## Wednesday,
May 4, 2005



# Part IV



# Department of
Health and Human

Services

Centers for Medicare & Medicaid Services

42 CFR Part 416
Medicare Program; Update of Ambulatory Surgical Center List of Covered Procedures; Interim Final Rule


### 23690 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

**DEPARTMENT OF HEALTH AND**
**HUMAN SERVICES**

**Centers for Medicare & Medicaid**
**Services**

**42 CFR Part 416**

**[CMS–1478–IFC]**

**Medicare Program; Update of Ambulatory Surgical Center List of** 
**Covered Procedures**

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

**ACTION :**  Interim final rule with comment period.

**SUMMARY :**  This interim final rule with comment period revises the list of procedures that are covered when furnished in an ambulatory surgery center (ASC) in accordance with section 1833(i)(1) of the Social Security Act. We published our proposed deletions and
additions in the Federal Register on November 26, 2004.

In this interim final rule, we respond to public comments and make final
additions to and deletions from the current list of Medicare approved ambulatory surgical center (ASC) procedures.

**DATES :**  Effective date: These regulations are effective on July 5, 2005.

Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m. on July 5, 2005.

**ADDRESSES :**  In commenting, please refer
to file code CMS–1478–IFC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX)

transmission.

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

1. Electronically. You may submit electronic comments on specific issues in this regulation to http:// www.cms.hhs.gov/regulations/

ecomments. (Attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word.)

2. By mail. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1478–IFC, PO Box 8017, Baltimore, MD 21244–8017.

Please allow sufficient time for mailed
comments to be received before the close of the comment period.

3. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786– 7195 in advance to schedule your
arrival with one of our staff members. Room 445–G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD

21244–1850.

(Because access to the interior of the HHH 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.)

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, see the beginning of the

**SUPPLEMENTARY INFORMATION** section.

**FOR FURTHER INFORMATION CONTACT :**  Dana Burley, (410) 786–0378.

**SUPPLEMENTARY INFORMATION :** 

Submitting Comments: We will consider comments from the public regarding the addition of procedures to the ASC list, deletion of procedures from the ASC list, and the ASC payment group assignment for newly-added procedures that are identified with an asterisk in Addendum A to signify that the procedure was not proposed for
addition or deletion in the November 26, 2004 rule. You can assist us by referencing the file code CMS–1478–IFC and the specific ‘‘issue identifier’’ that precedes the section on which you
choose to comment.

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 electronic
comments received before the close of the comment period on its public website as soon as possible after they have been received. Hard copy comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of
the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1–800–743–3951.

I. Background

[If you choose to comment on issues in this section, please include the caption ‘‘Background’’ at the beginning of your comments.]

A. Legislative History

Section 1832(a)(2)(F)(i) of the Social Security Act (the Act) provides that
benefits under the Medicare Supplementary Medical Insurance program (Part B) include payment for facility services furnished in connection with surgical procedures we specify and which are performed in an ambulatory surgical center (ASC). To participate in the Medicare program as an ASC, a facility must meet the standards specified in section 1832(a)(2)(F)(i) of the Act; in 42 CFR 416.25, which sets forth general conditions and requirements for ASCs; and, in 42 CFR 416, subpart C, which provides specific conditions for coverage for ASCs.

There are two primary elements in the total cost of performing a surgical procedure—the cost of the physician’s professional services in performing the procedure and the cost of items and services furnished by the facility where the procedure is performed (for example, surgical supplies and equipment and nursing services). This interim final rule with comment period addresses the second element, the coverage and payment of facility fees for ASC services under the current payment system. As we note below, section 626(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173, enacted on December 8, 2003) requires that we develop a revised payment system for ASC facility services that would be implemented no earlier than January 1, 2006. This interim final rule
addresses additions to and deletions from the list of Medicare approved ASC procedures before the implementation of that revised payment system.

Under the current ASC facility services payment system, the ASC payment rate is a standard overhead
amount established on the basis of our
estimate of a fair fee that takes into account the costs incurred by ASCs generally in providing facility services in connection with performing a specific procedure. The report of the Conference Committee accompanying section 934 of the Omnibus Budget Reconciliation Act of 1980 (OBRA) (Pub. L. 96–499), which enacted the ASC benefit in December 1980, states that this overhead factor is expected to be calculated on a prospective basis


### 23691 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

using sample survey and similar techniques to establish reasonable estimated overhead allowances, which take account of volume (within reasonable limits), for each of the listed procedures. ( See H.R. Rep. No. 96

– 1479, at 134 (1980)).

To establish those reasonable
estimated allowances for services furnished before implementation of the revised payment system mandated by the MMA, section 626(b)(1) of the MMA amended section 1833(i)(2)(A)(i) of the Act to require us to take into account the audited costs incurred by ASCs to perform a procedure, in accordance with a survey. Payment for ASC facility services is subject to the usual Medicare
Part B deductible and coinsurance requirements, and the amounts paid by Medicare must be 80 percent of the
standard fee.

Section 1833(i)(1) of the Act requires us to specify, in consultation with appropriate medical organizations, surgical procedures that can be safely performed in an ASC and to review and update the list of ASC procedures at least every two years.

Section 141(b) of the Social Security Act Amendments of 1994 (SSAA 1994) requires us to establish a process for reviewing the appropriateness of the payment amount provided under section 1833(i)(2)(A)(iii) of the Act for intraocular lenses (IOLs) for a class of new-technology IOLs. That process was the subject of a separate final rule
entitled ‘‘ Adjustment in Payment Amounts for New Technology Intraocular Lenses Furnished by Ambulatory Surgical Centers, ’’ published on June 16, 1999 in the Federal Register (64 FR 32198).

B. Summary of Updates of the ASC List

Section 934 of the Omnibus Budget
Reconciliation Act of 1980 amended sections 1832(a)(2) and 1833 of the Act to authorize the Secretary to specify surgical procedures that, although appropriately performed in an inpatient hospital setting, can also be performed safely on an ambulatory basis in an ASC, a hospital outpatient department, or a rural primary care hospital. The report accompanying the legislation explained that the Congress intended procedures currently performed on an ambulatory basis in a physician ’ s office that do not generally require the more
elaborate facilities of an ASC not be
included in the list of covered procedures (H.R. Rep. No. 96

– 1167, at 390, reprinted in 1980 U.S.C.C.A.N. 5526, 5753). In a final rule published August 5, 1982 in the Federal Register (47 FR 34082), we established regulations that included criteria for specifying which surgical procedures were to be included for purposes of implementing the ASC facility benefit.

Subsequently, in accordance with § 416.65(c), we published an update of
the ASC list in the Federal Register on March 28, 2003 (68 FR 15268).

During years when we do not update
the list in the Federal Register , we revise the list to be consistent with annual calendar year changes in codes established by the American Medical Association (AMA) Current Procedural Terminology (CPT), removing from the ASC list codes that are deleted by CPT and adding new codes that replace codes already on the ASC list. These annual CPT updates are implemented through program instructions to carriers who process ASC claims.

C. Regulatory Requirements

1. Sections 416.65(a), (b), and (c)

Section 416.65(a) specifies general standards for procedures on the ASC list. ASC procedures are those surgical and medical procedures that are

—

• Commonly performed on an inpatient basis but may be safely performed in an ASC;

• Not of a type that are commonly performed or that may be safely performed in physicians ’ offices;

• Limited to procedures requiring a dedicated operating room or suite and generally requiring a post-operative recovery room or short term (not overnight) convalescent room; and

• Not otherwise excluded from Medicare coverage.

Specific standards in § 416.65(b) limit ASC procedures to those that do not generally exceed 90 minutes operating time and a total of 4 hours recovery or
convalescent time. If anesthesia is required, the anesthesia must be local or regional anesthesia, or general
anesthesia of not more than 90 minutes
duration.

Section 416.65(c) excludes from the ASC list procedures that generally result in extensive blood loss, that require major or prolonged invasion of body cavities, that directly involve major blood vessels, or that are generally emergency or life-threatening in nature.

2. Criteria for Additions To or Deletions
From the ASC List

In April 1987, we adopted quantitative criteria as tools for identifying procedures that were commonly performed either in a hospital inpatient setting or in a physician ’ s office. Collectively, commenters responding to a notice published on February 16, 1984 in the Federal Register (49 FR 6023) had recommended that virtually every surgical CPT code be included on the ASC list. Consulting with other specialist physicians and medical organizations as appropriate, our medical staff reviewed the
recommended additions to the list to
determine which code or series of codes were appropriately performed on an ambulatory basis within the framework of the regulatory criteria in § 416.65. However, when we arrayed the proposed procedures by the site where they were most frequently performed according to our claims payment data files (1984 Part B Medicare Data (BMAD)), we found that many codes were not commonly performed on an inpatient basis or were performed in a physician ’ s office the majority of the time, and, thus, would not meet the standards in our regulations. Therefore, we decided that if a procedure was performed on an inpatient basis 20 percent of the time or less, or in a physician ’ s office 50 percent of the time or more, it would be excluded from the ASC list. ( See Federal Register, April 21, 1987 (52 FR 13176).)

At the time, we believed that these
utilization thresholds best reflected the legislative objectives of moving procedures from the more expensive hospital inpatient setting to the less expensive ASC setting without encouraging the migration of procedures from the less expensive physician ’ s office setting to the ASC. We applied these quantitative standards not only to codes proposed for addition to the ASC list, but also to the codes that were currently on the list, to delete codes that
did not meet the thresholds.

The trend towards performing surgery on an ambulatory or outpatient basis grew steadily, and by 1995, we discovered that a number of procedures
that were on the ASC list at the time fell short of the 20 percent and 50 percent thresholds even though the procedures were obviously appropriate in the ASC setting. The most notable of these was
cataract extraction with intraocular lens insertion, very few cases of which were being performed on an inpatient basis by the early 1990s. The thresholds
would also have excluded from the ASC list certain newer procedures, such as CPT code 66825, Repositioning of intraocular lens prosthesis, requiring an incision (separate procedure), that were rarely performed on a hospital inpatient basis but that were appropriate for the ASC setting. Strict adherence to the same 20 percent and 50 percent
thresholds both to add and remove procedures did not provide latitude for
minor fluctuations in utilization across settings or errors that could occur in the


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site-of-service data drawn from the National Claims History File that we were then using, replacing BMAD data, for analysis.

In an effort to avoid these anomalies but still retain a relatively objective standard for determining which procedures should comprise the ASC list, we adopted in the Federal Register notice published on January 26, 1995 (60 FR 5185) a modified standard for deleting procedures already on the list. We deleted from the list only those procedures whose combined inpatient, hospital outpatient, and ASC site of service volume was less than 46 percent of the procedure ’ s total volume and that were either performed 50 percent of the time or more in the physician ’ s office or 10 percent of the time or less in an inpatient hospital setting. We retained the 20 percent and 50 percent standard to determine which procedures would be appropriate additions to the ASC list.

D. Office of the Inspector General Recommendations, January 2003

In January 2003, the Office of the Inspector General (OIG) issued the results of a study entitled ‘‘ Payments for Procedures in Outpatient Departments and Ambulatory Surgical Centers ’’ (OEI

– 05

– 00

– 00340). The objective of that study was to determine the extent to which Medicare payments for the same procedures continue to vary between hospital outpatient departments and ambulatory surgical
centers and to assess the effect of this variance on the Medicare program.

The OIG concluded, as a result of its study, that there should be a greater parity of payments for services performed in an outpatient setting and those performed in ASCs. The OIG
based this conclusion both on its belief that the Congress intended Medicare to be a prudent purchaser of services and to pay only for those costs that are necessary for the efficient delivery of
needed health services and on its finding that disparities in Medicare payment amounts for the same services furnished in ASCs and hospital outpatient departments resulted in an estimated $1.1 billion in additional Medicare program payments. The OIG
also found that our failure to remove certain procedure codes from the list of ASC-approved procedures resulted in an estimated $8 to $14 million in additional Medicare program payments.

The OIG recommended that we

—

• Seek authority to set rates that are consistent across sites and reflect only the costs necessary for the efficient delivery of health services; • Conduct surveys and use timely ASC survey data to reevaluate ASC payment rates; and

• Remove the procedure codes that
meet our criteria for removal from the ASC list of covered procedures. (In its final report, the OIG included a list of 72 CPT codes that it found, based on its analysis of calendar year 1999 data, met
our criteria for deletion from the ASC list.)

In our response to the OIG ’ s recommendations, we indicated that we
would consider the OIG ’ s first recommendation as we develop future legislative proposals. In response to the second recommendation, we indicated our concerns about using survey data as the basis for setting ASC payment rates and that we were considering how to implement the survey requirement. (Enactment of section 626(b) of the MMA repealing the survey requirement and mandating implementation of a revised payment system in accordance with certain requirements set forth in the MMA supersedes our earlier response to this OIG recommendation.)

