies for the ASCQR Program
    In section XIV. of this final rule with comment period, we are 
adopting policies affecting the ASCQR Program. Of 5,260 ASCs that met 
eligibility requirements for CY 2014, we determined that 116 ASCs did 
not meet the requirements to receive the full annual payment update.
    In section XIV.B.5. of this final rule with comment period, we are 
finalizing the adoption of one claims-based quality measure, ASC-12: 
Facility Seven-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy, for the ASCQR Program beginning with the CY 
2018 payment determination, rather than beginning with the CY 2017 
payment determination as proposed. The measure is claims-based and will 
not require additional data reporting or other action by ASCs. 
Therefore, we do not anticipate that this measure will cause any 
additional ASCs to fail to meet the ASCQR Program requirements. We 
present the time and burdens associated with our finalized policies and 
proposals in section XIX.C.2. of this final rule with comment period.
    In section XIV.E.3.b. of this final rule with comment period, we 
noted the 3-

[[Page 67027]]

month delay in data collection for ASC-9 and ASC-10 for the CY 2016 
payment determination. We do not believe that this 3-month delay in 
data collection will significantly affect the number of ASCs that meet 
the ASCQR Program requirements.
    In section XIV.E.3.c. of this final rule with comment period, we 
are finalizing our proposal that ASC-11, which was to be first included 
in the CY 2016 payment determination, will not be included in the CY 
2016 measure set, and that the measure will be voluntary for the CY 
2017 payment determination and subsequent years. ASCs will not be 
subject to a payment reduction for the CY 2016 payment determination, 
nor will ASCs be subject to a payment reduction for the CY 2017 payment 
determination and subsequent years for failing to report this voluntary 
measure. Because this measure has not yet affected any payment 
determination, we do not believe that there will be any impact on the 
number of ASCs that meet the ASCQR Program requirements as a result of 
our decision not to include this measure in the measure set for the CY 
2016 payment determination and to make this measure voluntary for the 
CY 2017 payment determination and subsequent years.
    We do not believe that the other measures we previously adopted 
will cause any additional ASCs to fail to meet the ASCQR Program 
requirements. (We refer readers to the CY 2014 OPPS/ASC final rule with 
comment period for a list of these measures (78 FR 75130)).
    Further, we do not believe that any of the other proposals we are 
finalizing in this final rule with comment period will significantly 
affect the number of ASCs that do not receive a full annual payment 
update for the CY 2017 payment determination. We are unable to estimate 
the number of ASCs that will not receive the full annual payment update 
based on the CY 2015 and CY 2016 payment determinations (78 FR 75192). 
For this reason, using the CY 2014 payment determination numbers as a 
baseline, we estimate that approximately 116 ASCs will not receive the 
full annual payment update in CY 2017 due to failure to meet the ASCQR 
Program requirements.
    We invited public comment on the burden associated with these 
information collection requirements. We did not receive any public 
comments.
f. Effects of Changes to the Rural Provider and Hospital Ownership 
Exceptions to the Physician Self-Referral Law
    Section 6001(a) of the Affordable Care Act amended the rural 
provider and hospital ownership exceptions to the physician self-
referral law (sections 1877(d)(2) and (d)(3) of the Act, respectively) 
to impose additional restrictions on physician ownership or investment 
in hospitals. The amended rural provider and hospital ownership 
exceptions provide that a hospital may not increase the number of 
operating rooms, procedure rooms, and beds beyond that for which the 
hospital was licensed on March 23, 2010 (or, in the case of a hospital 
that did not have a provider agreement in effect as of this date, but 
did have a provider agreement in effect on December 31, 2010, the date 
of effect of such agreement). We issued regulations addressing the 
prohibition against facility expansion in the CY 2011 OPPS/ASC final 
rule with comment period (75 FR 72240).
    Section 6001(a)(3) of the Affordable Care Act added section 
1877(i)(3)(A)(i) of the Act to set forth that the Secretary shall 
establish and implement an exception process to the prohibition on 
expansion of facility capacity. We issued regulations that govern the 
expansion exception process in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74517) at 42 CFR 411.362(c). The regulations 
addressing the expansion exception process were issued by January 1, 
2012, and the process was implemented on February 1, 2012.
    As required by the statute, the expansion exception process 
provides that hospitals that qualify as an ``applicable hospital'' or a 
``high Medicaid facility'' may request an exception to the prohibition 
on facility expansion. The existing expansion exception process 
requires the use of filed Medicare cost report data from the Healthcare 
Cost Report Information System (HCRIS) for hospitals to demonstrate 
that they satisfy the relevant eligibility criteria set forth in Sec.  
411.362(c)(2) for applicable hospitals and Sec.  411.362(c)(3) for high 
Medicaid facilities (76 FR 42350 through 42352). As discussed in 
section XV.C. of the CY 2015 OPPS/ASC proposed rule (79 FR 41054 
through 41056), we proposed to permit physician-owned hospitals to use 
certain non-HCRIS data sources to demonstrate satisfaction of the 
expansion exception process eligibility criteria. In section XV.C. of 
this final rule with comment period, we are finalizing our proposal 
with certain modifications. Under our policy, we will continue to 
require each hospital seeking to qualify for an expansion exception to 
access and utilize data for its estimations or determinations to 
demonstrate that the hospital meets the relevant criteria and to 
provide a detailed explanation regarding whether and how it satisfies 
each of the relevant criteria. We believe the impact of our 
modification on affected hospitals will be minimal, given that the use 
of data from a non-HCRIS data source is voluntary.
    Our policy will require each requesting hospital also to provide 
actual notification that it is requesting an expansion exception 
directly to hospitals whose data are part of the comparisons set forth 
in Sec.  411.362(c)(2)(ii) and (c)(3)(ii) of the regulations, in 
addition to performing the other methods of notification specified in 
our existing regulations. We are finalizing this policy, and we believe 
the impact of this additional requirement on physician-owned hospitals 
will be minimal.
    We believe that our policy will affect a relatively small number of 
physician-owned hospitals. We estimate that there are approximately 265 
physician-owned hospitals in the country. Since the process was 
implemented in February 2012, we have received only four requests, only 
one of which has been considered sufficiently complete to continue with 
publication in the Federal Register, under the current regulations. We 
anticipate receiving a similar number of requests each year. We do not 
believe that we can use the four requests to estimate accurately the 
potential increase in operating rooms, procedure rooms, and beds 
pursuant to approved expansion exception requests, and we are not aware 
of any data that may indicate such an increase. At this time, we also 
have no data or projections that may help estimate the number of 
physicians that will be affected by these proposals as a result of 
their ownership interests in hospitals.
    We believe that beneficiaries may be positively impacted by our 
policies. Specifically, an increase in operating rooms, procedure 
rooms, and beds may augment the volume or nature of services offered by 
physician-owned hospitals. An expansion in the number of hospital beds 
may also permit additional inpatient admissions and overnight stays. 
Increased operating rooms, procedure rooms, and beds may result in 
improved access to health care facilities and services. We believe that 
our policies are necessary to conform our regulations to the amendments 
to section 1877 of the Act.
    We solicited public comments on each of the issues outlined above 
that contain estimates of the costs and benefits of the proposed rule. 
We specifically solicited comments on the potential impact on State 
governments, because we proposed to define external