E. Current ASC Payment Rates

Procedures on the ASC list are assigned to one of nine payment groups
based on our estimate of the costs incurred by the facility to perform a procedure. Payment groups 1 through 8 were first implemented in September 1990, based on a survey of ASC costs conducted in 1986 (55 FR 4539). Payment group 9 was added on December 31, 1991 (56 FR 67666) to establish a payment rate for extracorporeal shockwave lithotripsy (ESWL). There is no clinical consistency among the procedures in a payment group. Rather, assignment to a payment group is based solely on an estimate of facility costs associated with performing the procedures.

In a proposed rule published on June 12, 1998 in the Federal Register (63 FR 32290), we proposed a new ratesetting methodology based on ambulatory payment classification (APC) groups that were proposed for the new hospital outpatient prospective payment system (OPPS). We used data from a survey of
ASC costs collected in 1994 as the basis for the APC payment rates in the June 12, 1998 proposed rule. The Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106

– 113) required us to phase in full implementation of the proposed ASC rates over a 3-year period. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106

– 554) prohibited implementation of a revised prospective payment system for ASCs before January 1, 2002 and required that, by January 1, 2003, ASC rates be rebased using data from a 1999 or later Medicare survey of ASC costs.

We discuss in the final rule published on March 28, 2003 in the Federal Register (68 FR 15270) the reasons why we did not implement the requirements set forth in BBRA and BIPA with regard to rebasing ASC payment rates. The March 28, 2003 final rule with comment period implemented additions to and
deletions from the ASC list that had been proposed in the June 12, 1998 proposed rule, but did not implement any of the other proposed changes, including the proposed ratesetting methodology. We indicated that we were studying approaches to ratesetting, some of which may require legislative changes.

Section 626(b) of MMA repeals the requirement that we conduct a survey of ASC costs as the basis for rebasing ASC rates and requires us to implement a revised payment system between January 1, 2006 and January 1, 2008,
that takes into account recommendations in the report to the Congress that was to be submitted by January 1, 2005 by the Comptroller
General of the United States. Since section 626(b)(1) amends section 1833(i)(2) of Act, we are required to base payment for ASC services on survey data before implementation of the revised payment system. Therefore, the
additions to the ASC list in this interim final rule are assigned to one of the existing nine ASC payment groups and
rates that are derived from data collected in the 1986 survey of ASC costs, updated for inflation. The payment group for each addition to the
ASC list in this interim final rule is based on the payment group to which procedures currently on the list, which our medical advisors judged to be
similar in terms of time and resource inputs, are assigned. As of April 1, 2004, in accordance with the requirements in section 626(a) of MMA and instructions
that we issued to our contractors who process ASC claims in Transmittal 51, Change Request 3082, on February 6, 2004, the ASC payment rates are the following:

Group 1 ... $333 Group 2 ... $446 Group 3 ... $510 Group 4 ... $630 Group 5 ... $717 Group 6 ... $826 ($676 plus $150 for IOL) Group 7 ... $995 Group 8 ... $973 ($823 plus $150 for IOL) Group 9 ... $1339


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F. Summary of the Provisions of the Proposed Rule

In the November 26, 2004 proposed rule, we proposed to delete 54 procedures from the ASC list based on
the OIG recommendations. An additional 46 deletions were proposed
based on data that indicated that either the physician office or the inpatient setting was the predominant site of
service or based on recommendations from specialty organizations that there were beneficiary safety concerns associated with furnishing the procedure(s) in the ASC.

We also proposed to add to the list 25 procedures that were recommended by
commenters and other interested parties.

II. Analysis of and Responses to Public
Comments Received on the November 26, 2004 Proposed Rule and Provisions
of This Interim Final Rule With
Comment Period

[If you choose to comment on issues in this section, please include the caption ‘‘ ANALYSIS OF AND
RESPONSES TO PUBLIC COMMENTS RECEIVED ON THE NOVEMBER 26,
2004 PROPOSED RULE AND
PROVISIONS OF THIS INTERIM FINAL
RULE WITH COMMENT PERIOD ’’ at the beginning of your comments.]

A. General Comments

Summaries of the public comments and our responses to those comments
are set forth in the various sections of this preamble under the appropriate headings.

We received a number of general public comments on our proposed changes to the ASC list.

Comment: The comments we received expressed opposition to our proposed deletions. Although we received many comments requesting that we not delete specific procedures, we also received many from individual physicians, ASCs, professional and trade associations, and medical societies and organizations expressing their belief that our proposed deletion of 100 procedures from the ASC list was misguided. The overwhelming response from the public was that there are many beneficiaries for whom the ASC setting is the safest and most appropriate setting for a number of surgical procedures. The commenters were especially concerned about our proposals to delete procedures based on either the OIG recommendations or high physician office utilization.

They stated that there were several detrimental effects that would likely
result from deletion of the codes as proposed. They believe that deleting the procedures will result in beneficiaries ’ decreased access to the most appropriate care, increased costs for the Medicare program and for beneficiaries because the procedures will have to be furnished in the more costly hospital outpatient department if the ASC is not an option, and creation of incentives to perform procedures in inappropriate settings.

Response: As will be discussed in
more detail in other sections of this interim final rule, we recognize the validity of the arguments and clinical evidence that was provided to us by commenters. As a result, we will delete fewer procedures from the ASC list than we proposed.

Comment: We also received a number of comments that expressed disappointment that we have not adopted new criteria for determining which procedures are to be included on
the ASC list. The commenters stated
that the current criteria are obsolete and are in need of updating to account for new clinical practices and technological advances. Furthermore, many commenters objected to having an ASC list of procedures. They believe that we should adopt an exclusionary list
instead.

Response: We are embarking on development of a new payment system as mandated by section 626 of the MMA. As part of that process, we will review the criteria for determining which procedures are eligible for
inclusion on the ASC list.

Comment: We received several comments that expressed doubt about our proposals for ASC list additions and
deletions based on reimbursement. The
commenters believe that we are overstepping our authority in considering payment levels before we add codes to the ASC list. Specifically, they use as an example our decision to exclude from the ASC list procedures that would be paid significantly more by Medicare under the ASC payment system than they are currently being paid under the hospital outpatient prospective system.

Response: As discussed in our March 28, 2003 final rule (68 FR 15270), we do not add procedures to the lowest ASC payment group that would be paid significantly more in an ASC than the same procedure is paid in the hospital outpatient department. We believe that our process is consistent with the law and its intent. The legislative history of
section 934 of the Omnibus Reconciliation Act of 1980 (Pub. L. 96

– 499), which created the ASC benefit, indicates congressional intent to encourage performance of surgery in lower cost settings. Thus, we believe it is antithetical to the statutory mandate
to create incentives which could shift those procedures to an ASC setting for increased Medicare payment. Similarly, we try not to add procedures to the list that would be significantly underpaid in the highest ASC payment group.

In the June 1998 proposed rule, we proposed the addition of CPT code 50590, Extracorporeal shock wave lithotripsy to what would have been the highest payment group. The American Lithotripsy Society disagreed with the addition payment rate and, through litigation, avoided that addition. We now are embarking on development of a new payment system for ASCs, and so are not adopting any revisions to our rate-setting method before that development. At this time, we are updating the list of procedures on the ASC list, and it is beyond the scope of this rule to create payment groups that would provide payments closer to the costs of procedures that are either much more costly or much less costly than the existing highest and lowest ASC payment group.

In the November 26, 2004 ASC proposed rule, we proposed to delete 100 procedures from the ASC list, most of which were being performed in the office setting in more than half the number of cases. We also proposed to add 25 new procedures to the ASC list. Comments on the proposed rule
indicate that the ASC cases for codes proposed for deletion from the ASC list will migrate to the outpatient hospital setting rather than to the physician office setting because the procedures performed in ASCs involve patients who need anesthesia, or who have significant comorbidities or anatomic abnormalities, or who require a sterile operating room.

Based in part on the convincing arguments and clinical evidence submitted by commenters, we are deleting only five procedures from the ASC list out of the original 100 procedures that we proposed to delete. We have noted minimal shifts among ambulatory sites of service over the past decade even though most of the codes that we proposed to delete have been on the ASC list throughout that period. In other words, the availability of these procedures in ASCs has not induced
substantial shifts in the site of service. We are also adding 67 procedures to the ASC list, based on commenters ’ recommendations.

Over the past several years, the number of small, physician-owned specialty hospitals specializing in surgical and orthopedic services has grown rapidly. We have investigated this set of hospitals as part of our


### 23694 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

research in support of a report to the Congress mandated by section 507(c) of the MMA. Among other findings, we discovered that the surgical and orthopedic hospitals that billed the program in 2003 had an average daily census of 4.5. The predominant services in these hospitals appeared to be outpatient services rather than inpatient services. We speculate that physicians may be participating in the ownership of small hospitals rather than ASCs partly in order to take advantage of payment differences: Under Medicare ’ s current payment systems, outpatient services in many instances receive higher payments under the outpatient prospective payment system than under
the ASC fee schedule.

Section 626 of the MMA requires and sets parameters for a revision to the ASC fee schedule. The existing fee schedule is comparatively crude, with only nine payment rates used for approximately 2500 different surgical procedures. Consequently, each payment cell spans a broad set of clinically heterogeneous services. In addition, the basic structure of rates has not been updated since
1990. This combination of factors has resulted, among other things, in incentives to perform procedures in a hospital outpatient setting rather than an ASC, or the converse, when payment rates for particular procedures diverge significantly from the resources
consumed in connection with the procedures. Reforming the ASC fee schedule can materially reduce these divergences and mitigate inappropriate incentives from this quarter that favor proliferation of specialty hospitals.

The MMA requires that the new payment system be implemented after
December 2005 and not later than 2008. GAO has prepared and is about to conduct a survey to determine the
relative costs associated with procedures performed in ASCs as part of a report to Congress required under the
MMA. We are to take into account the
recommendations contained in the GAO report. Given the need to collect and analyze data and to complete full notice-and-comment rulemaking, we plan to implement the ASC payment reform January 1, 2008. Flowing from the MMA requirement that the GAO compare the relative costs of procedures
furnished in ASCs to the relative costs of procedures furnished in hospital outpatient departments, we are exploring relating the ASC fee schedule to the outpatient prospective payment system, using the same or very similar ambulatory payment classifications. Linking the two systems could provide a mechanism for automatic updates of weights in the ASC system and reduce divergences between the two payments to an average percentage value.

B. Proposed Deletions

In accordance with the statutory requirement that we review and update the ASC list at least every 2 years, we,
in consultation with our medical advisors, reviewed the current ASC list against the criteria. In this review, we
also considered deletions recommended by medical specialty societies and other commenters. Further, we reviewed the
codes that the OIG recommended for
deletion from the ASC list. In most cases, our medical advisors agreed that the procedures recommended by the OIG for deletion no longer met the criteria for ASC procedures, and we proposed to delete most of them from the ASC list. We removed the following seven procedures recommended for deletion by the OIG from the ASC list: CPT codes 21920, 42104, 51725, 56405, 56605, 62367, and 62368.

However, there were 11 procedures
the OIG recommended for deletion that our medical advisors determined, for health and safety reasons, should be
retained on the list:



### TABLE 

### 1.—P ROCEDURES 

### OIG R EC



### OMMENDED FOR 

### D ELETION 

### N OT 

### P ROPOSED FOR 

### D ELETION

CPT code Short descriptor

30802 ...... Cauterization, inner nose. 31525 ...... Diagnostic laryngoscopy. 31570 ...... Laryngoscopy with injection. 45305 ...... Proctosigmoidoscopy w/bx.
46050 ...... Incision of anal abscess. 51710 ...... Change of bladder tube. 51726 ...... Complex cystometrogram. 51772 ...... Urethra pressure profile. 52285 ...... Cystoscopy and treatment. 67031 ...... Laser surgery, eye strands. 67921 ...... Repair eyelid defect.

We received no comments about this proposal, and we are making final our proposal to retain these procedures on
the ASC list.

Based on our review of other procedures on the ASC list, we proposed to delete from the ASC list those listed in Table 2, for the reasons specified.

Rationale for deletion is indicated as
follows:

1. Procedure is performed in physician ’ s office more than 50 percent
of the time.

2. Medical specialty organizations recommended deletion because of safety

concerns.

3. Procedure is performed predominantly in the inpatient setting.

4. OIG recommended for deletion and
CMS medical advisors concur.



### TABLE 

### 2.—P ROPOSED 

### D ELETIONS 

### F ROM THE 

### ASC L IST

CPT code Short descriptor Rationale

11404 ......................... Removal of skin lesion ........................................................................... ..................................................... 4
11424 ......................... Removal of skin lesion ........................................................................... ..................................................... 4
11444 ......................... Removal of skin lesion ........................................................................... ..................................................... 4
11446 ......................... Removal of skin lesion ........................................................................... ..................................................... 4
11604 ......................... Removal of skin lesion ........................................................................... ..................................................... 4
11624 ......................... Removal of skin lesion ........................................................................... ..................................................... 4
11644 ......................... Removal of skin lesion ........................................................................... ..................................................... 4 12021 ......................... Closure of split wound ........................................................................... ...................................................... 4 13100 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13101 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13120 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13121 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13131 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13132 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13150 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13151 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 13152 ......................... Repair of wound or lesion ........................................................................ ................................................... 4 14000 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4 14020 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4 14021 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4


### 23695 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

TABLE 

### 2.

— P ROPOSED 

### D ELETIONS 

### F ROM THE 

### ASC L IST



### — Continued

CPT code Short descriptor Rationale

14040 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4 14041 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4 14060 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4 14061 ......................... Skin tissue rearrangement ........................................................................ ................................................... 4 15732 ......................... Muscle-skin graft, head/neck ..................................................................... .................................................. 2 15734 ......................... Muscle-skin graft, trunk ......................................................................... ...................................................... 2 15738 ......................... Muscle-skin graft, leg ........................................................................... ........................................................ 2 15740 ......................... Island pedicle flap graft ........................................................................ ....................................................... 4 19100 ......................... Bx breast percut w/o image ....................................................................... .................................................. 4 20670 ......................... Removal of support implant ....................................................................... .................................................. 4 21040 ......................... Removal of jaw bone lesion ....................................................................... ................................................. 1 21050 ......................... Removal of jaw joint ............................................................................. ....................................................... 2 21206 ......................... Reconstruct upper jaw bone ....................................................................... ................................................. 1 21210 ......................... Face bone graft .................................................................................. ......................................................... 1 21249 ......................... Reconstruction of jaw ............................................................................ ...................................................... 1
21325 ......................... Treatment of nose fracture ....................................................................... ................................................... 1
21355 ......................... Treat cheek bone fracture ........................................................................ ................................................... 1 21440 ......................... Treat dental ridge fracture ...................................................................... ..................................................... 1 21485 ......................... Reset dislocated jaw ............................................................................. ...................................................... 1 22305 ......................... Treat spine process fracture ..................................................................... ................................................... 4
23600 ......................... Treat humerus fracture ........................................................................... ..................................................... 4
23620 ......................... Treat humerus fracture ........................................................................... ..................................................... 4
24576 ......................... Treat humerus fracture ........................................................................... ..................................................... 1
24670 ......................... Treat ulnar fracture ............................................................................. ......................................................... 4
25505 ......................... Treat fracture of radius ......................................................................... ....................................................... 1 26605 ......................... Treat metacarpal fracture ........................................................................ .................................................... 4 27520 ......................... Treat kneecap fracture ........................................................................... ..................................................... 4
27760 ......................... Treatment of ankle fracture ...................................................................... ................................................... 4
27780 ......................... Treatment of fibula fracture ..................................................................... .................................................... 4
27786 ......................... Treatment of ankle fracture ...................................................................... ................................................... 4
27808 ......................... Treatment of ankle fracture ...................................................................... ................................................... 4
28400 ......................... Treatment of heel fracture ....................................................................... .................................................... 4 30801 ......................... Cauterization, inner nose ........................................................................ ..................................................... 4 30915 ......................... Ligation, nasal sinus artery ..................................................................... ..................................................... 2 30920 ......................... Ligation, upper jaw artery ....................................................................... ..................................................... 2 31233 ......................... Nasal/sinus endoscopy, dx ........................................................................ .................................................. 4 31235 ......................... Nasal/sinus endoscopy, dx ........................................................................ .................................................. 4 31237 ......................... Nasal/sinus endoscopy, surg ...................................................................... ................................................. 4 31238 ......................... Nasal/sinus endoscopy, surg ...................................................................... ................................................. 4 38505 ......................... Needle biopsy, lymph nodes ....................................................................... ................................................ 4 40700 ......................... Repair cleft lip/nasal ........................................................................... ......................................................... 2 40701 ......................... Repair cleft lip/nasal ........................................................................... ......................................................... 2 40814 ......................... Excise/repair mouth lesion ....................................................................... ................................................... 4 41009 ......................... Drainage of mouth lesion ......................................................................... ................................................... 1 41010 ......................... Incision of tongue fold .......................................................................... ....................................................... 1 41112 ......................... Excision of tongue lesion ........................................................................ ..................................................... 4 41520 ......................... Reconstruction, tongue fold ...................................................................... ................................................... 1 41800 ......................... Drainage of gum lesion ........................................................................... .................................................... 1 41827 ......................... Excision of gum lesion ........................................................................... ...................................................... 1 42000 ......................... Drainage mouth roof lesion ....................................................................... .................................................. 1 42107 ......................... Excision lesion, mouth roof ...................................................................... ................................................... 1 42200 ......................... Reconstruct cleft palate ......................................................................... ...................................................... 2 42205 ......................... Reconstruct cleft palate ......................................................................... ...................................................... 2 42210 ......................... Reconstruct cleft palate ......................................................................... ...................................................... 2 42215 ......................... Reconstruct cleft palate ......................................................................... ...................................................... 2 42220 ......................... Reconstruct cleft palate ......................................................................... ...................................................... 2 42409 ......................... Drainage of salivary cyst ........................................................................ ..................................................... 1 42425 ......................... Excise parotid gland/lesion ...................................................................... .................................................... 3 42860 ......................... Excision of tonsil tags .......................................................................... ........................................................ 1 42892 ......................... Revision pharyngeal walls ........................................................................ ................................................... 3 52000 ......................... Cystoscopy ....................................................................................... ........................................................... 4 52281 ......................... Cystoscopy and treatment ......................................................................... .................................................. 4
53850 ......................... Prostatic microwave thermotx ..................................................................... ................................................ 1 55700 ......................... Biopsy of prostate ............................................................................... ......................................................... 4 58820 ......................... Drain ovary abscess, open ........................................................................ .................................................. 3 60000 ......................... Drain thyroid/tongue cyst ........................................................................ ..................................................... 1 64420 ......................... N block inj, intercost, sng ...................................................................... ...................................................... 4 64430 ......................... N block inj, pudendal ............................................................................ ....................................................... 1
64736 ......................... Incision of chin nerve ........................................................................... ........................................................ 1 65800 ......................... Drainage of eye .................................................................................. ......................................................... 1 65805 ......................... Drainage of eye .................................................................................. ......................................................... 4
67141 ......................... Treatment of retina .............................................................................. ........................................................ 4


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TABLE 

### 2.

— P ROPOSED 

### D ELETIONS 

### F ROM THE 

### ASC L IST



### — Continued

CPT code Short descriptor Rationale

68340 ......................... Separate eyelid adhesions ........................................................................ .................................................. 1
68810 ......................... Probe nasolacrimal duct .......................................................................... .................................................... 4 69145 ......................... Remove ear canal lesion(s) ....................................................................... .................................................. 4
69450 ......................... Eardrum revision ................................................................................. ......................................................... 2
69725 ......................... Release facial nerve ............................................................................. ....................................................... 1 69740 ......................... Repair facial nerve .............................................................................. ......................................................... 2 69745 ......................... Repair facial nerve .............................................................................. ......................................................... 2
69840 ......................... Revise inner ear window .......................................................................... ................................................... 1

As displayed in Table 2, among the codes we proposed to delete from the ASC list were CPT codes 52000, Cystourethroscopy, 52281, Cystourethroscopy, with calibration and/or dilation of urethral stricture or stenosis, with or without meatotomy, with or without injection procedure for cystography, and 55700, Biopsy, prostate; needle or punch, single or multiple, any approach. We proposed
deletion of these codes from the list in response to the recommendations of the OIG. The study recommended that Medicare be a prudent purchaser of services and only pay for those that are necessary for the efficient delivery of
needed health services. The OIG found that discrepancies in the payment
amounts between services furnished in the ASC and in the hospital outpatient setting resulted in additional and unnecessary program payments. The
OIG also asserted that retention of these
codes was inconsistent with our criteria for procedures that are appropriately performed in an ASC. Based on their study findings, the OIG recommended that procedures be removed from the ASC list with the expectation that those
deleted services would then be furnished in the physician office setting
at a lower cost to Medicare.

These procedures have been on the list of Medicare-approved ASC procedures since its inception. However, in our review of the procedures on the ASC list for the biennial update, we found that the codes did not satisfy our criteria for inclusion on the list and, in addition,
the OIG ’ s report recommendation made it clear that we should propose removal of the procedures.

Comment: We received several hundred comments from the public opposing the deletion of these three codes. The commenters provided a number of arguments for retaining the codes on the ASC list. They asserted
that there are circumstances when clinically compelling reasons require that these procedures be performed in a facility setting rather than in the physician office. Examples of those
circumstances include the need for general anesthesia and the need for access to more highly qualified staff and a full spectrum of emergency equipment for patients with various comorbidities. Many Medicare beneficiaries have diabetes, prior myocardial infarctions, renal insufficiency or urological malignancies, any of which may indicate performance of the procedure in a facility setting.

The commenters also questioned our estimated cost savings as a result of the deletions. They stated that the procedures would not shift from the ASC to the physician office as assumed by the OIG, but would instead shift to the hospital outpatient department in most cases. Further, they asserted that
deletion of the codes from the ASC list will impose a barrier to access for those beneficiaries with limited access to a hospital outpatient facility. They
asserted that the deletion of these codes would actually result in additional costs for the Medicare program.

Response: We have considered the
comments and conclude that CPT codes 52000, 52281, and 55700 should be
retained on the ASC list. We find the clinical arguments contained in the comments to be compelling, and we believe that protecting patient safety and access to appropriate care is our primary responsibility.

We examined Medicare site of service data for the past 10 years and found that the pattern for the site of service for the procedures generally was stable. Consistently, the physician office is the predominant service setting even though the procedures were included on
the ASC list. As exhibited in Table 3 below, in 1992, 70 percent of cystourethroscopies (52,000) were furnished in the physician office, 17.5 percent in the outpatient department and 3.3 percent in the ASC. The change
in distribution across sites of service for this procedure from 1992 through 2003 is minimal. Generally, the data show a trend of decreasing volume in the hospital outpatient department accompanied by an increased volume in the physician office. With the exception of CY 2000, volume in the ASC setting has remained significantly less than 10 percent of the total cases.



### T ABLE 

### 3.

— S ITE OF 

### S ERVICE FOR 

### C YSTOURETHROSCOPIES 

### (CPT 52000), 1992

–2003

Year Office Percent (total) OPD Percent (total) ASC Percent (total) Total

1992 ............................. 563,548 70.0 140,805 17.5 26,369 3.3 804,683 1995 ............................. 581,672 72.1 133,024 16.5 41,990 5.2 807,302 2000 ............................. 618,984 74.1 102,109 12.2 79,116 9.5 835,669 2003 ............................. 725,000 80.1 92,981 10.3 55,543 6.1 904,860

We found similar patterns in the
Medicare site of service data for the other two high volume urology procedures, CPT codes 52281 and 55700, that we proposed to delete. We believe that the relative stability of the utilization and site of service is
evidence that the inclusion of the codes
on the ASC list has not influenced the physician ’ s selection of setting for performance of the procedures and provides strong evidence that there is a small but consistent population of beneficiaries for whom the ASC setting is the most appropriate for these procedures.

In light of the evidence presented to us in the comments, we agree with


### 23697 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

commenters that these procedures
should be retained on the ASC list in spite of the high percentage of cases performed in the physician office setting. Moreover, in light of our plans to develop and implement a new payment system for ASCs by 2008 and our expectation that the criteria for
inclusion on the ASC list will be reviewed as part of developing the new payment system, we believe that deleting these codes at this time could cause undue confusion and hardship for many beneficiaries.

If we accept the commenters ’ assertions that many of the procedures currently furnished in the ASC must be performed in a facility setting, as we have, we must reconsider the cost savings estimates that we assumed when we proposed deletion of these codes. If a significant portion of the procedures will migrate to the hospital outpatient department rather than to the physician office, then we may have diminished cost saving estimates compared to those included in our proposed rule, with resultant increased payment by the Medicare program rather than savings. See section IV of
this interim final rule for a full discussion of cost savings estimates.