[[Page 67028]]

data sources as data sources generated, maintained, or under the 
control of a State Medicaid agency. We did not receive any public 
comments on our estimates.
g. Effects of Policies Related to CMS-Identified Overpayments 
Associated With Payment Data Submitted by Medicare Advantage (MA) 
Organizations and Medicare Part D Sponsors
    In section XVII. of this final rule with comment period, we discuss 
our final decisions to set forth in regulations a formal process, 
including appeals processes, that allows us to recoup overpayments in 
the limited set of circumstances where CMS makes a determination that 
an overpayment to an MA organization or Part D sponsor occurred because 
the organization or sponsor submitted erroneous payment data to CMS. It 
is difficult to predict how many times CMS will annually determine an 
overpayment due to erroneous payment data submitted to CMS by an MA 
organization or Part D sponsor and that, therefore, will be subject to 
the offset and appeals regulations. However, we predict that it will be 
highly unlikely to exceed 10 cases a year and will probably be fewer. 
Further, electing to appeal a CMS overpayment determination under the 
final regulations is completely at the discretion of the MA 
organization or Part D sponsor. The MA organization or Part D sponsor 
may agree that the data require correction and resubmit the data; MA 
organizations and Part D sponsors that receive notification of an 
overpayment are under no obligation to initiate the appeal process. If 
the MA organization or Part D sponsor chooses not to appeal, there are 
no costs or burden associated with the appeal. If the MA organization 
or Part D sponsor chooses to appeal the overpayment determination, 
there will be costs associated with preparing the appeal request.
    We are establishing three levels of appeal (reconsideration, 
informal hearing, and Administrator review), each of which the MA 
organization or Part D sponsor will have to request. Once the appeal 
has been filed, however; there will be little or no cost experienced by 
the MA organization or Part D sponsor because the appeal process is on 
the record and will not involve oral testimony. The extent to which 
there will be costs associated with preparing the appeal request is 
subject to preference and choice. We estimate that it will take a plan 
5 hours to prepare and file a reconsideration request. In terms of 
cost, it has been our experience that most appeals have been prepared 
by high-level officials of the plan or lawyers. According to the most 
recent wage data provided by the Bureau of Labor Statistics (BLS) for 
May 2012, the mean hourly wage for the category of ``Lawyers''--which 
we believe, considering the variety of officials who have submitted 
appeals, is the most appropriate category--is $62.93. Multiplying this 
figure by 50 hours (10 submissions x 5 hours) results in a projected 
annual cost burden of $3,147. We estimate the preparation and filing of 
a request for a hearing, or for Administrator's review will take 2 
hours, at most, because the MA organization or Part D sponsor cannot 
submit new evidence. The hearing officer or Administrator is limited to 
a review of the record. Multiplying this figure by 40 hours (10 
submissions x 4 hours) results in a projected annual cost burden of 
$2,517. It is estimated that if the costs of benefits and overhead are 
included, the total annual costs for requests at the three levels will 
be approximately $11,000.

B. Regulatory Flexibility Act (RFA) Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
most hospitals, ASCs and CMHCs are small entities as that term is used 
in the RFA. For purposes of the RFA, most hospitals are considered 
small businesses according to the Small Business Administration's size 
standards with total revenues of $38.5 million or less in any single 
year. Most ASCs and most CMHCs are considered small businesses with 
total revenues of $15 million or less in any single year. We estimate 
that this final rule with comment period may have a significant impact 
on approximately 2,006 hospitals with voluntary ownership. For details, 
see the Small Business Administration's ``Table of Small Business Size 
Standards'' at http://www.sba.gov/content/table-small-business-size-standards.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has 100 or fewer beds. We estimate that this final 
rule with comment period may have a significant impact on approximately 
709 small rural hospitals.
    The analysis above, together with the remainder of this preamble, 
provides a regulatory flexibility analysis and a regulatory impact 
analysis.

C. Unfunded Mandates Reform Act Analysis

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $141 million. This final rule with 
comment period does not mandate any requirements for State, local, or 
tribal governments, or for the private sector.

D. Conclusion

    The changes we are making in this final rule with comment period 
will affect all classes of hospitals paid under the OPPS and will 
affect both CMHCs and ASCs. We estimate that most classes of hospitals 
paid under the OPPS will experience a modest increase or a minimal 
decrease in payment for services furnished under the OPPS in CY 2015. 
Table 49 demonstrates the estimated distributional impact of the OPPS 
budget neutrality requirements that will result in a 2.3 percent 
increase in payments for all services paid under the OPPS in CY 2015, 
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, 
estimated payment for outliers, and changes to the pass-through payment 
estimate. However, some classes of providers that are paid under the 
OPPS will experience more significant gains and others will experience 
modest losses in OPPS payments in CY 2015.
    The updates to the ASC payment system for CY 2015 will affect each 
of the approximately 5,300 ASCs currently approved for participation in 
the Medicare program. The effect on an individual ASC will depend on 
its mix of patients, the proportion of the ASC's patients who are 
Medicare beneficiaries, the degree to which the payments for the 
procedures offered by the ASC are changed under the ASC payment system, 
and the extent to which the ASC provides a different set of procedures 
in the coming year. Table 50 demonstrates the estimated distributional 
impact among ASC surgical specialties of the

[[Page 67029]]

MFP-adjusted CPI-U update factor of 1.4 percent for CY 2015.

XXII. Federalism Analysis

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct costs on State and local 
governments, preempts State law, or otherwise has Federalism 
implications. We have examined the OPPS and ASC provisions included in 
this final rule with comment period in accordance with Executive Order 
13132, Federalism, and have determined that they will not have a 
substantial direct effect on State, local or tribal governments, 
preempt State law, or otherwise have a Federalism implication. As 
reflected in Table 49 of this final rule with comment period, we 
estimate that OPPS payments to governmental hospitals (including State 
and local governmental hospitals) will increase by 2.1 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 final rule with comment period 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.

List of Subjects

42 CFR Part 411

    Kidney diseases, Medicare, Physician referral, Reporting and 
recordkeeping requirements.

42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 416

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

42 CFR Part 419

    Hospitals, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance, organizations (HMO), Medicare, Penalties, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Health 
professionals, Medicare, Penalties, Privacy, Reporting and 
recordkeeping requirements.

42 CFR Part 424

    Emergency medical services, Health professions, Medicare.
    For reasons stated in the preamble of this document, the Centers 
for Medicare & Medicaid Services is amending 42 CFR Chapter IV as set 
forth below:

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATION ON MEDICARE 
PAYMENT

0
1. The authority citation for part 411 continues to read as follows:

    Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877 
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).

0
2. Section 411.362 is amended by--
0
a. Under paragraph (a), adding a definition of ``External data source'' 
in alphabetical order.
0
b. Revising paragraphs (c)(2)(ii), (c)(2)(iv), (c)(2)(v), (c)(3)(ii), 
and (c)(5).
    The addition and revisions read as follows:

Sec.  411.362  Additional requirements concerning physician ownership 
and investment in hospitals.