Comment: In addition to the comments requesting that we not delete the three procedures, CPT codes 52000, 52281, and 55700, we received about 100 comments requesting that we not delete CPT codes 11404 through 15740,
as listed in Table 2. These commenters made many of the same points discussed above regarding deletion of this range of procedure codes. The same concerns regarding patient safety and access to appropriate care were consistently raised.

The commenters presented equally compelling clinical arguments opposing deletion of these procedures. They
assert that it is often difficult to schedule these non-emergent procedures in outpatient departments
but that the need for sterile conditions for the procedures requires a facility setting rather than the physician office. Many patients require heavy sedation or general anesthesia because of the delicate nature of many of the procedures, and need a facility setting due to Medicare patient comorbidities. Further, commenters cited a number of CPT coding definitions that make it impossible to identify important information about specific procedures that are performed. That is, one code
describes a number of different procedures, some of which are significantly more complex than others reported using the same CPT code. For example, CPT code 31233, Nasal/sinus endoscopy, diagnostic with maxillary sinusoscopy (via inferior meatus or canine fossa puncture), describes a procedure that may be accomplished by either of two distinct approaches, one of which may require no anesthesia while the other (requiring insertion of a trochar through the roof of the patient ’ s mouth) does require sedation in a facility setting.

Further, they assert that the deletion of the codes as proposed will not result in cost savings for the Medicare program but will result in diminished beneficiary access to appropriate care and to cost increases because the cases currently performed in the ASC will shift to hospital outpatient departments.

Response: We find the commenters ’ arguments convincing. We examined the site of service for these procedures over the past 5 years, and, as was the case for the urology codes, we found that the patterns for provision of these services were generally unchanged during that time. In light of the clinical evidence presented in the comments and our finding that the percent of procedures that are being performed in the ASC today is no greater than it was in 1999, we conclude that these procedures should be retained on the ASC list, and we will not make final our proposal to delete them.

Further, we believe that the estimated cost savings included in the proposed rule may have been over-stated. Therefore, we performed cost analyses using predicted site of service distribution changes that we believe are
more realistic than those we used in the proposed rule. A full discussion of the cost estimates is presented in section V
of this rule.

Comment: We received comments opposing the deletion of almost every procedure we proposed to delete in the proposed rule. The reasons provided were generally the same as those presented by the commenters regarding the urology and skin codes discussed above: that there is a portion of the Medicare patient population who, due
to clinical characteristics or due to limitations on access, is best served by having access to these procedures in an

ASC.

Response: We have examined the comments, the site of service data, and the list of proposed deletions, and we have decided that the evidence supplied by the commenters regarding the three urology procedures and the skin procedures, combined with the impending implementation of a new payment system in 2008 argue against making major changes in the ASC list at this time. Maintaining a degree of stability in the ASC list until the new payment system is implemented will minimize the risk of limiting beneficiary
access to needed services as well as
unintended incentives that could result in significant shifts of procedures to the generally more costly hospital outpatient setting.

Therefore, we will delete only the five
codes about which we received no comments. CPT codes 21440, 23600, and 23620 are all procedures that are performed in the office setting more
than half of the time. CPT code 69725 is performed as an inpatient procedure 100 percent of the time. The resources required to perform CPT code 53850 significantly exceed the highest ASC payment group. Therefore, we are making final our proposal to delete the
five codes listed in Table 4.



### TABLE 

### 4.

— F INAL 

### L IST OF 

### C ODES



### D ELETED 

### F ROM THE 

### ASC L IST

CPT code Descriptor

21440 ...... Treat dental ridge fracture.
23600 ...... Treat humerus fracture.
23620 ...... Treat humerus fracture.
53850 ...... Prostatic microwave thermotx.
69725 ...... Release facial nerve.

C. Proposed Additions

1. Additions Recommended by
Commenters and Other Interested

Parties

In response to public comments and our medical staff review, we proposed to add the procedures displayed in Table 5 to the list of Medicare-approved ASC procedures.



### T ABLE 

### 5.

— P ROPOSED 

### A DDITIONS 

### R ECOMMENDED BY 

### C OMMENTERS AND 

### O THER 

### I NTERESTED 

### P ARTIES

HCPCS code Short descriptor Proposed payment

group

15001 ......................... Skin graft add-on ................................................................................ ......................................................... 1

15836 ......................... Excise excessive skin tissue ..................................................................... .................................................. 3


### 23698 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

T ABLE 

### 5.

— P ROPOSED 

### A DDITIONS 

### R ECOMMENDED BY 

### C OMMENTERS AND 

### O THER 

### I NTERESTED 

### P ARTIES



### — Continued

HCPCS code Short descriptor Proposed payment

group

15839 ......................... Excise excessive skin tissue ..................................................................... .................................................. 3
21120 ......................... Reconstruction of chin ........................................................................... ...................................................... 7 21125 ......................... Augmentation, lower jaw bone ..................................................................... ............................................... 7 29873 ......................... Knee arthroscopy/surgery ......................................................................... ................................................... 3 30220 ......................... Insert nasal septal button ....................................................................... ..................................................... 3 31500 ......................... Insert emergency airway .......................................................................... ................................................... 1 31603 ......................... Incision of windpipe ............................................................................. ........................................................ 1 35475 ......................... Repair arterial blockage ......................................................................... ...................................................... 9 35476 ......................... Repair venous blockage ........................................................................... ................................................... 9 36834 ......................... Repair AV aneurysm ............................................................................... .................................................... 3
37205 ......................... Transcatheter stent .............................................................................. ........................................................ 9
37206 ......................... Transcatheter stent add-on ....................................................................... .................................................. 9 37500 ......................... Endoscopy ligate perf veins ...................................................................... .................................................. 3 42665 ......................... Ligation of salivary duct ........................................................................ ....................................................... 7 44397 ......................... Colonoscopy w/stent .............................................................................. ..................................................... 1 45327 ......................... Proctosigmoidoscopy w/stent ...................................................................... ................................................ 1 45341 ......................... Sigmoidoscopy w/ultrasound ....................................................................... ................................................ 1 45342 ......................... Sigmoidoscopy w/us guide bx ...................................................................... ............................................... 1 45345 ......................... Sigmoidoscopy w/stent ............................................................................ .................................................... 1 45387 ......................... Colonoscopy w/stent .............................................................................. ..................................................... 1 57288 ......................... Repair bladder defect ............................................................................ ...................................................... 5 62264 ......................... Epidural lysis on single day ..................................................................... .................................................... 1 67343 ......................... Release eye tissue ............................................................................... ....................................................... 7

Comment: We received many comments in support of the proposed additions to the ASC list. However, we received one comment that opposed the additions of CPT codes 37205, 37206, 35475, and 35476. The commenter stated that these procedures were not appropriate for the ASC setting and would allow for potential substandard

care.

Response: Our medical staff’ s reconsideration of these procedures led
to our decision not to add them to the ASC list. The procedures involve major vessels and therefore do not meet our
criteria for inclusion on the ASC list.

CPT code 31500, Insert emergency airway, also will be removed from the
list of additions to be made final. We will not add this procedure to the ASC list because it would be significantly overpaid even in the lowest ASC payment group. As discussed in our March 2003, final rule (68 FR 15270), our policy is not to add procedures for which significant overpayments would
result.

However, we will make final our proposal to add the other codes in Table 5. The final list of all procedures to be added to the ASC list is in section II,
Table 7.

Comment: We also received a number of comments requesting higher payment levels than those proposed for some of the codes. Table 6 provides a summary display of the procedure codes and the proposed payment group assignments and the commenter-requested payment group assignments for the codes for which a specific group was identified. For several procedures, there was variation among commenters regarding payment group requests and so more than one payment group is identified.



### T ABLE 

### 6.

— P AYMENT 

### G ROUP 

### A SSIGNMENTS 

### P ROPOSED AND 

### A S 

### R EQUESTED BY 

### C OMMENTERS

HCPCS code Short descriptor NPRM payment

group Requested payment

group

15836 ......................... Excise excessive skin tissue ..................................................................... ...................... 3 5
15839 ......................... Excise excessive skin tissue ..................................................................... ...................... 3 5 29873 ......................... Knee arthroscopy/surgery ......................................................................... ....................... 3 4 37500 ......................... Endoscopy ligate perf veins ...................................................................... ...................... 3 N/A 44397 ......................... Colonoscopy w/stent .............................................................................. .......................... 1 3 45327 ......................... Proctosigmoidoscopy w/stent ...................................................................... .................... 1 3 45341 ......................... Sigmoidoscopy w/ultrasound ....................................................................... .................... 1 2, 3 & 9 45342 ......................... Sigmoidoscopy w/us guide bx ...................................................................... ................... 1 2, 3 & 9 45345 ......................... Sigmoidoscopy w/stent ............................................................................ ........................ 1 2, 3 & 9 45387 ......................... Colonoscopy w/stent .............................................................................. .......................... 1 3 57288 ......................... Repair bladder defect ............................................................................ .......................... 1 9 62264 ......................... Epidural lysis on single day ..................................................................... ........................ 1 N/A

Response: We considered each of these requests and believe that the payment groups that we proposed are appropriate. In making the proposed assignments, we considered the assignments of codes already on the ASC list that the proposed additions most closely resembled in terms of clinical work and resource inputs such as equipment, supplies, and time required in the operating suite. To the extent possible, we assigned the


### 23699 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

additions to the list to the same payment groups to which comparable procedures are currently assigned. We will make no changes at this time and will make final the payment groups as proposed.

D. Procedures Requested for Addition in

Comments

We also received a large number of comments requesting that we add procedures to the ASC list in addition to those we proposed to add in the November 26, 2004 proposed rule. Following is a discussion of each of those requests.

Comment: We received a comment requesting that we add CPT codes 10061, Incision and drainage of abscess, complicated or multiple, and 10081, Incision and drainage of pilonidal cyst, complicated, to the Medicare list of procedures covered in the ASC.

Response: We reviewed the site of service data for these procedures and discussed the request with our medical
staff. CPT codes 10061 and 10081 are performed most of the time in the physician office, and we believe that they are most appropriately performed there and do not believe that they are procedures that should be added to the
ASC list.

Comment: Several commenters requested that we add CPT code 61795 (stereotactic computer assisted volumetric (navigational) procedure).
The commenters stated that this procedure is reported with other procedures on the list and is already reimbursed by most commercial payors in most settings, including ASCs. They
stated that Medicare also reimburses this technology in both the inpatient and outpatient setting and that it is appropriate for an ASC.

Response: CPT code 61795 is for coding the use of equipment, is not a surgical procedure, and is therefore, not an appropriate addition to the ASC list.
We will not add this to the ASC list of covered procedures.

Comment: Many commenters requested that we add CPT code 30220 (insertion, nasal septal prosthesis) to the ASC list. They stated that it was clinically appropriate for the ASC setting.

Response: This procedure meets our
criteria for inclusion on the ASC list. We agree that it is appropriate for the ASC list and are adding this procedure to payment group 3.

Comment: We received a request to add CPT code 31040 (pterygomaxillary fossa surgery). The commenters stated that it is clinically similar to CPT code 30920, Ligation arteries: internal maxillary artery transantral, a procedure already on the list and meets our criteria
for inclusion on the ASC list.

Response: Our medical staff do not agree that these two codes are comparable. CPT code 30920 is furnished as an inpatient procedure 61 percent of the time and was proposed
for deletion from the list in the November 26, 2004 proposed rule. CPT code 31040 is predominantly an office procedure (66 percent of the time). We
do not believe that CPT code 31040 is an appropriate addition to the ASC list
at this time.

Comment: Many commenters requested that we add CPT code 31545 (Laryngoscopy, direct, operative, w/ operating microscope or telescope, w/ submucosal removal of non-neoplastic lesion of vocal cord, reconstruction local tissue flap); and CPT code 31546 (Laryngoscopy, direct, operative, w/ operating microscope or telescope, w/ submucosal removal of non-neoplastic lesion of vocal cord, reconstruction with graft (incl. obtaining autograft)). They stated that these procedures are clinically similar to the procedures in the CPT codes 31615 through 31656 range, many of which are currently on
the list.

Response: Our medical staff agrees
that CPT codes 31545 and 31546 are clinically similar to some endoscopic lesion removal and skin flap or grafting procedures that are already on the list. We are adding both of these procedures to the ASC list in payment group 4.

Comment: We received a few requests to add CPT code 40812 (Excision of lesion of mucosa and submucosa, vestibule of mouth; with simple repair).

Response: We are not adding the procedure to the ASC list. This is primarily an office procedure. Data show that the procedure does not meet our criteria for office volume percentage and does not typically require the resources of a facility setting. For the small percentage of times that a facility setting is warranted, the procedure could be furnished in the hospital outpatient department.