    (a) * * *
    External data source means a data source that--
    (1) Is generated, maintained, or under the control of a State 
Medicaid agency;
    (2) Is reliable and transparent;
    (3) Maintains data that, for purposes of the process described in 
paragraph (c) of this section, are readily available and accessible to 
the requesting hospital, comparison hospitals, and CMS; and
    (4) Maintains or generates data that, for purposes of the process 
described in paragraph (c) of this section, are accurate, complete, and 
objectively verifiable.
* * * * *
    (c) * * *
    (2) * * *
    (ii) Medicaid inpatient admissions. Has an annual percent of total 
inpatient admissions under Medicaid that is equal to or greater than 
the average percent with respect to such admissions for all hospitals 
located in the county in which the hospital is located during the most 
recent 12-month period for which data are available as of the date that 
the hospital submits its request. For purposes of this paragraph, the 
most recent 12-month period for which data are available means the most 
recent 12-month period for which the data source used contains all data 
from the requesting hospital and each hospital located in the same 
county as the requesting hospital.
    (A) Until such time that the Healthcare Cost Report Information 
System (HCRIS) contains sufficiently complete inpatient Medicaid 
discharge data, a hospital may use filed Medicare hospital cost report 
data or data from an external data source (as defined in paragraph (a) 
of this section) to estimate its annual percent of total inpatient 
admissions under Medicaid and the average percent with respect to such 
admissions for all hospitals located in the county in which the 
hospital is located.
    (B) On or after such date that the Secretary determines that HCRIS 
contains sufficiently complete inpatient Medicaid discharge data, a 
hospital may use only filed Medicare hospital cost report data to 
estimate its annual percent of total inpatient admissions under 
Medicaid and the average percent with respect to such admissions for 
all hospitals located in the county in which the hospital is located.
* * * * *
    (iv) Average bed capacity. Is located in a State in which the 
average bed capacity in the State is less than the national average bed 
capacity during the most recent fiscal year for which HCRIS, as of the 
date that the hospital submits its request, contains data from a 
sufficient number of hospitals to determine a State's average bed 
capacity and the national average bed capacity. CMS will provide on its 
Web site State average bed capacities and the national average bed 
capacity. For purposes of this paragraph, ``sufficient number'' means 
the number of hospitals, as determined by CMS, that would ensure that 
the determination under this paragraph would not materially change 
after additional hospital data are reported.
    (v) Average bed occupancy. Has an average bed occupancy rate that 
is greater than the average bed occupancy rate in the State in which 
the hospital is located during the most recent fiscal year for which 
HCRIS, as of the date that the hospital submits its request, contains 
data from a sufficient number

[[Page 67030]]

of hospitals to determine the requesting hospital's average bed 
occupancy rate and the relevant State's average bed occupancy rate. A 
hospital must use filed hospital cost report data to determine its 
average bed occupancy rate. CMS will provide on its Web site State 
average bed occupancy rates. For purposes of this paragraph, 
``sufficient number'' means the number of hospitals, as determined by 
CMS, that would ensure that the determination under this paragraph 
would not materially change after additional hospital data are 
reported.
    (3) * * *
    (ii) Medicaid inpatient admissions. With respect to each of the 3 
most recent 12-month periods for which data are available as of the 
date the hospital submits its request, has an annual percent of total 
inpatient admissions under Medicaid that is estimated to be greater 
than such percent with respect to such admissions for any other 
hospital located in the county in which the hospital is located. For 
purposes of this paragraph, the most recent 12-month period for which 
data are available means the most recent 12-month period for which the 
data source used contains all data from the requesting hospital and 
every hospital located in the same county as the requesting hospital.
    (A) Until such time that the Healthcare Cost Report Information 
System (HCRIS) contains sufficiently complete inpatient Medicaid 
discharge data, a hospital may use filed Medicare hospital cost report 
data or data from an external data source (as defined in paragraph (a) 
of this section) to estimate its annual percentage of total inpatient 
admissions under Medicaid and the annual percentages of total inpatient 
admissions under Medicaid for every other hospital located in the 
county in which the hospital is located.
    (B) On or after such date that the Secretary determines that HCRIS 
contains sufficiently complete inpatient Medicaid discharge data, a 
hospital may use only filed Medicare hospital cost report data to 
estimate its annual percentage of total inpatient admissions under 
Medicaid and the annual percentages of total inpatient admissions under 
Medicaid for every other hospital located in the county in which the 
hospital is located.
* * * * *
    (5) Community input and timing of complete request. Upon submitting 
a request for an exception and until the hospital receives a CMS 
decision, the hospital must disclose on any public Web site for the 
hospital that it is requesting an exception and must also provide 
actual notification that it is requesting an exception, in either 
electronic or hard copy form, directly to hospitals whose data are part 
of the comparisons in paragraphs (c)(2)(ii) and (c)(3)(ii) of this 
section. Individuals and entities in the hospital's community may 
provide input with respect to the hospital's request no later than 30 
days after CMS publishes notice of the hospital's request in the 
Federal Register. Such input must take the form of written comments. 
The written comments must be either mailed or submitted electronically 
to CMS. If CMS receives written comments from the community, the 
hospital has 30 days after CMS notifies the hospital of the written 
comments to submit a rebuttal statement.
    (i) If only filed Medicare hospital cost report data are used in 
the hospital's request, the written comments, and the hospital's 
rebuttal statement--
    (A) A request will be deemed complete at the end of the 30-day 
comment period if CMS does not receive written comments from the 
community.
    (B) A request will be deemed complete at the end of the 30-day 
rebuttal period, regardless of whether the hospital submits a rebuttal 
statement, if CMS receives written comments from the community.
    (ii) If data from an external data source are used in the 
hospital's request, the written comments, or the hospital's rebuttal 
statement--
    (A) A request will be deemed complete no later than 180 days after 
the end of the 30-day comment period if CMS does not receive written 
comments from the community.
    (B) A request will be deemed complete no later than 180 days after 
the end of the 30-day rebuttal period, regardless of whether the 
hospital submits a rebuttal statement, if CMS receives written comments 
from the community.
* * * * *

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

0
3. The authority citation for Part 412 continues to read as follows:

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), sec. 124 of Pub. L. 106-113 (113 Stat. 
1501A-332), sec. 1206 of Pub. L. 113-67, and sec 112 of Pub. L. 113-
93.

Sec.  412.3  [Amended]

0
4. Section 412.3 is amended by--
0
a. Removing paragraph (c).
0
b. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d), 
respectively.
0
c. In redesignated paragraph (d)(1), removing the cross-reference 
``paragraph (e)(2)'' and adding in its place the cross-reference 
``paragraph (d)(2)''.

PART 416--AMBULATORY SURGICAL SERVICES

0
5. The authority citation for Part 416 continues to read as follows:

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

0
6. Section 416.164 is amended by revising paragraphs (a)(11) and (b)(5) 
to read as follows:

Sec.  416.164  Scope of ASC services.

    (a) * * *
    (11) Radiology services for which separate payment is not allowed 
under the OPPS and other diagnostic tests or interpretive services that 
are integral to a surgical procedure, except certain diagnostic tests 
for which separate payment is allowed under the OPPS;
* * * * *
    (b) * * *
    (5) Certain radiology services and certain diagnostic tests for 
which separate payment is allowed under the OPPS.
* * * * *

0
7. Section 416.171 is amended by revising paragraphs (b)(1), (b)(2), 
and (d) introductory text 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);
    (2) The device portion of device-intensive procedures, which are 
procedures assigned to an APC with a device cost greater than 40 
percent of the APC costs when calculated according to the standard OPPS 
APC ratesetting methodology.
* * * * *
    (d) Limitation on payment rates for office-based surgical 
procedures and covered ancillary radiology services and certain 
diagnostic tests. Notwithstanding the provisions of paragraph (a) of 
this section, for any covered surgical procedure under Sec.  416.166 
that CMS determines is commonly performed in physicians' offices or for 
any covered ancillary radiology service or diagnostic test

[[Page 67031]]

under Sec.  416.164(b)(5), excluding those listed in paragraphs (d)(1) 
and (d)(2) of this section, the national unadjusted ASC payment rates 
for these procedures and services will be the lesser of the amount 
determined under paragraph (a) of this section or the amount calculated 
at the nonfacility practice expense relative value units under Sec.  
414.22(b)(5)(i)(B) of this chapter multiplied by the conversion factor 
described in Sec.  414.20(a)(3) of this chapter.
* * * * *

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

0
8. The authority citation for Part 419 continues to read as follows:

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

0
9. Section 419.2 is amended by revising paragraphs (b)(7) and (b)(16) 
to read as follows:

Sec.  419.2  Basis of payment.

* * * * *
    (b) * * *
    (7) Ancillary services;
* * * * *
    (16) Drugs and biologicals that function as supplies when used in a 
surgical procedure (including, but not limited to, skin substitutes and 
similar products that aid wound healing and implantable biologicals);
* * * * *

0
10. Section 419.22 is amended by revising paragraph (j) to read as 
follows:

Sec.  419.22  Hospital services excluded from payment under the 
hospital outpatient prospective payment system.

* * * * *
    (j) Except as provided in Sec.  419.2(b)(11), prosthetic devices 
and orthotic devices.
* * * * *

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

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

* * * * *
    (b) * * *
    (1) * * *
    (iv) * * *
    (B) * * *
    (6) For calendar year 2015, a multifactor productivity adjustment 
(as determined by CMS) and 0.2 percentage point.
* * * * *

Sec.  419.46  [Amended]

0
12. Section 419.46 is amended by--
0
a. In paragraph (c)(1), removing the phrase ``section 1833(17)(C)'' and 
adding in its place the phrase ``section 1833(t)(17)(C)''.
0
b. In paragraph (d) introductory text and paragraph (d)(1), removing 
the term ``waiver'' and adding in its place the term ``exception'' each 
time it appears.
0
c. In paragraph (d)(2), removing the term ``waivers'' and adding in its 
place the term ``exceptions''.
0
d. In paragraph (e) introductory text, removing the phrase ``section 
1833(17)(C)'' and adding in its place the phrase ``section 
1833(t)(17)(C)''.
0
13. Section 419.64 is amended by revising paragraph (a)(4)(iv) to read 
as follows:

Sec.  419.64  Transitional pass-through payments: Drugs and 
biologicals.

* * * * *
    (a) * * *
    (4) * * *
    (iv) A biological that is not a skin substitute or similar product 
that aids wound healing.
* * * * *

0
14. Section 419.66 is amended by revising paragraph (b)(3) and removing 
paragraph (b)(4)(iii) to read as follows:

Sec.  419.66  Transitional pass-through payments: Medical devices.