Comment: A few commenters requested that we add CPT codes 42842 (Radical resection, tonsil, tonsillar pillars, &/or retromolar trigone; w/o closure); and 42844 (Radical resection, tonsil, tonsillar pillars, &/or retromolar trigone; closure w/loca). The
commenters stated that these procedures meet our criteria and are appropriate for an ASC.

Response: Clinically, these procedures typically require the resources of the hospital inpatient setting. While these procedures are also performed on an outpatient basis, the risks of complication require the ability to initiate an immediate inpatient response making these procedures inappropriate in the ASC setting.

Comment: We received several comments requesting that we add CPT code 43761, Repositioning of the gastric feeding tube, any method, through the duodenum for enteric nutrition, to the
Medicare ASC list. The commenters
believe that the addition is warranted in order to provide more latitude to physicians and patients to choose the site of service for performance of this procedure.

Response: This procedure is most often performed in the inpatient hospital setting, and our medical staff
do not believe that CPT code 43761 is an appropriate procedure for the ASC setting.

Comment: Several commenters requested that the following eight CPT
codes be added to the Medicare ASC
list.

• 45300 Proctosigmoidoscopy, rigid; diagnostic, with or without collection of specimen(s) by brushing or washing

• 45303 Proctosigmoidoscopy, rigid; diagnostic, with dilation (for example, balloon, guide wire, bougie)

• 45330 Sigmoidoscopy, flexible; diagnostic, with or without collection of specimen(s) by brushing or washing

• 46604 Anoscopy, diagnostic, with or without collection of specimen(s) by brushing or washing, with dilation (for example, balloon, guide wire, bougie)

• 46614 Anoscopy, diagnostic, with or without collection of specimen(s) by brushing or washing, with control bleeding (for example, injection, bipolar cautery, unipolar cautery, laser, heater probe)

• 46900 Destruction of lesion(s), anus, simple; chemical

• 46910 Destruction of lesion(s), anus, simple; electrodesiccation

• 46916 Destruction of lesion(s), anus, simple; cryosurgery

The commenter believes the codes
should be added to the ASC list to afford more latitude to patients and physicians with regard to choice of site of service. They point out that although these procedures are usually performed in the physician office, there are circumstances under which a facility
environment that is sterile and in which administration of general anesthesia is safe, is required. They believe that the ASC should be one of the options
available.

Response: With the exception of CPT code 45303, all of these procedures are performed in the physician office more that half of the time, and we do not believe that adding them to the ASC list is appropriate.


### 23700 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations

Comment: We received a number of comments requesting that we add CPT codes 47562, Laparoscopic cholecystectomy; 47563, Laparoscopic cholecystectomy with cholangiography; and 47564, Laparoscopic cholecystectomy with exploration of the
common bile duct. The commenters believe that these procedures qualify for performance in the ASC setting because the procedures usually take less than 60 minutes and the recovery time is usually less than 2 hours. The commenters say that laparoscopic cholecystectomies are substantially similar to laparoscopic cholangiograpy (CPT codes 47561 and 47562), that are on the ASC procedure list.

Response: After consultation with our medical staff, we decided that laparoscopic cholecystectomies are not appropriate for addition to the Medicare list of procedures for performance in an
ASC. There is a substantial risk that the laparoscopic approach will not be successful and that an open procedure will have to be performed instead. If an open procedure is required, the patient will have to be transported to a hospital for the procedure and subsequent hospital admission. The potential jeopardy to the beneficiary resulting from undergoing an emergency transfer is significant and far outweighs any benefit of covering these procedures in
ASCs. For this reason we believe that laparoscopic cholecystectomies should continue to be performed in a hospital setting (either inpatient or outpatient) as is the current practice.

Comment: We received several comments requesting that we add CPT codes 46221, Hemorrhoidectomy, by simple ligature; 46946, Ligation of internal hemorrhoids, multiple procedures; and 46947, Hemorrhoidopexy by stapling, to the Medicare list of ASC procedures. The
commenters stated that these procedures are commonly performed on
non-Medicare beneficiaries in the ASC setting. Further, they write that, although the procedures often are performed in the physician office setting, there are circumstances under which a facility setting is warranted. For example, for patients with certain comorbidities, it may be best to perform the surgery in a setting where anesthesia can be safely administered and emergency response capabilities are available and so should be performed in a facility. The physician and patient
should have more latitude to make site
of service determinations.

Response: The most common site of service for hemorrhoidectomy by simple ligature (CPT code 46221) and ligation of internal hemorrhoids (CPT code 46946) is the physician office, and we
do not believe that there is a clinical basis for adding either of these codes to the ASC list. Hemorrhoidopexy by stapling is a new procedure for 2005,
and our medical staff believe that the procedure is of a complexity substantially similar to other procedures (for example, CPT code 46257, hemorrhoidectomy, internal and external, with fissurectomy) assigned to payment group 3, and so we will add
CPT code 46947 to the ASC list and will assign it to payment group 3.

Comment: We received a comment requesting that we add CPT codes 45391, Colonoscopy with endoscopic ultrasound guidance; and 45392, Colonoscopy with transendoscopic U.S. guided intramural or transmural fine needle aspiration/biopsy, to the ASC list. These are new codes for 2005, and
the commenter believes that the procedures are appropriate for performance in the ASC setting.

Response: Colonoscopy CPT codes 45378 through 45387 are included on
the list for ASCs. We believe that the new codes are comparable to the colonoscopy procedures currently included on the list, and so we will add
CPT codes 45391 and 45392 as well. We will assign these two codes to payment group 2.

Comment: We received a comment requesting that we add CPT code 46230, Excision of external hemorrhoid tags and/or multiple papillae, to the ASC
list. The commenter believes that this code is appropriate for the ASC list because its performance is consistent
with the criteria we have set for
inclusion on the ASC list.

Response: Examination of the site of service data reveals that this procedure is performed 48 percent of the time in the physician office and 41 percent of the time in the outpatient department. We believe that it is comparable to CPT code 46220, Papillectomy or excision of single tag, anus, which is included in the ASC list. We agree with the commenter that this is an appropriate addition to the list. Therefore, we will add it and assign it to group 1.

Comment: One commenter requested that we add CPT code 46706, Repair of anal fistula with fibrin glue, to the list because the aspects associated with performance of the procedure are
consistent with the criteria for inclusion of the procedure on the ASC list.

Response: The site of service data for this procedure show that it is performed 86 percent of the time in the outpatient department and only 1 percent of the time in the physician office setting. We agree with the commenter that this procedure is appropriate for addition to the ASC list. We will add the procedure and will assign it to payment group 1.

Comment: One commenter requested that we add CPT code 49419, Insertion of intraperitoneal cannula or catheter, with subcutaneous reservoir, permanent, to the ASC list. The
commenter stated that since CPT codes 49420, Insertion of intraperitoneal cannula or catheter for drainage or dialysis; temporary, 49421, Insertion of intraperitoneal cannula or catheter for drainage or dialysis; permanent, and 49422, Removal of permanent intraperitoneal cannula or catheter, are on the ASC list, CPT code 49419 should
also be included.

Response: We agree with the
commenter that CPT code 49419 should
also be added to the ASC list. We will add it to the list in payment group 1 with CPT codes 49420, 49421 and

49422.

Comment: Several commenters requested that we add CPT code 52301, Cystourethroscopy; with resection or fulguration of ectopic ureterocele(s), unilateral or bilateral, to the ASC list. They stated that, due to patient discomfort, the procedure should be offered in the ASC where general anesthesia can be administered. They also noted that the procedure meets the ASC list criteria since it takes only 60 minutes of intra-operative time, 45 to 60 minutes of recovery time, involves only
minimal blood loss and is similar to at least one other procedure that is on the ASC list, CPT code 52214, Cystourethroscopy, with ejaculatory duct catheterization, with or without irrigation, instillation or duct radiography, exclusive of radiologic

service.

Response: We agree with the commenter that this procedure is very similar to other cystoscopic procedures
on the ASC list and that it be added to
the list. We will add it to the list and assign it to payment group 3.

Comment: We received a comment requesting that we add CPT code 52402, Cystourethroscopy with transurethral resection or incision of ejaculatory ducts, to the ASC list.

Response: This is a new code for 2005 but we believe that it is similar enough to other existing procedures that we can make a decision about adding it to the
list. Our medical staff believes that it is an appropriate procedure for inclusion on the list, and we will add it and assign it to payment group 3.

Comment: We received a few comments requesting that we add CPT code 57287, Removal or revision of sling for stress incontinence, to the ASC list.

Response: This is an open surgical procedure and our medical staff believes


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that more than 4 hours are needed for recovery time. Therefore, we do not believe that this is an appropriate
addition to the ASC list.

Comment: We received a comment requesting that we add CPT code 51992, Laparoscopy, surgical; sling operation for stress incontinence, to the ASC list.
The commenter believes that it meets
our criteria for addition.

Response: This procedure is performed most of the time in the hospital setting, either inpatient or outpatient, and our medical staff believe that it is an appropriate procedure for
inclusion on the ASC list. We will add it to the ASC list and assign it to payment group 5.

Comment: We received comments requesting that we add CPT codes 64517, Injection, anesthetic agent; superior hypogastric plexus; and 64681, Destruction by neurolytic agent, with or without radiologic monitoring; superior hypogastric plexus, to the ASC list. The
commenter stated that these CPT codes
were established in 2004 to add more specificity to the coding and that before that they were included on the ASC list under CPT code 64520, Injection, anesthetic agent; lumbar or thoracic (paravertebral sympathetic). The
commenter stated that CPT codes 64517
and 64681 should be included on the
list as is CPT code 64520.

Response: We do not have site of service data for these two procedures but agree with the commenter that they
are similar to CPT code 64520 for which
site of service data indicate that it is appropriately included on the ASC list. Therefore, we will add both of these codes to the list and will assign them to payment group 2.

Comment: We received several comments requesting that we add CPT codes 62290, Injection procedure for discography, lumbar, and 62291, Injection procedure for discography, cervical or thoracic, to the Medicare
ASC list. The commenters state that CPT
codes 62290 and 62291 are similar to CPT codes 62287, Aspiration or decompression procedure, percutaneous, of nucleus pulposus of intervertebral disk; and 62294, Injection procedure, arterial, for occlusion of arteriovenous malformation, which are
included on the ASC list. The
commenters wrote that in both procedures the physician places a
needle into the intervertebral disk while the patient is under conscious sedation. The procedures typically involve X-ray to guide the needle placement, and most physician offices are not equipped for these services. Although most Medicare patients (about 65 percent) go to the outpatient hospital setting for the procedures, most non-Medicare patients are able to have the procedures in ASCs. They believe that Medicare beneficiaries should have the same treatment options.

Response: We consider the procedures coded 62290 and 62291 to be integral to radiologic studies and are never performed alone and, as such, are not appropriate for addition to the ASC list. Radiologic studies that do not
include an intervention are not considered surgical procedures and are
not included on the list of ASC procedures. The procedures that are currently included on the ASC list that
the commenters have chosen for comparison, CPT codes 62287 and 62294, are interventional procedures and are, therefore, not valid comparatives for this purpose.

Comment: Several commenters requested that CPT codes 62367, Electronic analysis of programmable implanted pump for intrathecal or epidural drug infusion, without reprogramming; and 62368, Electronic analysis of programmable implanted pump for intrathecal or epidural drug infusion, with reprogramming, be added to the ASC list. They stated that because the procedures require X-ray imaging and because most physician offices are not adequately equipped for the services, Medicare beneficiaries typically go to the hospital for these services. They believe that Medicare
beneficiaries should have the same siteof service options as does the nonMedicare population.

Response: Our data show that more than 75 percent of these services are provided to Medicare beneficiaries in the office setting. We believe that this is appropriate. These are not surgical procedures and are not of a level of complexity to warrant addition to the
ASC list.

Comment: We received one comment requesting that CPT codes 64561, Percutaneous implantation of neurostimulator electrodes, sacral nerve; 64581, Incision for implant of neurostimulator electrodes, sacral nerve; and 95972, Intra-operative programming of implanted neurostimulator, be added
to the ASC list. The commenter stated
that these codes should be included because CPT code 64590, Insertion or replacement of peripheral neurostimulator pulse generator or receiver, direct or inductive coupling, is
on the list.

Response: We agree with the
commenter that CPT codes 64561 and 64581 are appropriate additions to the
ASC list. We will add them to the list and assign them to payment group 3. We do not agree that CPT code 95972 is an appropriate addition because it is an analysis of the implanted device and is not a surgical procedure, and therefore, does not meet the criteria for the ASC list of procedures.

Comment: A number of commenters requested that we add CPT code 31040, Pterygomaxillary fossa surgery, to the ASC list. They believe that the procedure is similar to CPT code 30920, Ligation internal maxillary artery, transantral, which is included on the list, and that beneficiaries and their physicians should have ASCs as an option for site of service.