* * * * *
    (b) * * *
    (3) The device is an integral part of the service furnished, is 
used for one patient only, comes in contact with human tissue, and is 
surgically implanted or inserted (either permanently or temporarily) or 
applied in or on a wound or other skin lesion.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

0
15. The authority citation for Part 422 continues to read as follows:

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

0
16. A new Sec.  422.330 is added to subpart G to read as follows:

Sec.  422.330  CMS-identified overpayments associated with payment data 
submitted by MA organizations.

    (a) Definitions. For purposes of this section--
    Applicable reconciliation date occurs on the date of the annual 
final deadline for risk adjustment data submission described at Sec.  
422.310(g)(2)(ii).
    Erroneous payment data means payment data that should not have been 
submitted either because the data submitted are inaccurate or because 
the data are inconsistent with Medicare Part C requirements.
    Payment data means data submitted by an MA organization to CMS and 
used for payment purposes, including enrollment data and data submitted 
under Sec.  422.310.
    (b) Request to correct payment data. (1) When CMS identifies 
erroneous payment data submitted by an MA organization (other than an 
error identified through the process described in Sec.  422.311), CMS 
may send a data correction notice to the MA organization requesting 
that the MA organization correct the payment data.
    (2) The notice will include or make reference to the specific 
payment data that need to be corrected, the reason why CMS believes 
that the payment data are erroneous, and the timeframe for correcting 
the payment data.
    (c) Payment offset. (1) If the MA organization fails to submit the 
corrected payment data within the timeframe as requested in accordance 
with paragraph (b) of this section, CMS will conduct a payment offset 
against payments made to the MA organization if--
    (i) The payment error affects payments for any of the 6 most 
recently completed payment years; and
    (ii) The payment error for a particular payment year is identified 
after the applicable reconciliation date for that payment year.
    (2) CMS will calculate the payment offset amount using the correct 
payment data and a payment algorithm that applies the payment rules for 
the applicable year.
    (d) Payment offset notification. CMS will issue a payment offset 
notice to the MA organization that includes at least the following:
    (1) The dollar amount of the offset from plan payments.
    (2) An explanation of how the erroneous data were identified and 
used to calculate the payment offset amount.
    (3) An explanation that, if the MA organization disagrees with the 
payment offset, it may request an appeal within 30 days of issuance of 
the payment offset notification.
    (e) Appeals process. If an MA organization does not agree with the 
payment offset described in paragraph (c) of this section, it may 
appeal under the following three-level appeal process:
    (1) Reconsideration. An MA organization may request reconsideration 
of the payment offset described in paragraph (c) of this section, 
according to the following process:

[[Page 67032]]

    (i) Manner and timing of request. A written request for 
reconsideration must be filed within 30 days from the date that CMS 
issued the payment offset notice to the MA organization.
    (ii) Content of request. The written request for reconsideration 
must specify the findings or issues with which the MA organization 
disagrees and the reasons for its disagreement. As part of its request 
for reconsideration, the MA organization may include any additional 
documentary evidence in support of its position. Any additional 
evidence must be submitted with the request for reconsideration. 
Additional information submitted after this time will be rejected as 
untimely.
    (iii) Conduct of reconsideration. In conducting the 
reconsideration, the CMS reconsideration official reviews the 
underlying data that were used to determine the amount of the payment 
offset and any additional documentary evidence timely submitted by the 
MA organization.
    (iv) Reconsideration decision. The CMS reconsideration official 
informs the MA organization of its decision on the reconsideration 
request.
    (v) Effect of reconsideration decision. The decision of the CMS 
reconsideration official is final and binding unless a timely request 
for an informal hearing is filed in accordance with paragraph (e)(2) of 
this section.
    (2) Informal hearing. An MA organization dissatisfied with CMS' 
reconsideration decision made under paragraph (e)(1) of this section is 
entitled to an informal hearing as provided for under paragraphs 
(e)(2)(i) through (e)(2)(v) of this section.
    (i) Manner and timing for request. A request for an informal 
hearing must be made in writing and filed with CMS within 30 days of 
the date of CMS' reconsideration decision.
    (ii) Content of request. The request for an informal hearing must 
include a copy of the reconsideration decision and must specify the 
findings or issues in the decision with which the MA organization 
disagrees and the reasons for its disagreement.
    (iii) Informal hearing procedures. The informal hearing will be 
conducted in accordance with the following:
    (A) CMS provides written notice of the time and place of the 
informal hearing at least 30 days before the scheduled date.
    (B) The informal hearing is conducted by a CMS hearing officer who 
neither receives testimony nor accepts any new evidence that was not 
timely presented with the reconsideration request. The CMS hearing 
officer is limited to the review of the record that was before the CMS 
reconsideration official when CMS made its reconsideration 
determination.
    (C) The CMS hearing officer will review the proceeding before the 
CMS reconsideration official on the record made before the CMS 
reconsideration official using the clearly erroneous standard of 
review.
    (iv) Decision of the CMS hearing officer. The CMS hearing officer 
decides the case and sends a written decision to the MA organization 
explaining the basis for the decision.
    (v) Effect of hearing officer's decision. The hearing officer's 
decision is final and binding, unless the decision is reversed or 
modified by the Administrator in accordance with paragraph (e)(3) of 
this section.
    (3) Review by the Administrator. The Administrator review will be 
conducted in the following manner:
    (i) An MA organization that has received a hearing officer's 
decision may request review by the Administrator within 30 days of the 
date of issuance of the hearing officer's decision under paragraph 
(e)(2)(iv) of this section. The MA organization may submit written 
arguments to the Administrator for review.
    (ii) After receiving a request for review, the Administrator has 
the discretion to elect to review the hearing officer's determination 
in accordance with paragraph (e)(3)(iv) of this section or to decline 
to review the hearing officer's decision.
    (iii) If the Administrator declines to review the hearing officer's 
decision, the hearing officer's decision is final and binding.
    (iv) If the Administrator elects to review the hearing officer's 
decision, the Administrator will review the hearing officer's decision, 
as well as any information included in the record of the hearing 
officer's decision and any written argument submitted by the MA 
organization, and determine whether to uphold, reverse, or modify the 
hearing officer's decision.
    (v) The Administrator's determination is final and binding.
    (f) Matters subject to appeal and burden of proof. (1) The MA 
organization's appeal is limited to CMS' finding that the payment data 
submitted by the MA organization are erroneous.
    (2) The MA organization bears the burden of proof by a 
preponderance of the evidence in demonstrating that CMS' finding that 
the payment data were erroneous was incorrect or otherwise inconsistent 
with applicable program requirements.
    (g) Applicability of appeals process. The appeals process under 
paragraph (e) of this section applies only to payment offsets under 
paragraph (c) of this section.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
17. The authority citation for Part 423 continues to read as follows:

    Authority:  Secs. 1102, 1106, 1860D-1 through 1860D-42, and 1871 
of the Social Security Act (42 U.S.C. 1302, 1306, 1395w-101 through 
1395w-152, and 1395hh).

0
18. A new Sec.  423.352 is added to read as follows:

Sec.  423.352  CMS-identified overpayments associated with payment data 
submitted by Part D sponsors.

    (a) Definitions. For purposes of this section--
    Applicable reconciliation date occurs on the later of either the 
annual deadline for submitting--
    (1) Prescription drug event (PDE) data for the annual Part D 
payment reconciliations referred to in Sec.  423.343(c) and (d); or
    (2) Direct and indirect remuneration data.
    Erroneous payment data means payment data that should not have been 
submitted either because the data submitted are inaccurate or because 
the data are inconsistent with Medicare Part D requirements.
    Payment data means data submitted by a Part D sponsor to CMS and 
used for payment purposes, including enrollment data and data submitted 
under Sec.  423.329(b)(3), Sec.  423.336(c)(1), and Sec.  423.343, and 
data provided for purposes of supporting allowable reinsurance costs 
and allowable risk corridor costs as defined in Sec.  423.308, 
including data submitted to CMS regarding direct and indirect 
remuneration.
    (b) Request to correct payment data. (1) When CMS identifies 
erroneous payment data submitted by a Part D sponsor, CMS may send a 
data correction notice to the Part D sponsor requesting that the Part D 
sponsor correct the payment data.
    (2) The notice will include or make reference to the specific 
payment data that need to be corrected, the reason why CMS believes 
that the payment data are erroneous, and the timeframe for correcting 
the payment data.
    (c) Payment offset. (1) If the Part D sponsor fails to submit the 
corrected payment data within the timeframe as requested in accordance 
with paragraph (b) of this section, CMS will conduct a payment offset 
against payments made to the Part D sponsor if--

[[Page 67033]]