Response: According to our data, the site of service for these two procedures is very different. Pterygomaxillary fossa surgery is performed in the physician office 66 percent of the time and on an inpatient basis 19 percent of the time compared to only 2 percent in the physician office and 61 percent in the inpatient setting for ligation of internal maxillary artery, transantral. We will
not add CPT code 31040 to the list at this time because it is primarily an office-based procedure.

Comment: We received several comments requesting that we add CPT Level II code G0289, Arthroscopy, knee, surgical, for removal of loose body, foreign body, debridement/shaving or articular cartilage (chondroplasty) at the time of other surgical knee arthroscopy in a different compartment of the same knee, to the ASC list of procedures. The
commenters believe that the additional time (at least 15 minutes) represented by this code should be recognized for payment in the ASC setting.

Response: By definition, the procedure represented by CPT Level II code G0289 is part of another procedure and is never furnished as a separate procedure. For this reason, we will not
add it to the ASC list.

Comment: We received a number of comments requesting the addition of CPT codes 21030, Excision of benign tumor or cyst of maxilla or zygoma by enucleation and curettage; 21031, Excision of torus mandibularis; and 21032, Excision of maxillary torus palatinus, to the ASC list. The commenters stated that although these procedures are often furnished in the physician office, occasionally a facility setting is required for a patient who requires a deeper level of anesthesia or monitoring or whose condition warrants
a sterile environment.

Response: Our data indicate that these services are furnished in the physician office more than 80 percent of the time,
and therefore we will not add these to
the list at this time.

Comment: We received a number of comments requesting that we add CPT codes 22520, Percutaneous


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vertebroplasty, one vertebral body, unior bi-lateral injection; thoracic; 22521, Percutaneous vertebroplasty, one vertebral body, uni- or bi-lateral injection; lumbar; and 22522, Percutaneous vertebroplasty, one vertebral body, uni- or bi-lateral injection; each additional thoracic or lumbar vertebral body, to the ASC list.
The commenters stated that the procedures require about one hour per vertebra, that the recovery time also is about 1 hour and that the procedures can be safely furnished in the ASC.

Response: Our medical staff reviewed these procedures and determined that there is often an overnight stay required for patients who undergo vertebroplasty procedures. We believe that the recovery period usually is longer than 4
hours and so will not add these to the list of ASC procedures at this time.

Comment: We received several comments requesting that CPT code 27096, Injection procedure for sacroiliac joint, arthrography and/or anesthetic steroid, be added to the Medicare ASC
list. The commenters stated that the procedure is typically required to ensure proper placement of the needle into the sacroiliac joint and that most physician offices do not have the appropriate equipment for this, forcing Medicare beneficiaries to go to hospitaloutpatient departments, whereas nonMedicare patients may go to ASCs for
this service.

Response: This is a radiological
service that is furnished in the physician office setting more than half
the time. We do not believe that it is an appropriate addition to the ASC list.

Comment: A number of commenters requested that we add CPT codes 27412, Autologous chondrocyte implantation, knee; and 27415, Osteochondral allograft, knee, open, to the ASC list because these new procedure codes meet our clinical procedure criteria for
addition.

Response: The CPT codes 27412 and 27415 are new in 2005, and we have no
site of service data on which to base our decision. However, our medical staff
believes that these are still predominantly inpatient procedures and
should not be added to the ASC list at this time. Therefore, we will not add
these to the ASC list.

Comment: Several commenters asked that we add new CPT codes 29866, Arthroscopy, knee, surgical; osteochondral autograft(s); 29867, Arthroscopy, knee, surgical; osteochondral allograft; and 29868, Arthroscopy, knee, surgical; meniscal transplantation (includes arthrotomy for meniscal insertion), to the Medicare
ASC list. The commenters stated that these procedures meet our clinical
criteria for inclusion on the list and that they are similar to other knee arthroscopy procedures that currently
are included on the list.

Response: The CPT codes 29866, 29867, 29868 are new in 2005, and, therefore, we have no site of service data
on which to base our decisions. Our
medical staff believes that the procedures are most often performed in the inpatient setting, however, and as such are not appropriate for addition to the ASC list. Therefore, we will not add these procedures to the ASC list.

Comment: We received one comment requesting that we add a number of CPT
codes to the ASC list. For one of the codes, CPT code 63030, we received several requests for addition to the list. The requested additions are as follows:

CPT code Descriptor Percent inpatient

. 63001 ......................... Laminectomy with exploration &/or decompression of spinal cord &/or cauda equina, w/o facetectomy

, foraminotomy, or diskectomy, 1 or 2 vertebral segments; cervical. 97

63003 ......................... Laminectomy with exploration &/or decompression of spinal cord &/or cauda equina, w/o facetectomy

, foraminotomy or diskectomy, 1 or 2 vertebral segments; thoracic. 98

63005 ......................... Laminectomy with exploration &/or decompression of spinal cord &/or cauda equina, w/o facetectomy

, foraminotomy, or diskectomy, 1 or 2 vertebral segments; lumbar, except for spondylolisthesis. 95

63011 ......................... Laminectomy with exploration &/or decompression of spinal cord &/or cauda equina, w/o facetectomy

, foraminotomy, or diskectomy, 1 or 2 vertebral segments; sacral. 98

63020 ......................... Laminotomy, (hemilaminectomy), w/decompression of nerve root(s), incl partial factectomy, foraminotomy &/or excision of herniated intervertebral disk; one interspace, cervical. 88

63030 ......................... Laminotomy, (hemilaminectomy), w/decompression of nerve root(s), incl partial factectomy, foraminotomy &/or excision of herniated intervertebral disk; one interspace, lumbar (incl. Open or endoscopically-assisted approach). 84

63035 ......................... Laminotomy, (hemilaminectomy), w/decompression of nerve root(s), incl partial factectomy, foraminotomy &/or excision of herniated intervertebral disk; each additional interspace, cervical or
lumbar. 93

63040 ......................... Laminotomy, (hemilaminectomy), w/decompression of nerve root(s), incl partial factectomy, foraminotomy &/or excision of herniated intervertebral disk; reexploration, single interspace, cervical. 94

63042 ......................... Laminotomy, (hemilaminectomy), w/decompression of nerve root(s), incl partial factectomy, foraminotomy &/or excision of herniated intervertebral disk; reexploration, single interspace, lumbar. 93

63045 ......................... Laminotomy, (hemilaminectomy), factectomy and foraminotomy (uni- or bi-lateral w/decompression of spinal cord, cauda equina &/or nerve root(s)), single vertebral segment, cervical. 96

63046 ......................... Laminotomy, (hemilaminectomy), factectomy and foraminotomy (uni- or bi-lateral w/decompression of spinal cord, cauda equina &/or nerve root(s)), single vertebral segment, thoracic. 97

63047 ......................... Laminotomy, (hemilaminectomy), factectomy and foraminotomy (uni- or bi-lateral w/decompression of spinal cord, cauda equina &/or nerve root(s)), single vertebral segment, lumbar. 94

63048 ......................... Laminotomy, (hemilaminectomy), factectomy and foraminotomy (uni- or bi-lateral w/decompression of spinal cord, cauda equina &/or nerve root(s)), single vertebral segment, each additional segment, cervical, thoracic or lumbar. 96

The commenter asserted that, although these are usually furnished as inpatient procedures, the commenter believes that they meet the criteria for inclusion on the ASC list because they do not involve major or prolonged invasion of a body cavity, do not involve major blood loss, intra-operative time is less than 90 minutes, and recovery time is only 60 minutes.

Response: As displayed, the procedures that the commenter has requested as additions to the ASC list


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are performed predominantly as inpatient procedures. Even CPT code 63030, the procedure for which addition was requested by several commenters, is performed in the outpatient department only 14 percent of the time and is otherwise performed on an inpatient basis. We do not believe that any of these is appropriate for addition to the
ASC list.

Comment: We received comments requesting that we add CPT code 65820, Goniotomy, to the Medicare ASC list.
The commenters believe that addition of this procedure to the list is appropriate so that beneficiaries who require an inpatient setting due to comorbid conditions or the need for general
anesthesia will have the ASC as a choice for the procedure setting.

Response: The site of service data indicate that this procedure is furnished in the physician office 40 percent of the time, in the outpatient department 25 percent of the time, and in the ASC 34 percent of the time. We believe that adding it to the Medicare ASC list is appropriate at this time. We will assign CPT code 65820 to payment group 1.

Comment: We received a few requests that we add CPT code 65771, Radial keratotomy, to the ASC list.

Response: Radial keratotomy is not a Medicare-covered procedure and will
not be added to the Medicare ASC list.

Comment: We received a number of comments requesting that we add to the list the following laser procedures that
treat some of the most common forms of vision loss and blindness in elderly

Americans: 65855 Trabeculoplasty by laser surgery 66711 Ciliary body destruction;

cyclophotocoagulation endoscopic 66761 Iridotomy/iridectomy by laser

surgery 67028 Intravitreal injection of a

pharmacologic agent 67105 Repair retinal detachment,

photocoagulation 67110 Repair retinal detachment by

injection of air or other gas 67145 Prophylaxis of retinal

detachment, photocoagulation 67210 Destruction of retinal lesions,

photocoagulation
67220 Destruction of localized lesion

of choroid; photocoagulation
67221 Destruction of localized lesion

of choroid, photodynamic therapy
67228 Destruction of extensive or

progressive retinopathy, photocoagulation

The commenters stated that these procedures should be added to the list because they meet the criteria for inclusion. The intra-operative time is 15 to 20 minutes, recovery time is 40 to 60 minutes, no major blood vessels are encountered during the procedures, and anesthesia is rarely required. Further, commenters stated that, because CPT code 66821, Discission of secondary membranous cataract, laser surgery, is on the list, the other laser procedures
should be included as well.

Response: We reviewed these codes and, with the exception of new CPT code 66711, all of these codes usually are performed in the physician office. The new CPT code 66711 is a procedure
that has been included on the ASC list as part of CPT code 66710, Ciliary body destruction, cyclophotocoagulation, until January 2005 when CPT code
66710 was redefined and CPT code 66711 was implemented. For the other procedures the commenter listed, except for CPT code 66761, the physician office is the site of service for the procedures more than 80 percent of the time. The predominant site of service for CPT code 66761 also is the office, with 68 percent of procedures furnished in that setting. Therefore, we will add only
66711 to the ASC list at this time.

Comment: A number of commenters requested that we add CPT code 67445, Orbitotomy with bone flap or window,
with removal of bone for decompression, to the Medicare ASC ist.

Response: The procedure is performed 58 percent of the time in the outpatient department and is virtually never performed in the physician office. We agree with the commenter and will
add CPT code 67445 to the ASC list and will assign it to payment group 5.

Comment: We received a comment requesting that we add CPT code 67570, Optic nerve decompression, to the ASC
list.

Response: The procedure is performed 66 percent of the time in the outpatient department and is virtually never performed in the physician office. We agree with the commenter and will
add CPT code 67570 to the Medicare ASC list and will assign it to payment group 4.

Comment: Several commenters requested that we add CPT codes 67810, Biopsy of eyelid; 67825, Trichiasis, epilation by other than forceps; 67840, Excision of lesion of eyelid without closure or with simple direct closure; and 67850, Destruction of lesion of lid margin, to the Medicare ASC list.

Response: These codes are performed in the physician office 88 to 95 percent of the time. Because these procedures are seldom performed in any other setting, we will not add them to the ASC
list.

Comment: Several commenters requested that we add CPT code 67912, Correction of lagophthalmos, with implantation of upper eyelid load, to the Medicare ASC list. They stated that the procedure is commonly performed to treat paralyzed upper eyelids that are
sometimes the result of cardiovascular accidents (stroke). The procedure should be performed in a sterile environment and, although general anesthesia is rarely used, performance of the procedure in an operating room is preferable in many cases.

Response: This was a new code for 2004, but using CPT code 67911, Correction of lid retraction, as a comparative, we examined the site of
service data. We discovered that CPT code 67911 is performed in the physician office only 8 percent of the time; the rest of the time it is performed in outpatient settings. For this reason,
we believe that CPT code 67912 should be added to the ASC list, and we will assign it to payment group 3.

Comment: A few commenters wrote to request that we add CPT codes 68100, Biopsy of conjunctiva; and 68110, Excision of lesion, conjunctiva, to the
Medicare ASC list.

Response: These two procedures are performed in the physician office more that 50 percent of the time and so will
not be added to the ASC list.

Comment: We received a few requests to add CPT codes 68400, Incision, drainage lacrimal gland; 68420, Incision, drainage of lacrimal sac; and 68530, Removal of foreign body or dacryolith, lacrimal passages, to the
Medicare ASC list.