    (i) The payment error affects payments for any of the 6 most 
recently completed payment years; and
    (ii) The payment error for a particular payment year is identified 
after the applicable reconciliation date for that payment year.
    (2) CMS will calculate the payment offset amount using the correct 
payment data and a payment algorithm that applies the payment rules for 
the applicable year.
    (d) Payment offset notification. CMS will issue a payment offset 
notice to the Part D sponsor that includes at least the following:
    (1) The dollar amount of the offset from plan payments.
    (2) An explanation of how the erroneous data were identified and 
used to calculate the payment offset amount.
    (3) An explanation that, if the Part D sponsor disagrees with the 
payment offset, it may request an appeal within 30 days of issuance of 
the payment offset notification.
    (e) Appeals process. If a Part D sponsor does not agree with the 
payment offset described in paragraph (c) of this section, it may 
appeal under the following three-level appeal process:
    (1) Reconsideration. A Part D sponsor may request reconsideration 
of the payment offset described in paragraph (c) of this section, 
according to the following process:
    (i) Manner and timing of request. A written request for 
reconsideration must be filed within 30 days from the date that CMS 
issued the payment offset notice to the Part D sponsor.
    (ii) Content of request. The written request for reconsideration 
must specify the findings or issues with which the Part D sponsor 
disagrees and the reasons for its disagreement. As part of its request 
for reconsideration, the Part D sponsor may include any additional 
documentary evidence in support of its position. Any additional 
evidence must be submitted with the request for reconsideration. 
Additional information submitted after this time will be rejected as 
untimely.
    (iii) Conduct of reconsideration. In conducting the 
reconsideration, the CMS reconsideration official reviews the 
underlying data that were used to determine the amount of the payment 
offset and any additional documentary evidence timely submitted by the 
Part D sponsor.
    (iv) Reconsideration decision. The CMS reconsideration official 
informs the Part D sponsor of its decision on the reconsideration 
request.
    (v) Effect of reconsideration decision. The decision of the CMS 
reconsideration official is final and binding unless a timely request 
for an informal hearing is filed in accordance with paragraph (e)(2) of 
this section.
    (2) Informal hearing. A Part D sponsor dissatisfied with CMS' 
reconsideration decision made under paragraph (e)(1) of this section is 
entitled to an informal hearing as provided for under paragraphs 
(e)(2)(i) through (e)(2)(v) of this section.
    (i) Manner and timing for request. A request for an informal 
hearing must be made in writing and filed with CMS within 30 days of 
the date of CMS' reconsideration decision.
    (ii) Content of request. The request for an informal hearing must 
include a copy of the reconsideration decision and must specify the 
findings or issues in the decision with which the Part D sponsor 
disagrees and the reasons for its disagreement.
    (iii) Informal hearing procedures. The informal hearing will be 
conducted in accordance with the following:
    (A) CMS provides written notice of the time and place of the 
informal hearing at least 30 days before the scheduled date.
    (B) The informal hearing is conducted by a CMS hearing officer who 
neither receives testimony nor accepts any new evidence that was not 
timely presented with the reconsideration request. The CMS hearing 
officer is limited to the review of the record that was before the CMS 
reconsideration official when CMS made its reconsideration 
determination.
    (C) The CMS hearing officer will review the proceeding before the 
CMS reconsideration official on the record made before the CMS 
reconsideration official using the clearly erroneous standard of 
review.
    (iv) Decision of the CMS hearing officer. The CMS hearing officer 
decides the case and sends a written decision to the Part D sponsor 
explaining the basis for the decision.
    (v) Effect of hearing officer's decision. The hearing officer's 
decision is final and binding, unless the decision is reversed or 
modified by the Administrator in accordance with paragraph (e)(3) of 
this section.
    (3) Review by the Administrator. The Administrator review will be 
conducted in the following manner:
    (i) A Part D sponsor that has received a hearing officer's decision 
may request review by the Administrator within 30 days of the date of 
issuance of the hearing officer's decision under paragraph (e)(2)(iv) 
of this section. The Part D sponsor may submit written arguments to the 
Administrator for review.
    (ii) After receiving a request for review, the Administrator has 
the discretion to elect to review the hearing officer's determination 
in accordance with paragraph (e)(3)(iv) of this section or to decline 
to review the hearing officer's decision.
    (iii) If the Administrator declines to review the hearing officer's 
decision, the hearing officer's decision is final and binding.
    (iv) If the Administrator elects to review the hearing officer's 
decision, the Administrator will review the hearing officer's decision, 
as well as any information included in the record of the hearing 
officer's decision and any written argument submitted by the Part D 
sponsor, and determine whether to uphold, reverse, or modify the 
hearing officer's decision.
    (v) The Administrator's determination is final and binding.
    (f) Matters subject to appeal and burden of proof. (1) The Part D 
sponsor's appeal is limited to CMS' finding that the payment data 
submitted by the Part D sponsor are erroneous.
    (2) The Part D sponsor bears the burden of proof by a preponderance 
of the evidence in demonstrating that CMS' finding that the payment 
data were erroneous was incorrect or otherwise inconsistent with 
applicable program requirements.
    (g) Applicability of appeals process. The appeals process under 
paragraph (e) of this section applies only to payment offsets under 
paragraph (c) of this section.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
19. The authority citation for Part 424 continues to read as follows:

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

0
20. Section 424.13 is amended by--
0
a. Revising paragraph (a) introductory text.
0
b. Removing paragraph (a)(1).
0
c. Redesignating paragraphs (a)(2), (3), and (4) as paragraphs (a)(1), 
(2), and (3), respectively.
0
d. Revising redesignated paragraph (a)(1)(i).
0
e. Revising paragraph (b).
    The revisions read as follows:

Sec.  424.13  Requirements for inpatient services of hospitals other 
than inpatient psychiatric facilities.

    (a) Content of certification and recertification. Medicare Part A 
pays for inpatient hospital services (other than inpatient psychiatric 
facility services) for cases that are 20 inpatient days or more, or are 
outlier cases under subpart F of part 412 of this chapter, only if a

[[Page 67034]]

physician certifies or recertifies the following:
    (1) * * *
    (i) Continued hospitalization of the patient for medical treatment 
or medically required diagnostic study; or
* * * * *
    (b) Timing of certification. For outlier cases under subpart F of 
Part 412 of this chapter, the certification must be signed and 
documented in the medical record and as specified in paragraphs (e) 
through (h) of this section. For all other cases, the certification 
must be signed and documented no later than 20 days into the hospital 
stay.
* * * * *

    Dated: October 22, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 26, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-26146 Filed 10-31-14; 4:15 pm]
BILLING CODE 4120-01-P
```