Response: These procedures are performed in the physician office more than 80 percent of the time and so will
not be added to the ASC list.

Comment: We received one comment requesting that CPT codes 65780, Ocular surface reconstruction; amniotic membrane transplantation; 65781, Ocular surface reconstruction; limbal stem cell allograft; and 65782, Ocular surface reconstruction; limbal conjunctival autograft, be added to the
Medicare ASC list.

Response: These were new codes in 2004 and, based on the site of service data for other corneal procedures and the judgment of our medical staff, we believe that these procedures should be included on the Medicare ASC list, and we will assign them to payment group

5. Comment: We received a comment requesting that we add CPT code 68371, Harvesting conjunctival allograft, living donor, to the ASC list.

Response: This code was new for 2004, and we have no site of service data to use in our decision-making. Our medical staff determined, however, that this procedure is appropriate for


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addition to the ASC list, consistent with other procedures currently on the list, CPT codes 68360, Conjunctival flap; bridge or partial; and 68362, Conjunctival flap; total. We will add it to the ASC list and assign it to payment group 2.

Comment: We also received comments requesting that several other ophthalmology codes be added to the list. These are: CPT codes 66990, Use of ophthalmic endoscope; 21386, Open
treatment of orbital floor blowout fracture; periorbital approach; 21390, Open treatment orbital floor blowout fracture; periorbital approach, with alloplastic or other implant; 21406, Open treatment of fracture of orbit; except blowout; without implant; and 21407, Open treatment of fracture of orbit; except blowout; with implant. The
commenters asserted that these procedures are not performed in the physician office and that they qualify as procedures suitable for the ASC.

Response: CPT code 66990 does not represent a surgical procedure, and we do not believe that it is an appropriate addition to the ASC list. The code is used to recognize the use of equipment that is integral to surgical procedures. The three CPT codes, 21390, 21406, and 21407, are performed predominantly in the hospital setting. Our medical staff believes that these procedures require more than 4 hours of recovery time and that the hospital site of service is the most appropriate. Therefore, we will not
add them to the list.

Comment: We received one comment requesting that we add the following procedures to the Medicare ASC list:

CPT code Short descriptor Percent furnished as an in-patient

procedure

33206 ......................... Insertion of heart pacemaker ..................................................................... .................................................. 81.4 33207 ......................... Insertion of heart pacemaker ..................................................................... .................................................. 85.6 33208 ......................... Insertion of heart pacemaker ..................................................................... .................................................. 86.7 33212 ......................... Insertion of pulse generator ..................................................................... .................................................... 43.4 33213 ......................... Insertion of pulse generator ..................................................................... .................................................... 40.3 33214 ......................... Upgrade of pacemaker system ...................................................................... ............................................. 68.5 33215 ......................... Reposition pacing-defib lead ..................................................................... .................................................. 77.3 33216 ......................... Insert lead pace-defib, one ...................................................................... .................................................... 73.3 33217 ......................... Insert lead pace-defib, dual ..................................................................... .................................................... 76.7 33233 ......................... Removal of pacemaker system ...................................................................... ............................................. 47.4 33234 ......................... Removal of pacemaker system ...................................................................... ............................................. 79.6 33235 ......................... Removal pacemaker electrode ...................................................................... .............................................. 84.3

The commenter requested that we add these codes and create a new payment group to accommodate the costs for these procedures.

Response: With the exception of CPT codes 33212, 33213, and 33233, we do
not believe that these codes are appropriate for the ASC setting because they are performed predominantly on an inpatient basis. However, our medical staff agrees that the procedures coded as CPT codes 33212, 33213, and 33233 are appropriate for inclusion of the ASC
list. We will add these codes and will assign CPT codes 33212 and 33213 to payment group 3 and CPT code 33233 to payment group 2.

Comment: We received one comment requesting that we add the following
codes to the Medicare ASC list:

CPT code Short descriptor Percent furnished as an in-patient

procedure

35470 ......................... Repair arterial blockage ......................................................................... ...................................................... 67.5 35471 ......................... Repair arterial blockage ......................................................................... ...................................................... 57.3 35472 ......................... Repair arterial blockage ......................................................................... ...................................................... 60.8 35473 ......................... Repair arterial blockage ......................................................................... ...................................................... 54.2 35474 ......................... Repair arterial blockage ......................................................................... ...................................................... 56.2 35490 ......................... Atherectomy, percutaneous ........................................................................ ................................................. 59.5 35491 ......................... Atherectomy, percutaneous ........................................................................ ................................................. 78.9 35492 ......................... Atherectomy, percutaneous ........................................................................ ................................................. 69.7 35493 ......................... Atherectomy, percutaneous ........................................................................ ................................................. 66.2 35494 ......................... Atherectomy, percutaneous ........................................................................ ................................................. 53.1 35495 ......................... Atherectomy, percutaneous ........................................................................ ................................................. 67.2
36200 ......................... Place catheter in aorta .......................................................................... ...................................................... 45.7 36215 ......................... Place catheter in artery ......................................................................... ...................................................... 46.7 36216 ......................... Place catheter in artery ......................................................................... ...................................................... 47.2 36217 ......................... Place catheter in artery ......................................................................... ...................................................... 59.1 36218 ......................... Place catheter in artery ......................................................................... ...................................................... 55.0 36245 ......................... Place catheter in artery ......................................................................... ...................................................... 55.5 36246 ......................... Place catheter in artery ......................................................................... ...................................................... 51.5 36247 ......................... Place catheter in artery ......................................................................... ...................................................... 57.7 36248 ......................... Place catheter in artery ......................................................................... ...................................................... 60.5

The commenter believes that the listed procedures are appropriate for performance in an ASC setting because they meet the clinical criteria for
inclusion. Specifically, the commenter stated that CPT codes 35470, 35471, 35473,
and 35474 are less invasive than CPT


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codes 37205, Transcatheter placement of an intravascular stent(s), (except coronary, carotid, and vertebral vessel) percutaneous, initial vessel; and 37206 Transcatheter placement of an intravascular stent(s), (except coronary, carotid, and vertebral vessel) percutaneous, each additional vessel, which we proposed to add to the ASC list in the November 26, 2004 proposed
rule. The commenters also stated that CPT codes 35490, 35491, 35492, 35493, 35494, and 35495 should be added if we are making final our proposal to add CPT codes 35475, Transluminal balloon angioplasty; brachiocephalic trunk or branches; and 35476, Transluminal balloon angioplasty; venous, to the list.

Response: We are reluctant to add CPT codes 35470, 35471, 35473, 35474,
35490, 35491, 35492, 35493, 35494, or 35495 to the ASC list. The procedures are performed in either the outpatient or inpatient departments of the hospital;
and the distribution between the two settings is about even although most are performed somewhat more frequently on an inpatient basis. There is almost no utilization of the ASC or physician office settings. We believe that this is
indicative of a level of clinical complexity that requires immediate
access to the facilities available in the hospital and are not available in either the office or ASC settings. These procedures require more than 4 hours of recovery time and involve major blood
vessels and do not meet our clinical
criteria for inclusion on the ASC list. We will not add these procedures to the ASC list at this time. Furthermore, as explained in section II above, we reevaluated our proposal to add CPT codes 35475, 35476, 37205, and 37206
to the ASC list and have determined that they are more appropriately limited to the hospital outpatient and inpatient settings at this time.

Similarly, based on their clinical judgment and site of service data, our
clinical staff considers all of the other procedures on this list to be predominantly inpatient procedures and not appropriate for addition to the ASC
list.

Comment: We received a comment requesting that we add new CPT codes 36475, Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; first vein, 36476, Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; second and subsequent veins in single extremity, each through separate access sites; 36478, Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; first vein; and 36479, Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; second and subsequent veins treated in a single extremity, each through separate access sites, to the ASC list. The commenter
believes that the thermal ablation procedures are appropriate for performance in the ASC.

Response: The codes represent a new technology, and we do not have site of
service data for these codes or comparable codes to use to support our
decision to add them to the list of procedures on the ASC list. Based on
clinical information and indications for use of the procedures, our medical staff believes that these codes are appropriate for the ASC setting and recommends
that we add them to the ASC list. We will assign the codes to payment group 3 consistent with other procedures with
similar clinical indications.

Comment: We received one comment requesting that we add CPT codes 36100, Introduction of needle or intracatheter, carotid or vertebral artery; 36120, Introduction of needle or intracatheter; retrograde brachial artery; 36140, Introduction of needle or intracatheter; extremity artery; and 36145, Introduction of needle or intracatheter; arteriovenous shunt created for dialysis, to the Medicare
ASC list. The commenter believes that these procedures satisfy our criteria for inclusion on the list because they are integral to the surgical procedures for stent placement and other surgeries. The
commenter believes that these procedures should receive separate payment in the ASC.

Response: These codes represent procedures that are components of other procedures and are not typically performed alone. As components of other procedures, they do not qualify as appropriate additions to the ASC list. Similar to the OPPS, the ASC payment system does not recognize for separate payment procedures that are integral to the performance of the primary surgical procedure.

Comment: We received one comment requesting that we add CPT Level III code 0020T, Extracorporeal shock wave therapy for plantar facsitits, to the ASC
list. The commenter stated that this procedure was recently approved by the CPT Editorial Panel to be changed to a Category I code in 2006 and therefore, we should add the new code, CPT code 2825X, to the ASC list. The commenter believes that because the equipment necessary to perform this treatment is expensive, the service is not typically available in physician offices and is more common in the ASC setting.

Response: Although there will be a
Level I CPT code for this service in 2006, there is not one now and so, we will not add this procedure to the list.

Comment: A commenter requested that we add CPT code 28108, Excision or curretage of bone cyst or benign tumor, phalanges of foot, to the ASC list
because all of the other related CPT codes (28106 28107, 28110, etc.) are on
the list. The commenter believes that
CPT code 28108 is like the codes that are already on the list.

Response: We agree with the commenter that CPT code 28108 is very similar to other CPT codes in that group, and we will add it to the list in payment group 2.

Comment: One commenter requested that we add CPT codes 28230, Tenotomy, open, tendon flexor; foot, single or multiple tendon(s); and 28232, Tenotomy, open, tendon flexor; toe, single tenson, to the list because they are comparable to CPT code 28234,
which is on the list.

Response: CPT codes 28230 and 28232 are components of other procedures and are not comparable to CPT code 28234, which is a separate, stand-alone procedure. Because the procedures are components of other procedures, we do not believe it is appropriate to add these codes to the ASC list for separate payment.

Comment: We received a few comments requesting that we add CPT code 58565, Hysteroscopy, with bilateral fallopian tube cannulation to induce occlusion by placement of permanent implants, to the ASC list.
This is a new code for 2005 and was created to allow for more coding specificity.

Response: Our medical staff
determined that this code is an appropriate addition to the ASC list based on the other hysteroscopy codes currently included on the list. We will add it to the ASC list and assign it to payment group 4.

Comment: We received one comment requesting that we add a number of urologic and gynecologic codes. The codes requested for addition are displayed in the table below:


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CPT code Descriptor

51741 ......................... Complex uroflowmetry. 51784 ......................... Electromyography studies (EMG) of anal or urethral sphincter, other than needle. 51795 ......................... Voiding pressure studies (VP); bladder voiding pressure 51797 ......................... Voiding pressure studies; intrabdominal voiding pressure (AP). 58260 ......................... Vaginal hysterectomy, for uterus < 250 gms. 58262 ......................... Vaginal hysterectomy, w/removal of tube(s), &/or ovary(s). 58263 ......................... Vaginal hysterectomy, w/removal of tube(s), &/or ovary(s), w/repair enterocele. 58267 ......................... Vaginal hysterectomy, w/colpo-urethrocystopexy with or w/o endoscopic. 58270 ......................... Vaginal hysterectomy, w/repair enterocele. 58275 ......................... Vaginal hysterectomy, w/total or partial vaginectomy. 58280 ......................... Vaginal hysterectomy, w/total or partial vaginectomy, w/repair enterocele. 58290 ......................... Vaginal hysterectomy, for uterus > 250 gms. 58291 ......................... Vaginal hysterectomy for uterus > 250 gms w/removal of tube(s) &/or ovary(s). 58292 ......................... Vaginal hysterectomy for uterus > 250 gms w/removal of tube(s) &/or ovary(s), w/repair of enteroc ele. 58293 ......................... Vaginal hysterectomy for uterus > 250 gms, w/colpo-urethrocystopexy with or w/o endoscopic contro l. 58294 ......................... Vaginal hysterectomy for uterus > 250 gms, w/repair of enterocele. 58356 ......................... Endometrial cryoablation w/ultrasonic guidance, including endometrial curettage. 58552 ......................... Laparoscopy surgical, w/vaginal hysterectomy, for uterus ≤ 250 gms, w/removal of tube(s) &/or ovary(s). 58553 ......................... Laparoscopy surgical, w/vaginal hysterectomy, for uterus ≥ 250 gms. 58554 ......................... Laparoscopy surgical, w/vaginal hysterectomy, for uterus ≤ 250 gms, w/removal of tube(s) &/or ovary(s).

Generally, the commenter believes
that the listed codes should be added to the ASC list because the physician
should be allowed to select the most appropriate setting for performance of procedures. The commenter identified a
few codes that are included on the ASC
list that the commenter believes are comparable to several of the codes for which addition is being solicited. For example, the commenter indicates that because CPT code 58550, Laparoscopy surgical, with vaginal hysterectomy for uterus 250 grams or less, is included on the list, CPT codes 58552, 58553, and
58554 also should be included and that the inclusion of CPT code 51772, urethral pressure profile studies is an
indication that CPT code 51741 should
be added to the list.

Response: We do not believe that any of the codes listed is appropriate for
addition to the ASC list. CPT codes 51741, 51784, 51795, and 51797 are performed in the physician office setting 80 percent or more of the time and so do not meet our criteria for inclusion on
the ASC list. The other listed procedures are furnished as inpatient procedures most of the time and require more than 4 hours of recovery time and
so do not meet the criteria for inclusion
on the ASC list. We do not believe that addition to the ASC list is appropriate
for these codes at this time.

Comment: We received one comment requesting the addition to the ASC list of the following procedures:

CPT code Descriptor

58970 ......................... Follicle puncture for oocyte retrieval. 58974 ......................... Embryo transfer, intrauterine. 58976 ......................... Gamete, zygote, or embryo intrafallopian transfer, any method.

The commenter believes that the physician should have the freedom to select the most appropriate site of service for performance of these procedures.

Response: These procedures are performed predominantly in the outpatient department, and we believe that they satisfy the criteria for
inclusion on the ASC list. We will add the procedures to the list and assign all of them to payment group 1.

Comment: We received a comment requesting that we add CPT code 64435, Injection, anesthetic agent; paracervical (uterine) nerve, to the ASC list. Response: This is a procedure that is predominantly performed in the physician office and as such is not appropriate for inclusion of the ASC
list.

Comment: We received several comments asking us to add brachytherapy codes:

CPT code Descriptor

13153 ......................... Repair, complex, eyelids, nose, ears and/or lips;each additional 5cm or less. 19295 ......................... Image guided placement, metallic localization clip, percutaneous, during breast biopsy. 19296 ......................... Placement of radiotherapy afterloading balloon catheter into the breast for interstitial radioele ment application following partial mastectomy, includes imaging guidance; on date separate from partial mastectomy. 19297 ......................... Placement of radiotherapy afterloading balloon catheter into the breast for interstitial radioele ment application following partial mastectomy, includes imaging guidance; concurrent with partial mastectomy. 19298 ......................... Placement of radiotherapy afterloading brachytherapy catheters into the breast for interstitial r adioelement application following partial mastectomy, includes imaging guidance. 57155 ......................... Insertion of uterine tandems and/or vaginal ovoids for clinical brachytherapy. 58346 ......................... Insertion of Heyman capsules for clinical brachytherapy.

Response: Procedures represented by CPT codes 13153, 19295, and 19297 are

‘‘ add-on ’’ procedures that are included in another procedure and are not performed on their own. We do not typically approve this type of procedure for addition to the ASC list as the facility costs for the additional work included in the procedure is not usually


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significant. That is, the resources required to perform a procedure with or without also performing an ‘‘ add-on ’’ procedure are not significantly different. Time in the operating suite, supplies, and other resources that Medicare pays for in the ASC, are not significantly increased by performance of the additional procedure. Therefore, under the current rate-setting method, we cannot accurately identify a separate price for ‘‘ add-on ’’ procedures. We will not add CPT codes 13153, 19295, or
19297 to the ASC list.

However, we agree with the commenters that CPT codes 19296, 19298, 57155, and 58346 meet our
criteria and should be added to the ASC list. We also agree that uterine and breast brachytherapy are appropriate services for the ASC setting. While we are adding these procedure codes to the list, these codes alone do not comprise a brachytherapy procedure. Similar to the performance of prostate brachytherapy, the codes for uterine and breast brachytherapy are among several procedures that may be furnished in the performance of uterine or breast brachytherapy and do not include the application of seeds.

We are currently trying to resolve a number of payment options related to the performance of prostate brachytherapy and the extent to which those services could be paid for when furnished in an ASC under existing regulations related both to ASCs and other payment systems such as the Medicare physician fee schedule. The issues are very complex, and we are still exploring various options. Until we address them comprehensively through national instructions, payment for uterine or breast brachytherapy performed in an ASC is determined by
local carriers.

Comment: We received one comment requesting that we place CPT code 50590, Extracorporeal Shock Wave Lithotripsy, on the list of approved ASC procedures.

Response: We had proposed to add this code in our June 1998 proposed rule with a proposed payment of $2,107. The American Lithotripsy Society opposed the $2,107 payment rate. In American Lithotripsy Society v. Sullivan , 785 F. Supp. 1035 (D.D.C. 1992), the District Court ordered that we

‘‘ publish the data and other information we are relying on in setting a (lithotripsy) rate and allow time for comment before issuing a final notice

* * *. ’’ The data and other information that we would rely on in setting a payment rate for ESWL are part of the ratesetting methodology that we proposed in the June 1998 proposed rule. Because we are not making that ratesetting methodology final at this time, we might not be in compliance
with the District Court order if we were
to add CPT code 50590 to the ASC list
in this interim final rule under the current payment rate structure. Therefore, we are not adding CPT code
50590 to the ASC list at this time.

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Table 7: Final Additions to the ASC List, Effective July 2005

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III. Collection of Information Requirements

This document does not impose
information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).

IV. Waiver of Proposed Rulemaking

We ordinarily publish this list and propose payment amounts for new items and propose deletions of items in a notice of proposed rulemaking, subject to public comments. We published such a notice in November 2004. In response to the proposed rule, we received and acted upon a large number of public comments. Commenters requested the addition of a number of procedures to the list; we have added a number of procedures to the list, and we have assigned them to payment groups. Despite the fact that we view these additions as logical outgrowths of our proposed rule, we have decided to provide an opportunity for public comment on the procedures and payment group assignments which were not contained in the proposed rule. Nonetheless, payment will be made, beginning July 5, 2005, based on the list and payment groups contained in this
rule.

With respect to the procedures added to the ASC list since the proposed rule, we are waiving our usual notice and comment process. Those procedures will be used effective July 5, 2005 as though they had been included in the proposed rule. We believe that waiving the notice and comment process with respect to those procedures is in the public interest. If notice and comment were not waived, we could not add the procedures suggested by public comments to the list of procedures that may be performed in ASCs. This result could be detrimental to beneficiaries, who might be unable to receive the procedures in an ambulatory setting. Therefore, we find good cause to waive notice and opportunity for comment with regard to the changes being made
to the ASC list which were not published in the proposed rule.

V. Regulatory Impact Statement

[If you choose to comment on issues in this section, please include the caption ‘‘ REGULATORY IMPACT

STATEMENT ’’ at the beginning of your comments.] A. Overall Impact
We have examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96

– 354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L.

104

–4), and Executive Order 13132.

Executive Order 12866 directs 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). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). Our actuary has prepared a fiscal impact estimate. As shown in the table below, for fiscal years 2005 through 2009, the estimated effect on Medicare program expenditures that
result from the additions to and
deletions from the ASC list made final
in this rule are estimated to have zero impact in 2005, increasing to $5 million savings per year for 2006 through 2009. We expect the estimated savings to result from approximately 10 percent of


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the procedures proposed for addition moving to a less costly ASC setting from the hospital. This interim final rule will not have a major impact on the Medicare budget.

FY Cost (Tens of $ millions)

2005 ...................................... 0

2006 ......................................

¥ 5

2007 ......................................

¥ 5

2008 ......................................

¥ 5

2009 ......................................

¥ 5

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either because of their nonprofit status or because they have revenues of $6 million to $29 million in any 1 year. According to small business associations, approximately 73 percent
of all ASCs are considered small entities because they have revenues of $11.5
million or less. Individuals and States
are not included in the definition of a small entity.

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a final rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100
beds. This interim final rule does not have a significant impact on the operations of small rural hospitals.

Section 202 of the Unfunded
Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local or tribal governments, in the aggregate, or by the private sector, of $110 million. This rule
will not have an effect on the governments mentioned, and the private sector costs will be less than the $110
million threshold.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications.
This rule will not have a substantial effect on State or local governments. B. Anticipated Effects
The entities affected by this interim final rule are Medicare certified ASCs, physician offices and clinics, hospitals, and beneficiaries. No other providers
are affected. This rule will not affect State or local governments. There are more than 4,000 ASCs currentlycertified by Medicare, nearly threequarters of which fit the definition of a

‘‘ small entity ’’

.

This interim final rule revises the ASC list by adding 67 procedures and deleting five. Professional societies, physicians, ASC administrators, and
ASC associations recommended most of the codes proposed for addition to the ASC list. Currently, the procedures that we propose to add to the ASC list are performed predominantly in a hospital outpatient setting. Our medical advisors agree that the proposed additions meet the criteria for ASC procedures that are discussed in section II of this preamble and that they can be safely and appropriately performed in an ASC.

Currently, if a physician performed one of the 67 procedures before the effective date of this rule, Medicare would not allow payment to the ASC. Addition of these procedures to the ASC list may benefit ASCs because it will allow Medicare to pay the facility fee to the ASC when the procedures are furnished there. Further, the additional procedures may increase the number of
beneficiaries to whom the ASC can offer

its services.

Beneficiaries may benefit from the additions to the ASC list because they will have an additional service setting that they and their physicians may consider for elective surgical procedures and the copayment amounts for services furnished in the ASC setting may be lower than in the hospital outpatient department where many of these procedures currently are furnished.

We estimate that approximately 25 percent of the newly-added procedures that are currently furnished in the physician office will migrate to an ASC setting. This may increase Medicare program spending and beneficiary copayment amounts because the ASC facility fees for these procedures often exceed changes in the physician office setting.

To the extent that hospital outpatient
utilization decreases and ASC utilization increases, the Medicare program will realize a savings because the ASC facility fee for most of the proposed additions to the ASC list is lower than the payment rate for the same procedures under the OPPS. Because hospitals perform a much higher volume of ambulatory surgeries overall than are performed in ASCs, we do not expect significant hospital revenue losses from procedures proposed for addition to the ASC list shifting to the ASC setting.

In addition, we are deleting five procedures from the existing ASC list. We proposed to delete these codes
based on recommendations from physicians or specialty societies because the procedures do not meet our criteria; however, they do not represent a significant volume of procedures furnished in ASCs and so deleting them from the list will have no negative effect
on ASCs or beneficiaries. As we explained above, three of the codes that we are proposing to delete are procedures that are being performed primarily in a physician office setting and do not require the more elaborate resources of an ASC to be safely performed, and one is furnished 100 percent of the time as an inpatient procedure. Therefore, we do not believe that deleting these procedures from the ASC list will limit beneficiary access or compromise patient safety. For the above reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined, and we certify, that this
interim final rule would not have a significant economic impact on a
substantial number of small entities or a significant impact on the operations of
a substantial number of small rural hospitals.

C. Alternatives Considered

We are issuing this interim final rule to meet a statutory requirement to update the list of approved ASC procedures biennially. We last updated the ASC list effective July 1, 2003. We implement the biennial update of the list through notice in the Federal Register and give interested parties an opportunity to comment on proposed
additions to and deletions from the ASC list. If we do not update the ASC list by July 2005, we would be out of compliance with the statute, and we would be denying beneficiary access to surgical procedures in the ASC setting that meet our criteria and are safely and appropriately performed in an ASC.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

Authority: (Catalog of Federal Domestic Assistance Program No. 93.774, Medicare

— Supplementary Medical Insurance Program)


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Dated: April 15, 2005.
Mark B. McClellan, Administrator, Centers for Medicare &
Medicaid Services.

Approved: April 28, 2005.
Michael O. Leavitt,
Secretary.

Addendum—List of Medicare Approved ASC Procedures With
Additions and Deletions

‘ A ’ indicates that the procedure is being

added to the ASC list, as proposed ‘ A* ’ indicates that the procedure is being added to the ASC list in response to comment and was not proposed. These additions are open
for comment.

‘ D ’ indicates that the code is being

deleted from the ASC list, as proposed

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